How To Use Bid Caps To Prevent Your Facebook Ad Costs From Going Through The Roof
What is a bid cap?
A bid cap tells Facebook to not bid more than a selected amount for a certain event. They are set at the ad level.
The event that the bid cap applies to depends on your campaign’s objective.
For example, if you choose the conversions objective and tell Facebook to optimize for purchases, your bid cap will determine the maximum amount that Facebook will bid for a purchase.
Keep in mind that bid caps aren’t guarantees.
Just because you set a $5 for a lead generation campaign doesn't mean you’ll get results for less than $5.
If your bid cap is unrealistically low, Facebook won’t spend any of your budget.
Bid caps are mainly there to prevent you from spending money when it’s no longer profitable to do so.
When to use Facebook ad bid caps
Use bid caps to prevent your cost per event from skyrocketing unexpectedly.
Facebook ad costs fluctuate regularly. They are known to especially inflate during the lead up to a holiday or during the holiday itself. For example, Christmas holidays, Black Friday and Valentine’s Day.
When this happens and you’re not equipped to handle the sudden price fluctuations, you’ll end up spending double or triple, raising your budget unexpectedly.
To prevent this from happening, you’re better off using bid caps.
Doing so will mostly likely reduce your reach and prevent you from spending your full budget. But at the same time, you’re saving a lot of money and improving your long term ROI.
How to use Facebook ad bid caps
Bid caps are set at the ad level.
Log in to your ad manager and select a relevant ad set. Then click on edit.
On the window that follows, scroll down to the Optimization and Delivery section.
Beneath “Lowest cost”, tick the checkbox next to “Set a bid cap” and enter your amount.
When you set a bid cap, remember that the number you enter is the upper limit of what you’re willing to pay. It is not your target cost.
From the example above, I’ve entered $5 as my bid cap. If Facebook can generate conversions for less than that, they will. That’s what the [Lowest Cost bid strategy] is for.
If this is your first time using bid caps, start with the maximum amount you’re willing to pay. If the maximum you’re willing to pay for per lead is $20, start with that then slowly adjust downwards.
If on the other hand, you’ve run campaigns before and have a clear idea of how much your average cost per event is, you can start with a lower amount.
The number of Facebook advertisers and how much they spend always spikes around certain times of the year such as holidays like Christmas and Black Friday.
Setting up a bid cap will ensure that your cost per event doesn’t skyrocket during these times.
This will mostly likely reduce your reach and prevent you from spending your full budget during those times, but that is often preferable to inflated costs.
If you would like my help in implementing this and other strategies to sell your high ticket products and services, get in touch with me by clicking the button below to apply for a complimentary consultation.