There are many debates when it comes to Facebook bidding. Should you use manual bidding or the lowest cost? What is the difference? And, most importantly, which one is better for your business?   

In this post, we will discuss what manual bidding is and how it helps maximize your conversions at your CPA on unlimited spend. We will also look at what lowest cost/auto bidding does, as well as give examples of the two types of bidding.  

What Is Bid Cap and How Can It Help Your Ad Strategy?   

A bid cap or manual bidding is a bidding strategy that allows you to set a maximum cost-per-acquisition (CPA) threshold  for your ad campaign. With this setting in place, Facebook will never bid more than the amount you specify, even if it means your ads don’t show as often. This is a great way to make sure you never go over your desired target.   

When using bid cap, Facebook will automatically adjust your bids up and down to get as many conversions as possible while still staying within your set bid. This way, you’re guaranteed to get the most bang for your buck and never go over target. So, in short, bid caps help maximize your conversions at your CPA on unlimited spend. 

What Is Lowest Cost and Can It Help Your Ad Strategy? 

In contrast to manual bidding, lowest cost/auto-bidding is a bidding strategy that automatically sets your bids to get you as many conversions as it can while spending your budget in full and as evenly as possible throughout the day. While this may seem like the best option at first, it’s important to note that auto bidding doesn’t always get you the most conversions. Sometimes, it can lower your conversion rate due to how Facebook calculates its bids.   

Example on Lowest Cost Ad Strategy   

If you have a budget of $28K/day, Facebook would need to make sure that it can invest that money throughout the day, even in the later hours. This is because no one wants to see their budget used up by 8 pm. You might be skeptical still because if you graphed out your spend by hour on the lowest cost, you might see a chart like below.  

You might think, “That’s Facebook maximizing conversions!” It’s not. Pacing isn’t even through the day because of impression inventory. e.g. There are fewer people to serve ads to at 2 am compared to 2 pm.   

For example, you might be seeing a massive number of low-cost conversions coming in at 10 am. You may want to capitalize that, but Facebook can’t continue to invest simply because they need to make sure there’s enough budget to go around for the remaining 14 hours of the day. 

Example on Bid Cap Ad Strategy   

If you now decide to shift to a bid cap campaign and increase your budget to $40K/day. Facebook will still want to spend $40K/day in full. But our bid cap will put a constraint on its ability to spend all of that money. The bid cap will limit Facebook from spending if you’re not hitting your CPA target. 

In the prior example, your 10 am slot was limited by your budget. Now, your non-10 slots are limited by your bids. At 9 am, for example, Facebook might want to be spending 2X more, but it can’t. Your bid is constraining delivery.

At 10 am, though, something else is happening: Facebook is still trying to spend the $40K in full for the day. It wants to spend in full by not blowing the budget before 12 am, but potentially making up for lost delivery earlier in the day because of the bid.   

Facebook has more room to spend and still wants to spend the full budget. Unlike 9 am, it can deliver more ads within your bid now. So it’s going to spend as much as it can without going over that bid. With bids, your conversion volume and pacing might look like this for the day.   

What Is an Inflated Budget?  

An inflated budget is a budget that’s higher than your average daily budget. This could be because you’ve increased the amount you’re spending on Facebook ads or because you’ve switched to manual bidding with a bid cap. Whichever way you choose to do it, an inflated budget will help ensure that you’re getting the most out of your ad spend. It can be 10X more. Whatever you’re comfortable with. The idea is you should never spend your full budget on any given day.   

Benefits of Running Bid Cap Campaigns with Inflated Budgets   

When you run a bid cap campaign with an inflated budget, Facebook will automatically adjust your bids up and down to get as many conversions as possible while still staying within your set CPA. This way, you’re guaranteed to get the most bang for your buck and never go over budget.   

Additionally, since auto bidding doesn’t always result in the most conversions, running a bid cap campaign with an inflated budget will help to maximize your conversion rate and get you more leads for the same price.   

