Facebook's bid strategies help you get measurable business outcomes for your objective. The objective can be about increasing the sale, reaching a greater number of customers, or making sure your amount is only being spent when you are getting the performance, etc. These bid strategies, if chosen wisely, can help you greatly in increasing the efficiency of your campaigns.
Since Facebook Ad works on an auction basis, it is important sometimes to maintain control over your cost. Each time there's an opportunity to show an ad to someone, an auction takes place to determine which ad to show to that person. Billions of auctions take place every day across the Facebook family of apps. If we set the right rule in the bid strategy, we make sure that our money is spent wisely.
To evaluate which bid strategy is going to work the best for your campaign, you'll first need to understand the objective of your campaign & your key performance indicator.
Once you've your objective set, it'll determine the bid strategy you should be choosing.
What are the different Bid Strategies available on Facebook?
To make it simple for you, Facebook now provides 4 different kinds of bid strategy rules:
> Lowest Cost without Cap (with no cost control):
Lowest cost bid strategy tells us to bid with the goal of getting you the lowest possible cost per optimization event while also spending your entire budget by the end of the day, the end of your ad set or the end of your campaign schedule.
If you care more about spending your whole budget, we recommend the lowest-cost bid strategy. This bid strategy is best for spending your budget as efficiently as possible. The lowest cost bid strategy can produce costs that fluctuate more but Facebook will always get you the lowest cost results available.
In simple words, when you chose the Lowest Cost bid strategy, the campaign will focus on spending your entire budget by the end of the day & get you the most results or value possible. This is something that we use by default in every campaign.
> Lowest Cost with Bid Cap:
Before we begin, please understand that Bid Cap is not the same as the average cost of your result in reporting, rather it tells us how to bid in an Ad Auction. When you use bid cap, it sets a maximum bid across auctions (rather than allow Facebook to bid dynamically based on your cost or value goals).
A bid represents what you're willing to pay to achieve your desired result from someone in your target audience. However, your bid is not the cost of your chosen optimization event. If you want to directly control the cost of an outcome, then use the cost cap.
Two important things to keep in mind when you are using Bid Cap strategy:
-- Bid cap doesn’t control the cost per action you see in reporting and requires more frequent bid changes.
-- If you use bid cap, you should be able to calculate bids based on projected conversion rates and marginal cost.
> Cost Cap:
Cost cap simplifies campaign management and helps you focus on scaling the volume of results while controlling costs. Unlike other bid strategies that help optimize for cost, cost cap enables you to set the max CPA/CPI you're willing to pay for results, reducing complexities in managing bids while maximizing your campaign results.
Here, you can set a cost or value you want to achieve. This bid strategy is best suited when you want to keep the CPS of your campaign at or below a certain amount.
Through this bid strategy, we are telling Facebook that we are only willing to pay a certain amount to get a result.
Important: Since Facebook doesn't have better flexibility, your campaign might spend the amount slowly. Moreover, the campaign might take a longer time to exit the learning phase.
> Lowest Cost with Minimum ROAS:
Through Minimum ROAS bid strategy, you can target a minimum return on Ad spend for each bid. Suppose you're spending 100₹ through Facebook Ads & you need at least 200₹ in revenue (200%), you would set your ROAS control as 2x
This bid strategy is best for breaking even on your ad spend and reaching a certain reasonable return. Furthermore, you'll have better control over the purchase value that you generate from ads rather than the highest value bidding.
An important point to note:
If Facebook can not reach your set ROAS target, the delivery may get reduced. It means your campaign might not spend the entire amount by the end of the day.