The Ultimate Guide to Manual Bidding on Facebook

 

 

The Ultimate Guide to Manual Bidding on Facebook

Table of contents:

Given the choice between manual and automatic anything, most people would probably go for the automatic. It sounds easier, more seamless, and just a lot less work. Why have a car where you have to manually roll down its windows, instead of just pressing a button, or a phone that requires you to adjust the brightness through several steps instead of just doing it automatically?

Less work, however, doesn’t always mean better. Sometimes “manual” also means “more control,” and that’s exactly the case for Facebook Ad’s bidding system.

I’ve used manual bidding to scale and optimize my campaigns and make thousands in profit through Shopify Stores, and I can help you do the same thing for your business.

In this guide, we’re going to teach you everything you need to know about the manual bidding on Facebook, including when to use it, best practices to use it strategically, and all the factors that can affect it.

Why Does This Matter?

Facebook Ads runs on a bidding system. All advertisers will bid what they’re willing to pay for results (which can be conversions, impressions, clicks on a site, or other actions) from the specific audience that they’re targeting. Your bid will be a central part (though not the only factor) in whether or not you earn placements in Facebook Ads.

Facebook takes three different factors into consideration when determining who sees your Facebook Ads. These are:

  • How much you bid.If you outbid your competitors, you’ll have a better shot of getting more ad placements than them if all else is equal. Bidding higher can work to your advantage, especially since you’ll never pay more than one penny higher than what your competitors bid was. Even if you bid $1 when they only bid $0.50, you’ll only be paying $0.51.

  • Estimated action rates.This is the likelihood that showing the ad to the person will result in the desired action. Facebook tries to show your ads to users who are most likely to take the action you’re optimizing for, so they’ll show the ad to users who have a history of those online behaviors.

  • User value.This determines how valuable your ad will be to a user, and can be evaluated largely through your relevance score. Factors like amount of engagement, number of clicks, likes, saves, and hides from users are all taken into account.

What this means is that bid alone isn’t enough to guarantee the best placements. A high relevance score can actually save you a lot in ad spend, because you can pay less and still get more placements.

It’s important to note that competition on Facebook Ads isn’t industry exclusive.
Advertisers are competing with each other for the limited number of spaces in the newsfeeds or side columns of audience members; there aren’t a set number of ad slots for furniture companies, or fashion businesses, or subscription services.

What this means is that yoga companies aren’t just competing with other yoga companies, and businesses aren’t just bidding against other businesses– there’s so much audience overlap, and only so many spaces, so you’re bidding against everyone who may share your interest in certain audiences.

What is Manual Bidding?

When you’re moving through the ad creation process, Facebook doesn’t require you to customize anything in the budget and scheduling section except for your ad’s budget and schedule. You aren’t required to make any choices regarding bidding at all. But, if you so choose, you can- and that’s where manual bidding comes in.

While you can just opt to go with Facebook’s automatic settings, you can also select different options for ad optimization, bid strategy, bid caps, and delivery type. All of these options, pictured below, fall under the manual bidding category.

Manual bidding isn’t necessary, but it gives businesses more control over what they’re willing to spend and on what. It gives you more room to be strategic, and it’s a valuable cost control tool. If you know, for example, that you can only afford to pay $1 per lead and only half of the clicks that come to your site convert into actual leads, you’ll want to set your bid cap at about $0.50 or lower to start. This ensures that you’re never spending more than you can afford, both in total and per result.

Manual bidding allows you to customize the following:

  • How much you want to spend

  • What types of results you want to pay for

  • Whether or not you want to set a bid cap

Should I Always Use Manual Bidding?

No. Simply put, you should not always use manual bidding. You shouldn’t use it, for example, if you are really unfamiliar with Facebook Ads and aren’t really sure what the different options mean and how they’ll affect your campaign.

ou want to make sure you know what you’re doing. Fortunately, that’s why I’m writing this guide. By the end of it, you’ll know how to optimize your Facebook Ad campaigns with strong manual bidding strategies, and all the most common bidding mistakes that you want to avoid.

Ready to get started?

Let’s go.

