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Understanding Facebook Bid Strategy

Nick Tatoian

Social Media

Have you ever wondered what’s going on under the hood when it comes to Facebook advertising? Here are some insights into Facebook bid strategy and how it can help increase your ROI.

What is Facebook bid strategy?

Companies use bid strategies to determine how they’re going to outbid other competitors for customers’ attention on social media platforms like Instagram or Twitter. They determine which ad is best to show to a person at a particular time, maximizing value for both the people seeing the ads and the businesses that the ads belong to.

Implementing a winning bid strategy can have significant positive impacts on a company’s bottom line, so determining which one is right for you should not be taken lightly. There are many different types of bid strategies available to maximize campaign efficiency and increase ROI from advertising investments. However, it’s important that these choices also meet individual client needs. No two companies will experience success with exactly the same approach.

Types of Facebook Bid Strategies

Knowing which bid strategy to use for your business can be difficult, but here’s a brief overview of the three main types. The best approach is whichever one matches up with what you want from your ROAS—whether it’s increasing budget or reaching specific goals in an ad campaign.

Spend-based bidding

With spend-based bidding, a business spends their entire budget to receive either the highest volume or highest value possible. With the highest volume method, they’re working toward maximizing ad delivery by using all their ad dollars—hopefully resulting in more conversions.

On the other hand, the highest value method works to spend the company’s budget and focus on purchases that will maximize conversion rates. This means they’re careful about what ads are put into place, as opposed just increasing how many people see them or clicking through. This method can return a better ROAS (return on ad spend).

Goal-based bidding

Goal-based bidding has been proven to increase ROI by ensuring that a business sticks with their goals no matter what the market may be. One way is the cost-per-result method. The company sets an average cost that will ideally result in profitability by calculating how many impressions are needed in order to make the campaign profitable. Bids are adjusted accordingly for price fluctuations. 

Another method of goal-based bidding for Facebook Ads is with the ROAS method, which looks at the campaign’s return on ad spend. With this approach, the business works to keep the return on ad spend around a certain amount for the entire course of the campaign. Much like with the cost-per-result goal, Facebook bids the necessary amount over the course of the campaign’s lifetime in order to deliver the ROAS goal that has been set.

With this method, however, there are certain requirements that must be met in order to use this bid strategy in your ads (pixel installed on your website, verified business account or long history of running ads, etc.), so it’s not always available as a bidding option.

Manual bidding

Manual bidding is a method of the business controlling the amount that can be bid. The company sets the bid cap (the maximum bid allowed in the auction), rather than allowing Facebook to choose how much to bid based on a company’s stated goals related to cost or value. This approach requires a deep understanding of the industry, conversion rates, marginal costs and how to calculate the best bid for the overall benefit and success of the campaign.

Once you determine the best bid strategy for your company and your ad campaigns, Facebook uses this information to ensure your ads are reaching the correct audience at the most appropriate times. Hopefully, this means you are seeing positive results.

Facebook bid strategies are a complex part of social media marketing. Don’t feel confident the amount of money you’re spending to run Facebook ad campaigns is worthwhile and well spent? Give us a call. We’ll make your bids count!

Nick Tatoian

Nick Tatoian

Digital Content Specialist, Holland Adhaus

Nick is always looking to work with others to create an all-encompassing strategy.

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