Facebook Ad Bidding Strategy – Only Guide You Will Ever Need

Facebook ads bidding plays an important role in your Facebook ad campaigns.

If you want to make sure that you stay ahead of the competition in Facebook Ads, then ad design and creatives will only take you so far.

You also need to understand how to laser target your audience with Facebook audience insights tool and how to optimize your ad bidding strategy.

Is your cost per event not what you want? Not able to keep your costs stable? Having trouble knowing which objective to choose?

In this guide, I’m going to tell you everything you need to learn about Facebook Ad Bidding strategies so you can understand how to use these tactics to your advantage.

What is Facebook Ad Bidding?

Facebook ad distribution is based on an auction format. Your costs will often depend on the bid that you make to reach your audience. You need to understand that Facebook Ads is similar to joining an auction worldwide.

Most of the times, you are going to be competing with thousands and thousands of other Facebook advertisers to buy the precious real estate on Facebook’s News Feed, Audience Network, Mobile apps, Messenger, and so on. This is where your ads will be displayed.

Facebook tries its best to satisfy every advertiser, but some rare times when  Facebook is not able to meet the demand of every advertiser, they will opt to fulfill the needs of highest bidders.

Although, the highest bid does always win. Three contributing factors determine if your bid is going to win or not, these are: Relevance score, your bid, and Estimated Action Rates.

The amount that you bid for a click or a conversion or 1000 impressions is not what you are always going to pay. It’s just the maximum that you are willing to pay in order to win that bid. Facebook will always make sure that you have to pay the lowest amount that’s possible to win that bid.

For example,
If your competitor bids $5 and you bid $10, then you will only have to pay $6 or even ($5.01) actually to win the bid instead of $10.

Don’t get it?

Well, let me explain it like you are 5

Assume there are 4 advertisers bidding: A, B, C, and D. However, Facebook only has three ad spots available.

So, what’s going to happen?

It depends on the Advertisers’ bids. (The actual method is much more complex, but I’m simplifying it so you can understand the process)

  • If A bids $5
  • B bids $7
  • C also bids $7
  • D bids $10

What happens in this example is that A will most likely be out of the scene and will receive no impressions. B and C will get their spots and get decent impressions at a price somewhere between $5.5 and $6 while D will get the most impressions at a slightly higher price above both Advertisers B and C, somewhere between $5.5 and $7. He’s NOT going to pay the entire $10.

See, that’s how Facebook Ad Bidding works!

Wasn’t too hard, was it?

Let’s check out the different Facebook bidding types!

Lowest Cost Bid Strategy

Lowest cost tries to get you as many ad placements as it can while keeping the costs as little as possible. This is great for online businesses that have a low budget. It also allows you to set a Bid cap which ensures that you are keeping all the costs below a certain amount.

facebook Lowest Cost Bid Strategy

Facebook will never bid above the “Bid Cap” that you set so that you will get costs always below the fixed amount.

Lowest Cost Bid Strategy Pros

  • Cheap enough for businesses that are on a tight budget.
  • Facebook takes care of the optimization.
  • Quite efficient and effective for getting cheap leads.

Lowest Cost Bid Strategy Cons

  • Unstable results.
  • Better for short-term ad campaigns.

Target Cost Bid Strategy

Target cost bid strategy allows you to set an approximate target cost that you want to spend on your bid, it’s all about the average cost.

facebook Target Cost Bid Strategy

Now, Facebook will go over the cost and sometimes go under the cost, but in the end, the average cost will come out to be the same as the bid amount you set.

If your budget is flexible, then this is definitely a better option for businesses that require high-priced placements.

Target Cost Bid Strategy Pros

  • Stability across the entire campaign.
  • Easy to scale.
  • Easier conversions.

Target Cost Bid Strategy Cons

  • Much expensive than lowest cost strategy.
  • Costs can often fluctuate.

So, which strategy to use?

Let’s find out!

Which Bidding Strategy Should You Use?

The answer to this question is not simple. Simply put, it always depends. There is no single answer to all the situations.

However, I recommend that most newbie advertisers should stick to the “Lowest cost strategy” with or without bid cap; however, setting a bid cap will prevent Facebook from spending more than what you are willing to pay.

If you are looking to run a long-term campaign or want to scale your ad budget then you should use “Target cost”. This will give you a much more stable cost per event.

But, if you are not comfortable using the target cost, then it’s better to avoid it altogether. You are better off using the lowest cost strategy. Target cost is only recommended for advertisers with the highest budgets who know the ins and outs of Facebook Ads.

What are the different objectives?

Facebook offers a bunch of different objectives for your ads using which you can set the real goal of your ad. Do you want to just show your ad to a large audience? Do you want people to click on the ad? Do you want people to take a specific action on your ad? etc.

Here are the most popular objectives that you should get familiar with.

CPM (Cost per Mile)

CPM (Cost per Mile) bidding is also known as Cost per Thousand (Impressions). This bidding shows the amount you are willing to pay to get 1,000 impressions on your ad.

It’s one of the most unpredictable methods, and as a newbie, you should definitely steer clear of it. Otherwise, you risk running your entire budget without getting any meaningful results.

However, big brands that are already trusted or have a popular brand can use this method since people are more likely to take action when they see their trusted brand.

But, if you are not a big brand (Well, you aren’t)

Then you are better off using some other objective for your ads.

facebook CPM bid

CPC (Cost per Click)

This means that you only have to pay when a Facebook user clicks on your ad.

That’s great, right?

You could potentially have your ad displayed 1 million times without having to pay a single dime if you don’t receive any clicks.

There’s a catch though!

However, you should know that if your ads actually don’t receive any clicks then Facebook will stop delivering the ads since it’s not profitable for them at all. They’d instead start delivering other ads even if they have low CPC with higher click-through rate.


When you are bidding on conversions then Facebook will try to only deliver your ads to people who are most likely to convert. The actual conversion objective depends on what you select, you can select a page like conversion, generating leads, or app installs, etc.

facebook Conversions bidding

Any of these actions will trigger the conversion event and Facebook will know that the user has converted so they will charge you per conversion.

If you are bidding for conversions that are supposed to happen outside of Facebook then you should make sure to install the Facebook Pixel on your store. Otherwise, Facebook will not gather results and won’t optimize your ad delivery at all.

Conclusion – What’s your Facebook Ad Bidding Strategy?

I’d recommend that you start your bidding on the higher side at first and then gradually work your way down to find that sweet spot. Because a higher bidding strategy will put you at an advantage which is pretty much the best starting point for newcomers.

However, don’t just take my word for it!

Do your own research to understand what your aims and objectives are for that specific ad. Only then you can guess which strategy you’d like to use when running your Facebook Ads.

Already running ads?

Let us know how you bid for your Facebook ads in the comments below!

Dilawar Hussain

Dilawar Hussain is a professional blogger who loves gaming, technology, and ecommerce. He spends his time testing new strategies, hacks, and tricks to help the ecommerce community.

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