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17 april 2019 0 comments reading time: 5 minutes

Facebook introduces a new bid strategy

On April 16, Facebook launched a new bid strategy — cost cap. It is currently not available in all regions, but it will be introduced worldwide within a year.

Facebook has provided only two bid strategies earlier, namely bid cap and target cost, which focus on maximizing conversion volume and cost predictability respectively.

Cost cap enables you to purchase the cheapest optimization events. Target cost presupposes that cost remains fixed foregoing cheaper alternatives.

Facebook claims that the cost cap is designed to make it easier for businesses to run ad campaigns.

A new bid strategy enables you to maximize conversion rate at or below your set maximum cost.

This is what you need to know about cost cap:

  • Cost cap minimizes costs by delivering the cheapest results first, thus enabling you to get as many conversions as possible at your set minimal cost under your CPA.
  • If your average cost remains below your cost cap, all the available budget will be used to maximize conversion volume.
  • As the cheapest options disappear, costs may exceed by up to 10%, according to Facebook.
  • If you use a bid cap, your cost cap is not the same as your bid cap. Your cost is the actual cost of your optimization event, while your bid cap is the maximum amount you are willing to pay to win an auction.
  • Extensive testing is required for effective optimization.
  • Use the lowest cost to determine your CPA.
  • If you have hit your cap, raise your cost cap, as increasing your budget is not likely to deliver more conversion volume. If you can’t change your cost cap, consider updating your creatives or expanding your audience to boost delivery.

“This strategy is not suitable for affiliates who want to get profit immediately. However, cost cap is a good option for companies on a long-term perspective,” said Artem Kravchenko, Adcombo.

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