This is a very “straight to the point” article. I made this to give you a COMPLETE easy-reading resource on Facebook Ads Bidding so you can have one article to get back to, whenever you’re building and defining your facebook campaigns. That way, you can just check this out when there’s any sort of doubt and get back to focusing on creating your nice, genius and smart facebook campaigns ideas.
So let’s cut to the chase.
The article will make the following information very simple to understand:
- How Facebook Ads Bidding Work
- The Facebook Ads Bidding Strategies
- CPM Bidding
- oCPM Bidding
- CPC Bidding
- CPA Bidding
Treat this as a resource for future consulting.
HOW FACEBOOK ADS BIDDING WORK
THE REVELATION: The Facebook Ads Bidding is a Worldwide-level AUCTION. Period. There’s no better definition than this sentence. So know now that when you’re creating your Facebook campaign for your product, this is the very first thing you need to know from the start. It’s an auction. The moment you run your ads, you’re investing your money in a deadly, highly competitive AUCTION.
(ok not really “deadly”, I just wanted to be a little dramatic here).
So…yes. You’re raising a “I give this amount of money” plaque the moment you set your bids and run your campaign for whatever product/service/business you’re promoting. Then, after your ads are created, Facebook will CONSIDER your bids as one decisive factor among others to decide if it will show your Ad to users or not. So the good news is that your bid is not a decisive factor to whether your ads will be shown or not, but rather just ANOTHER factor used by Facebook to untie a strict auction case.
Facebook uses a powerful algorithm to decide what exact audience your ads will strike, so rest assured that it doesn’t depend on how much money you put into the table all the time because showing your ads to users, rely on a variant called the TOTAL VALUE.
The TOTAL VALUE is based on these 3 factors below:
- BIDS — The amount you’re willing to pay to beat other contestants. Remember that if everything else is in place (audience’s interest, relevance, ad quality), then it all comes down to the highest bid to decide the winner.
- INTEREST — The person will give your desired outcome once the Ad is shown to her? Is it likely that the person will click on your Ad? Is the person used to CLICK on Ads of that particular interest or not? Or is the person used to click on Ads only when they want to buy? Some important questions that Facebook answers to decide WHICH users will be selected to see your great ads. It’s like a “double-auction”. Both sides must contribute with real value.
- ADVERTISING QUALITY — The Ad’s imagery, the Ad’s content and the Ad’s relevance are all taken into account here by Facebook to decide how much quality your Ad has in reality. Facebook cares about whether they’re displaying high-quality ads or not to its users, which is why this is part of the equation. (PS: Relevance = Positive/Negative Feedback from users, but this will be approached further on).
(BIDS + INTEREST + ADVERTISING QUALITY)
The ad with the HIGHEST TOTAL VALUE WINS the auction for the people you’re trying to reach. Get it? Easy, right? OK. Now let’s address some important questions I’m used to hearing:
Question 1: Is the amount I bid for Clicks, Impressions or Conversions the amount I’ll pay?
Response: No. Facebook will always make you pay the LOWEST RATE possible because he wants you to get the best ROI (Return on Investment) out of it. After all, good service naturally ends in Word of Mouth Marketing. Facebook wants a great ROI for its advertisers. But Facebook will make you pay the highest bid whenever is necessary to untie things.
Question 2: How does the Relevance Score for Ad Quality works?
Response: The relevance score is based on the Positive/Negative feedback an Ad gets from its target audience. Positive indicators vary depending on the ad’s objective, but may include video views, conversions, etc. So if your Ad is being shown to the right people, who usually clicks on your type of ads, and they’re not clicking at all in YOUR Ads then it means your Ad is getting a negative feedback. This, therefore, will resonate in a lower total value because of that. This is why Ad Quality is important. Because sometimes it may determine if you win an auction or not. And in case you want to know more on Relevant score see what Facebook itself teaches about it.
Question 3: What Does Facebook’s Relevance Score Actually Do?
Response: The higher the Relevance Score is, the better for your pocket because it means you’ll pay LESS for each ad delivered to the end user, according to Facebook (read the end). This is in a certain way, a sort of incentive for advertisers to work hard on their Ad’s quality so users can benefit more, along with Facebook of course. The higher your relevance score is, the less money you’ll spend to deliver your ads.
This is how Facebook gives you the score:
THE 2 SPECIAL TIPS:
TIP #1: ALWAYS BID A HIGH AMOUNT — So as you probably realized by now, the greatest takeaway is not to worry bidding a high amount of money because Facebook will always make you pay the lowest rate, whenever possible. You’ll get what you paid for so why pay low rates if the ROI is always maximized?
TIP #2: IMPROVE AD QUALITY — Improve Ad quality so Facebook can lower the cost of reaching people for your Ads. Thanks to the relevance score, you can do some A/B testing to see which one of your Ads get the best results. Improve your images, copy, number of links etc.
Ok, next point.
THE FACEBOOK ADS BIDDING STRATEGIES
I know you might be confused nowadays because advertising even on Facebook is not that simple anymore. Well, at least is what it seems, right? But relax because I’ll make it simpler for you. And this time, you don’t have to hand me any money.
There are 4 different Facebook Bidding Strategies nowadays:
- CPM — Cost Per Mille (1.000 impressions)
- oCPM — Optimized Cost Per Mille (conversions + 1.000 impressions)
- CPC — Cost Per Clicks (every single click)
- CPA — Cost Per Actions (every single install, like etc)
Images speak louder than words and our brain tend to learn faster with them, so here you go:
Now that you know all 4 bidding strategies, we’re gonna dive into each and every one of them.
