This article can also be found at https://www.facebook.com/business/help/1619591734742116?helpref=page_content
What's a bid strategy?
Bid strategies are cost control tools. They help control your cost per optimization event the same way budgets help control your overall spend. Your bid strategy choice tells Facebook how to bid for you in ad auctions. There are two bid strategies:
- Lowest cost: This tells Facebook to bid with the goal of getting you the lowest possible cost per optimization event while also spending your entire budget by the end of the day or your ad set's (or campaign's) schedule. You can also set a “bid cap,” which tells us the maximum amount we can bid in an auction.
- Target cost: This tells Facebook to bid with the goal of achieving an average cost per optimization event as close to your target cost as possible. This strategy is only available for campaigns using the lead generation, app installs, conversions or catalog sales marketing objectives.
What's a bid?
A bid is a number representing how much you value an optimization event from someone in your target audience. We set your bid for you in alignment with your selected bid strategy. This may include raising or lowering it on an auction-by-auction basis, which is called “pacing” your bid. (The only time we don't pace your bid is if your ad set isn't performing well or you're using accelerated delivery.)
Which bid strategy should I choose?
The basic tradeoff is between efficiency and stability.
The lowest cost bid strategy may produce costs that fluctuate more (ex: if auction competition decreases, costs may go down; if auction competition increases, costs may go up), but we'll always get you the lowest-cost results available, and make the most efficient use of your budget. If you set a bid cap you have more control over your cost per optimization event, but if you set one that's too low you may get less delivery.
The target cost bid strategy aims to achieve an average cost per optimization event as close to your target cost as possible over the lifetime of your ad set. It also aims to keep that average cost stable, even if you increase your budget. However, we can't maintain this stability without sometimes skipping less expensive results in favor of more expensive ones.
If you care more about getting the most value from your budget, we recommend the lowest cost bid strategy. If you care more about having a stable average cost per optimization event, we recommend the target cost bid strategy.
How do bid cap and target cost changes work?
These changes are applied immediately. This is important to keep in mind if you're also changing your budget. Unlike bid cap and target cost changes, budget changes can take about 15 minutes to be applied. If you try to change both at once, you could end up with a short period where your new bid cap or target cost has taken effect but your new budget hasn't. Because of this, we recommend waiting 15 minutes after changing your budget to change your bid cap or target cost.
Keep in mind that there's a difference between a change being applied and our delivery system learning how to optimally deliver your ads, given the change. Depending on the magnitude of the change, the system may need time to re-learn that. We call this the learning phase, and recommend waiting until the learning phase is over before making a significant change to your bid cap or target cost.