By now, you already know the importance of running ads on Facebook. With more than 1.35 billion people using Facebook monthly and more than 860 million daily users, it’s only natural for businesses to leverage Facebook ads to gain exposure. They’ve become a necessary means to surviving in today’s competitive digital landscape.
Businesses using Facebook ads are now paying 122 percent more per Facebook ad unit when compared to last year. With 70 percent of Facebook users engaging daily, there’s a plethora of opportunity to revolutionize your Facebook marketing approach.
Apart from realizing the importance of Facebook ads however, do you know how Facebook Ad Bidding works or do you stick to the basics of creating and running ads?
What is Facebook Ad Bidding?
Consider Facebook Ad bidding as a live auction where an advertiser is looking to purchase real estate (advertising space) by bidding against others seeking similar space. Advertisers bidding the highest to reach a certain audience have their ads displayed.
To benefit from Facebook ads, you must bid on a campaign. The highest bidder will receive the most impressions due to the placement they’ve won. Therefore, it is important to take your bidding amount into careful consideration.
How High Should I Bid?
Although Facebook ads can be extremely lucrative, it’s easy to screw up the bidding process. Even with the highest bid, your ad can still plunder if it isn’t relevant, compelling, optimized, or hold a strong call-to-action.
As a result, you should optimize your ad to be delivered to the most relevant users by setting objectives. While Facebook calculates the possible impressions you’ll receive and evaluates the performance of your previous ads, the pacing algorithm will determine how your ads will be displayed throughout the day for potential impressions. Here are some tips you can implement during the bidding process:
1. Increase Your Bid
According to a study by Salesforce, 70 percent of marketers will increase their advertising budget this year to allow more room for social media ads. That’s because these ads have a positive effect on company sales and revenue.
For example, fans of Starbucks Corp. exposed to the company’s message on Facebook were 38 percent more likely to make a purchase than the typical Facebook user in the month that followed, according to a study.
The first step to actually succeeding with Facebook ads starts with the biding process with four bidding options available: CPC (cost per click), CPM (cost per mille), Optimized-CPM (optimized cost per mille), and CPA (cost per action). You can bid as high as your budget allows per click or per 1,000 impressions. However, remember that you may not actually pay the price you’re bidding as your final cost is determined by the number of impressions or clicks your ad receives based on the bidding method you choose.
With CPC bidding, you’ll be charged when your ads are clicked, while CPM charges for the cost of impressions. Optimized-CPM bidding is often preferred as it allows advertisers to more widely define and prioritize their marketing goals by automatically delivering ad impressions to a targeted demographic. CPA bidding is ideal if you want more control over the price you’re willing to pay as it extends beyond impressions to include page likes, clicks, and offers.
You want your money to work in your favor, so bid the maximum allowable cost per action. Monitor your sales funnel and conversion rates to make bidding adjustments where needed.
2. Establish a Custom Audience with oCPM
Using the information you’ve compiled pertaining to your audiences’ demographics such as lifestyle, and other important factors, develop a custom audience to target. Often, oCPM is the preferred method as it allows you to create a more direct targeting approach.
If conversions are important to your ad campaign, oCPM is the best option as you’re able to optimize for Reach, Clicks, and Social Impressions with a specific objective.
MGM Resorts International is a prime example of a Facebook ad success story using an optimized approach. The global hospitality company was able to create five times the return on their ad spending using Custom Audiences, while tripling their return on Facebook Offers.
However, oCPM isn’t always beneficial for companies with a target audience under 500,000. If you’re an eCommerce company, chances are it won’t be effective as it can be difficult for Facebook to choose the right bid for conversions. Businesses with a low audience generally produce low daily conversions, which means CPC or CPM would be a more appropriate course.
3. Understand Your Ad Objectives
Defining your underlying goals allows you to highlight the effect your ads will have in terms of linking results and costs pertaining to achieving your objective. With the correct objective, your ads will be displayed to the most relevant users who are more likely to take action to click on your website, increase page post engagement, or accept offered claims.
Your campaign will also drive more efficiency, just as Renault UK accomplished with their ad campaign. Not only were they able to boost their lead generation, but spent nearly three time less for the cost per acquisition.
Facebook ads provide you the opportunity to boost page likes, build engagement, and produce video views. However, competition is tough as there are many advertisers who are competing with the same objective as you. Therefore, it’s best to choose CPM or CPC to bid, unless you have a larger audience, in which case oCPM is appropriate.
If you’re only trying to gain visibility, CPM bidding is ideal because you’ll only pay per 1,000 impressions. For example, if you have a special event to promote to a limited audience, CPM will be an efficient means to driving clicks. On the other hand, if conversions are your objective, CPC bidding is the route to go. You’ll pay per click, but you’ll receive a higher return on your ad investment.
4. Monitor Your Suggested Bid
Suggested bid prices will let you monitor the competition for the demographic you’re targeting. A rise in suggested bid prices means competition is high and vice versa.
For example, during the holiday season, suggested bid prices are likely to be high for retailers as a large number of them are running holiday campaigns and therefore competing with each other for demographics such as individuals with an interest in electronics.
So if your campaign isn’t urgent, you can stop bidding during peak advertising seasons such as before the holidays, as well as Mother’s Day and Back-to-School season. By monitoring suggested bid prices, you’ll be able to determine when prices are low for CPC bidding. You also have the option to pause or shift a campaign when bid prices peak.
5. Trial and Experiment
Facebook Ad Bidding takes a bit of trial and error to find the perfect recipe for an excellent campaign. There are a lot of different ingredients that must be implemented to find the perfect combination. Apart from a budget to apply, you need the ideal placement, target audience, and ad objectives.
AdEspresso recommends using bidding experiments to find the ideal method to generate the best ad. AdEspresso created four different campaigns but used the same budget, design, and targeting options. The only difference were the bidding strategies. As you can see, each campaign held pretty significant results.
If your first ad is unsuccessful, don’t give up. Try a different bidding strategy, location, and targeting option.
What Works For You?
The right bidding strategy can be very beneficial for your campaign, so make sure your bidding plan is airtight and there’s enough room in your budget to trial and experiment. Take the above-mentioned tips into consideration, and stick to what works best for you.
What bidding tactics have worked for you in the past? Got any suggestions to make? We’d be real interested in hearing from you.