If you’re running bid cap campaigns with the same budget you’d invest on the lowest cost, you’re using them wrong.     

Can You Move from a Daily to a Weekly or Even Monthly Budget Using a Bid Cap?  

Bid caps help ensure that you’re getting the most out of your ad spend, so it’s advisable to use them if you can. But as much as you be on a tight budget and may want to consider moving to a weekly or monthly budget instead, it’s not quite advisable. It may make sense to use them that way, but it is hard to execute in practice. Reasons being: 

1. Advertisers need to use lifetime budgets to achieve weekly/monthly budgets.   
2. Most DR advertisers use daily budgets because they need more control over performance if things are good or go off the rails. 
3. Since most people don’t know how to use bid caps, they adjust their daily budgets with the lowest cost bidding based on performance instead.   
4. It will be harder to adjust a lifetime budget on the fly if you see good/bad performance. These adjustments have become even more important post-iOS 14.6, where Facebook reporting isn’t as reliable. You’d also likely need to constantly make new campaigns to make this work.   
5. Also, theoretically, a daily budget is a weekly budget because it can spend +/- 25% of the budget any given day and will average out to your daily budget, correct?   

Should You Replace the Bid Cap with the Lowest Bid?   

No, you shouldn’t replace the lowest bid with a bid cap. The bid cap is for scaling and should be run in conjunction with the lowest bid, not in replacement. In reality, it’s hard to find an equilibrium of bid that leads to proper CPA, especially post iOS 14.6. However, in general, using a bid cap can be more effective than relying on the lowest cost bidding alone.   

Which Bid Caps Bring Success?  

There’s no one perfect bid cap that will work for every advertiser. It depends on several factors, including your average order value (AOV), your ad spending, and your goals. However, in general, you should aim for a bid cap that’s around double your AOV. If you want to play it safe, start with a low bid and adjust up. The worst-case in this instance is no delivery to start.   

Generally speaking, to get the maximum result, you can aim to run an auto bid campaign and use that CPA you’re getting + 20% as your initial bid.   

Will Facebook Delayed Reporting Affect Your Strategy?  

Facebook says it needs 3 days to get data from iOS, which can make you question how the system will know when to spend at 9 am if it doesn’t get data for 72 hours.   

What you should note is that bid delivery isn’t based on conversions that have happened, but on expected outcomes. If there are a lot of cheaper users available who might convert at a certain time of day, there will be more delivery. On lowest cost, Facebook is just conserving delivery to ensure even pacing.   

Prior conversion data only helps calibrate the model.   

An inflated budget with a manual high bid cap removes the pacing component to help you enter more auctions.   

The cost control using bid cap allows the system to better understand your willingness to pay for a particular auction transaction and therefore has more freedom to partake in auctions that meet your actual, realized CAC requirements rather than an artificial pace.   

What To Do When You Use Bid Cap Campaigns but Get No Impressions  

If you get no impression unless you increase the CPA to an unprofitable level, consider: 

• Slowly creeping up CPA by 10% – 15% each day until you get delivery.   
• Be patient.   
• Using bid cap just as a way to scale beyond your lowest cost campaigns. They should be a complementary, not a replacement.   

Which Strategy Is Right for You?  

Manual bidding gives you more control over your ad spending, but it can be difficult to find the right balance of bids that leads to proper CPA. On the other hand, the lowest cost bidding is more automated and easier to use, but it can be less effective in terms of overall ROI.   

If you’re not sure which bidding strategy to choose, or if you want to get the most out of your Facebook advertising budget, consider using a bid cap campaign. With a bid cap campaign, you set a maximum bid that you’re willing to pay for each click or conversion, and the Facebook algorithm will automatically adjust your bids to stay within that budget. Your bid is what controls the slots. This ensures that you never spend more than you want to while still giving you the chance to compete in high-value auctions. 

