26 March 2020
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Podcast: Facebook Testing Phases and Bidding Process Explained

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Dave Granfield:

Hi guys, Marketing Ear Biscuits episode… I don’t know what episode it is, but welcome. I’m doing another solo because Jay is flat out busy. 

A couple of big clients just signed up with the agency and we’re just going through the process of getting them live. So Jay and the team are absolutely flat out and so I’m running the show today. 

I was going through more of those tough questions and we’re getting more and more and more every day, and I just want to take the time to go through some of the questions that have been coming in because it’s really important to me to actually answer these questions that you’ve been asking, right? 

You’ve reached out to us to ask us something that we can help you with and I really appreciate that. So let’s get into a couple of those questions. So, today there’s one kind of long question with multiple parts to it, which I want to answer.

And the question comes from the business Little Human Linens, so Little Human Linens. Let’s talk about the first part. 

So the first part is you said in the testing phase of our top of funnel ads, what kinds of targeting audience size verse ad spend is appropriate?

Let’s break that down. So to start with, we’re talking about the top of funnel advertising. So that’s like brand awareness and exposure and introducing as many people to your brand as possible who are likely to be a potential buyer. 

So, what sort of targeting audience size and what sort of ad spend is appropriate? 

So targeting audience size, look, Little Human Linens if you’re advertising in Australia at all you want as bigger audience as you can. But from the sounds of it, you’re probably marketing to young moms or soon to be moms, expecting moms, and or grandparents or friends of expecting moms or young moms who are looking for a gift or looking for something to purchase for someone who’s expecting.

So I would be going as big an audience size that fit those private as possible. 

And then you need to work out how far you want to spread your budget to that audience. So you could target grandmothers or expecting grandmothers and parents and friends of the moms that are coming and kind of get the same message in front of them. 

And you could do all of that in one campaign. And so once campaign budget optimized campaign with multiple audience sets so you can track the different audiences. 

You might then do a separate audience or a separate campaign for like the husbands if you’ve tried to recommend the husband buy something nice for the expecting wife. But you kind of need to get the biggest audience you can of like-minded people who will potentially be the customer for you.

And then what is the appropriate ad spend? Now, there are probably two metrics that we can talk about with that one. 

We love to use video at the top of the funnel because the video is a format that is extremely cheap to serve. Now, what we’ve been finding lately with the video content that we produce is Facebook and Instagram being social platforms. 

People are really engaging with social looking content or peer to peer content. So when we do videos, some of the best videos that we’re doing might be a product unboxing or a product review from one of the people who have purchased from you or might just be you. 

One of our customers, Megan from Fawn and Finch, does an amazing job promoting her products on our Instagram by just being herself and documenting her life. And some of those videos get the highest engagement of her brand because people are on Facebook and Instagram to see what like-minded people are doing, right?

People don’t come to Facebook to be advertised to. 

So, the private ad spends when we use video, we’re tending to use video that’s a little bit more roar and a little bit more user-generated. And we’re finding that we can serve that for cents on the dollar. I think the record at the moment on one of our dog-related accounts is 0.002 cents for a through play. 

So a video view or a video watch on Facebook. So 0.002 cents to get in front of an ideal customer and then progress them down through the funnel. So if you’re talking how much is appropriate to spend, if you can get literally cents on the dollar for a top of funnel video a view, you spend as much as you can. 

Now in relation to the actual funnel that we work on, we kind of work on usually about 70% of our overall advertising budget is going to be top of the funnel.

Now, we’ve talked about this in the past, but about 70% of what we’re doing is top of funnel brand awareness and video view campaigns. What we’re doing is trying to get your message and your product or service out to as many of your ideal customers as possible. 

Now, what we’re doing when we do this brand awareness and top of the funnel is making them aware that they have a need, making them aware that they have a problem, and we’re trying to educate them that at the beginning that your product or service is going to fix that problem that we’ve just made them aware of. 

