7 Reasons Your Bid Caps Won't Spend

Summary

This video delves into the intricacies of running Meta ads, with a focus on using bid caps effectively. It covers common issues like low spend, poor performance, and bid caps set too low, along with the challenges faced by businesses with high Average Order Values (AOVs). The speaker discusses strategies for optimizing ad spend, managing fluctuating auctions, and navigating Meta's learning phase. Throughout, the importance of adjusting attribution settings, using bid caps wisely, and understanding the ad ecosystem’s behavior is emphasized to ensure better results and improved ROI.

Takeaways

• 😀 Bid caps may limit your ad spend, especially if set too low or in a high Average Order Value (AOV) account.
• 😀 Auto bidding and bid caps can conflict if your target row is already being achieved with auto bids, leading to inefficiencies.
• 😀 High AOV accounts may face challenges in producing enough conversions for Meta's optimization, especially when spending large amounts with low conversion volume.
• 😀 For brands with high AOV and low conversions, you may encounter prolonged learning phases, making it harder for Meta to optimize the ad delivery effectively.
• 😀 Low AOV businesses often perform better early on because they require less spend to achieve conversions and reach the learning phase faster.
• 😀 Setting bid caps too low may prevent Meta from spending effectively, as the available spend may not be sufficient to hit performance goals.
• 😀 Bid caps should be set with an understanding that spend will fluctuate due to varying auction availability, with weekends typically having more opportunities for ad delivery.
• 😀 Using bid caps at the bottom of your auto-bidding spend may lead to missed opportunities, as the system already performs worse in this portion of the spend.
• 😀 Daily spend fluctuations can occur when using bid caps, as Meta adjusts based on auction volume, especially on weekends and holidays.
• 😀 It is better to evaluate campaign performance weekly rather than daily to avoid making changes based on short-term fluctuations that may not reflect actual performance.
• 😀 Analyzing performance across different periods (like weekends) can help avoid making decisions based on anomalous spend fluctuations due to fewer available auctions.

Q & A

What are bid caps in Meta (Facebook) ads?

Bid caps are a setting in Meta ads that allow advertisers to set a maximum cost-per-action (CPA) they are willing to pay. This helps control how much they spend per conversion while allowing Meta to adjust bids within that set limit.

Why might spending not reach the desired levels when using bid caps?

Bid caps can limit the spending because Meta is working within the constraints of the cap, optimizing to meet the target without overspending. If the bid cap is set too low, Meta may not be able to access higher-value auctions, thus limiting the overall spend.

How can poor ad performance affect the success of bid caps?

If the ad performance is below the expected level, Meta will restrict the spend to avoid wasting money on low-performing ads. As a result, even if there is available budget, the ads may not generate enough conversions to exit the learning phase.

What could happen if the bid cap is set too low?

When the bid cap is set too low, the system may not participate in higher-competition auctions, leading to fewer opportunities for the ads to be shown, potentially decreasing overall performance.

How do attribution and optimization settings impact bid cap performance?

Incorrect attribution or optimization settings can cause Meta to misallocate the budget or optimize inappropriately, affecting the overall effectiveness of the campaign and making it harder to achieve the desired results within the set bid cap.

How does a high Average Order Value (AOV) affect the use of bid caps?

A high AOV, especially in campaigns with lower conversion volumes, can cause issues when using bid caps. Since the system needs more conversions to exit the learning phase and optimize effectively, it may take longer to see meaningful results with bid caps in these scenarios.

What does it mean when bid caps are used at the 'bottom' of auto-bid spending?

When bid caps are set at the 'bottom' of auto-bid spending, it means the budget is being used inefficiently. The auto-bidding system might already be spending at a rate that results in lower-than-expected returns, so applying a bid cap in this context might limit spend even further, affecting performance.

Why is it important to track ad performance on a weekly rather than daily basis when using bid caps?

Tracking performance on a weekly basis helps account for natural fluctuations in auction availability and performance, such as weekends when more ads are likely to be shown. Analyzing performance daily could lead to unnecessary adjustments based on short-term variability.

How does auction availability affect spend with bid caps?

Auction availability fluctuates daily, with some days offering more auctions than others. Bid cap campaigns are sensitive to these fluctuations, and on days with fewer auctions, spend may be lower than expected, while higher-volume days (like weekends) may see more spend.

What strategies can improve the effectiveness of bid caps in Meta ads?

To improve the effectiveness of bid caps, ensure that the bid cap is set at a realistic level based on historical performance, use proper attribution and optimization settings, and be patient with fluctuations in daily spend. Additionally, consider running a mix of auto-bid and bid cap campaigns if needed, and track performance over longer periods like weeks rather than days.