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.