So, what kinds of targeting audience size? As big as possible. Let the algorithm go and run with it. And the idea here is we’re trying to qualify and disqualify as many people for as cheap as we can.

And then what is the appropriate ad spend? Well, we tend to do 70% of our total advertising budget is top of funnel advertising. 

Now, a lot of smaller agencies and freelancers and businesses get stuck in putting more money into their retargeting campaigns because they think it’s a quick win, but you’ll eventually run out of people to retarget to if you’re not feeding the top of the funnel back up, right? 

And a sales funnel is literally called a sales funnel because you put more people into the top and get a smaller amount of people at the bottom. 

So, the next part of Little Human Linens questions, I can’t even say that fast, Little Human Linens. 

The next part of the question is what kind of audience size should I stick to when creating new audiences to A/B split test?

I should’ve got Jay on for this one. And when I’m testing the audience with a $5 ad spend per day, you probably need a bigger ad spend for that.

So to be honest, Facebook’s targeting, especially with campaign budget optimization, it’s doing a really, really good job of top of the funnel and just targeting for audiences. 

And we try and leave them as big as we possibly can and let the algorithm do the work. 

Can I even split test an ad on different audience sizes and get an accurate comparison of how effective it is? 

That part I can answer, and I can answer that with clarity. 

So Facebook now has made campaign budget optimization the preferred method of running ads. So if you haven’t tuned in to one of our videos or podcasts before, campaign budget optimization is where you put your advertising spend or your budget at the campaign level, which is essentially the objective that you’ve got like brand awareness or video views or conversions. 

So you put your budget at the top and then in the ad set area you’re choosing multiple audiences or multiple placements to actually serve.

So can I even split test an ad on the different audience sizes and get an accurate comparison? What we’ve been finding lately is within campaign budget optimize… 

Within CBO campaigns you need to have four to six different ad sets. And now those ad sets are going to be different audiences. If those audience sizes are drastically different, you won’t get accurate testing. 

So drastically different could be you might have a CBO campaign with top of funnel ads, and you might have an interest-based or a wide-open interest targeting in Australia, which has millions of people in it. 

You might then build a lookalike audience and it’s only got 70,000 people in it. And then website traffic, and then you might build an interest group, sorry, with 70,000 people traffic. And then you might build a 1% lookalike audience, which in Australia is going to be about 170,000 people.

So in one ad set, we’ve got over a million, in another ad set we’ve got 70,000, in another ad set we’ve got 170,000. That campaign isn’t going to get an accurate measure because your audience sizes are too different within the ad sets. 

So what we’ve really found is get your ad set audiences very close to the right size or as close as you can so that each ad set gets the sort of similar amounts of impressions. 

And then once you’ve got similar amounts of impressions, you can start getting fancy with what you’re doing with manual bidding across those or setting your minimum and your maximum bids between those ad sets before you work out which one performs and which one doesn’t. 

So it is all about the audience size and all about how the targeting that you do. You cannot really actively split test audiences with massively different sized audiences in them.

Cool. Little Human Linens if that answered your question, please comment below that we answered it. We will reach out to you and let you know which episode. We’ve just answered this on the social media channel that you originally reached out to us on. 

Next question is from Josh, not that Josh. Josh asked, “What is the bidding process on Facebook?” 

Now, the bidding process on Facebook, if you didn’t know, Facebook actually has a bit of a bidding process and Facebook will often grant a better placement or a lower result to someone who’s got everything, sort of their ducks in a line and everything working out a little bit better. 

So what Facebook calls this is, I’m just opening up a quick document here, is the auction and delivery best practices. 

So to make it even simpler, you bid for placements on Facebook. It’s one big auction of how your results are going to perform to another. And if you’ll try to target the same audience as someone else who has a better creative, a better user experience, more money, then chances are they going to show their ad to the same audience more often than you are.

Now, Facebook ranks based on what they call a total value for each ad. 

And what that total value is, is maximizing an advertiser value. So the bid that you’re selecting for, so your desired result at the optimization level, top of the funnel, middle of the funnel, brand awareness, traffic conversions, right? 

