The world of Facebook advertising can seem like a fog to new digital marketers. One thing everyone aims for is to maximise their ad budget while getting maximum ad performance. The question is, what’s the best way to do so?
The short answer is: it’s debatable. Some experts advocate the bid cap strategy, while yet many others prefer to stick to a ‘no cost control’ method. At the end of the day, you have to find out what works for your industry and brand.
Before you delve into testing these approaches out for yourself, let’s explore how cost control works in Facebook advertising.
Cost control vs no cost control
Everyone begins a campaign with a budget, but cost control determines how this budget is used. Having no cost control is basically letting Facebook have full reign over what to do with your ad budget. What Facebook does is strive to spend it fully, while minimising the cost per conversion. It does this irrespective of your campaign goals or margins.
For people who would like a bit more control over how Facebook uses their ad money, cost control lets them tell Facebook what to do. There are a few strategies for this (more on the strategies later), which restricts how your budget is used, allowing for more targeted ads.
- The case for no cost control
There are two main reasons why anyone might stay away from cost control. The first is when your ad account is new. Cost control won’t be of much help without past data to rely on, so you are more or less limited to having no cost control.
Another reason to go this route is when you have a tight budget to work with. Having no cost control means Facebook will go for the lowest possible bids and deliver ads whenever it can secure the lowest-cost conversions.
- The case for having cost control
Restrictions aren’t always a bad thing, as cost control shows. If you set a cost control, Facebook only delivers when it predicts it can nail you a conversion at the cost you defined. When used strategically, this is an excellent way to tell Facebook who you want to target and saves you spending on ads that go to audiences you aren’t so interested in.
Tips for implementing cost control
Cost control works best when it has past data to work on. After all, it is an algorithm that needs to learn what works and what doesn’t, and it uses your past campaigns and website pixel data to do so.
Thus, if you want to make full use of cost control, it is recommended you consolidate your campaigns, rather than have many smaller campaigns. Having few campaigns with a high conversion rate is more favourable than having many with few conversions.
If your ad account is new, Facebook won’t have much data to base their predictions on. How do you know how much data is enough? A good gauge, to begin with, is when you are hitting steadily over 50 conversions a week. That’s a good time to make the move to cost control strategies.
We’ve been talking a lot about cost control, but there’s really no one way to do it. Facebook itself mentions 3 types of bid strategies, namely the target cap, cost cap, and bid cap strategies. The social media giant provides a pretty nifty description of these strategies themselves on their help centre. But for your reading convenience, here’s a quick overview of what they are.
- Target cap bid strategy
In the target cap bid strategy, cost control means setting your target for the average cost you want to spend. Facebook will choose events with costs near to your target average while ignoring lower-cost optimisation events, even if they are available.
This is considered an aggressive bidding approach which favours more conversions and higher volume of delivery rather than focusing on the lowest possible cost.
- Cost cap bid strategy
When you set cost control in the cost cap bid strategy, you are setting an average amount that you want your campaign to stay under, with the algorithm focusing on securing the lowest cost optimisation events wherever possible. Only when lower-priced events are exhausted, then only will Facebook go for higher-priced events, which may include some slightly over the cost cap. However, the average cost of all events will remain at or under your cost cap.
This strategy gives some flexibility in your campaign spending, allowing you to pursue more options while making effective use of your budget.
- Bid cap bid strategy
The bid cap bid strategy sets a maximum amount you can spend in an auction, which is a strict upper limit. This gives you finer control over the cost per optimisation event, but it also means that a small difference in your bid cap can make a huge impact.
A bid control is useful for times where tight control of the cost of every optimisation event is necessary.
Cost control and bid strategies are an important concept for any digital marketer using Facebook ads. You can get acquainted with the finer workings of this concept in a Facebook marketing course if you are interested in mastering it yourself.
Have a campaign you need help with? You can also engage the expertise of a digital marketing agency to manage your brand’s social media marketing in Singapore. Look forward to more traffic, conversions, and ROI when you use cost control wisely in your Facebook campaigns!