Facebook Bidding Unraveled: Choosing the right bid amount with AdParlor

Now that you've chosen your bid type, it's time to choose your bid values. How much is too much? How much is not enough? How do you cope when the market price is constantly changing?

There is no hard and fast answer; the market price is not only constantly changing, but it also depends on a whole variety of factors. As with every other aspect of advertising, the best way forward is to test, refine, and optimize. 

Start bidding to collect data

To get started, if you don't have a goal CPA (i.e. your performance metric) in mind, Facebook provides a range of Suggested Bids for each Ad that you upload - this accounts for your effective audience and other influencing factors in the market such as current demand. We would recommend starting your bids at halfway between the median and upper limit of this range; this should get you quick delivery without having to overpay and allows you to collect data. 

Pro Tip: To ensure you don't waste a lot of budget during this 'exploratory' learning phase, set your Ad Set budgets to very conservative levels. 

If you do have a goal CPA in mind, our Ad Operations specialists recommend:

  • Starting CPA bid values at 150% of the goal CPA so you can quickly collect data. You will want to bid more aggressively on your CPA bid type because the market demand for this bid type is always very high.
  • Starting oCPM bid values at 100% of your goal CPA i.e. bid exactly what each audience of users is worth to you. This strategy will allow you to quickly figure out which audiences will convert (and which won't) at your CPA goal. 

Note: If your bid value is too low, your Ads will not get delivered and you will not have data to work with. Sometimes it's a smart strategy to overpay with higher bid values during your 'exploratory' phase to accrue more data; this allows you to uncover better insights and thus, in the long run, will lead to better campaign performance. 

For oCPM to Actions bidding, Facebook's Ads Manager and Power Editor interfaces will default your bid to:

  • $10.00 USD for mobile app installs
  • $30.00 USD for offsite conversions
  • $5.00 USD or all other actions

How does Facebook decide which Ads to show?

For Ads using the oCPM bid type, this is the basic equation that Facebook's Ad serving system uses to choose which Ads get served, and how much delivery they receive:

If your bid value is below the actual CPA for that conversion spec, then Facebook will reduce your delivery of those Ads. This is a built-in optimization that helps you as the advertiser; your poor performing Ads will get less and less delivery over time and then eventually stop serving. Facebook will not spend your bid if they do not think it will result in a conversion to save you money. 

Note: The minimum # of actions that need to be generated before the Facebook oCPM algorithm becomes effective and accurate has not been disclosed by Facebook. Rest assured that Facebook is making these optimization decisions based on significant data. 

How do I optimize my bidding?

For optimum return on your advertising spend, you should be constantly monitoring and adjusting your bidding as you collect more information on who your most responsive audience is, and the market price (actual CPA) for such people. This can either be a manual process; easily achieved using our Actionable Reporting tool, an automated process; using our Rules Engine to configure logic that lets the system make changes on behalf of you, or something in-between. 

What metrics do I need to monitor? 

The three key determinants of your actual CPAs are:

  Represents Recommended Actions
CPM ($) "Cost per thousand" impressions - serves as a good proxy for the market cost to reach your audience (note that this will fluctuate with supply and demand)

If it increases, the market may be becoming saturated; consider:

- Testing new targeting

- Increasing your bid values to stay competitive in the market for that audience

CTR (%) The percentage of users that actually click (i.e. interact) on your Ad

If this is low or begins to decrease, consider:

- Testing new creative to improve your messaging

- Testing new targeting to find an audience of users more likely to respond to your existing Ads

CVR (%) The percentage of users who click on your Ad that actually perform the action that you want (e.g. completing an install)

If this is low or begins to decrease, consider:

- Testing new creative to improve your messaging

- Testing new targeting to find an audience of users more likely to respond to your existing Ads

Feel free to reach out to the AdParlor Customer Success team to learn more about the industry vertical averages for metrics like CTR and CVR.

What happens when I change my bid amount?

If you're starting to see good delivery with your budgets being fulfilled, it's time to start thinking about optimizing your bidding so you get the maximum bang for your buck. The table below introduces a very simplistic view on bidding modifications:

  Reach Actual CPA Budget
Increase bid More reach by expanding access to more expensive users who you weren't originally reaching i.e. expanding your Ads' 'effective reach' Might increase; but these more expensive new users might generate even more positive performance results (e.g. revenue) than the previous users Should continue to be fulfilled, unless the market supply and demand changes
Decrease bid Less reach by reducing access to users who you were originally reaching i.e. reducing your Ads' 'effective reach'.  Should decrease; see if you can reach your goal CPA while still fulfilling your budgets

May not be able to be fulfilled (hence missing your volume goals). Either:

- Increase your bid to continue fulfilling your budget or

- Pause the Ad Set and Ads as this audience is not going to be ROI positive for your campaign

It is important to note that the art of bidding is a complex realm of advertising in itself, and it goes hand-in-hand with budgeting. Furthermore, your bidding strategies will vary depending on your advertising objective. 

Check out our Best Practice guidelines for each advertising objective:


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