Facebook Ad Bidding system operates like an auction in which the advertisers will be able to bid for their ads placed over various placement locations of Facebook. It has a significant impact on your ad results. Without a proper ad bidding strategy, you may lose money even if other factors like Ad copy or audience targeting are on point.
Now, what makes it different from an auction? With a large number of advertisers trying to get connected with billions of potential buyers via the Facebook platform, it will be difficult for Facebook to deliver all ads and satisfy every advertiser. Facebook needs to create value for advertisers by helping them in reaching the target audience to get desired results and at the same time, provide a positive environment for its users. Unlike auction where the highest bid normally gets the most ad placements, Facebook bidding depends on the following factors:
Estimated Action: This aspect happens behind the scenes of Facebook. This is a metric that isn’t visible to us. Facebook usually calculates how likely an individual is going to take actions that are necessary to achieve the desired results. The estimate depends on the actions taken by the individual who is qualified to view your ad, as well as the previous performance of the ads, run in your account.
Ad quality: The quality of an ad is determined by various factors like the user interactions of hiding or ignoring the ad; low-quality features in the ad, such as concealing information, sensationalized language, and even engagement bait.
Your Bid: Just like an auction, the maximum amount that an advertiser is willing to pay also influences the Bidding result.
Facebook uses a factor - Ad relevance, which is measured by combining estimated action rates and ad quality. Ad relevance factor helps Facebook to even subsidise relevant advertisements in auctions so that more relevant ads cost less and provide more results.
The bidding strategies offered by Facebook can be classified into 3 types :
Aims in spending the entire budget allotted and delivering the most possible results or value. There are two types of bidding under this category:
This bidding is the default option for any Ads you set on Facebook and it’s available under all campaign objectives. Facebook will aim to provide maximum placements at the lowest cost possible.
This bid strategy is for those ad sets that provide optimization for the purchase value. The highest value will utilize the entire ad budget within the ad set’s schedule while maximizing the value of the purchase.
There are two types of bidding under this category:
Helps in keeping the ad below a specified amount, irrespective of market conditions. You can set a limit on average CPA (cost per action).
Minimum ROAS is an advanced option that can only be used for the following campaigns: App installs, Conversions & Catalogue sales. Here, you won’t be setting any budgets limits. Rather, you can provide the minimum revenue that you need to get from the Ad.
You will be able to control the amount that is required to bid in Ad Auctions.
A bid cap can be used in placing a hard limit on the cost per bid. They are best for controlling the bids in the auction. This strategy doesn’t control the cost per auction. It’s meant for advertisers who can calculate bids based on projected conversion rates and marginal costs.
Many factors like budget, campaign objectives, timeframe, etc influence Facebook ads’ bid strategy. Therefore, it is necessary to use different bid strategies for different campaigns or ads. How the ad delivery is optimized determines whom Facebook will be showing Ads to and control the spending limits.
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