Reducing Facebook Ad Costs with Manual Bidding

Reducing Facebook Ad Costs with Manual Bidding

Some marketing gurus have purposely avoided using Facebook for advertising, because they would like to have more control over their campaign costs. There is a way of managing your campaign costs which not everyone knows about, but which can be very effective in keeping costs down. Manual Facebook ad bidding can do a very good job of controlling advertising costs, and there are three different approaches you can take to make this happen.

Manual bidding vs automatic bidding

When you first establish a budget for any Facebook campaign, you’ll have the option to set up automatic bidding (which is the default setting), or you can establish a budget per bid, which amounts to manual bidding. When you use automatic bidding, Facebook’s algorithm will work to discover the lowest possible cost for an objective which you are bidding on. It will compare your bids to those of other advertisers, and it will determine the likelihood of attracting attention from your target audience.

Reducing Facebook Ad Costs with Manual BiddingThe primary reason you would want to use automatic bidding is that it makes use of built-in Facebook intelligence to theoretically achieve the best possible outcome in maximizing your budget. If you’re new to Facebook advertising, this is probably the way to go, since Facebook will make any bid adjustments on your behalf, while you are learning the ropes.

It’s also useful when you’re attempting to find a benchmark for your ad costs, or if you’re trying to calculate a cost-per-lead or a cost-per-conversion. If you’re on a limited budget, automatic bidding can be to your advantage, since you will probably maximize your reach and impressions using this method.

Manual bid strategies are much better for permitting you to establish a cost control versus whatever objective you’re trying to achieve. It works by having you inform Facebook how much you’re willing to bid on any ad auction, and then having Facebook use that budget in order to accomplish your objectives. Manual bidding is not available for all placements, but it is established when you determine your budget.

It changes the way that Facebook makes use of that budget when you are considered in each auction. It’s used primarily to manage campaign costs, to be a little more competitive compared to your rivals, and to obtain better cost efficiency from all your ad campaigns. The three main manual bid strategies are outlined below.

Establish a cost cap

Reducing Facebook Ad Costs with Manual BiddingWhen you establish a cost cap, you are instructing Facebook to spend no more than the amount you want on any bid you’re involved with. Then it’s up to Facebook to track down as many results as possible using that set bid amount as a kind of average cost. This is a good option when you’re trying to stay within the framework of a certain cost range.

For instance, if you are trying to sell a product which has high-volume but low cost margin, and you had to spend less than $10 per conversion to make a profit, cost cap bidding would help you to find conversions at around $10. Of course, the downside of this strategy is that you probably won’t get as many conversions as you would otherwise. Since Facebook will attempt to find as many conversions as possible which fit within your cost, you’ll be limited to only those that fall within your specified framework. In such situations, it will often happen that you don’t spell your full budget.

Set an ad campaign bid cap

When you use a bid cap, you’re actually instructing Facebook about an amount you’re willing to spend per bid, so Facebook will not exceed this amount when bidding on your behalf. However, since this all runs on a second-tier auction, the cost you actually pay may not be a true reflection of your original bid. As an example, if your bid was set at a cost-per-click of $7, and you win the bid in competition with another advertiser who bid $5 per click, you would be charged the $5 per click and not the $7.

Reducing Facebook Ad Costs with Manual Bidding

On the other hand, if you establish a bid at $5 and someone else sets a bid at $7, and Facebook determines that both of you are providing useful ads to a customer, you would lose out on that auction because your bid amount has been capped. Setting a bid cap is useful when you’re trying to get the most opportunities out of any set bid you establish. It can also help add to your competitiveness in a marketplace which is generally very crowded.

If you’re seeking to add customers and beat out the competition, using a higher bid cap can generally help you gain more opportunities. This is another situation where you may not use your full budget, since Facebook might not use the bid cap amount you established to gain a high-volume of opportunities within the budget you have set. It’s also possible that your costs will begin to escalate when the less expensive opportunities begin drying up.

Establish a target cost bid

Making use of target cost bidding involves setting a target cost for each app install or for each conversion. Facebook will adjust your bid so as to guarantee that you can achieve conversions within a very close range of the target cost you have established. The best situations to use target cost bidding are when you’re trying to ensure as many conversions as possible for a set cost.

It’s also very useful for keeping your costs consistent, so that they’re much easier to budget for, and you can count on them over a period of time. Be aware that you will probably miss out on cheaper conversions, because in effect you will have restricted Facebook to using a set cost range. There will likely be opportunities for conversions which would have cost you less using some other strategy.

It’s also possible that you may not spend your full budget because there won’t be as many opportunities for conversion within the cost range you’ve established. You can only use target cost bidding for lead generation, conversions, app installs, and product catalog sales, primarily because Facebook must be able to track a cost-per-conversion when you use this type of bidding.

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Heather Hart

Heather Hart

Operations Manager at $99 Social
Heather began working with $99 Social in April 2014 as a content writer, but quickly moved into a customer support role, then to Operations Manager in May of 2017. She loves exploring different artistic mediums, including copywriting, drawing and painting, website coding, and helping people succeed.

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