So there's a new cost control in town. We're all familiar with the bid cap (setting max bid) and target cost (allowing fluctuation but average specified bid rate); now there's a cost cap...get excited! With the cost cap, instead of focusing on what you bid in auction, FB will focus on driving the desired cost per [insert desired action (i.e. purchase)]. So let's work this out in a quick exercise. We will assume we want to generate purchases at $25 or less, and we believe by spending $2 per each potential buyer, given our targeting, we should achieve that. These are our options - Bid cap - the max bid we're willing to make for a likely buyer, so our bid cap would be $2. Per the bid cap algorithm, If a user in auction costs $2.01 we will not bid for them to see the ads. Target cost - the average bid we're willing to make for a likely buyer, our bid cap would also be $2. Per the target cost algorithm, If a user in auction costs $2.50 and another $1.50 we will bid for them both as the goal is to maintain a $2 average. Cost cap - set the cost cap to $25 because we are willing to pay any bid amount as long as it back into a purchase costing us $25.

Digital Strategist | Programmatic Media Buyer | Amber S. Foxworth | https://www.amberfoxworth.com/anti-blog/there-s-a-new-cap-in-town | Amber Foxworth