So what your bid is times the action, right? So what is the likelihood that an impression is going to be shown to the person who is going to lead to the result that you asked for? Do you get me? So whatever you’re bidding for, whatever objection it is… I’m losing it.

So whether it’s brand awareness, video view, traffic to your website, conversion, what level of conversion is it an add to cart or purchase. So it’s that times the estimated action, right? 

So what’s the likelihood that an impression is going to be shown to the person which will lead to that exact result? So it’s those two together and then the user or consumer experience. 

So how interested does Facebook think that individual is going to be in the ad? So is your ad high enough quality? So, your bidding capability and your estimated action rate plus your user value or how your user experience equals your total value. 

People, advertisers with a higher total value are going to be more likely to get a better auction delivery.

So, I guess let’s break it down. So the first way that you can get better total value is to match your business objective to your campaign goal. 

So it might seem simple, but keep in mind when creating an optimizing or Facebook ad campaigns, if you truly want to go for website traffic, go for website traffic. If you truly want to go for purchases, go for purchases. 

Then the next thing you want to do is bid for the actual value that, that action is going to take place or how it’s going to happen. 

If you’re trying to get purchases on an eCommerce store and you’ve only ever got purchasers on an eCommerce store through advertising for $15 a purchase, don’t spend $5 a day because you’re not going to get enough purchases to warrant the actual value for that action taken. 

You need to test and measure this and make sure once you’ve got really your campaigns and your ad sets out of a learning phase, you then truly know how much you’re paying for an action.

Once you know how much you are prepared to pay for that action, it’s simple mathematics, right? 

How many do you want in a day, you’ve got to spend X amount to get that. 

You’ve got to know when to segment your audience. So that’s number three. 

So your bidding strategy should be informed by the value of your audience. 

So, different look-alike tiers, that sort of stuff, do they provide significantly different value? And are you going to bid for someone differently? Are you going to bid for someone extremely cold in a conversion campaign differently from a retargeting campaign, of course.

Number four, which goes back to Little Human Linens kind of the first question is don’t over narrow your audiences. 

So select fewer constraints and let Facebook do the bidding and the adjustment for you. So if you don’t know how your conversion rates and can’t calculate how large your audience should be, Facebook says, and we’re going to put a link to this document that I’m reading from in the description. 

Facebook says that an audience that is one to five million in size is a recommended good place to start. So let’s rewind about two minutes when I was answering Little Human Linens question, Facebook in this document, this is a Facebook document and it’s linked below. It’s called auction delivery and best practices. Facebook says one to five million in size is a good starting place for your audiences. 

Do not over narrow them.

Number five in the document when working out how to beat the bidding and beat the auction is being mindful of audience overlaps. 

So I know a lot of the Facebook reps that been working with at the moment on different ad accounts are really trying to push us to reduplicate any ads. 

So make sure you’re not targeting the same people in a top of funnel campaign, in a middle funnel campaign or make sure that you’re using a lot of exclusions. 

To consolidate your ad sets with overlapping orders and utilize a lot of exclusion targeting. 

Now, once again, this is from Facebook’s mouth. It’s something that Jay and the team had been doing a heck of a lot of over the last couple of months, and our results are outstanding when we’re using exclusion targeting and keeping in mind audience overlaps.

Look number six, if you’re not sure what to bid, start with the lowest bid option or the lowest cost option. 

Your bid might vary with different audience or targeting. 

You might be willing to pay a little bit more for customers that have maybe a higher lifetime value, but your ideal bid can vary with your target audience factors. 

And so use the lowest cost option to start with and learn what’s happening with the audiences that we’re using. The next step would be to know the actual value for the action taking place. We kind of, I covered that before. 

What are you actually prepared for cost per acquisition to get a sale? And if you’re not spending that much to get a sale, then don’t spend it at all, right? Choose a different optimization.

Number eight, use automatic placements. 

Die-hard Facebook marketers will say, don’t use automatic placements. 

