Bidding Strategies and budgeting will determine how much you spend and what you spend it on. Budgeting and bidding strategies work together directly, controlling together how many results you get out of what you pay.
Setting your Facebook Ads Budget
Facebook Ads can quickly rack up a large bill before you even know what happened, so it’s important to know how much you are willing to spend on your campaigns and to stick to that number.
It’s important to keep in mind, too, that while well-executed and successful campaigns can bring in a lot of money and easily be well worth the investment (that’s why we’re here and why Ryan created the FB Ads Formula), there’s often a trial-and-error period many advertisers go through when first starting the campaign.
When you set your budget, you also need to keep in mind that you are setting a budget only for that campaign, not all of them—remember that is you plan on split testing or running several ads at once, or any in the near future.
Once you’ve decided how much you want to pay, you have several options when choosing how to set your budget through the ad system, prompted by Facebook to say how much you want to spend, and when you want to spend it.
You can choose to set either an amount per day or a lifetime budget.
Choosing a Budget Per Day
When you choose an amount per day, you are ensuring that you are evenly spacing out your ad’s budget for however long you intent to run your campaign.
Especially if you choose an amount per day, unless you have a bottomless bank account, it’s extremely important to set a schedule for when you want your campaign to end instead of running it continuously. It’s too easy to forget to stop the campaign and to watch a lot of money disappear.
Choosing a Lifetime Budget
When you choose to set a lifetime budget for your campaign, Facebook still tries to spread your ads (and spending) out evenly across the entire period of time you’ve selected if you’ve set a schedule.
If you have a $200 budget across 20 days, for example, Facebook will try to spend about $10 a day. If it doesn’t spend as much one day, it will try to make up for it on another.
Selecting a Facebook Bidding Strategy
Bidding strategies are extremely important and, with targeting, choosing your bidding strategy is one of the most persuasive factors in how much your campaign will actually cost you.
When we say bidding strategies and not “order prices,” that’s exactly what we mean. With Facebook, you aren’t purchasing a number of views outright. You are placing a bid to compete with your competitors, all of whom are trying to show the same audience members their ads.
One thing a lot of users don’t realize is that people in different fields and industries are often competing for the same clients. Let’s say you sell gourmet dog treats. Suzie has expressed interest in all things pet related, so she’d be a perfect member of your target audience. She also, however, is extremely interested in cooking equipment, local restaurants, and online gaming. All of these other niches will be competing for Suzie’s views and clicks, not just the dog boutique two streets over from you. Your competition is a lot higher than you’d likely expect.
To select a bidding strategy (instead of keeping with Facebook’s default bidding strategy of optimizing for your objective), click on “Show Advanced Options” underneath the budgeting section. This reveals your options for your bidding strategies.
When you are selecting a bidding strategy, you are prioritizing what you want to prioritize, reach or clicks. Different strategies have different costs, and all for different reasons. The bidding strategies currently in place are CPC, CPM, and oCPM.
Optimize for Clicks: CPC
CPC stands for cost-per-click, so it makes sense that this bidding strategy would be optimized for finding users who are most likely to click on your ad. On Facebook’s new interface, CPC falls under the category of “optimize for clicks.”
While it sounds like paying only for clicks is a great way to do online marketing (and it definitely can be), we’ve recently noticed in our own campaigns that the price of CPC has increased dramatically.
Optimizing for clicks can be a highly effective bidding strategy, how many competitors you’re up against will have a big say in the final pricing, and sometimes it’s not worth the added cost.
You can manually set up your maximum bid for clicks (and Facebook does give you an estimated bid), though it may not be enough to successfully challenge your competitors.
Sometimes automatically optimizing your bid, though expensive, can be the best way to get more clicks. It’s up to you to determine what price you are willing to pay per click, and how much of your budget each click should get.
Optimize for Impressions: CPM
CPM stands for cost per mille, or cost per thousand. The CPM bidding strategy is now called “optimize for impressions” under Facebook’s new interface, and it prioritizes impressions and the reach of your ad.
It’s about getting as many relevant views on your ad as possible, and paying for the views instead of individual clicks (which can get expensive). Whether two people click on your ad or eight hundred people click, you’ll pay the same amount.
CPM is great for exposure and brand awareness, as well as recently being marginally less expensive than CPC.
Similar to CPC, you can either choose for Facebook to automatically bid for you, or to manually select a maximum bid per 1,000 impressions. Facebook suggests bid prices to give you an idea of what prices might be best.
Optimize for Objective: oCPM
OCPM stands for “optimized CPM.” Under Facebook’s new interface it is the default and most encouraged option, referred to as “optimized for objective.” If you’re objective is Page likes, you’ll see it listed as “optimize for Page likes,” and so on.
It is referred to as optimized CPM, and in Facebook’s vernacular as optimizing for the objective, due to the fact that Facebook still charges per thousand views. It is optimized, however, because the thousand people Facebook shows your ad to aren’t just in your target audience, but have a history of taking your desired action to fulfill your goal.
What this means is that if you are trying to sell a product, Facebook will prioritize showing your ad to the members of your target audience that have a history of purchasing after clicking away from an Ad. If you are trying to get app downloads, Facebook targets the members most likely to do this.
Yes, this means OCPM and “optimizing for the objective” is more expensive than your typical old CPM. It’s often worth it, however, as your ad is shown to the people most likely to take action on it within your target audience. Conversions and results are often higher in OCPM than either of the other two bidding strategies, as long as targeting are done well.
Unlike CPM and CPC, you don’t have the option of manually choosing your bidding price. You are charged the price Facebook sees fit for your bid each time your ad is served.
What To Remember When Picking a Bidding Strategy and Budget
When you’re choosing a Facebook bidding strategy and a budget for the ad system, which go hand in hand, you have to find the balance between setting a budget and bidding high enough to get significant results without spending more than you can afford.
Paying for quality clicks (instead of clicks that don’t amount to much) is worth every penny. It’s for this reason that optimized CPM is recommended and Facebook’s default strategy. It’s often the best option to use (with exceptions), even if it is more expensive.
It’s important to remember that pricing is directly affected by the bidding strategy of your choice, and is contained within the budget you set.
Your budget dictates how much you’ll pay, and your bidding strategy dictates the amount of clicks, impressions, and results you’ll get out of what you pay.
Once you’ve set up your budgeting and bidding strategy, you’re ready to place the final order of your ad. After it goes through the approval process we’ve talked about, the next important step is monitoring your campaign.
To learn more about perfecting your Ads and choosing the best bidding strategy, click here to learn more about our FB Ads Formula.
To see how to monitor your campaigns, click here to go to Chapter 6.