Bid cap campaigns can be especially useful if you have a limited budget. You can get more impressions and clicks for your buck by bidding high enough to enter into more auctions. And, because you’re only paying the maximum bid if someone converts, you can often get a lower CPA than with lowest cost bidding.   

If you’re thinking of using a bid cap campaign, there are a few things to keep in mind:   

• First, make sure you set your bid cap high enough to enter into the auctions you want to compete in. If you set it too low, you may not get any impressions at all.   
• Second, be patient. The Facebook algorithm can take a few days or even weeks to learn your new bidding strategy and start delivering results.   
• Finally, keep in mind that bid cap campaigns should be used as a way to scale beyond your lowest cost campaigns. So if you’re getting good results with your current bidding strategy, don’t switch to bid caps just yet – try using them in addition to what you’re already doing.   

Manual Bidding vs. Lowest Cost Bidding: The Takeaway 

Both manual bidding and lowest cost bidding have their pros and cons, but bid cap campaigns can be a great way to get the most out of your Facebook advertising budget. By entering into more high-value auctions, you can get more impressions and clicks for your money. And, because you’re only paying the maximum bid if someone converts, you can often get a lower CPA than with lowest cost bidding. So if you’re thinking of using bid caps, give them a try – you may be pleasantly surprised by the results. 

Not sure how to get started with bid cap campaigns? We can help. Contact us today, and one of our experts will be happy to walk you through the process. We are sure you will find it a valuable addition to your Facebook advertising strategy.   

Facebook’s Dynamic Catalog Ads have long been a much-loved and regularly-used tool for advertisers on the platform, especially in the eCommerce industry.

The ability to auto-generate and optimize ads thanks to Facebook’s incredible machine learning and algorithms was exceptional; you could create a single ad template, connect your catalog, and have Facebook drop images and text into the template that individual users will be most responsive to.

Now, though, there’s a catch. Catalog ads unfortunately are no longer what they once were.

If you’ve been plugging ahead with catalog ads in the past few months and seen a sudden downturn, there’s a reason: iOS 14.6.

Right now, we firmly believe that brands shouldn’t be running facebook catalog ads since the update has rolled out, and in this post we’ll explain why and talk about what you can do to adapt your campaigns moving forward.

The iOS 14.6 Impact on Facebook’s Dynamic Product Ads & Dynamic Ads for Broad Audiences

Facebook has two commonly-used types of dynamic ads: Dynamic Product Ads and Dynamic Ads for Broad Audiences.

Facebook’s Dynamic Ads allow you to create ads from your product catalog, automatically plugging a product’s image and information into an ad template. Different users will see different products based on their past in-app activity, off-platform activity, and their past interactions with your business.

The Dynamic Product Ads (DPA) utilize remarketing audiences to show relevant ads to people who have visited your site or your app, previously engaged with your ad, or interacted with your business in some way.

Dynamic Ads for Broad Audiences (DABA), on the other hand, you can show dynamic ads to users who align with your customer profile even if they’ve never visited your site or app.

Both use product catalogs, and both require the pixel to be installed. You can choose product categories within the catalog and choose what ad formats you want to use.

Facebook was extremely clear that Dynamic Product Ads would be impacted by iOS 14.6, which made sense given the heavy retargeting focus of the campaigns. They failed to warn advertisers about the impact on DABA, however.

How DPA Was Impacted

We knew early on that DPA would become a fast casualty, as Facebook’s remarketing pools were largely focused around content and page viewers. The ability to track off-Facebook, on-site activity like page views and adds to cart would be significantly reduced from Apple opt-outs.

There were no surprises there, though this was deeply disappointing since DPA had previously been such a valuable resource for brands with large product inventories who were letting Facebook’s algorithm do what it does best: Take charge and drive conversions.

How DABA Was Impacted

Facebook had initially recommended moving your campaigns more towards using dynamic ads with broad audiences, so at first it seemed like DABA would be just fine.