I’ll give you a little hint, Facebook knows best right now. And that’s probably the number one takeaway from this podcast session is using automatic placements. The algorithm is smarter than you. 

I know that’s a shock. Sorry, Facebook ad peers you’re going to hate me, but automated placements are working really bloody well right now. The algorithm is working really bloody well right now. 

Using automatic placements isn’t cheating, using automatic placements isn’t showing that you don’t know what you’re doing. Right now in Facebook ad land using automatic placements is knowing that the algorithms got your back, and the algorithm of the advertising platform is going to do the best thing it can. 

I didn’t realize there are so many steps in here. I’ve got three to go, four to go.

Number nine, take advantage of campaign budget optimization. 

So we talked about that. Use the actual budgets that you’re prepared to pay, right? Don’t try and trick the algorithm. If you know you’ve got $15 to get a sale, make sure that you’re spending that much money. Make sure the allocating enough money per ad set to get that out of that learning phase. 

Number 10, if you’re using conversion optimization without a sufficient number of conversions, try optimizing higher up the funnel. 

So Facebook in writing in this document, which you can see in the comments below. Facebook in writing says, “If you aren’t receiving at least 50 conversions per week, consider optimizing for a higher point in the funnel.” 

Now, that means if you’re not getting 50 purchases, optimize for 50 add to cart. If you’re not getting 50 add to cart, optimize for view contents, right? That’s in writing from Facebook in Facebook’s document. 

Read it and get it through your head that, that’s what Facebook says. And we have seen that significantly through the learning phase, 50 conversions a week stabilizes everything that you’re doing with the optimization.

Number 11, we recommend you do not make any changes to your campaign until a minimum of 50 conversions is met. 

Do not chop and change. Do not think that you can school it. Wait at least one week after the campaign receives 50 conversions. It’s in black and white again from Facebook. 

Avoid making changes during the learning phase. If possible, only make changes to campaigns where it is a business case for it. So creative has a typo, you’ve put an incorrect budget, that’s it. If not, do not change it. Do not make rash decisions.

Jay and the team have got really good looking at attribution windows. So Facebook works up to a 28-day attribution window. So someone might view an ad or clicking at and not take action for 28 days and Facebook will still track that for you in a loose sense. 

We wait at a minimum of three days and really a seven-day window before we make any decisions on any of the creative copywriting or audiences that we’ve got going. If you chop and change too often, you will never get out of the learning phase and you will never be productive in your advertising.

Number 12, the last one, I’m done speaking. Think about user experience. 

So when we go back up to the total value, that user value of that user experience has a massive part to play in how well your ads are going to perform in a budget. Oh, sorry, in a bidding situation on Facebook. 

So think about your call to action buttons, think about your audience, and more importantly think about your landing page. Pay attention to the user experience included on your landing page. 

So minimize landing page redirects, minimize the plugins, make it nice and fast, compress files, improve server time response, remove any JavaScript that’s blocking and rendering, but then also think about your user experience on there. So write your copy to be compelling, write your copy to provoke emotion, to educate and motivate and to get a response out of someone. That includes your sales, your product pages on eCommerce. 

Make sure your product pages are written to make people want to buy.

Josh, thanks for the question man. That all came around. 

That was 12 points from Facebook. The document will be linked below. 

It’s an awesome document that came out about six months ago when CBO was really starting to fire up. Josh asked, “What is the bidding process on Facebook?”

Now, the bidding process is your ability to target audiences and bid effectively, plus your user experience, which will get you bidding or get you a better placement or Facebook advertising. 

Now, the analogy that I always tell people is the bidding process is like bad days when you used to have to snap tools. And now at the last second, you’d bid 1 cent more and win the item that you’re trying to buy. 

Facebook’s algorithm has that sort of targeting and that sort of ability to do that one little bit better than your competitors and get your ad shown more and shown cheaper. All right guys, I’m done. I was going to talk about that ROAS Calculator, but that’s a lot of talking for me. That’s 20 minutes straight of no break.

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