Advertisers who use Facebook will soon have a third bidding option in addition to bid cap and target cost. The new cost cap bidding strategy will help advertisers maximize cost-efficiency and overall results. According to Facebook,
“It is an average amount we try to stay under by going after the lowest cost events available. As you spend more and increase your budget, your average CPA may increase.”
With cost cap, advertisers can set a maximum CPA or cost per action using a guided bid experience. Facebook will attempt to get the most results at or below your desired CPA. They also note that costs may exceed the CPA by up to 10% in some cases.
Cost cap works best for advertisers who view cost as an important metric to evaluate performance. Facebook uses this example to illustrate its use:
“If you are looking to scale your business by driving as many subscriptions or purchases as possible, and need to stay within a specific CPA, we recommend that you use cost cap.”
Although cost cap bidding isn’t available to all users, they expect to continue the rollout throughout the year.