MWI’s Secret Sauce Series will be expert level blogs on how we at MWI attain killer results for our clients. We’re pulling back the curtain for everyone to see!
Back in the early days of Facebook Ads, setting up and optimizing your ad account really came down to three main items. Any ad optimization was isolated to your creative, your targeting, or your messaging (primary text, headline, description). If something was wrong, it was one of those three areas that you focused on.
Things are a little different now.
Facebook has completely adopted AI and put more emphasis into machine learning to optimize ad performance than those original three. For us marketers, that doesn’t mean we’ve all lost our jobs to AI robots.
In fact, we have MORE levers to pull when optimizing ads.
In Frederick Vallaeys book Digital Marketing in an AI World, he discusses exactly this point. How data driven marketers’ jobs have changed to informing the machine what to optimize vs the mechanics of setting up the tools.
A prime example of this is Facebook’s campaign objectives and ad set bid strategies.
Our Media Team has run dozens of A/B tests across our E-commerce accounts and we’ve discovered the Facebook bid strategy and ad delivery that will drive the best return on ad spend (ROAS) and we’re sharing it here.
But First, What Is A Campaign Objective And Which Do I Choose?
Your advertising campaign objective is what you want people to do when they see your ads. As of January 2020, there are 1.66B daily active Facebook users and 500M daily active Instagram users. With such a large audience, Facebook’s AI helps us better identify which of those users will take each action and more often. The campaign objective is the first step in that segmentation process.
There are plenty of great resources that dive deep into conversion objectives. AdEspresso’s Ultimate Guide is one that does it in 7 convenient chapters. But in short, there are three broader categories, or goals, that your objectives may fall under.
- Awareness: Objectives that generate interest in your product or service. Increasing brand awareness is about telling people what makes your business valuable. For example, Jasper’s Market is going to launch a small regional chain of grocery stores. Using the Brand Awareness objective they can create a campaign that highlights their fresh, organic produce to people in the local area.
- Consideration: Objectives that get people to think about your business and seek more information. For example, Jasper’s Market has a website that tells their story and lists some of their store’s unique offerings. Using the Traffic objective they can create a campaign that encourages people to visit their site to learn more.
- Conversions: The most common objective. It encourages people interested in your business to buy or use your product or service. For example, Jasper’s Market has opened a few new locations. Using the Store Traffic objective they can create a campaign to encourage potential customers to stop by their nearest store.
Now when running e-commerce ads setting up your campaign objective for Conversions is a must but what about bid strategy? Which one will drive the best sales for my product? Well the answer is, it depends.
What Exactly Does the Bid Strategy Do?
Your Facebook bid strategy further segments your audience based on the campaign objective. At the Ad Set level, you can choose multiple ways for Facebook or Instagram to optimize for ad delivery*. Within the Conversion campaign objectives, there are three main options:
*To note, if you are running a CBO campaign (campaign budget optimization) then you must keep the same bid strategy across the campaign.
CONVERSIONS
Facebook’s NOTES: Optimization for Ad Delivery based on Conversions delivers your ads to the right people to help you get the most website conversions for the lowest cost. Facebook recommends this for Lower Funnel (more on that later). [These ads] drive decision-making from people showing the most intent. If you’ve had at least 25 conversions in the past week, you can start a campaign here (MWI disregards this message).
VALUE
Facebook’s NOTES: Optimization for Ad Delivery based on Value delivers your ads to people to maximize the total purchase value generated and get the highest return on ad spend (ROAS). Facebook recommends this for Lower Funnel (more on that later). [These ads] drive decision-making from people showing the most intent. If you’ve had at least 25 conversions in the past week, you can start a campaign here (MWI disregards this message).
LANDING PAGE VIEWS
Facebook’s NOTES: Optimization for Ad Delivery based on Landing Page Views delivers your ads to people who are most likely to click on your ad’s link and load the website or instant experience. Facebook recommends this for Mid Funnel. [These ads] grow interest from people engaging with your business (MWI rarely uses this ad optimization method).
How Do We Choose Which Bid Strategy To Use?
Facebook’s default bid strategy for conversion campaigns is to drive the most conversions at the lowest cost. But for our e-commerce campaigns, we recommend to set the ad set delivery to optimize for Highest Value. There are instances when we use the other ad deliveries, however.
