Facebook Ads Bidding Strategies: What Are They?

Marketing Strategy
Rafia Tabassum Sara
4 mins

There are only a limited number of spots on Facebook to display your ads. This is where bidding comes in. When and where exactly your ads are going to be displayed depends on your bidding strategies.  While the highest bid usually receives the most ad placements, the size of the bid isn't the only factor in ad delivery. This is what distinguishes Facebook's bidding system of Facebook from other auction advertising.

How Does Bidding for Facebook Ads Work?

The auction system is intended to balance advertisers' needs with Facebook users' needs by allowing marketers to generate revenue while serving relevant content to users.

Three factors behind influencing ad delivery are:

Bid Amount:

This is the most you will be ready to pay to win a bid. Facebook's system is meant to enable you to pay the smallest amount possible while still winning the bid.

For example, if your competitor makes a maximum bid of $2, and your highest bid is $3, you will need to pay $2.01 to win the bid, not your proposed amount of $3.

Relevance Score:

The relevance score is very significant for Facebook because this indicates the number of time users spends on their app. 

The relevance score of your ad is calculated by weighing all positive interactions with your ads, such as likes, comments, or clicks on it, against all negative interactions, such as users hiding or ignoring your ad.

Estimated Action Rates: 

If the algorithm predicts that your ad will get a large number of clicks, it will prioritize your one over other ads.

Why Does Your Bid Strategy Matter?

Creating a bidding strategy can assist you in determining how your budget will be spent. Your strategy will be determined by your ad campaign objectives, budget, and other factors such as market research and internal performance metrics. Going for the best Facebook Ads bidding and pricing strategy is critical if you want to achieve the specific results you want with your campaign.

What Is Lowest-Cost Bidding?

This is the default bidding strategy offered by Facebook. When you select Lowest Cost, Facebook will attempt to deplete your budget. There will be no goal or concern about Cost Per Action or ROAS.

When to Use Lowest-Cost Bidding for Facebook Ads

You should go for Lowest-Cost bidding when: 

  • Cost Per Action or CPA is not your concern
  • You wish to spend your entire budget

What Is Cost Cap Bidding?

When you use a Cost Cap, Facebook will attempt to keep the average Cost Per Action at or below the cost control you specify.

If you set a cost control of $20.00  after using Cost Cap, Facebook will try to keep the cost per conversion at $20.

When to Use Cost Cap Bidding for Facebook Ads

You should go for this when you wish to inform Facebook of the highest CPA that will ensure the profitability of your campaign.

What Is Bid Cap Bidding?

Instead of allowing Facebook to bid flexibly based on your cost or value goals, Bid Cap allows you to set the maximum bid across auctions. This is intended for those who understand projected conversion rates and can evaluate the appropriate bid.

When to Use Bid Cap for Facebook Ads

If you’re a marketer with in-depth knowledge regarding costs and KPIs and have a high volume, you may consider going for Bid Cap bidding. 

What Is Minimum ROAS?

If you optimize for Value, Facebook will try to maximize revenue while spending the least amount of money. The Minimum ROAS Control feature allows you to specify a Minimum ROAS (Return on Ad Spend), and Facebook will use this Minimum ROAS as a benchmark when allocating your budget.

When to Use Minimum ROAS for Facebook Ads

Bid strategies are offered to give you more control over how Facebook spends your money. You can accept the defaults, and Facebook will work to maximize your results while staying within your budget. Facebook's Bid Strategies have stricter criteria, which may help you control costs but may also prevent you from sticking to your budget. If you are finding it difficult to stay profitable while optimizing for Value, you should consider using a minimum ROAS control.

Frequently Asked Questions

Which bid strategy should I use on Facebook?

What are bidding strategies in Facebook ads?

The bidding strategies on Facebook are: 

  1. Lowest Cost
  2. Cost Cap
  3. Bid Cap
  4. Minimum ROAS

What is the lowest cost bid strategy for Facebook?

The goal of the lowest-cost strategy is to place your ad in as many ad placements as you can for the least amount of money.

How much should I bid on Facebook ads?

You should start with a bid cap that’s double what you’re actually willing to pay.

Final Thoughts on Facebook Bidding Strategies

You must comprehend how Facebook's bidding system functions in order to run lucrative Facebook campaigns. You will need to select a particular ad delivery type, and optimization, in addition to a bidding strategy based on your goals. As always, you must conduct extensive testing to determine the delivery type, optimization, and bidding strategy that is most effective for you.

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