Topics discussed in this podcast include bid caps account structure, bidding strategies and ad sets, bid caps vs cost caps, testing new creatives with bid controls, optimizing for one day click, fixed budget allocation strategies, and running multiple ad accounts.
Setting bid caps allows advertisers to control the maximum amount to pay for a conversion and maintain a target customer acquisition cost while enabling scalability.
Organizing ad sets based on Average Order Value (AOV) helps in setting bid caps effectively and aligning them with the unit economics of the business.
Bid caps outperform cost caps in managing ad spend budgets by preventing overspending during peak periods and focusing on achieving the desired target cost per acquisition.
Deep dives
Importance of Bid Caps in Media Buying
Bid caps in media buying play a crucial role in controlling the maximum amount to pay for a conversion. By setting bid caps, advertisers can enable the platform to bid in auctions and strive to acquire conversions at or below the specified cost. This strategy allows for scalability while maintaining a target customer acquisition cost. Bid caps differ from cost caps, as the former focuses on a maximum price per conversion, while the latter provides an average outcome. Bid caps provide advantages such as maximizing spend efficiency and accommodating different products with varying Average Order Values (AOV).
Structuring Ad Sets with Bid Caps
When working with bid caps, it is advisable to organize ad sets based on AOV. By grouping products with similar AOVs in the same ad set, advertisers can effectively set bid caps relative to the AOV of the products. This approach ensures that bid caps align with the unit economics of the business. For instance, if there are products with a $100 AOV and products with a $200 AOV, bid caps can be set accordingly to achieve the desired return on ad spend. Furthermore, optimizing at the ad set level allows for efficient spend distribution and effective campaign management.
Bid Caps vs. Cost Caps in Ad Spend Budget
Bid caps generally outperform cost caps when it comes to managing ad spend budgets. Cost caps may lead to overspending during periods of increased sales due to external factors like email pushes or organic social media engagement. Bid caps, however, prevent subsidizing low-performing campaigns with good spend and focus on achieving the desired target cost per acquisition. Bid caps offer flexibility in spending more during peak periods, such as weekends, while maintaining efficiency. Ultimately, bid caps provide a more reliable approach to controlling ad spend and optimizing performance compared to cost caps.
Optimizing Bidding Strategies
When it comes to bidding strategies, the speaker discusses the importance of considering optimization timelines and delayed purchase behavior. They suggest setting bid caps based on the desired optimization window and recognizing that longer consideration cycles may require a broader optimization window, such as running on a seven-day click instead of a one-day click. The speaker also emphasizes the value of collecting more purchases for machine learning training and suggests running on a seven-day click to achieve this. In cases with low conversion volume, auto bidding may be necessary to ensure consistent spend. Overall, the speaker advises bidding as usual but adjusting optimization timelines and considering purchase volume for effective bidding strategies.
Bidding Strategies for New Brands
When starting with a new brand, the speaker recommends setting bid caps in alignment with unit economics and business goals. They highlight the importance of having some spend in the initial days to gather valuable learnings, and suggest slightly higher bid caps to guarantee spend. However, the speaker quickly transitions to spending at the proposed bid cap that aligns with their target unit economic goals. They also mention the possibility of adjusting bid caps if the primary focus is on learning rather than immediate profitability. Ultimately, the speaker advises staying consistent with bidding strategies for new brands, focusing on unit economics and long-term business objectives.
You had questions about Bid Caps. I answered them.
Questions ranged from why your Bid Caps are underspending, why they're overspending, and whether or not they just target lower funnel traffic you were already going to get.
Hopefully this episode helps you manage your Meta Ads smarter. And if you have suggestions for my next AMA, email me or DM me on X and maybe I'll do it.
[00:10:01] Optimization and measurement in advertising.
[00:12:27] External forces and bid caps.
[00:15:11] Bid caps vs. cost caps.
[00:19:20] Bid caps and performance optimization.
[00:22:01] Longer consideration cycle and bidding.
[00:26:31] Testing new creatives with bid controls.
[00:28:54] Bid caps and budgeting.
[00:31:05] Turning off ads in CBO campaigns.
[00:34:07] Optimizing for one day click.
[00:37:39] Fixed budget allocation strategies.
[00:40:06] Bid caps vs cost caps.
[00:44:12] Restarting ad sets with lower spend.
[00:46:37] Bid and cost cap strategies.
[00:51:12] Running multiple ad accounts
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