How to Place Manual Bids on Facebook

You can adjust your bid and your bidding strategy in the “Budget and Scheduling” section in the ad set creation of Facebook Ads. This will be located towards the bottom of the ad set section, and it will look something like this:

 

Your bidding options may be restricted by the type of campaign you’re running. You can’t, for example, optimize for conversions when you’re running a Traffic campaign, which limits other options on the playing field.

In this section, you’ll get to choose what to optimize for. This helps determine who sees your ad, as Facebook will show your ad to those most likely to take these actions. Different options may include:

  • Link clicks

  • Conversions

  • Link clicks and conversions<>/span

  • Daily unique reach

  • Impressions

  • Landing page views

If you’ve chosen conversions, you’ll next be asked to choose your conversion window. You can set how long it typically takes for someone to convert after clicking or viewing an ad; this gives you more control over how Facebook is tracking and charging conversions from your ads.

Below this, you’ll see the options to choose a bidding strategy and your actual bid (we’ll discuss what these options mean a few sections down), and when you get charged. In many cases, your choices will be clicks or impressions. For clicks, you’ll be charged for every click. For impressions, you’ll be charged for every 1,000 views of your ad.

What Does Facebook Mean by “Pacing” And How Does It Affect the Process?

The pacing of your Facebook Ads determines how your ad budget is distributed across different opportunities.

There’s currently two pacing options in the Facebook Ad system: standard and accelerated. The pacing and delivery speed will depend on what bidding strategy you choose (which we’ll discuss more thoroughly in the next section).

Standard Delivery

Standard delivery will distribute your ad spend as evenly as possible through the lifetime of your campaign. If you have a budget for $70 for one week, about $10 will be spent every day.

Both the lower cost bid strategy and the target cost bid strategy automatically use standard delivery, but they both have slightly different pacing.

The lower cost bid strategy option uses “discount” pacing, meaning that your budget will be spent to get the most results for the lowest price possible, but that it will do so as evenly throughout the ad’s lifetime as possible. In this case, your bid may be lowered slightly to maximize your ad spend, though it’s worth noting that you may lose out on some placements because of the lowered bid.

The target cost strategy uses “probabilistic” pacing to distribute your ad spend on stable cost-per-result opportunities. Even if you increase or decrease your total budget, the cost-per-result should stay consistent. If you’re looking to scale your campaigns quickly, this could be a good option to choose.

Accelerated Delivery

Accelerated ad delivery will go through your ad spend as quickly as possible while giving you the best results.

The lower cost with bid cap strategy is the only one of the three that utilizes accelerated delivery. It works by automatically entering you into every auction under or at your bid cap, choosing quick spend and a lot of results up front over a consistent cost per click (CPC). This can be a good option for advertisers with really large budgets, or those who want to show their ads to a lot of people very quickly.

The 3 Bid Strategies You Need to Know

We touched on these three bid strategies in the pacing section. Each one gives you a different level of control, and different capabilities for scaling. Let’s take a close-up look at each and when to use them.

Lowest Cost

This bidding strategy prioritizes getting the most results for the lowest CPC possible. Without adding a bid cap, the lowest cost strategy (which is typically Facebook’s default choice) is essentially automatic bidding. This is a good way to ensure that your full budget is spent, but it sacrifices some of the control. Facebook will still try to get you as many placements as possible, and costs may vary.

If you don’t know how much to bid, this is the option to choose. Facebook can tackle all of that for you.

Target Cost

This option gives you more control than the lowest cost bidding option, and works by letting you set a target cost for your bids. This option does not minimize your CPC, which can inadvertently make your campaigns cost a little more than they need to. This can be a good option if you know what you can afford to spend and want to keep it at a very specific cost; in some cases, this makes it easier to know what to expect when scaling your campaigns, which can work to your advantage.

The target cost bidding strategy may not use your full budget, and it can be a little more expensive than other options. In many cases, choosing one of the other two options would benefit most businesses who want to keep their CPC low.

Lowest Cost with a Bid Cap

This option gives you the most control, and helps you to keep your costs as low as possible. It allows you to set a bid cap, which is the maximum amount you’ll pay for a single result. This kind of cost control allows you to make sure that you’re never spending more than you can afford. While it can run the risk of costing you placements because you aren’t running an “average” bid amount (which some higher and some lower costs mixed together to hit the ideal), you’re guaranteed to never spend more than you want for any given result. This can make it easier for some advertisers to maintain their ad spend and stay on budget.

