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Understanding Facebook's Bid Strategy Updates

Tim Burd author profile image
understanding facebook's bid strategy updates
understanding facebook's bid strategy updates

If you haven’t been under a rock the past couple of weeks then you may have heard of some pretty big changes to Facebook’s advertising platform.

They’ve announced a couple of new services, the combining of ads manager and power editor, and other features that are coming real soon (messenger objective, improved lead form, etc.).

But, one of the changes that really caught our attention was the new bidding terminology.

It caused quite the buzz on the forums and the BIG question on everyone’s mind is; what do these changes mean? In this article we will go over the updates to the new bid strategy terminology and explain and how will they affect YOU!

The Bid Strategy Landscape Now

First, a quick recap on bidding and how it works, for those of you who may be newer to the game.

A “bid” is the value you give to an ad set in your ad campaign, or what you would be willing to pay for the results. Facebook takes this value into consideration along with several other factors to determine whose ads are seen in a particular targeted market.

Bidding essentially allows you to control the cost of your campaign using different strategies. Previously those bidding strategies included Automatic Bidding, and Manual Bidding (as seen above). But, things are a-changing…

Bid Strategy Options in the Very Near Future…

Update #1 – “Lowest Cost” - aka Auto Bidding

Automatic bidding is the most widely used bidding strategy with Facebook Ads. This option will now be known as “Lowest Cost”. When choosing this bidding option you’re telling Facebook to automatically adjust your bid to get you as many results as possible for your budget. And to evenly distribute the results over the course of the campaign. With the change, you will now also see a "bid cap" function like in the previous manual maximum bid option. They function exactly as they did before, they are now just being described differently to help people better understand how they work.

Update #2 – “Target Cost” aka Average Manual Bidding

“Target Cost” was formally known as manual average bid or average cost bidding. With the new changes come some welcomed improvements to the system. Facebook has stated that with the new updates a user selecting this option should see a much more stable cost per result. And, the learning phase is only 50 results. Once you’ve passed that mark Facebook has said that users can expect a much more stable cost per result. You will only find this option available in a select number of campaign types; app installs, conversion and product catalog sales campaigns.

“Target Cost” Example: If your target cost is $10 and your current average cost is $8, we'll seek out results that will get you closer to $10. Even if we could be getting a lower cost instead. If maximizing the efficiency of your budget is more important than maintaining your target cost, you should use the lowest cost bid strategy instead.

Well, that’s all for now folks. While some people are still skeptical that the updates are just a simple change in verbiage. It sounds to us like Facebook is just making an attempt to help users better understand how these strategies work. And, from what we can see, the updates make sense and are definitely a step in the right direction.

One thing is for sure. We will be keeping an eye out for any additional updates to the bidding strategies. So, keep your eyes peeled for updates.

About Tim Burd

Tim Burd is a public speaker, consultant, and serial entrepreneur who’s been called the “Godfather of Facebook Advertising” for his many years of supporting and empowering digital marketers.

Tim’s Facebook Ad Buyers Group is the largest community of online advertisers in the world. He is the co-founder of AdLeaks, an exclusive subscription-based community, and resource for digital marketing and business growth.

In addition to hosting Mastermind workshops and events, Tim has been featured on publications and platforms ranging from Forbes and Bloomberg to Buzzfeed and Bravo.

Tim Burd lives in Newport Beach, California, and works with clients worldwide as a high-end advertising consultant and business development expert.