Facebook Ads Bidding Explained
When it comes to Facebook advertising, the main factors in deciding the success of your ad campaign, will be the targeting of your demographics and the split testing of your images and ad copy. The reason why split testing is so important, is that the higher click through rate you receive for your advertisements, the less you will have to pay per click. In this post we are going to cover the basics of understanding Facebook Ads bidding and how you can lower your cpc pricing.
There are two different methods for advertising within Facebook Ads, which are on a CPC (cost per click) or a CPM (cost per 1,000 impressions) basis.
In the earlier days, if you were really great at creating ad copy that made people click, it was a great choice to go the CPM route. This is because you would pay a flat CPM rate, and if you had a campaign hat was delivering a high click through rate, you would get a lot of traffic. The downside to bidding on a CPM model is that you can blow through a ton of money fast, and Facebook will keep billing you no matter on how many (if any) clicks you receive. Most successful Facebook Ads users are running off the CPC model now.
Quick Facebook Ads TIP: When first creating your campaigns on Facebook Ads, always go with CPC and upload a bunch of different variations. Facebook will start serving traffic to all of your ad copies, and continue to show only the best ones. If you have an ad copy that was shown 10,000 times and didn’t receive any clicks, that’s like free testing from Facebook, telling you that no one is clicking this ad. If you were bidding on a CPM basis, you would have had to pay for those 10,000 impressions!
Let’s take a quick glance at how Facebook Ads “suggested price” bidding works.
As you can see in the screenshot above, the “Suggested Bid” for this example campaign I created, is .15 to .30 per click. The suggested bid amounts that Facebook will create, are based on the actual demographics/country and audience settings that you selected for your ad campaign.
So why does all of this matter, and how does split testing come into play?
Simple, the suggested bids that Facebook gives you when you are first creating a campaign, that is just a rough estimate on where to start. Depending on the actual click through rate of your ad campaigns, each of your ad copies will start to have it’s own CPC amount as it starts to receive traffic and clicks. The better the click through rate, the lower you will have to pay.
Facebook Bidding Explained: While Facebook Ads does offer a CPC or CPM model, their back end really serves ads based on their overall CPM what Facebook is actually earning.
To best explain this, let’s show you a small test campaign I was playing around with. I uploaded a few different ad copies, but all of the targeting and demographics were the same for each… the only difference was the image used. All of the “bid” rates were also the same, at .16 per click.
Within a few hours or days of receiving traffic, Facebook Ads will start to adjust the actual price you are paying per click, based on your CTR. As you can see in the highlighted red area, my ad copy that was getting a .151% CTR only had to pay .10 per click, even though I set my max bid at .16 per click. The other ad copies that were not performing as well on their click through rates, still had to pay a higher rate.
Facebook Ads is now serving up to six advertisements per page. If you can get a click through rate above .30%, then you are doing a good job. Anything below .15% is not that great, and will not lower your bid pricing by much. Facebook Ads pricing is all dependent on your click through rate and who you are targeting, though it is possible to still get clicks on Facebook for a few pennies per click.
In the next post, we will take a deeper looking into the importance of split testing and how you can drastically cut your costs and increase your profits.
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