The Ins and Outs of Bidding On Facebook Ads – 5th PPC Challenge Post

Facebook bidding

I have to admit, I’m intimidated by numbers.  Start talking about percentages and ratios and watch how fast I can run.  Mention the word ‘manipulation’ and see how fast I can run while I’m screaming.  CPC, EPC, CPM, CTR – what does THAT mean?  If you’re like me, you need somebody to explain to you what all those terms have to do with making MONEY.  Otherwise, you’re just going to run away screaming.

I’m glad I started this little Facebook ads project.  I’ve always been terrified of CPC advertising because it seemed like such a risky proposition.  But it’s only taken one round of ads – at very little cost – for me to learn how to manipulate those numbers to my advantage.  The first thing you need to do is understand what you’re looking at.

*Note, this is for the newbies so if you know all this stuff, skip it!

Bid: This is the maximum amount you’re willing to pay for each click your ad receives.  The only thing this means is that the higher you bid the more frequently your ad will be shown.  You’re bidding against other marketers who are targeting the same interests you are.

Impressions: This is the number of people who have been shown your ad.  It doesn’t mean they actually read it and it doesn’t mean they clicked on it.  It just means your ad appeared on a page they were looking at.

Clicks: The number of times someone clicked on your ad.

CTR: The click through rate is the number of times someone clicked on your ad compared to the total number of times your ad was viewed.

CPC: You may bid $1 per click but that doesn’t necessarily mean you’ll have to pay a full $1.  The cost per click figure shows how much you’ve paid for each click based on what you’ve spent so far and the number of clicks you’ve received.

CPM: This is your cost per 1000 views and it’s based on how many clicks you got per 1000 views and the CPC for each of those clicks.

EPC: This stand for Earnings Per Click and it’s not reflected on your Facebook stats page.  To determine this number you need to know how many total clicks your ad received and how much total commission you earned.

Conversion rate: This is the ratio of the number of ads to the number of desired outcomes.  For example, the conversion rate of your Facebook ad would be the number of people who actually click on your ad compared to the total number of people who saw it.  But that’s not necessarily how you’re going to make your money.

You also need to be concerned about the conversion rate of the landing page you’re sending people to.  How many people clicked through, saw your landing page and then completed the desired action, whether it was buying something or just signing up to an email list?

Commission: The money you make each time someone completes the desired action.  It’s important to remember how much commission you’re going to earn when you’re setting up your bids.  Not everyone who clicks through to your ad is going to become a buyer.

Let’s say you earn $1 in commission every time someone downloads a toolbar.  If your CPC is $1 and only 10 people out of every 100 people who click through actually register for that toolbar, you’ve paid $100 to earn $10 in commission.

OK, that’s the basics, but how does it all work?  You need to understand how to manipulate these numbers if you want to run a successful Facebook ad campaign.  And trust me, you can read and reread this article until the cows come home but the best way to learn this is to just set up an ad and play around with it.  You can run a Facebook ad for as little as $1 so put $10 up there and learn by doing.

Set Your Budget – The first thing you need to do is set a budget for your ad and it can be as little as $1 if you want.  I set my original budget at $10 and I’m going to adjust it as I go along.

Set Your Starting Bid – When you were setting up your ad you should have seen the suggested bid amounts showing up at the bottom of the ad form.  Ignore that for now and set your starting bid high.  For example, on my ad the suggested bid in the beginning was $1.74 I think and I set my starting bid at $5.

This does NOT mean you’ll be paying $5 every time your ad is shown.  It also does NOT mean you’ll be paying $5 every time someone clicks on your ad.

What it DOES mean is that you’ll be bidding higher than most of your competitors so your ad will get a lot of exposure fast.  And your cost per click will only be whatever it takes to beat your highest competitor.  NOT the full $5.  So don’t panic.

Adjust your bid – After your ad receives the first round of impressions, take a look at your CPC.  Your goal is to get the lowest cost per click possible.  You can see by my example that while I was bidding $5 per click, I only really paid $0.58 which means I can now drop my bid down to a more realistic level without risking any clicks.

By clicking on my bid amount I can see that Facebook is recommending I bid somewhere between $0.78 and $1.27 if I want to make sure my ad appears so I’m lowering my bid to $0.80.  Now, my ad should appear regularly until I run out my budget.