When We Use Highest Value Bid Strategy
“We opt for the Highest Value bid method when ROAS is the primary goal of the campaign.” says our Paid Media Manager Daniel Delgado. “The campaign will focus on ROAS rather than simply optimizing for purchase numbers. Think quality over quantity.”
MWI regularly sees higher ROAS with this bid strategy mostly due to big purchasers. This is especially true for products with higher price points.
Are there exceptions? Of course, but not what you might think.
In the above screenshot Facebook recommends not utilizing the Value delivery method unless you are driving at least 25 conversions a week. We find that number closer to be 3 or 4. Facebook also recommends only using the Highest Value bid strategy for bottom of the funnel (BOF) targets, while MWI also uses this method for middle funnel (MOF) targets.
Things to Consider:
For every marketer, and every business, where a user sits in the purchase funnel differs. To keep it simple, we have grouped common Facebook audience types into where we consider them in the purchase funnel.
MIDDLE OF FUNNEL TARGETING EXAMPLES
- All Website Visitors excluding purchasers
- Product Views or Scroll Depth
- First Party User Data
- Fans of page
- Video viewers or social engagement metrics
BOTTOM OF FUNNEL TARGETING EXAMPLES
- Cart Abandonment
- Initiate checkout abandonment
- Recent Purchaser or High value customers
Actual Results
Let’s see some proof! Below is an actual bid strategy test we ran for a cart abandonment program. The only difference between the two campaigns is the ad optimization bid strategy.
- Optimized for Highest Value / Minimum ROAS – 7.49 ROAS
- Optimized for Lowest Cost – 6.11 ROAS
NOTE: For whatever reason, when you view your campaign at this dashboard view instead of the edit view, Facebook changes the name of the ad optimizations. Optimization for Delivery is called Bid Strategy. The Conversion based bid strategy is called Lowest Cost while optimization for Highest value will be called Highest Value, or in this case – we added a Minimum ROAS exception.
This Cart Abandonment test is a perfect example of the Highest Value bid strategy at work. The highest value bid strategy (minimum ROAS) has a higher cost per result and a lower conversion rate. However, because of a larger percentage of high value purchases, this ad set delivers a higher ROAS.
Do You Ever Choose Any Other Ad Delivery Optimization Methods?
Yes actually we do. We haven’t mentioned any prospecting or top of funnel (TOF) targeting. For top of funnel targeting, we’ve found optimizing for conversions outperforms all other delivery methods.
“We believe this is the case due to allowing the algorithm to optimize during the learning phase and reach the right customers.” says Daniel.
TOP OF FUNNEL TARGETING EXAMPLES
- Lookalike Models
- Interest based Prospecting
- 3rd party data
Actual Results
For this example, our ad targeting is a lookalike audience. The audience is built from a 1% match from our first party data. We are in a true prospecting stage, as these people have never engaged with our product but we are still trying to drive leads and return. As mentioned before, the only difference between the two adsets is the bid strategy.
- Optimized for Highest Value – 1.56 ROAS
- Optimized for Lowest Cost – 3.08 ROAS
Zero Conversions on Either Bid Strategy, What Now?
One last note we want to leave on optimization. Say you’ve done everything we have covered above and still have zero conversions and little to no cart activity? What can you do? Well instead of looking to the bid strategy, we recommend optimizing for a different conversion event.
MWI still recommends to stick to the conversions or highest value Facebook bid strategy. But without enough purchases the system cannot properly optimize for that conversion. So by changing the event you are optimizing for, that should jump start the Facebook AI.
In this example, we are changing the optimization from purchase, to initiate checkout. But if you are still not seeing enough purchases, you can move further up the purchase funnel. We just recommend you get to a point with at least 25 events since pixel installation before re-running your ads.
So what do you think about Facebook’s bid strategy?
Have you identified certain bid strategies that work better in specific situations?
Please share in the comments and other thoughts on Facebook Ads. If you are interested in hearing more about how MWI runs paid social ads, check out more information here or check out one of our paid social case studies.
TL;DR THE “VALUE OPTIMIZATION WITH MINIMUM ROAS” BID STRATEGY CONSISTENTLY PRODUCED THE HIGHeST ROAS BUT DEPENDING ON WHERE YOUR TARGET AUDIENCE LIES ON THE SALES FUNNEL, THERE MAY BE BETTER OPTIONS.
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