Bid Cap Vs Cost Cap: What’s The Golden Goose For 2024?

The bid cap vs cost cap has been a longing battle for advertisers as many do not know which side to choose. Of course, we always want to stay with the winning side. But how? 

Well, that is why this article appears. Keep on reading and you will find the holy grail to settle this war. 

The Lord of The Strategies: Bid Cap vs Cost Cap

Bid Cap

The Function

Basically, bid cap is a more advanced Meta bid strategy compared to others. When using this method, advertisers are allowed to manually set the highest value that Meta can bid in auctions.

In other words, regardless of the competition, you will not overspend.

Since you are the one controlling all aspects of this Facebook ads bidding strategy, you better calculate the expected conversion rates and costs correctly. Or say goodbye to your money.  

The Power

So, you can choose the max amount of money spent with a bid cap, right? Then it is natural that you save more in the long run. 

Yet, pay attention to the words “manual”. It requires more effort to set bid cap Facebook ads effectively.

Now, you have known your power, control it, do not let it control you. And so, here we come to a case study. 

The Case Study

We know you are interested in scaling Facebook ads, then this is an example from Facebook in a simplified version. 

Company A identified that a new client spends a yearly average of $135 for a certain product type and this generates $41 in profit. So, the team knows that it will be okay as long as they do not spend over $41 in Facebook ads to acquire a new customer. As a result, the best bid strategy for Facebook ads will be bid cap of $40 in this case. 

Cost Cap (now is Cost Per Result Goal)

The Function 

While bid cap is more “human”, then cost cap is all about “machine”. When using a cost cap strategy, you set the average cost per result, and Facebook will hold on to that number to bid despite the competition with the aim to deliver the best results. 

Seeking answer for the question: What is a good cost per result facebook ads question? Here it is. 

Basically, cost cap strategy is more preferred since it is easier to use for many people while providing the most results.

Note: If you set this cost too low, Facebook will also take longer to use your budget and prolong the learning phase. Facebook won't be able to progress to ad optimization if it can't complete the learning phase. Until then, ad costs and performance will be volatile. So, this strategy only works best if you know your average CPA

The Power

Wow, getting the best results and only having to spend a desired amount of cash on average, so awesome. And what? Bidding competition? What in the world is that? 

Yes, that is definitely the beautiful part of the cost cap approach and it looks enough to sit on the first page of scaling Facebook ads 2022 guide. 

But, hold on to that part. Everything has two faces like a coin. 

We bet that you understand the word “average” as the money spent might be higher than the cap set. 

Also, to get good results, you might have to sit and watch Facebook learning how to deliver the ads (take some time, yeah). During that time, money gets out, results get out too. 

“But the numbers will be stable afterwards”, Facebook said, we did not. So, be mindful.

The Case Study

Cost cap sounds so good, right? Then let’s see how good it is. The below case study is taken from Facebook as well. 

Brand B wants to reach more people and get more sales while achieving a better cost per result. And what do they choose? Cost cap. 

With some A/B testing, this brand really got some serious numbers. Firstly, 31% more conversions. Secondly, 23% lower cost per acquisition. Thirdly, 23% lower max cost. 

However, be well noted that brand B knows about its target audience, has data from past campaigns and deploys effective testing campaigns.

The Lord of The Strategies: The Return of The Right Bid

Now, what is the best bid strategy for Facebook ads? You think you know the answer? No, no. It depends on several factors. 

Nevertheless, choosing the right side in the bid cap vs cost cap war grants you many perks. Using ad set bid strategy correctly is an art and you hopefully will become an artist.

Let’s go with bid cap strat first. Listen up!

As mentioned above, if you want to save the cost, then go for a bid cap as the Meta bid strategy. Because each conversion will cost lower than your limit, for example, $30 and you surely make profit out of that. 

Additionally, when the upcoming campaigns are short, bid cap takes no time for Facebook to learn and you will not waste extra money, plus time. Also, with a certain and right target audience, bid cap saves you cash too. 

Moreover, you want advanced control over the cost? Bid cap is ready to serve.

You can say that the motto of bid cap users is saving, saving and saving.

Moving on to the cost cap method. 

To get more results, choose a cost cap approach. With that, a conversion will come at around $30 (higher or lower), but Facebook will maintain the average to be $30. This will sometimes generate less profits but sometimes more. 

However, if you have time and the campaigns are long, Facebook’s machine learning will help optimize the cost while still proving to be superbly efficient in getting conversions.

Another thing to consider is that the cost cap relies on the machine, so it does not take much effort to manage. This is extremely handy when you are running a large number of campaigns simultaneously.

Additional Information You Will Want to Know

The cost cap vs bid cap battle sees the appearance of two other sides, do you know that? Their names are lowest cost bid and minimum ROAS strategies. 

Talking about those methods will take lots of time and we will cover them in the near future. Stay tuned!

For now, you only need to know that this is also a fierce battle since both of them are quite opposite and suit different situations.

Final Words

Here we are, the final of the bid strategy Facebook ads battle between cost cap and bid cap. We know that you are eager to master how to scale Facebook ads and dive right into action.

But, be patient there. Let us tell you some of our thoughts.

Cost cap might be loved more, however that is not the whole picture. Bid cap still proves to be a more effective bid strategy Facebook in some cases. 

We recommend testing repeatedly to know which approach suits your campaigns, especially if you are a small merchant with a limited Facebook ad budget. Do not run into anything without careful research and thinking. And eventually, your Facebook ads will return what you deserve. 

Also, do not forget to use Facebook Pixel and Facebook CAPI to optimize your ads. 

FAQs about Bid Cap and Cost Cap

How to set up a bid cap? 

• Step 1: Head to Ads Manager and look for campaign level you want to set the bid cap

• Step 2: Hover to that ad and choose edit, then scroll down till you see the Campaign budget Advantage+
• Step 3: Choose the ad bid strategy, set it to bid cap and enter the wanted limit for each result. 

Why does my Facebook bid cap not spend? 

The reason comes from your own bid. The current bid might be too low and the solution is to raise the bid. But, remember to test first to avoid overspending.

What is the spend cap on Facebook? 

Well, the name says it all. The spend cap helps you to control the amount of money spent on all campaigns. 

Generally, you can adjust this number but if your ads account is too new, Facebook will set a limit in the beginning and you will see it being raised over time.