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How Do Bidding Strategies Work for Social Media Ads?

Advertising on social media is vital for many brands. It can help you reach specific targets and easily experiment with a variety of ad formats. 

In most cases, each social platform allows you to post an advertisement at any given time. When you post an ad on a social platform your company sets a budget, a target market, and a bidding strategy. While your ad will always show on the social platform getting in front of your target market at the best time all depends on your bidding strategy. 

Bidding is a little confusing at first. That’s why it’s a good idea to spend some time learning how it works before diving in. 

 

What Is Social Media Ad Bidding?

Social networks determine which ads to run based on a behind the scenes auction. The outcome of the auction tells the platform how much each advertiser will pay for their ad to be served to their target audience. 

As the advertiser, you choose which bidding strategy your ads perform behind the scene. This bidding strategy outlines how much you pay for each action you want to happen on your ads. 

What Is a Bidding Strategy?

Developing a bidding strategy can help you determine how your budget is spent. 

 

Your strategy will depend on your goals for the ad campaign, your advertising and marketing budget, and other factors like market research and internal performance metrics. 

 

It’s critical to put together a bidding strategy before you jump into social media ad bidding. Going through this process will help you decide how you pay for the actions performed on your ads. The bidding is happening behind the scenes and affects the cost of your ads. While you don’t have to sit and monitor your bids, knowing your strategy can help you save money on your ads. . 

 

Social media marketing campaigns rely on these four bidding strategies to form an effective social media ad campaign. 

 

1. Cost per Acquisition (CPA)

What Is CPA?

CPA, also known as cost per action, requires you to only pay for conversions

 

For example, if you place a bid for a Twitter ad under this structure, you’ll pay a set rate when someone performs a conversion action on your ad, like getting a quote or filling out a form. 

 

You set the conversion action using a snippet or tag built into the social platform. Your ad will be shown no matter what your CPA bid is set at and you only pay when someone completes that action. You pay the price you have set or the going rate for that bid depending on how you set your bid caps. Social platforms will ensure your budget meets minimum requirements to get you at least one conversion on your ad and will not allow you to set a budget below the bid minimum. 

 

CPA Pay Structure

Unlike other marketing methods where you pay for ad space with no guarantee of sales, CPA costs nothing upfront. You only pay for acquisitions or specific customer actions. Each social account will serve your ads to people most likely to complete the action you have set like filling out a form. 

 

Why Use CPA Bidding?

CPA can result in a substantial return on investment, and it’s an easy way to start scaling. 

 

CPA also allows you to quickly compare your ad’s performance across channels, which can be valuable when you embark on your next bidding strategy. 

 

You can only use CPA if you have an action that is easy to track on your social platform. We do not advise using this if you can’t easily pinpoint the action your customer takes. This strategy should never be used when you are looking for website views as you will inflate the cost of your view. 

 

2. Viewable Cost-per-Thousand Impressions (vCPM)

What Is vCPM?

vCPM is a marketing metric that measures how frequently your ad is viewed by your target audience. vCPM tracks “cost per mille,” or one thousand impressions.

 

vCPM Pay Structure

Under a vCPM structure, payout to the platform is triggered each time one thousand ads are viewed. You set your bid based on the maximum amount you’re willing to pay for every thousand impressions.

 

Why Use vCPM?

Focusing on vCPM can be an affordable bidding strategy. This is the best strategy when you are looking for brand awareness and engagement in your post. This strategy will get the most people to see your ad but may not get you the highest clicks. 

 

If your goal is to increase brand awareness versus driving traffic to your site, focusing on views may be an ideal strategy. You can use vCPM bidding to get your message in front of customers in large numbers. 

 

3. Effective Cost-per-Thousand Impressions (eCPM)

What Is eCPM?

The eCPM structure allows you to take into consideration the effectiveness of marketing campaigns with different pricing models across different social media platforms. It’s a good choice when you want to calculate whether you’re likely to successfully achieve your social media objectives. 

 

eCPM Pay Structure

The eCPM for an ad is the revenue it generates per thousand impressions. For example, if your winning bid has you paying $1 per click, and your link receives 2,000 clicks for every 100,000 impressions, you’ll end up paying $20 using eCPM.

 

You’ll need to check the number of impressions your ad is receiving and the total number of clicks on each social media platform in order to make comparisons. 

 

This strategy is best used when your products are being sold for a set price on an application like Facebook ads or through a site like Shopify. 

 

Why Use eCPM?

eCPM is especially useful when your ad buys are a mix of strategies. You can calculate eCPM to determine which pricing methods have been the most effective. This information can help you plan your next bidding strategy.

 

4. Cost-per-Click (CPC)

What Is CPC?

CPC, also known as cost per click, is the amount you pay each time someone clicks on your ad. This method of online advertising was one of the first options for digital marketers. 

 

A maximum cost per click, or max CPC, is a bid that you set at the highest amount you’re willing to pay for a click on each of your ads. 

 

CPC Pay Structure

Social media platforms calculate CPC by dividing the cost of the ad by the number of clicks it received. 

 

You can also calculate related metrics like average cost per click, which is based on the average of your actual CPC cost. 

 

Why Use CPC?

The primary reason to use CPC is that there are fewer variables to consider. Once you’ve set the viewing parameters to match your desired target audience, the social platform will get you the most traffic to your website or article. This is a great strategy when you want to increase traffic to your website. 

 

Are You Benefiting from High-Quality Leads?

When you partner with Meta Blue for paid advertising services, you’ll benefit from high-quality, low-cost leads. Learn about the advantages of clearly defined targeting before you create your next bidding strategy.