 

 

enough users and data to offset challenges and lack of data resulting from Apple’s update. We were wrong, however; these campaigns were impacted, too, as enormous numbers of Apple’s users downloaded the update and large portions of the data got knocked off kilter.

 

What This Means for Your Campaigns

We know from experience that things started shifting rapidly once the updates rolled out. Product catalog ads, to say the least, were no longer the powerhouse they once were.

When iOS 14.6 launched, our catalog ads started to shift ad spend from our clients’ best selling products to cheaper products almost overnight.

At the same time, we couldn’t see catalog breakdowns. This meant we couldn’t check to see if Facebook was actually driving sales to these products from the ads.

The backend data was showing that sales were tied to lower cost products, and we wanted to course-correct, showing customers more profitable SKus.

We ultimately removed lower price point items from the ad campaigns, focusing exclusively on our top-performing and high-value SKUs.

Performance did improve slightly, but it was still lower than expected… and significantly less than before. Product delivery still felt random as opposed to targeted, and that’s because it was.

What Brands Should Be Doing Instead

The first thing that advertisers should do right away is to steer more of your ad campaigns away from dynamic product ads. You can create ad campaigns for high-value and best-selling products manually if needed to ensure they’re getting the reach that they need to.

And if you are going to continue using product catalog ads, make sure that you’re grouping items carefully. Organize them into categories determined by price points and qualities like “best sellers” so you can run more niche campaigns and ensure that you’re getting eyes on your high-value products.

Additionally, the more Facebook can get on-platform signal about your products, the more likely the system will be able to find the right target consumers. Make sure that all of your product ads leverage the Instagram product tags so people can checkout in the Instagram app. Even if a consumer ends up buying on your website instead, all of the interactions on Instagram leading up to that sale (such as viewing the product or adding it to their Instagram cart) are valuable for the ad system to know what someone is interested in buying.

Final Thoughts

The iOS 14.5 and 14.6 updates have been anything but fun for advertisers, and it’s definitely impacted our campaigns and our clients in a major way while we adjust and find workable long-term solutions.

And the good news is that there are new solutions; you just need to know how to find them and how to adapt your existing campaigns to stay profitable in the new advertising environment.

Need help adapting your brand’s campaign and strategies to the post iOS 14.6 world? Get custom help revamping your strategy here. 

Your ROAS was great two weeks ago, but performance has started to tank.

Here’s how to quickly identify the issue(s) and get back on track as soon as possible:

1. Creative/audience fatigue: use the compare feature in ads manager/a quick line graph to evaluate your CTR over time – a downward trends means you likely need to refresh your content. Stay ahead of this issue by constantly testing new angles of creative, even when performance is great. In addition, check your frequency at the account/campaign/ad set level – anything above 1-2 per week is likely too much weighting. To solve, consider adjusting budgets and/or broadening/consolidating audiences which have overlap.

 

2. Website changes: sometimes, it’s not a media problem but a website problem. To identify issues that might be site specific, look at data like your landing page to conversion rate percentage in ads manager (conversions divided by landing page views). For example, those new beautiful, but heavily weighted images sitting on your homepage might have slowed down your site load speed – therefore causing an increase in bounce rate. Use a tool like Google page load insights or Pingdom to help. Overall, always analyze key ad metric costs relating to the various stages of your buy flow as it will commonly direct you to the problem area. For instance, a significant spike in ATC cost could be because of a recent edit on a product page.

3. Performance trends: look at your key performance metrics by day of the week historically. Are Monday’s always bottom performing days, whereas Wednesday’s crush it every week? Seeing poor performance at the end of the month/quarter/fiscal year? You’re likely being impacted by Facebook auction dynamics – where advertisers are bidding/spending aggressively on the premise of hitting performance targets, or Fortune 500 advertisers are dumping marketing dollars into the platform under a “use it or lose it” mandate.