This guide is to share my insights on when, where and why to use manual bid as opposed to auto-bidding, which is the default together with mini case studies.
ABOUT MANUAL BIDDING
Consider manual vs auto bid as the difference between driving a manual stick motor vehicle and an automatic one (you are of a driving age, right?).
There are pros and cons of both; if driving an automatic vehicle, it’s one less thing to think about whilst you’re increasing speed, steering and thinking about the various decisions that need to be made whilst driving.
So why do people still drive manual cars? Let’s take our analogy to sports car racing – how many professional sports cars drivers actually use an automatic gearbox? All of the races I’ve seen involve cars with manual shift. This gives the driver 100% control on how the car behaves because, right now, cars cannot see what’s ahead and make decisions based on future outcomes.
In fact Formula 1 (F1) racing cars have so many options such as tweaking suspension and braking that a cockpit of an F1 car looks more like a cockpit of an aeroplane than an everyday car.
What does that have to do with Facebook ad campaigns? That depends on what you want and what position you are in right now. If you’re one of the majority of 10 million advertisers on the platform that want to focus on your product, avatar, copy, ads, landing pages, sales funnels, fulfilment and client retention then perhaps using automatic bids is right for you.
In fact as someone that has spent 10’s of millions in ad spend I can tell you that 9 out of 10 times, I prefer to use automatic bidding too. In fact I’m what’s referred to as a ‘full stack marketer’; someone that’s as technical as needed to code and created web pages as is capable of creating brand campaigns, high performing sales funnels and retention strategies.
Yet I don’t need to race my manual shift sports car every day. Most days I opt for stability and predictability, kind of like driving my auto.
WHEN & WHY TO CHOOSE MANUAL BIDDING
FAST scaling.
Manual bidding allows you to override Facebook’s ‘bid’ in the auction. Each time your ad has the chance to be delivered to someone in your audience, Facebook has to decide, at a basic level, whether the ad is going to be good for the user and good for Facebook; that is, will the user react positively to the ad in terms of showing an interest, clicking and taking a positive action and will it reflect well on Facebook. The problem is that Facebook won’t always put your ads in front of the BEST people on a given day, all the time. As I write this, we’re pushing manual bid on a number of scale-up campaigns, ahead of Black Friday, because we want the control to push spending higher at will. Fast results require greater control on where and how Facebook spends our budget.
BETTER results.
One reason why I use manual bid, in fact I’m using this on my test store right now, is when you don’t have the right quality signals set up (or don’t have the time to, which is my case right now). The quality signals include Page engagement, ad quality metrics, landing page and sales funnel performance and more. To create an ad account that has all the right signals for Facebook takes time and effort – time and effort well worth spending because when you get this right, your automatic bids will naturally be enough to get your ads in front of the right people at the right time.
MORE profitability.
Certain manual bid options are built for better stability, once you know what you’re doing and can provide a more predictable route to creating higher profits. That said, whilst technically some of these strategies are considered manual bidding, in reality, as shared later, there is currently only one real manual bid strategy.
There are potentially other reasons but for me these are the main reasons I would choose manual bidding. So if you know when to use manual bidding lets explore who should (and should not) use manual bidding.
WHO SHOULD USE MANUAL BIDDING
It requires a certain level of confidence and understanding to use manual bidding, but after reading this guide you should know when the right time will be for you.
Let’s start with your mindset first, which best describes you?
I want steady results but I’m not confident in getting technical with manual bidding.
- This is like the new driver that wants a car and drive that’s predictable. In your case, stick to automatic bidding but do learn what needs to go in to create the best auction ‘conditions’ so your ads reach the right people at the right time. This is far more beneficial than using manual bidding right now.
I want steady results but I’m ok with manual bidding and have the experience to learn and apply it.
- This is the person that’s ready for a high performance, manual-shift car willing to learn, make some mistakes but become more confident and efficient over time.
I want fast-growth and I’m keen to test manual bidding.
- This is the person that dreams of driving the fastest cars and is prepared to do whatever it takes to achieve this.
I already have the battle scars from manual bidding but want to get better at it.
- This is the person that’s already driven a race car, crashed, dusted off and is ready to get back into the driving seat!
With your mindset clear, what ingredients do you need to make manual bidding effective?
Experience
- It’s far easier to learn to drive with an automatic car. Learning how a manual car operates is one of the first and most difficult parts to master for a new driver. If a new driver steps into an automatic, they move straight on to step 2 which is learning the roads and how to navigate them. The same applies to Facebook ads; you don’t jump into manual bid if you haven’t learned the basics first. Therefore having had experience of running Facebook ads, understanding audiences, funnels and reading the data are all important parts of your experience before using manual bidding.
Confidence
- You can be inexperienced yet confident enough to learn fast. Let’s take someone who’s a high-risk taker that loves high adrenaline experiences; for example, jumping from learning to drive to driving fast cars in months. The same applies with Facebook ads too. Confidence comes with a higher tolerance for risk.
Product-Offer Fit
- You may have heard of product-market fit, which is about ensuring your product actually has demand. Product-offer fit is the next step of ensuring your ad campaigns are driving profitable sales. If you use manual bidding before ensuring you have Product-offer fit, chances are you’ll blow your budget. This means you have audiences, ads and a sales funnel that works.
Now you know where you’re at and what’s required to make manual bidding work let’s look at manual bidding in more detail.
HOW TO USE MANUAL BIDDING
Manual bidding can be applied on different objectives, such as Lead Generation, Website Conversions, Video Views and Page Post Engagement.
What you bid is supposed to be the value you assign to that action (depending on bid strategy). But in reality there are some grey areas that allow you to hack the system – whilst I’m not a fan of hacking for the sake of trying to defeat the Facebook algorithm, I am a fan of hacking Facebook products to make them work – such as how I’ve made Campaign Budget Optimization work so well for me.
