Cost Caps - An introduction to this advanced media-buying strategy

Nerdy Meta media-buying post alert 🔔🤓

Let's talk Cost Caps!

If you’re running an account that’s spending over £30k/$40k per month, consider testing cost caps.

What is cost cap bidding?
Cost Caps is a bid strategy on Facebook ads that allows you to set the maximum Cost Per Acquisition (CPA) on a purchase. Facebook will keep the average CPA at, or below, your set cap. Essentially, you tell Facebook to keep its CPAs under a maximum amount, so you can focus on increasing your conversions and your conversion rate at that CPA.

Cost cap bidding is particularly useful for controlling your ad spend and ensuring that your CPAs stay profitable for your business. They can help you control your ad spend and ensure that you don't go over budget. This method comes especially handy if you have a set budget.

What is the difference between cost cap and bid cap?

Another Facebook bid strategy, bid caps, sets a maximum bid that you are willing to bid on in an ad auction, and how much you are willing to pay for a single conversion. For example, if you want to pay $25 for a conversion, you set your bid cap, or your bid's upper limit, to $25, and your average bid won't ever hit that number. It's a hard limit.

In contrast to Bid Caps, Facebook chooses bids "dynamically based on your cost or value goals" when using Cost Caps. Some bids may be higher than others. Facebook makes sure that the average CPA is the Cost Cap that you set.

How to use this strategy:

Start higher than your tracked cost per purchase (CPA), then when you have some data move the cap up or down based on performance. Once performance is great adjust the budget. For this you want to use your best, tested creative and an audience you know works as well.