Need a Recap?

This chart from Facebook sums it up pretty well.

Choosing Your Bid

Choosing a bidding strategy can be helpful, but not if you don’t know what you should be bidding for your ad campaigns. Even if you’re planning on using Facebook’s automatic bidding, you should still understand what you want to bid, and what you can afford to bid; this will help you assess if your campaigns are profitable and helping you, or if they’re costing more than they should be.

There are three main factors to take a look at when calculating your bid. These are the immediate ROI of a conversion, the lifetime value of a customer, and your total ad spend budget.

Immediate ROI of Conversion

Are you looking to drive immediate sales right away with your Facebook Ad campaigns? Determine the ROI of an immediate conversion that comes directly from a Facebook Ad.

Sometimes, this is easy. If you’re selling a pair of shoes that’s $70, and your CPC is $.75 with 30% of clicks converting, it’s easy to see that your ad is profitable even once shipping costs and credit card fees are taken out.

Sometimes, this is more difficult. How much is a like, comment, or share worth to you? What about a video view? Monetarily, not much, but the social proof can be valuable, and maybe these campaigns are designed to set the stage with a cold audience for a lead generation campaign once they’re familiar with you. In this case, it’s best to take a look at our next factor…

Lifetime Value of a Customer

The lifetime value of a customer is an exceptionally important metric that a lot of marketers overlook when deciding on bid cost.

Let’s look at our shoe store example again. You’re looking at a $70 pair of shoes, with a 30% click-to-conversion rate. But maybe it’s not just about that one $70 sale. Maybe 60% of customers who purchase will come back and buy at least three more pairs of shoes from you. That makes those initial leads and sales significantly more valuable, giving you more wiggle room in your budget.

You can calculate the lifetime value of a customer based on a combination of historic and predictive metrics and assumptions. You can learn more about this here.

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Your Total Ad Spend Budget

How much can you actually spend right now? This is something that marketers sometimes overlook, starry-eyed with the allure of the potential of Facebook Ads. Sometimes, though, campaigns may flop for reasons that are difficult to detect, and you may lose a little money before you start getting it back. This is especially true for marketers and businesses who are new, haven’t started split testing yet, and are still finding their footing.

What’s your total marketing budget? If you can only spend $15 per day, you don’t necessarily want to be paying $1.25 per click or you’ll blow through your entire budget really, really quickly.

How to Use Manual Bidding to Stay Ahead of the Competition

When used correctly, manual bidding can help you to stay ahead of the competition, beating them out and winning over the customers before they can. Here’s how…

Using Manual Bidding to Keep Adspend Optimized

Manual bidding gives you full cost control over your ads. This means that you’re distributing your ad spend as efficiently as possible, and that your likelihood of profiting as a result increases significantly. If you’re able to get more bang for your buck, you’ll have more ad spend to go around, getting you more results in the long run for your budget and giving you a strong advantage over competitors who aren’t making this choice.

Careful control of your budget will also allow you to push more ad spend to your most profitable or important campaigns. Long-term, this will help you get the results you want.

Use It Strategically to Scale Ad Campaigns

Ideally, many businesses would like to scale their ad campaigns overtime, just as they’d like to scale their businesses. Scaling would ideally mean more ad distributions falling at a consistent rate of conversions and a stable CPC, but in reality, this can be difficult to achieve. If you scale your ads too quickly and without focusing on cost-control, your costs can end up skyrocketing and you’ll lose your ROI in no time.

By establishing manual bids with either the target cost strategy or by setting a bid cap, you’ll be able to prevent this from happening and allow your ads to scale more efficiently. You can learn more about how to scale your ads with manual bidding in my extensive guide on scaling Facebook Ads here.

Be Willing to Outbid During Peak Seasons

The very nature of the bidding system automatically implies fluctuation, and it does just that. When more advertisers enter the market or start increasing their total ad spend, bid prices are going to go up. There’s only so many spaces in users’ feeds to fill, after all.

