The Horrifying Truth About Facebook Ads Bidding...

You're Not Going To Like This!

It's a lot of competition! A whole lot of competition in the feeds these days! Advertisers are struggling with maintaining stable costs and scaling their campaigns effectively. The challenge lies in navigating Facebook's bidding strategies to find what works best for your specific situation.

What Are the Current Bidding Strategies?

Facebook operates through an auction format where costs depend partly on your bids. The platform offers two main bidding strategies: "Lowest Cost" (which is the default) and "Target Cost."

Lowest Cost: Bidding Strategy

Benefit: This strategy focuses on efficiency. Facebook aims to get you the lowest short-term costs per event, automatically optimizing your bids to achieve the best possible results within your budget.

Drawback: However, results may be unstable as your spending increases or competition rises. This can make it difficult to scale campaigns predictably.

Lowest Cost: Set Bid Cap

With this option, advertisers can set a maximum amount they're willing to spend per event. Here's a practical example: if a customer pays you $250 monthly, you might set a $250 bid cap, accepting breakeven costs initially with the expectation of future profits from customer lifetime value.

Important considerations:

• Facebook recommends daily budgets "at least five times higher" than your bid cap
• You'll need approximately 50 conversions within seven days for effective optimization
• This approach gives you more control but requires sufficient budget and volume

But Don't Let Facebook Guess

When you set bid caps, you're telling Facebook exactly what you're willing to pay. This prevents the algorithm from testing costs that might be too high for your business model. However, you need enough data for the system to work effectively.

Target Cost: Bid Strategy

Formerly called "manual bidding," this strategy aims to deliver stable costs as you scale your campaigns. The goal is to maintain consistent cost-per-acquisition even as you increase your budget.

However, success with this strategy has been limited except in cases where advertisers have large budgets generating 75 or more conversions per week. Without this volume, the algorithm struggles to optimize effectively.

Which One To Use?

The truth is, there's no one-size-fits-all answer. The best approach is to test both strategies in separate ad sets, as results vary significantly across different audiences and campaigns. What works for one business might not work for another, and what works today might need adjustment tomorrow.

Start with Lowest Cost to gather data, then experiment with bid caps or Target Cost once you have sufficient conversion volume to support optimization.