Cost Cap vs. Bid Cap: Which One Will Supercharge ... - Databox

Each cap limits bid costs using different processes. Cost cap averages out your bids to meet your desired cost-per-acquisition. Meanwhile, bid ... Login BookaDemo FreeSignup Product Solutions Resources Pricing Company FreeSetup Login BookaDemo FreeSignup Subscribe Facebookadbiddingisanart.It’seasytopickup,butittakesskillandknow-howtomaster. Whetheryou’renewtorunningFacebookadcampaignsorcallyourselfaveteran,youmightfindyourselfataconundrum:Shouldyouusecostcaporbidcapwhenyoubidforyourads? Weasked40+marketersabouttheirpreferredmethodandhowtheychoosetheirstrategy.Manyofthemtoldusthattherightanswerdependsonthesituation,andtheyexplainedthefactorsthatshouldgointoyourdecision. So,let’sgettoit. CostCapvs.BidCap:What’stheDifference?8FactorstoConsiderWhenChoosingBetweenCostCapandBidCap CostCapvs.BidCap:What’stheDifference? Firstthingsfirst—whatarecostcapandbidcap,andwhat’sthedifferencebetweenthem? AccordingtoFacebook,itsadsplatformasksyouifyouwanttocontrolcosts.Ifyouchoosetocontrolcosts,Facebookwilldefaulttocostcapwiththeoptiontoswitchtobidcap. Imagecredit:Facebook.com Eachcaplimitsbidcostsusingdifferentprocesses.Costcapaveragesoutyourbidstomeetyourdesiredcost-per-acquisition.Meanwhile,bidcapplacesahardlimitonyourcost-per-bid. So,whilecostcapkeepsyourcost-per-bidflexibletofocusonresults,bidcapprioritizeslimitingyourcost-per-bid. 8FactorstoConsiderWhenChoosingBetweenCostCapandBidCap Whenweconsultedmarketingprosabouttheirfavoritebiddingstrategy,costcapwonoverbidcap—butnotbymuch.Fifty-ninepercentofrespondentsusecostcapthemostoften,while41%preferbidcap. Whyweretheanswerssoclose?Whenweaskedthemarketersfordetailedadvice,manyofthemtoldusthateachstrategysuitsdifferentsituations.Theymentionedeightfactorstothinkaboutwhendecidingifyouwanttousecostcaporbidcap. Costvs.ConversionsYourTestingResultsControlvs.ConvenienceYourTargetingFocusYourUpperSpendingLimitperAdYourCampaignTimeframeYourBiddingTacticsCost-Effectivenessvs.Predictability PROTIP:What’stheoverallengagementofyouradcampaigns? WanttomakesureyourFacebookadsareperformingandtrendingintherightdirection?Thereareseveraltypesofmetricsyoushouldtrack,fromcoststocampaignengagementtoad-levelengagement,andsoon. Hereareafewwe’drecommendfocusingon. Costperclick(CPC):Howmuchareyoupayingforeachclickfromyouradcampaign?CPCisoneofthemostcommonlytrackedmetrics,andforgoodreason,asifthisishigh,it’smorelikelyyouroverallreturnoninvestmentwillbelower. Costperthousandimpressions(CPM): Ifyouradimpressionsarelow,it’sagoodbeteverythingelse(CPC,overallcosts,etc.)willbehigher.Also,ifyourimpressionsarelow,yourtargetingcouldbetoonarrow.Eitherway,it’simportanttotrackandmakeadjustmentswhenneeded. Adfrequency:Howoftenarepeopleseeingyouradsintheirnewsfeed?Again,thiscouldsignallargerissueswithtargeting,competition,adquality,andmore.Sokeepacloseeyeonit. Impressions:Ahighnumberofimpressionsindicatesthatyouradiswelloptimizedfortheplatformandyouraudience.Amountspent:Trackingtheestimatedamountofmoneyyou’vespentonyourcampaigns,adsetorindividualadwillshowyouifyoustayingwithinyourbudgetandwhichcampaignsarethemostcost-effective. TrackingthesemetricsinFacebookAdsManagercanbeoverwhelmingsincethetoolisnoteasytonavigateandthevisualizationsarequitelimiting.It’salsoabittime-consumingtocombineallthemetricsyouneedinoneview. We’vemadethiseasierbybuildingaplug-and-playFacebookAdsdashboardthattakesyourdataandautomaticallyvisualizestherightmetricstogiveyouanin-depthanalysisofyouradperformance. WiththisFacebookAdsdashboard,youcanquicklydiscoveryourmostpopularadsandseewhichcampaignshavethehighestROI,includingdetailssuchas: WhatareyourhighestperformanceFacebookAdcampaigns?(impressionsbycampaign)Howmanyclicksdoyouradsreceive?(click-throughrate)Areyouradcampaignsunderoroverbudget?(costperthousandimpressions)Whatareyourmostcost-efficientadcampaigns?(amountspentbycampaign)Howoftenarepeopleseeingyouradsintheirnewsfeed?(adfrequency) Andmore… Youcaneasilysetitupinjustafewclicks–nocodingrequired. Tosetupthedashboard,followthese3simplesteps: Step1:Getthetemplate  Step2:ConnectyourFacebookAdsaccountwithDatabox.  Step3:Watchyourdashboardpopulateinseconds. Getthetemplatefree 1.Costvs.Conversions Thesecompetinginterestsprobablycometomindfirstwhenyoulearnhowcostcapandbidcapwork.Theywerealsotheoverarchingthemeformanyoftheanswerssurveyrespondentsgaveus. GlueUp’sManzarMashhoodframestheirexplanationofcostcapandbidcapwiththesefactors:  “Thebidcapsimplymeansthatadvertiserscancontroltheamountofmoneythey’rewillingtospendonFacebookauctionsforpeopletoseetheirad.Now,thisisnotforthemtotakeanaction.Rather,theamountyou’rewillingtospendonthemachineinorderforpeopletoseeyourad. Costcap,ontheotherhand,helpsadvertisersinsettingtheamountofmoneythey’rewillingtospendontheaction.Thisisdifferentfromthebidcapasitisoptimizedforcost.Costcapisoptimizedforaction,whichhelpsadvertiserssimplifytheircampaignswhenthey’retryingtounderstandhowmuchitcoststogetsomebodytopurchaseordownloadorwhatevertheconversionanadvertiserisoffering. So,ifyouareallaboutcost,thenchoosebidcap.Butifyouareallaboutresults,choosecostcap.” Thisdefinitionleadsustoanotherquestion—howdoyouknowifyoushouldprioritizecostorresults?“TochoosebetweencostcaporbidcapwhenrunningyourFacebookadvertisingcampaigns,youneedtounderstandthevalueofyourcustomersandleadsandwhatyou’rewillingtopayforconversions,”JonathanAufrayfromGrowthHackersanswers. Aufraycontinues,“Ifyoucareabouteverysingleconversionthatyougetandyouwanttomakesurethateachconversiondoesn’tcostyoumorethanwhatyou’rewillingtopay,thenyoushouldchoosethebidcapoption.Forinstance,youcantellFacebooktolookforconversionsata$20/conversionandFacebookwillworkonfindingyouconversionsthatcost$20orless.” So,whatifyouconsiderconversionsyourgoal?“Ontheotherhand,ifyouwantmoreconversionswithoutfocusingoneachandeverysingleone,whatyouwantistotellFacebookthatyouwanttheaveragecostperconversiontobe$20.ThisiscalledcostcapbiddingwhereFacebookwillfindconversionsatacostlowerthan$20andhigherthan$20aswellwiththegoaltoreachanaverageof$20/conversion,”Aufrayconcludes. LilyUgbajaofMomBabyHeartpointsoutthattheseideasapplywhenyou’relookingatmorethanonecampaign,too.