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4 Common Myths About Facebook Bidding, Busted

Written by: Jacinda Siew, APAC Account Manager

Do you think you know everything about Facebook bidding? Let’s take a moment to debunk the myths that are commonly held among digital marketers. You’d be surprised that even large-scale advertisers still believe them.

Myth: If I bid too high, Facebook will cap my effective reach.

Busted: As far as we are aware, Facebook does not have such a logic in place to try and cap your effective reach just because you are bidding very high. Bidding higher means you are likely to be winning more auctions, ensuring your ad will be getting more delivery; thereby increasing your effective reach. A good rule of thumb is that you should be bidding at the true value that you are willing to pay for that impression/click/action you are optimizing for.

Myth: If I bid at a ridiculously high price, that will not be my true cost.

Busted: Well, that depends. Bidding at a very high price very often may not translate to the actual price you pay for, but if you have a substantial number of competitors with a similar strategy and the same set of audiences, then you may end up paying close to your actual bid. It’s important to note that unlike what happens in a second-price auction (for example, eBay), Facebook charges the winning ad a displacement cost – this measure is meant to provide incentive for truthful bidding in a marketplace with competitive ads.

Myth: I should not bid high on my best performing audiences, since they are going to convert anyway.

Busted: Wrong! You should be willing to bid as high as you can afford to for your best performing audiences, ensuring that you are winning auctions and getting delivery to the customers that drive the most revenue for your business. At Nanigans, we encourage advertisers to take a specific and scientific approach to breaking up their target audiences. This allows the Nanigans software to bid up on your highest-value users.

Myth: I should keep my bids low so that my cost per acquisition is low too.

Busted: While having low bids will help you keep cost per acquisition down, it won’t allow you to reach the kinds of customers that will keep making purchases weeks, months and years down the line.

With Nanigans Predictive Lifetime Value bidding and optimization algorithms, we assist you in finding your high-value customers and driving ROI. By bidding up to get your spend on these power users, your cost per acquisition might increase, but what you should really care about is keeping the lifetime value of your customer higher than the cost per acquisition.

We hope this post has helped debunk some of the common myths that keep advertisers from reaching their best performing audiences. If you are thinking about the golden question – what should my optimal bid be? – you are on the right path. Nanigans predictive optimization and bidding algorithms help automate that process for you, so you don’t have to crunch numbers behind your laptop. Focus on testing new target audiences, iterating on ad copy and creatives, and let Nanigans bid optimally for your most valuable customers.

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