Understanding Meta Ad Auctions: Auto-Bid vs. Manual Bid Explained

🗣 “I ONLY use cost caps” 🗣 “I NEVER use cost caps”
The reason we hear this mixed advice is because most digital ad buyers don’t actually know how bidding works in Meta's ad auction or when to use manual bids. Here’s the Meta bidding breakdown you’ve been waiting for.

Let me start with a metaphor we can all relate to: buying groceries.

Imagine once per week you go to the grocery store to buy food with a $200 budget.

▶ You’re always going to spend the full $200.
▶ You’re always going to buy the same core/staple items you need to eat.
▶ You might buy a few extra items here and there if it fits within your budget.

This is a lot like standard max-conversion auto-bid ads with daily budgets.

This works most of the time, but if an item you regularly buy goes on sale, you only have a small amount of room in your budget for that item at its sale price.

Now imagine you make a special trip to Costco and you have an additional budget of $200. Your goal is to find bulk products that you always need, but at a discounted price.

If you can find…

🫒 olive oil for less than $10.00/quart
☕️ or coffee for less than $7.00/lb
🧻 or paper towels for less than $1.50/roll

… you will buy up to $200 worth (or as much as can fit in your car).

▶ But you may not spend the $200.
▶ And you may not find the items you want at the price you want.
▶ But if you do find the right item at the right price, you’re going to buy in bulk at a great price

This is a lot like a manual bid campaign. It can spend up to a certain amount. But it will only spend if it can get the conversions you want at the price you want.

If you want to get Purchase conversions for $50.00, and Meta can get them for that amount or less with manual bids, your campaign might spend your entire budget in a few hours.

If it can’t find Purchase conversions for $50.00 bids, the campaign will spend a few dollars trying, then cut spend, leading to very few conversions (but no wasted money).

HIGHEST VOLUME CAMPAIGN TRADEOFFS

Standard max-conversion auto-bid ads are a great way to have some predictability and consistency with your account. You know what you will spend and about how many conversions you will get. But these campaigns don’t know how to take advantage of moments in the auction when timing is perfect. Because the campaign needs to spend evenly, it will limit how much it can spend at any given hour to ensure the budget doesn’t spend too fast.

MANUAL BID CAMPAIGN TRADEOFFS

Meanwhile, manual bid campaigns can be a very effective way to get incremental conversions at the target price you desire. They aren’t very predictable or consistent in terms of volume or pacing. But when timing is ideal, these campaigns will deliver as many conversions as they can, at the price you want.

Stack both campaign types together for a balanced, best-of-both-worlds approach that gets predictability and incremental conversions at an optimal price.