“Costcapisidealforgeneratingalotofcampaignsatthelowestcostwhilebidcapisforfewercampaignsbutwithmorecertainconversions,”Ugbajaexplains. “So,asanadvertiser,ifyou’dratherhavealotofcampaignsatthelowestpossiblecost,andhopetogetconversionsfromsomeofthem,costcapisyourgo-to.But,ifyou’dratherstreamlineyourcampaignstotargetjustbidsthatyouarealmostsurewouldconvert,bidcapisthebetteroption,”Ugbajaconcludes. Forsomefolks,biddingwillbeaback-and-forthbetweencost-focusedandconversion-focusedstrategies.Thinkaboutyourindividualcampaigngoalsandoverarchingobjectivesasyouswitchupyourbiddingmethods. 2.YourTestingResults Anotherincrediblyimportantpieceofthebiddingpuzzletoreviewisyourindividualtestingresults.Adviceandbestpracticesmakegreatstartingpointsforastrategy,butattheendoftheday,yourresultswillbeuniquefromeveryoneelse’s.Testinganddatafromyourpaidadsdashboardshouldformthebasisforyourbiddingtactics. AfewrespondentshaddifferentopinionsonthebestbiddingstyleforFacebookads,buttheyallcametotheirconclusionsbasedonrigoroustesting.Theyrecommendthatyoutestasmuchasyoucan,too. Forexample,JacobLandis-Eigstirecommendscostcapoverbidcapbasedondata.“Wealwaysrunatestforbothbidstrategies,but90%ofthetimecostcaphasoutperformedbidcap.Becausebidcapswillneverreachoveryourtargetbid,evenifthere’sanidealcustomeralittleoverthemanualbid,itcanbechallengingtodrivesufficientsalesvolumeusingbidcap.Costcapsaretheperfectmixofvolumeandhittingtargetcosts,butifstayingbelowyourtargetcostisthe#1priority,bidcapstendtobeabetterchoice,”Landis-Eigstiexplains. But,Famoid’sKristelStacifoundadifferentanswerwhenlookingattheirresults.“Facebookhassomeamazingadvertisinganddemographicoptions,whichmakessplittestingandbudgetmanagementquiteeasyandeffective.Forus,bidcaphasworkedwell.Aslongaswearelookingatthenumbersdailyandmakingsurenothingisoutoftheordinary,we’veseenthismethodworkbest,”Stacisays. There’softennorightorwronganswerinmarketing—onlycarefullyresearchedones.BothLandis-EigstiandStacichosethebestsolutionbasedontheirpastresults,andyoushould,too. SeanKimofKoKiMediaLLClooksatcostcontrolonanindividualbasis.“Ifyouhaveamaximumbudgetforeachconversion,bidcapsaresuperpowerfultomakesureyourconversionpriceisunderthatsetamount.Ifthereisaspecificconversiongoalyouaregoingafter,usingcostcapcanhelpgetyouconversionsatagivenaveragepricepoint.” However,oneelementtakespriorityovereitherofthosegoals:“Attheendoftheday,choosingbetweenthetwostrategiesrequiresindividualtesting/experimentingtotrulyseewhatismoreprofitable,”Kimconcludes. Howcanyougetmeaningfuldatatoinformyourbiddingstrategy?TryconductingaFacebookadsauditfocusingontheareasmarketingexpertsrecommend. 3.Controlvs.Convenience Sincecostcapusesautomatedbiddingandbidcaprequiresmoremanualinput,you’llhavetothinkaboutcontrolandconveniencewhenchoosingbetweenthetwo. Here’showJennaCarsonfromMusicGrottoexplainsthisdifference:“AcostcapcampaignmeansFacebook’sAIwillworkitsmagictogetthemostofyourrequiredactionsdonebasedonyourmaxcap.Thisisaquickandeasysolutionmeaningthatyoucanleaveyouradsincapablehandsknowingthatyouwon’toverspendonyourbudget–ifyou’relowontimethenthisisforyou! BidcapallowsFacebookadvertiserstomanagetheadvertsatagranularlevellookingatspecificbidsbutifyourbidwasn’tenough,it’llneedalotmoremanagementtomakeitwork—butitcansaveyouinthelongrun.” YuviAlpertofNoémieagreeswithCarsonbutaddsthatcostcaprequiressomelearningaswell.“Ifyou’relookingtocontrolthecostofyourresults,costcapisthewaytogo—however,thisdoescomewithalearningcurve,”saysAlpert.