Optimizing Facebook Campaigns and Manually Bidding for Conversions

Facebook’s ad auction is designed to ensure that users see relevant and interesting content from advertisers who are trying to sell their product or service, build brand loyalty and add value to consumers. If you advertise on Facebook, you may be familiar with the platform’s auction concept and automatically/manually bidding for a conversion. Several factors determine which advertiser will win the ad auction and reach a user: advertiser bid, ad relevance, and estimated conversion rate. Here’s how to manually bid for a conversion or action, and the importance of doing so.

Many advertisers who unfamiliar with Facebook’s ad auction format or are too inexperienced to manually bid choose to place an automatic bid on an action, which allows Facebook to make a bid for conversions on an auction-by-auction basis. Facebook will formulate bids in real-time with the goal of spending your daily budget(s). When you choose to place a bid for a conversion manually, you are informing the platform that the dollar amount you bid is the most you are willing to pay for a conversion.

In order for conversion optimization to be effective, you need several things: (1) large enough ad set audiences, (2) high enough daily budget per ad set, and (3) several conversions being driven per day.You need a large enough ad set audience (> 1 million users is recommended) for conversion-optimization to be effective because when you bid for conversions, you are effectively shrinking your audience. If you think of this as a dartboard, you are eliminating the outermost layer because you are instructing Facebook’s optimization algorithm only to deliver ads to users with the highest expected conversion rate.

You need a large enough ad set audience (> 1 million users is recommended) for conversion optimization to be effective because when you bid for conversions, you are effectively shrinking your audience. If you think of this as a dartboard, you are eliminating the outermost layer because you are instructing Facebook’s optimization algorithm only to deliver ads to users with the highest expected conversion rate.Additionally, for conversion-optimization to work well, each ad set needs to deliver several conversions per day. This gives the algorithm the time and space to deliver ads to these users with the highest expected conversion rate and to find trends within each of your audiences to make the best use of your advertising dollars and deliver ads to users who are likely to convert.

Additionally, for conversion optimization to work well, each ad set needs to deliver several conversions per day. This gives the algorithm the time and space to deliver ads to these users with the highest expected conversion rate and to find trends within each of your audiences to make the best use of your advertising dollars and deliver ads to users who are likely to convert.

As a result, the best practice is to set daily ad set budgets between 5x to 10x of your cost-per-acquisition (CPA) goal. For example, if you typically see your CPA’s coming in around $50 per conversion, you would set a bid around $70 (to ensure that your bid is competitive) and set your daily ad set budget between $350 to $700 per day.

Facebook is not an infinitely scalable platform. At some point, your ad set audiences will “tap out” because when optimizing for conversions, Facebook will initially seek to target the users most likely to convert—the “low-hanging fruit.” Once these users have been exhausted, Facebook will then look to target users that are likely, but not as likely, to convert. When your campaigns reach a point where conversions are steadily declining, your eCVR (the estimated conversion rate) will continue to decrease, and you may observe difficulty in spending your full daily ad set budget.As you scale your budgets, you will inevitably start serving your ads to users with a lower eCVR to deliver your daily ad set budget in full. This lower eCVR can, in turn, hurt your campaign’s performance. The best option here (aside from abandoning your campaign altogether) is to increase your bid along with your daily ad set budget(s) to reach more expensive users with a higher conversion rate. Once you start delivering your full daily budget again, you may test adjusting your bid (lowering your manual maximum bid for a conversion) to ensure that your actual CPAs are aligned with your CPA goals again.

As you scale your budgets, you will inevitably start serving your ads to users with a lower eCVR to deliver your daily ad set budget in full. This lower eCVR can, in turn, hurt your campaign’s performance. The best option here (aside from abandoning your campaign altogether) is to increase your bid along with your daily ad set budget(s) to reach more expensive users with a higher conversion rate. Once you start delivering your full daily budget again, you may test adjusting your bid (lowering your manual maximum bid for a conversion) to ensure that your actual CPAs are aligned with your CPA goals again.

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