On this particular offer I’m making approximately $17.00 per sale so I need to make sure I keep my bids low enough that I’m not spending more than $17.00 in clicks per sale if I want to at least break even.  In checking my Clickbank stats right now I’m not showing any sales so I’ll have to closely monitor this until I get more history.  I may want to tweak my ad text to improve my CTR.

Adjust your ad – You can also see from my example that my CTR isn’t great.  It’s only at 0.089% which means out of every 100 people who viewed my ad less than 9 of them clicked on my ad.  If you don’t like the CTR you’re seeing you can go in and edit the text or the image in your ad.

Adjust your budget – If you’re happy with the results you’re seeing then go ahead and add a few more dollars into your total ad budget.  If not, either edit the ad or delete it and start all over with something new.  Just be aware that you can adjust your budget at any time during the process – you have complete control.

I’ve been around affiliate marketing for a few years now and I know for a fact there are people out there who absolutely love PPC advertising and make a pile of money with it and there are people who wouldn’t touch it with a ten foot pole.  Generally, those who shy away from it are those who don’t understand it – like me.

But I’m here to tell you that old dogs really can learn new tricks.  This is only my first real round of ads and I’m hooked.  I’d never try this with Google Adwords but with Facebook?  Yeah, I’m definitely hooked.   You will be too, if you just get in there and give it a try.


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6 Responses to The Ins and Outs of Bidding On Facebook Ads – 5th PPC Challenge Post

  1. Thank you very much for the explanation,why doesn’t Facebook explain it the way you did.Been searching days for this information. By any chance do you know how much someone earns from selling their app on android and on the app store paid and free.Again I have been looking for this information for the last couple of days and still can’t find it. Also do you know how much these ad network sites like admod and adwhirl charge you for advertising. These companies give a wealth of information but when it comes to pricing and finding out what they cost and how much an app developer will earn there is no mention of it. Any help you can give me would be greatly appreciated.

  2. Larry Eath

    Hi Donna,
    I loved your series of posting. You did Great for a 1st Timer. BTW I’m 62 yrs old so you shouldn’t fell like this game is just for the young. I’d just add that for your future campaigns separate your Target Interest (don’t mixed Cityville with Farmville & others) so your STATs show you exactly where your clicks & sales are coming from. This way in your 2nd round of adjusting you know where to tweak more in adding Daily Budget, or split testing your Ads (Title, Image, and Ad Copy), drop the non-performers and keep the Winners. Understand that when they’re all grouped together the non-performing Targeted Interest pull down the STAT’s of the Performers (you can’t see your Winners). You’re a Gutsy Girl, I love it.
    Best Wishes & Profitable Investing to you.

    • Hi Larry,

      Thanks so much for the feedback! It helps a lot to hear someone say these are good results for a 1st Timer. So many of the bloggers I follow talk like they made a million bucks their first time out of the gate so I’m feeling like quite the Newbie here :D

      I’ve been setting up at least 2 landing pages for each ad – CityVille, FarmVille and Cafe World – and then I have another opt-in form on the blog I set up to go along with all of this. THAT form is just a general form to sign up for a free game Tips newsletter for ALL the games. And I’m finding that I have a better open rate with the emails sent to the specific game users than I do with that general form.

      All-in-all, I’m having a great time! Thanks for your Best Wishes. Believe me, I need all the help I can get!

  3. Hell yes, i want compose something similar this but didnt have time, may i repost this The Ins and Outs of command On Facebook Ads – 5th PPC Challenge statio messenger | oDigger

  4. Maria Cruz

    Hi Donna!
    Great post! I’m new to FB ads too, I have more experience with Google Adwords, but I think FB ads are actually easier to set up and track… Correct me if I’m wrong, but I think “impressions” in FB refers to the number of times your ad was shown, not to the number of people that saw your ad. “Campaign Reach” is the number of people that saw your ad, which will always be a smaller number than “impressions”, since people usually see the same ad more than once. Is this right? Thanks for posting!

    • Hi Maria,

      Yes, you’re right on impressions vs. campaign reach. These posts are running about 2 weeks behind and every time I see a new one go up I see something I’ve learned since I wrote it. But that just adds to the excitement – and gets great people like you involved in the conversation! I’m glad there’s someone else out there who thinks FB ads are easier to work with, too. Makes me feel like less of a newbie. :) And if you’re already familiar with running Adwords, you’re probably doing a lot better than me with FB. My biggest hurdle was finding an ad type that they’d approve every time. That and waiting around for them to actually come to work and approve the darn things!

      Thanks for posting and correcting that error. Jump in any time! And have a great 4th!