“Ifyou’relookingtomanuallycapbidsinauctions,bidcap’sthebestoption.Thisisamoreadvancedmethodforbusinesseswiththeabilitytocalculatebasedonmarginalcostandprojectedconversionrates.” Whileexplainingtheindividualbenefitsofcostcapandbidcap,DaivatDholakiaofForcebyMojiobringsupeaseofuse.“While[costcap]won’tbeexact,youwillevenoutaplacewhereyou’repayingasmuchperpurchaseasyouhaverequested.It’spredictableandeasytoset,”Dholakiasaysofcostcap. Meanwhile,Dholakiaexplainsthatbidcap“isalittlemorecomplicated.Itsetsalimitforwhatisbidonyourbehalfinauctions.Whileitaveragestolowercostsoverall,ittakesmoreworkoverall.” So,afteryouthinkaboutyourcampaigndataandpriorities,youshouldalsofactorinyourresources.Doyouhavethetimetoputintheextraworkneededforbidcap,orshouldyouoptforcostcap’ssimplicity? 4.YourTargetingFocus Facebookadtargetinghasahugeinfluenceonyourcampaignresults.Didyouknowthatitalsoimpactsyourbiddingstrategy?Whilecostcapallowsforbroadertargeting,bidcapworksbetterformarketerswhohaveanexactaudienceinmind. CharteredSurveyorsLondon’sPaulMcLaughlingpreferscostcapbecauseofitstargetingflexibility.“UsingcostcapI’mnotpayingmore,buttheFacebookalgorithmisabletocatchsomemorecostly,butmorebeneficialmarketingoperationsforme.Thenitdoessomecheaperonesso,infact,Ihavevariousmarketingpossibilitiescovered.Withbidcap,itcanonlyusethosethatdon’tpasstheborderofmybudget— so,somemediumones—andomitthechancetousemoreexpensiveones,”McLaughingelaborates. AndrewSteninmannfrominkablelabelhighlightshowtargetingstrategiesplayintobusinesssizeandbiddingtactics.“Ifyourbusinessisnewandyouwanttogetasmanyleadsaspossible,thenyoushouldusethecostcapmethod.Thismethodisthebasicsetupforgettingleadsatamostaveragecostlikepayasyougo.ButifyouhaveanoldbusinessandhaveexperiencewithFacebookadsrunningandalsowanttogetmoreleadsatthelowestaveragecost,thenthebidcapisperfectforyou.” AsyouplanyourFacebookadcampaign,lookatitholistically.Yourbusinessgoals,targetingmethodsandbiddingtacticsallinfluenceeachother.Everydetailcounts. 5.YourUpperSpendingLimitperAd Ifyourbudgetstructuremakesitimportanttokeepanupperlimitonyourspendinglimitperad,itmightbewisetochoosebidcapovercostcap. ChrisRileyofUSARxpointsoutthatyoushouldkeepyourbidcapunderyourabsoluteupperspendinglimitperad.“WhenadvertisingonFacebook,itisimportanttomakesurethatyourmaximumbidcapislessthanthemaximumamountofmoneyyouareabletospendonyourprojectedconversionrate.Soifyou’reexpectingtheadtobringinanadditional100dollarsworthofbusiness,itisonlyworthwhileifyoubidlessthanthatamount,”Rileyexplains. MarketerswithtightbudgetrestrictionscanalsoresearchCPC-reducingstrategiestokeepoveralladcostsdown.Ingeneral,asyouoptimizeyouradtargetingbasedonbestpractices,youshouldseelowercosts. 6.YourCampaignTimeframe Manyofthefactorswealreadydiscussedwon’thaveasbigofanimpactifyouhaveashortercampaign.Campaignlengthinfluencesyourbiddingandtargetingpriorities,especiallyifyouhaveafasttimeline. AccordingtoImpulseCreative’sRachelSatow,costcapworksbetterforlong-termcampaignsthanbidcap.