Cost Cap: The Latest Strategy of Facebook’s Bidding System

By Tim Burd - May 20, 2019 1770 Views
By Tim Burd - May 20, 2019 1771 Views

Understanding the Facebook Bidding System

Facebook’s Ad delivery system works on a bidding system. This method automatically determines which ads will be displayed in the news feed. Today we are going to be talking about their newest bidding strategy – Cost Cap.

But when showing ads, Facebook aims to balance two things at all times. First, the value of those who advertise on Facebook. They want to help paying advertisers to reach their target audience and get results from that target audience. Second, keep the actual Facebook users in mind. To make sure that the ads do not flood the news feed and take away the purpose of Facebook – to connect people.

In a traditional bidding system, the highest bid wins. Worry not because Facebook bidding system works differently.

Facebook Bidding
What a traditional bidding system feels like.

 

On Facebook, a bid is a number representing the value of an optimization event from someone within your target audience. But you have options here. The bid strategy you choose will tell Facebook how to bid for you during ad auctions. Read more about Facebook’s Bid Strategies here.

What is Cost Cap?

Cost Cap is Facebook’s newest bid strategy. It gives Facebook an idea of the maximum cost you can afford so they can adjust when helping you achieve your goals. The previous bid strategies either focused on getting the highest conversion volume or cost certainty. This strategy offers an option to do both.

 

Facebook Bid Strategies
The three bid strategies in the Facebook bidding system.

 

Additionally, it simplifies campaign management. It allows you to focus on conversions while worrying less on the cost of doing it. Unlike bid cap and target cost, Cost cap enables you to set a limit on the maximum CPA/CPI you are willing to pay to get results. This means, removing complexities in managing your bids so you can capitalize more on your goals.

To Wrap It Up…

Choosing the best bid strategy depends on what you prioritize more. Hence, this new strategy is the best option when you need to limit cost within a specific threshold and still want excellent results.

Cost cap is still rolling out and will be fully functional within this year. Facebook will make sure to stay within your selected limit but will help you drive results no matter what. Therefore, expect a simplified guided experience when choosing the right bid strategy.

 

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