PS: You can go grab a glass of water if you like. But not beer. We need you sober to learn this.
THE REVELATION: The CPM bidding strategy makes you bid to deliver 1.000 impressions to facebook users. Period. The goal here is obviously to create brand awareness and not aim for conversions. This is why it is not usually recommended for brands (especially small brands) most of the times because it doesn’t target the audience well enough, leaving you with a negative bank account without giving you any considerable ROI if you are looking for more sales or leads.
IDEALLY USED FOR: Brand awareness.
P.S: This is usually used by big brands because they have HUGE advertising budgets and therefore, they can unleash HORDES of CPM campaigns to create a truly strong brand awareness in weeks. Usually, the more money you have here, the better.
THE REVELATION: The oCPM bidding strategy makes you bid to deliver ads EXACTLY to those who’ll likely make your desired action (The “o” means Optimized, remember?). This means that your ads will be displayed especially for a share of your target audience that is much more likely to give you likes, app installs, conversions or whatever action you bid for. Also, since this is a variant of CPM bidding, it means that you’re paying for 1.000 impressions. But this is extremely effective because Facebook carefully SELECTS the best people to show your ads to, giving you great results for the amount of money invested. And as you may guess, it’s more expensive than the CPM due to its ROI (of course). So expect it to be expensive, but also expect it to give you GREAT results as well. Otherwise, work on your relevance score to make things even.
IDEALLY USED FOR: Conversions.
P.S: This is the best option to use nowadays.
THE REVELATION: The CPC bidding strategy makes you bid for EVERY type of click. This is important to notice, my friend. Because you’ll pay even if the user clicked on links like “share”, “like”, “comment”, “facebook page name” and also on external links inside your promotional content. This means that you can post a great ad, but if it got an accidental click you’re already paying for it. And if there’s a link to another website which you’re mentioning as a source to support your content for example, if the user clicks on the link you’re being a good samaritan by promoting other people’s website for no charge. This is why you can pay for 500 clicks but only get users to see what you want 300 times. The good side of this, though, is getting A LOT more than 1.000 impressions (like MILLIONS) if people don’t click on your ads because after all, if there are no clicks, Facebook must keep displaying your ads.
IDEALLY USED FOR: Brand Awareness OR A/B Testing .
P.S: Lower CTR means you’ll not be shown much, so don’t expect to be smarter than Facebook by using some bad ads to gain brand awareness because it won’t work. Facebook will lower your impressions. Also, on the other hand, higher CTRs means lower rates (CPC) for each ad delivered.
THE REVELATION: The CPA bidding strategy makes you bid for a SPECIFIC action. This is actually pretty similar to the oCPM strategy as you may notice. But there’s a slight difference. In CPA, you pay the maximum amount you want whenever the desired action is done by the user (likes, clicks etc). Whilst in oCPM, you pay for 1.000 impressions but AIMING for that best specific action. CPA focus on the action itself and when that action is accomplished, you pay. And in oCPM, you focus on impressions and you pay for every optimized ad up until you reach 1.000 impressions. Get it? Is that simple.
oCPM = Your Ad is being SHOWN to someone who will LIKELY convert (PAY!)
IDEALLY USED FOR: Conversions.
P.S: CPA is not trackable as oCPM is, which is why you can’t promote EXTERNAL website conversions using it. You’ll have to go with oCPM for that specific case due to its trackable abilities.
THE ARTICLE IS OVER?!
Well…that’s pretty much what you needed to know. I told you that it would be quick this time, didn’t I? But since I like giving more than expected, I gathered a some tips/advice on what works best for each bidding strategy.
This is obviously a BONUS, so feel free to go watch Netflix.
There’s no need to feel guilty about ignoring the following freakishly smart practices that ALL Award-Winning Marketing Agencies in the world use to build their own campaigns.
(sorry, that was my copywriting blood talking).
So here are some important tips you should remember taking into consideration next time.
- Have lots of money? Make your campaign last between 1-3 months. You’ll make people remember more about your brand due to The Repetition Principle
- The more attention you draw, the better. So make high-quality images AND copy to create high impact on users. This is the strategy you should especially give enough attention to displaying the right colors. Use the Science of Colors to persuade more and make people remember your brand with more ease
- Events are GREAT choices to promote in this bidding strategy because you just use images to sell the event. Since events usually have simple information (date, time, place etc) and you’re paying for impressions, you can make the best ROI possible out of your message
- Landing pages are good choices to promote in this bidding strategy because conversion is the main goal here. And since Facebook does a really good job displaying your ads in this Ad style, you can truly have great results
- The daily budget should be at least 5 to 10x your bid because you can get some remarketing benefits most of the time. Sometimes, the same person will see your ad twice on the same day, thanks to this tip
- Target audience size must be bigger than when using CPC. Why? Because Facebook will shrink that audience to the most optimized crowd possible. Tell Facebook to consider more people so it can work on bringing the best people to see your ad
- Remove all external clicks and other clicks that can steal your money (when possible)
- Promote events and other low-level information ads to save money and get a better ROI
- Draw attention to the right link with crazy smart headlines to prevent useless clicks
- CPA is cheaper than oCPM. So use this strategy with a MailChimp Signup Form on Your FB Page and grow your email list using targeted ads to increase your business inside Facebook
Alright, that’s enough tips for today.
I hope I’ve helped you with this short article 🙂