There are 3 main bidding strategies I use, at various times:
- Bid Cap
- Cost Cap
- ROAS Control
Here’s something I bet most of you don’t realise – there’s only ONE true manual bidding strategy. BID CAP.
The other 2, Cost Cap and ROAS Control are actually parameters that you provide to Facebook, within which they bid on your behalf.
Bid Cap is the only true manual bid in the auction.
There is no right and wrong on which to use, that depends on the following:
COST CAP
Goal: set your target cost per action and let Facebook bid accordingly.
Pros
- Great to use when your audiences, ads and funnels have been optimised to bring a fairly consistent set of results
- Once it’s up and running it can become fairly hands-off
Cons
- Difficult to scale as you rely on Facebook being able to find the right users for the price you’re willing to pay
- Budgets are often under spent (as in the example below where we aimed to spend much more than we did)
- Does require daily check-in to ensure you’re able to get a profitable CPA for the chosen bid level
- Relies on successfully leaving the learning phase and can make losses before you see the gains
Let’s take a look at this test we ran for an Ecommerce business with a low AOV and challenging CPA goal.
Though we had success with auto bid, Cost Cap actually brought about the best CPA and ROAS – the goal for this account was to aim for a CPA of £9 or below.
The last row shows a bid of £6.75 which we tested as a lower boundary – it worked, as far as CPA and ROAS go but struggled to spend.
We also ran higher bids and let Facebook spend to see how the results compared – it turned out that the £9 Cost Cap was the best balance between spending enough and performing well. Notice the massive differences in sales conversion rate (last column) between the bids. This was the main difference, in that Facebook found buyers highly likely to purchase at a reasonable cost per click.
ROAS CONTROL
Goal: set your ROAS (return on ad spend) and let Facebook bid to get you the better average order values (as opposed to just looking at the cost of acquisition).
Pros
- When it works, the ROAS can be amazing!
- Good to keep running in the background even if spends might be limited
- It works well in particular when you have a good range of product pricing and/or the likelihood of people buying more than one item
Cons
- Difficult to scale as you rely on Facebook being able to find the right users for the price you’re willing to pay
- Budgets are often under spent (as in the example below where we aimed to spend much more than we did)
- You might not get the ROAS you actually want
- Relies on successfully leaving the learning phase and can make losses before you see the gains
Let’s take a look at this test we ran for an Ecommerce business with a good AOV (Average Order Value) of $75+.
This test for ROAS minimums of 1.2 up to 3.0 only had one bid level that found any form of performance, which was the 1.8 ROAS minimum goal and 19 purchases (still profitable since this campaign’s minimum target is 1.3x ROAS).
With this particular test the other bid levels failed to produce performance in fact the 1.2 bid level had very poor traffic overall.
Let’s take a look at this campaign a BPM Method student setup – lifetime stats, just in case you’re thinking that’s scalable, but nonetheless, for an account that averages 2 to 2.5x ROAS these are very healthy ROAS numbers to keep adding profits to your overall campaigns.
Notice how the 3x ROAS minimum bid (second row) has spent the least yet provided the best ROAS and CPA blend. Initially the 1x ROAS bid was spending faster but pausing it due to poor performance meant the next best ad set (2x ROAS) received most of the spend.
BID CAP
Goal: set your target auction bid based on knowing your KPIs to take full control
Pros
- The most scalable option
- Has the best ability to manage spend and performance
- Allows you to react to the auction each day
Cons
- Requires far more controls and monitoring than the other bid options
- Easy to make mistakes and lose money fast
- Requires some calculation to get the right bid to start with then to track each day
Bid Cap is the only way to truly manual bid. The Target Cost and Minimum ROAS options are designed to allow you to instruct Facebook better than automatic bidding.
However if you want the true hands-on experience then you need to use Bid Cap.
The example above is a test we ran on an account which struggled with ROAS (return on ad spend). Leading up to Black Friday we needed a way to tap into better audiences, knowing that they were not sending the strongest signals back to Facebook.
Looking at the bids submitted (3rd column) you’ll notice the best bid cap with a ROAS of 3.19 is bidding at $70, followed by the $80 bid. This is a week’s worth of bid testing by which point we’ve determined our winning bid range.
Notice how in both the example above and the example below, it is NOT the highest bid that gets the best performance.
The $100 bid level is the most profitable in this particular test. However during the test we did see the $110 bid perform at website conversion rates (last column) that were ok, yet the higher CPM (costs) negated any benefit.
IN SUMMARY
source: facebook.com/business
It’s probably clear then why I prefer Bid Cap right? If not, then let me explain:
- I’m an experienced Facebook advertiser so I know how to set this up and what to look out for
- I’m comfortable with bid-range testing and finding the right bids before scaling
- I have a secret weapon, called CBO.
CBO stands for Campaign Budget Optimization and in simple terms, it allows Facebook to control budget allocation. It’s also a secret behind how to make Bid Cap work even better.
Facebook’s auction changes daily; so instead of setting budgets for each ad set and monitoring them through the day, what if you could set a single budget each day and let Facebook find the best ad sets (i.e. bids) and spend more there?
It takes some tweaking to get it setup but once done and if you’ve applied the right ingredients then it makes the whole idea of manual bidding far less stressful.
I’d love to hear how you implement manual bidding and your observations.
Want The Exact Steps I Use For Manual Bidding?
I’ve written up an extensive step-by-step guide on how I implement manual bidding like above in The Ultimate CBO Cookbook.
It’s a low-cost, high value to-the-point short-training program designed for those that want better stability and higher profitability within weeks.
More details over at www.CBOcookbook.com
Alternatively if you’d like my team to help you implement this faster, book a call today.