Facebook Suggested Bid Spiral Effect

Posted in Pay Per Click, Social Media by redembermarketing on July 9th, 2009

I was debating whether or not to blog about this, but since a few people have confirmed the phenomenon, and I couldn’t find any other blog posts about it, perhaps it will make an interesting story.

Background:
I run some Facebook Ad Campaigns for clients, and have recently noticed that impressions were drying up.   At the beginning of the month, I had created some brand new ads and increased bids slightly, so I didn’t check the suggested bid range before contacting Facebook support.  Their response was that the ads were not being displayed because bids were not in the suggested range.  Of course, they were at the high end of the range when the ads were created, but within just a few days, the range changed fairly drastically.

So I increased the bids a second time and checked back the next day.  Again, almost no impressions – I was surprised to see that the range had increased again!  At this point, I start to get suspicious, and started contacting some other PPC colleagues to see if anyone else was experiencing this.  There were mixed responses, but at least one person confirmed what I am now calling the suggested bid spiral effect:

“I am seeing this spiral effect too. However, unlike with Google’s AdWords, it is impossible to trace it to a specific driver. As you note, Facebook’s lack of transparency is frustrating to say the least. They make changes without telling anyone and come across as totally capricious. I actually wonder if they are in trouble because it is as if some executive is cracking the whip in the background fanatically trying to extract more and more money out of each interaction with zero regard for stakeholders. Until they explain the rules better, Facebook ads will remain an unviable option for serious advertisers IMO.”

With little change in impressions and no change in the CTR, it’s tough to figure out what’s driving the bid range increases.  I decided to continue playing the game though, only this time I’d monitor it more closely.  No sooner than a couple of hours after raising bids, I noticed that the range increased again for some of the ads.

I should have noted this earlier, but all of the ads were set up as CPC.  So my next tactic was to create a similar ad and change the bid type to CPM and see if it made a difference.  Over the next 24 hours, the CPM Ad represented 75% of the clicks among 5 other ads.

Although I have heard nothing back from Facebook support about the issue yet, perhaps others will confirm the same behavior or describe what they did in response.  The mystery surrounding this simply calls attention to the obvious lack of transparency and documentation from Facebook about how they run ad campaigns.  The more information/guidance they can provide to advertisers, the more confidence the market will have in their platform, not to mention less negative commentary like this blog post.