“First,consideryouroptimizationgoals,theyarenotavailableforall.Then,consideryourtimeframeforthespend.Costcapcanbeslowertospendandbetterforlong-termcampaigns,”Satowbegins. Satowcontinues,“Abidcapisgoodifyouknowthevalueyoucanexpectfromanewcustomertokeepconversioncostsbelowthatvaluetoretainprofitandhaveanattentiveteammonitoringthecampaignasitwillrequiremorefrequentupdates.” Ifyouradcampaignmovesfast,yourbiddingtacticswillhavetoaswell.Alwayskeepaneyeonyourdataandadjustyourstrategyaccordingtoyourmetrics. Editor’snote:Busymarketersneedbird’s-eyeviewsoftheirdatatokeepupwithbusiness.TheFacebookAdsCampaignReviewdashboardoverviewsyouradcampaignstogiveyouthehigh-levelmetricsyouneedfast. 7.YourBiddingTactics Evenconsideringthefactorswe’vealreadydiscussed,biddingtacticshavenohard-and-fastrules,especiallyifyouthinkoutsideofFacebook’slogic. Ifyoudon’tmindmakingfrequentadjustments,trythisstrategyfromVincentD’ElettoofWordAgents:“WhenitcomestoFacebookads,Ifindmyselfusingthelowest-costbiddingstrategywithabidcap.It’smosteffectivetocapitataround25%to30%higherthanI’dwanttopayfortheaveragead.Anylowerandyou’llrisklosingalotofplacements.” Keepingyourbidcaplowerthanyourlimitmayhelpwhenyouhaveatightbudget,butifyouhavethefinancialroom,raisingthecapcouldopenmoreopportunities. D’Elettogetsgreatresultsfromthisapproach.“Ifindthisendsupcostinglessperconversion,andwhileitmayrequiremoretweaking,it’sgenerallyworthit.I’dadviseusingthelowestcostbiddingwithoutabidcapwhenyouhavetheentirebudgettospendanddon’tneedtoscale,suchasinashort-termstrategy,”theysuggest. Furthermore,welearnedinthisstudyonFacebookadsthatwhenitcomestocostandfrequencycontrols,agenciesaremorelikelytouseauctionbuying(57.14%),andthemostcommonchoiceamongSMBsis“reachandfrequencybuying”(around35%). Lookingformoreoutside-the-boxFacebookadstrategies?Weaskedmarketersabouttheirtactics,andtheyhad29ideastoshare. 8.Cost-Effectivenessvs.Predictability Thecostcapvs.bidcapconundrumalsocomesdowntocost-effectivenessandpredictability.Marketerswhofindcostcapmorebudget-friendlythanbidcaphavetoweighitscost-effectivenesswithbidcap’scontrol. KristaNeherofBootCampDigitalPublishingtendstosavecostsusingcostcapbutconsidersbidcapmoreconsistent.“Theadvantageofacostcapisthatitcontrolsyourfinalcost.Theadvantageofthisisthatyoumaypaymoreforanindividualclick,butthefinalcostperactionshouldbelower.Costcapsalsohelptocontrolyourfinalcost–soifyourfinalcostsaregoingup,thecostcapwillbehitandyouradswon’tdeliverexpensiveconversions,”Nehersaysofcostcapbidding. Andasforbidcaps?“Bidcapscontrolthebidandnotthefinalcostperaction.Thisishelpfulifyouwanttohavemoreconsistencyindeliveryandpredictabilityinwhatyoupayperclick.” Abouttheauthor MelissaKingMelissaKingisafreelancewriterwhohelpsB2BSaaScompaniesspreadthewordabouttheirproductsthroughengagingcontent.Outsideofthecontentmarketingworld,shewritesaboutvideogames.Checkoutherworkatmelissakingfreelance.com. Join33,989subscriberstoreceivelatestposts. Subscribe Wewon’tspam,ever.Itonlytakesaclicktounsubscribe. Thankyou! Youmayalsolike... Readmore Gaining1,200NewMQLsviaVirtualEvents(w/OllieWhitfield,VanillaSoft) LearnhowVanillaSoftdrove1,200newMQLsthroughvirtualevents. Metrics&ChillPodcast   |  Aug10 Readmore 7WaystoUseB2BIntentDatatoBoostYourMarketingStrategy Learnhowexpertsuseintentdatatoimprovetheirmarketingaswellasgeneratemoresales(andhowyoucantoo). 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