History: prior to Oct 2017, "Lowest Cost" was called "automatic bidding" and "Lowest Cost with Bid Cap" was "manual bidding" or "maximum bid". "Lowest Cost with Cost Cap" was known as "average bidding".

You can choose, among others, these two options if you're creating a Campaign that meets the following criteria:

• Optimization goal: Offsite Conversions or App Installs
• Billing event: Impressions

In a nutshell:

• Given a Bid Cap, Facebook pursues the cheapest conversions, and does not pursue any single, marginal conversion that is expected to cost more than your Bid Cap
• Given a Cost Cap, Facebook pursues the cheapest conversions, and some conversions that are more expensive than the Cost Cap, so that the average cost per action equals your Cost Cap

To decide which one to use, consider this:

• If you know that, all costs considered, the true lifetime value of one single conversion is $10, then you should use Lowest Cost with a Bid Cap of $10. Facebook will not pursue conversions that are more costly than this, since each of those conversions would mean you lose money.
• If you are tasked with achieving an average cost per conversion of $10, you should use Lowest Cost with a Cost Cap of $10. Facebook will pursue some cheaper and some more expensive conversions in order to reach this average.

If you care more about maximizing delivery and conversion volume within an average cost threshold, you should probably use Lowest Cost with Cost Cap bidding. And if you care more about every result you're optimizing for costing no more than a given amount, you should use the Lowest Cost with Bid Cap option.

In both cases, if bid is not the factor limiting delivery — in other words, if Facebook can spend the budget fully with cheaper conversions, your average costs will remain low. This is what "lowest cost" in the name means.

Low bids can cause costs higher than your bid or underdelivery

In both cases, in small scale and before Facebook has enough data on the ads, Facebook might overestimate how many people will convert, which means costs may end up greater than your bid. If this happens, Facebook will soon stop delivering the ads completely if it determines your targets cannot be reached.

We generally recommend going for a higher budget for such ad sets, even if it means you have to lower your bid. It's important to get a least a few results a day for your ad set so Facebook can start gathering information on your ad and refine how Facebook shows it.

Lowest Cost with Cost Cap bidding

Lowest Cost with Cost Cap bidding allows you to tell Facebook what you want your average cost per result to be, rather than the maximum amount you're willing to pay for any incremental result.

If you use this type of bidding, Facebook will try to get you as many results as possible while keeping your average cost per result less than or equal to your desired average. The cost for a given individual result might be more or less than that average, but over time, as you accumulate more results, the average cost for each should even out to that number.

Note: Facebook does not guarantee that the average CPA does not exceed the limit; costs may exceed the target by up to 10%.

For example, if you set your target cost per app install at $10, Facebook will show your ad to people likely to install your app. Sometimes Facebook may need to spend $8 to find someone to install your app, other times Facebook may need to spend $12, but over time Facebook will aim to have your charges average out to $10 per app install, starting from the time you set your bid to $10.

In the example below, imagine you have a budget of $50 and set your Cost Cap at $10.

In this scenario, you'd spend $48 of your budget for 6 results at an average of $8 each.

Read more on Cost Cap in Facebook Help Center

ℹ️ Note: Facebook measures your average cost per action based on 1-day or 7-day post-click attribution windows (depending on which you choose to optimize for during Campaign creation) in ads reporting. If you're not using a 1-day or 7-day post-click attribution window in your ads reporting, the results you see might not match the delivery you're getting.

Lowest Cost with Bid Cap

The Lowest Cost with Bid Cap option allows you to tell Facebook the maximum amount you're willing to pay for any given conversion. Facebook will try to get you any incremental conversions at prices equal to or less than your bid. This means that you will end up with an average CPA that is below your Bid Cap.

In the example below, imagine you have a budget of $50 and set your bid cap at $10.

In this scenario, you'd spend $24 of your budget for 4 results at an average of $6 each.

In Smartly.io you can select the Target Cost or Lowest Cost strategy in the bidding selection:

Read more about all Bid Strategies.