Bid Price and Budget
When diagnosing the under-delivery problem, we always check the settings of ads through four aspects: Bidding, Budget, Creatives, and Audience. After defining the problem, we adjust the settings and improve the impressions of ads. Prior to this article, we have introduced you how to diagnose the under-delivery problem through Creatives and Audience. Today, we are going to introduce you the impact of Bidding and Budget on ads’ delivery issue.
Bid Type and Bid Price
Bid price impacts on your ads’ delivery directly. The ad will not be shown on the screen of users immediately after you confirm all the settings. The ad should win the placement through competing the system of Real Time Bidding (RTB) first, so that it will be delivered to audiences . If there are certain amount of ads are set to deliver to same group of audiences, and these audiences can only see one ad on their screen, the system will transform CPM, CPC, and CPA, which was set by you, into a standard value, then the ad with highest bid price will win the game and get the chance to show on these users’ screen. According to Facebook, this formula decide whether your ad will win the placement in the RTB System:
The Priority of Delivery = Bid Price + Relevance Score
Although the system will deliver the ad with highest bid price first, the real price when the ad is delivered may not be the bid price set by you. For example, if a marketer set the bid of CPC as $10, and win the placement because of $10, the real CPC show in his advertising report can be $9 or even less than $9. Why does it happen? The bid price set in your advertising system is the highest price you are willing to pay, but Facebook will sell the cheapest placement first and do its best to deliver ads with lowest cost. Meanwhile, the bid price set by you may not the valid price to win the placement of audience set by you, the cost of ad will be decreased eventually.
Now we have a consensus: ad with too low bid price leads to under-delivery! But, what is the appropriate bid price? We suggest you to estimate the highest cost that you are willing afford and set it as your bid price, so that you will not miss any chance to deliver your ad because the bid price is too low. Also, suggested bid prices provided by Facebook are also good references for marketers. Confirming that the bid price you set is not in the lower range of suggestion price helps you avoid ads from being under-delivery. Consequently, set bid price as the highest price you are willing to pay and avoid to speculate are the keys for managing Facebook advertising.
If you have set the bid price higher than the suggested price of Facebook, but still find under-delivery after the ad was implemented, please check the Facebook suggested bid price again. Why? Because the suggested price is dynamic. It will up and down following the market price. There are different amounts of ads with different bid prices in the system at every moment, so the suggested prices change accordingly. If you find your bid price cannot compete with others on Facebook anymore, just change your settings or you will lose the chance to trade on the market. In order to get more placements for advertising, we suggest you to increase bid price under this condition.
Lesser budget can influence on the impressions of ads for the release of API v2.4. After this breaking change, budget and bid price got their correspondent relations. As we explained above, the bid price will decide ads competitiveness on the market, and your budget have to be adjusted based on the bid price. That is, lesser budget will put negative impact on your ads’ delivery.
When the bid price of ad set was manually set:
Including Taiwan, the countries or areas mentioned below should double their budget:
Austria, Australia, Belgium, Canada, Denmark, Finland, France, German, Greece, Hong Kong, Israel, Italy, Japan, Netherland, New Zealand, Norway, Singapore, South Korea, Spain, Switzer Land, the UK, and the US.
Bid with CPM and set the bid price as NT$300 Daily Minimum Budget should be NT$300 x 2 (for ‘doubled areas’) = NT$600
Bid with CPC / CPA and set the bid price as NT$5 Daily Minimum Budget will be NT$5 x 5 (for every area) x 2 (for ‘doubled areas’) = NT$50
Thus, if your daily budget is not enough to set an appropriate bid price, you do not need to feel frustrated with RTB system because the ad creation system will not allow you to upload your ad at the beginning.
However, even if you set enough budget and bid price for your ad, it is still not 100 percent effective in preventing under-delivery from happening. Take Aaron’s story as an example. Aaron, the marketer who work for Hub Online Shop, bided with CPM and optimizes the pixel of ‘purchase’ to gain more conversion value for Hub Online Shop. He got really good conversion rate at first, but the ad became under-delivery later. The conversion rate also went down to 0.05%. To improve the advertising performance, he changed the setting of optimization object from ‘purchase’ to ‘add to cart’ for increasing the impressions and conversion rate. Observing this example, we can know that marketer cannot diagnose the under-delivery problem only with the amount budget and bid price. Optimized object and audience as well as creatives, which we have explained in former article, may cause under-delivery, too. Setting appropriate budget and bid price help you decline the possibility of under-delivery, but it cannot guarantee everything.
After reading our introduction, we hope that you have known more details of the relations between ads’ delivery, bid price, and budget. We have many experienced marketers, they will use adHub, our user-friendly ad technology, to maximize the effectiveness of ads and helps clients reach their business goals. If you are interested in deliver digital ads, please get in touch with us!