Facebook Ads Bidding Part 1: Everything you need to know to build an effective advertising strategy

Struggling with Facebook ads? Don’t seem to get the results you were hoping for? One of the major reasons your Facebook ads aren’t performing they way you would expect is Facebook ads bidding.

If you want to keep ahead of your competition and even win a spot in the Facebook ads race then except of the seamless creative design and the powerful wording you will also need to master the art of targeting the right Facebook audience for your kind of business as well as learn how to optimize your ad bidding.

In this particular article we will explain in detail all the information you need to know about Facebook ads bidding.  

Imagine that you came up with the perfect ad and that you have even selected the right audience for your campaign. But you have failed to choose the right bidding strategy. In this case, you could either end up paying too much for your campaign, restraining its profitability, or reaching a much smaller audience from your potential reach and thus limiting yourself.

If you choose the wrong bidding strategy for your ads, two things might happen:

• You will overpay for your ad results
• Your ads will underperform due to low ad bids

So how can you avoid falling into the trap and choose the right ad bidding strategy for your campaign?

How does Facebook Ads bidding work?

The first thing you have to understand in regards to ads bidding is that this is an auction! When each one of us is creating a new campaign, we are all entering into a huge worldwide auction and we are all trying to win a place on the News Feed, Messenger, Audience Network and Mobile Apps in order to display our ads to the users with the possibility to convert them into loyal customers.

Facebook will do its best to satisfy every advertiser but the space for advertisements is not sufficient even with billions of monthly active users. Therefore, Facebook won’t be able to satisfy all the requests. In this case, the highest bidders will get their ads seen by more people and thus achieve higher exposure.

However, ads bidding is not the only contributing factor to your ad delivery. Relevance score and estimated action rates (we will cover these in the next week’s article) are also important factors that affect your ad delivery. So, the highest bid does not always win the auction.

The amount you bid for a thousand impressions or a conversion for example, is not the actual amount that Facebook will charge you. It is just the maximum amount you are willing to pay to win the auction. According to Facebook, advertisers pay only the lowest amount possible to win the bid and as a result a place for your ad.

Let’s look at the following example and let’s assume that Facebook has only 3 available spots for advertisements to be displayed but there are 4 advertisers bidding (this is just for simplification purposes):

• Advertiser A bids €0,20
• Advertiser B bids €0,50
• Advertiser C bids €0,50
• Advertiser D bids €5

In this example, advertiser A will likely receive very low or even zero impressions. Advertisers B and C will get a fair amount of impressions at a price between €0,21 and €0,50. Advertiser D will get the most impressions at a price slightly above those of B & C. Between €0,25 and €0,60. By no means is he going to pay €5!

Food for thought:

• If you bid too low, your campaign will not reach your target audience and you will not achieve your goals
• Don’t be afraid to bid a higher amount. In the end you will pay the lowest amount possible in the auction and get your ads delivered to the right people

Stay tuned! In the next part we will discuss about the different factors that affect the delivery of your Facebook ads as well as about the bidding strategies you have on your disposal in order to build an effective advertising strategy.

by Christina Kotziapashi

Social Media Specialist at Clickhouse Media
Email: c.kotziapashi@clickhouse.media