The Ultimate Guide to Facebook Ads Bidding

I’ve gotten a few questions about this, so I thought I would address this in an in-depth guide. There are too many people wasting too much money on Facebook ads because they don’t have a bidding strategy in place. Here’s what typically happens to the novice Facebook advertiser: He gets excited about “social marketing” and throws up a few broadly targeted ads on Facebook, leaving the default suggested bids on, gets a terrible CTR, spends tons of money very quickly without getting enough data for statistical significance, and runs off sniveling and whining on some forum about how Facebook Ads don’t work.Let’s learn right now how to avoid those mistakes, develop the right bidding strategy, monetize, and scale.

Suggested Bids Mean Nothing

This is the most important thing to remember on any PPC platform: The suggested bids mean nothing. Absolutely nothing. They are completely random, arbitrary numbers put in place by executives to justify their revenue projections. Don’t even look at suggested bids. Ignore them. They are in no way related to what anyone is actually paying on Facebook. Actual minimum bids to get impressions are based on a complex interplay of CTR, account history, available inventory, etc, and not on a single number Facebook throws at inexperienced advertisers hoping they’ll bite.Just how arbitrary are Facebook suggested bids? Consider this: A friend setting up a new Facebook Ads campaign saw suggested bids of $1.14-$1.78. For comparison, I tried to create a new ad with the exact same targeting options, and was given suggested bids of $0.28-$0.41. Maybe my account spending history or quality score helped me get cheaper traffic. Or maybe Facebook suggested bids are created by a random number generator and don’t really matter.

Stick to CPC Bidding

It might be tempting to go for CPM bidding, because you can get lots of relatively cheap traffic without obsessing over CTR as much. But, in most circumstances, sticking to CPC bidding will give you much higher quality traffic. The reason for this: Some months ago, Facebook made a tweak in their algorithms which affect how ad impressions are distributed. CPC ads are now much more likely to be shown in premium placements on the site: profiles, news feed, and so on. These placements generally deliver a much better CTR and more clicks.CPM ads are more likely to be shown in parts of Facebook that result in lots of impressions but not as many clicks- games and apps. When your ad has to compete with a plethora of visual stimuli from Farmville, it’s a lot less likely to get noticed and get clicks.You can easily confirm this by checking the referrers in your analytics when running ads. If you see a lot of low performing apps traffic, consider changing up your ads.

Bid High for Small Groups, Low for Big Groups

This should be intuitive, but most people don’t seem to act on this simple concept: A larger group of users will have more impressions available than a smaller, less targeted group. If you target males age 18-49, you should be able to bid less and still get traffic compared to, say, only targeting 22 year old single males. This is a good way to get data about what images or headlines work before increasing your bids to campture more traffic.The converse is also true: If you’re going for a small, highly targeted demographic (ex. using interests/like targeting), you need to start out bidding very high(even if it’s very unprofitable) to beat the broadly targeted ads you’re competing against that will also be shown to the same people. If your ads are relevant enough to the interests/likes you’re targeting, you should get a good CTR (0.1% is OK, 0.2% or above is fantastic) right away, without having to split test a lot of images or headlines. This will enable you to rapidly bring your bids down significantly- probably as low as 10-15 cents a click and still get volume. To be continued…Next Week: I walk you through setting up a Facebook campaign and optimizing the bids to profitability.

  • NKSmith

    This is interesting info… I didn’t know that CPM ads can be places in apps and games. Those impressions are virtually useless.

  • Dzinta

    Also use the pause button to your advantage

  • mh

    Lets say i have a 0.2%+ ad. after how many clicks can i drop my bids? and with how many cents can i drop the bids (1 cents, 3 cents, 10 cents. etc) ?I have noticed when dropping to fast the impressions get cut of. So after how many clicks can you drop to stay safe?

  • kennyschmied

    "Or maybe Facebook suggested bids are created by a random number generator and don’t really matter."This is the only part of the post that I disagree with. It seems to me that Facebook, Google, Bing etc have incentives behind this number. Historically, the thoughts have been – as you pointed out – that these numbers are kind of useless, though usually on the high side with respect to what people actually have to pay.Which makes me wonder, are Facebook and Google shooting themselves in the foot by suggesting what they ultimately know to be too high of a suggested bid? Is this akin to skinning the sheep for most first-time online marketers? You mention that some advertisers who don’t know better will bid at the suggested bids, realize horrible ROI’s, and then exit the online marketing space entirely. I just wonder – on the whole – whether this practice of providing ‘inaccurate’ suggested bids is really the most profitable long-term strategy for the bid advertiser networks…

  • online business ideas

    Solid post. I was going to try CPM because it is so much cheaper – but you made a great point about it being served in irrelevant places. Will report back with my test