If you want to get some of those crucial Black Friday, holiday, and Valentine’s Day clicks, for example, you have to be ready and willing to outbid the competition. Take a look at what you can afford, and ramp up your bid and your ad spend right before the peak season starts in.

Manual Bidding Mistakes to Avoid

Manual bidding mistakes can negatively and significantly affect your Facebook Ad campaigns, and most people make the same three mistakes over and over again on a loop.

Here’s the three biggest ones you need to watch out for:

  • Don’t make changes too quickly. A lot of marketers will make changes to their manual bidding so quickly and so often that it’s difficult to track how well the change actually works. It can take several days for your campaign to adjust to a changed bid or scaled budget, so give it time to settle in before rushing to change it again, and again, and again. All you’re doing is sending your campaigns into pure, untrackable chaos.

  • Forgetting to change bids depending on different factors. You shouldn’t just pick a magic number and stick with it across all of your campaigns. Different audiences and different ad goals, for example, may have different costs. They also may be of different value to you, which is also worth noting. You don’t want to pay the same amount for a dozen likes as you do a dozen conversions, after all. Pay close attention to different audience members and the specific goals you have from each campaign when setting and adjusting your manual bids.

  • Having bid costs that are too high. I know what you’re thinking– this sounds counterintuitive– but it does happen. Sometimes, people will calculate what a lead is worth and be willing to spend a lot for every potential lead. Sometimes, though, their bid amount is high enough that the total ad spend gets used up way too quickly. Try to avoid this, because you want your campaigns to get enough clicks and results that the likelihood of actual conversions increases.

Our Manual Bidding Case Study

One of my clients was spending between $100,000-150,000 every month on Facebook Ads before he came to me. In October 2017, they had their CPA at $15.67. This was much too high, as their customer lifetime value only permitted an ad spend of $10 per purchase as they were selling inexpensive fashion jewelry. He was actively losing his company money, and knew that something had to change.

He got in touch with me, and we set to work right away

The first thing we did was improve the funnel to increase average purchase value. This meant we’d be able to comfortably spend a higher CPA because the average purchase value was going up. This is an easy win for businesses in all industries, especially if your ad volume is pretty high.

We did this through several steps, including:

  • Testing more expensive products and bundles of products, both of which increased the average purchase value, and thus the ROI.

  • Using email campaigns to distribute information on new products and offers, allowing us to sell more products on the backend and increase profits.

  • Testing new designs and copy for landing pages, including upsells to increase lifetime value and purchase value. We found that adding more details and product benefits helped sell the products more effectively.

Once we did this, we dug into Facebook data. We found the target audiences that were most profitable, and created lookalike audiences from buyers and email lists. We also used Facebook Insights to discover new potential audiences we could target. Despite all of this, the campaigns just weren’t performing well.

We still were hitting a CPA of $15.97.

 

We decided to test manual bidding. It was a good thing we did.

We tested several different bidding options, including:

  • An average bid of less than $10 (which was our goal CPA) and monitored the performance of the ads closely.

  • An average bid that fell in Facebook’s suggested bid range.

  • An average bid of $20, or 2x as much as our CPA goal.

We saw results improve almost immediately, though they did fluctuate a good bit, including during certain times of hte day. We had to spend more time monitoring the ad spend, and we did have to turn off some unprofitable ad sets. At the end of the day, however, manual bidding caused our campaigns to improve significantly by allowing us to control the cost of our campaigns, allowing us to lower what we were spending on sales and increasing ROI significantly.

 

We found that maximum bidding didn’t perform well, but remember to try it for yourself and see if it does work for you!

We were also able to scale our Facebook ad campaigns from $113K per month to $179 all while making more sales at a lower cost.

That’s how powerful manual bidding can be.

Conclusion

Manual bidding won’t be for everyone, and while it will be more work, it’s an investment of time and strategy that can massively pay off for your Facebook Ads and their ROI. I’ve used manual bidding to scale multiple campaigns, sell more, and increase my return on investment dramatically through Facebook Ads, and you can do the same for your business, too.

What do you think? How do you use manual bidding for your businesses? Do you use any of the strategies discussed above? Leave us a comment and let us know what you think?

 

 

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