7 Myths About Cost Caps That Make Zero Sense But People Weirdly Believe transcript

I have now had countless conversations in the last couple years about whether or not using manual bids on meta ads is right for you and for your brand and for my clients and their brands and for people on this podcast and their brands and for my friends and their brands and everybody in between. Talking cost caps, bid caps, target rowass, how to bid on meta ads, whether you should be using auto bids or not. And in those conversations, I have realized there are persistent myths that people believe about manual bids that I think stop them from getting the most out of the tool.

And so today on the show, I'm going to [music] try to correct seven myths that I see consistently about manual bids that may explain why they are not working for you the way you want them to, what you're getting right about them, what you're getting wrong about them, and all the rest. Let's get into it right now. Classic episode on bid caps, cost caps, target OS. Uh, let's get into it. All right, myth number one about these.

Oh, actually before myth number one really fast, I said cost caps in the title of this episode because that's what people talk about a lot. people will click on that more than the word manual bids. But actually, I mostly use bid caps. I'm not even going to talk about the difference between them today, but just for reference, bid caps, and also target rorowass uh uh bidding. But really, what I'm talking about here is manual bids in general.

So, even though I prefer bid caps, I prefer target rorowass. I've put out a ton of content about that. You might hear me reference cost caps as well. It's fine. Just this will apply to all of them. Okay, so great. That's covered. Let's get into myth number one. Manual bids are not just an efficiency tool. They are a scale tool. Okay. The So, the myth here would be manual bids are just for efficiency and that's it. They're not for scale.

You use them if you want more efficiency and not for scale. And and here's the reason that's a myth. Like what I really believe, okay, is true is that the way to spend the most total dollars in your ad account is actually with manual bids. Okay? And I'm going to tell you why it doesn't seem that way in a second. But if you want to spend the most total dollars in your ad account, you should use manual bids. Because what I think the core thing that manual bids do is like the great value of them is that they distribute your ad dollars the most efficiently.

So that is your next dollar gets spent in the best place when you use manual bids. And if you think about it, that is the path to the most scale. Distributing your dollars the most efficiently in each place next is the way to maximize the total number of dollars you distribute. Like very simply, imagine you have $1,000 to spend. Okay, just imagine you have a limited amount. The way to get those to go the furthest is to make each dollar generate the highest rowass possible.

Okay, that's how you actually get the most scale. Whether that's scale described as spend, but really as revenue, it's by getting each one of them placed next to get the highest return on each one. And if you do that consistently over time, you're very likely to generate the highest total return over time. And that will then reinforce that you can spend more money. Okay? And so I see this over and over. I've seen plenty of accounts that I've taken over that run auto bids where maybe at first spend comes down a little but over time after not very long we actually spend more total ad dollars than other you know a past agency or something like that when we take over an account because we're able to eliminate more waste faster and we're able to amplify winning ads faster as well and that creates the best total use to spend.

If you just imagine there's some potential customer who's scrolling their feed, right? And they could get one of two ads from you. Okay? And ad one is going to be less effective for converting them than ad two. Okay? If that is the case, if you limit your distribution of your ads with budgets, it's very possible that they are going to get one versus the other. I don't even remember which one I said was the good ad. Okay?

But say add one's the good ad, add two is the bad ad. Okay? You may give them the bad ad, add ad two, when you would rather give them the good ad, add one, because the budget on the good ad ran out, right? But if instead you manage the distribution of your ads by telling meta, here is the return that I want on those ads and keep spending as long as you can get me this return. Then ad one is unlimited with how much reach it can give.

Whereas if you keep running ad two, the bad ad, what's going to happen is that it's going to actually bring down your total performance and limit the total number of dollars you can spend. And it's a very simple principle when you think about it like that, but I actually think it's pretty critical to understand this correctly. So, if that's the case, why is it that so many people spend less money with manual bids than with auto bids?

Well, there's a couple reasons for that. But I'm going to tell you the one that you don't want to hear, but that's actually really, really, really important, maybe the most important. You ready? It's actually because you should be spending less money. It's because many, if not most, e-commerce brands are overspending because the marginal return on their ad dollars, especially like the last ad dollars they're spending, which is a concept I'll talk about more in a second, that marginal return is unprofitable for them.

And so manual bids actually generate the highest return, but also they do eliminate some waste in your spend. So you may actually spend less total dollars in that process, at least for a little while before you sort of solve creative problems and offer problems and all those things. But that's good. That's not a problem with manual bids. That's because you shouldn't be spending that money. It is not profitable in your brand.

And manual bids have a way of shoving that in your face. If you tell Meta, hey, I want to spend only if you can get me a $100 CAC or a 2 to1 rorowass or whatever it is. Okay. Now, I'm going to talk later about another challenge with this. And so, just bucket that later. This is not the only reason you're not spending more. But if you tell Meta that's the return that you want and it does not deliver, there's a very likely reason that it's not delivering your ads.

It's because you can't generate that return. It's because Meta does not probabilistically forecast with the manual bids that you can actually get that return. And so it stops spending for you. But the problem is that's a hard pill to swallow. It's hard to stomach the idea that you should be spending less money because it feels like you're doing something wrong if you're not scaling. And you know, all the people on Twitter and and everywhere else are are scaling, you know, supposedly.

So in that respect, they tell you the truth about your ad account. So you may spend less, but it's not it's not because the manual bid is like choking out. It's not because you had potential good spend that the manual bid is choking out because it somehow makes you more conservative than you should be or something like that. Okay? It's not because of that. It's because you should be spending less money. It's because if you get realistic about your targets, you should be spending less money and and so the manual bid will sort of shove that in your face.

So that is the main reason I see why brands are spending less often with manual bids is because they should be spending less. You're shaving off bad ad dollars. Again, if you think about your ad spend, imagine you spend $10,000 in a day. Okay? If you do that, in fact, let's say 5,000 because it'll make the math easier. Okay? If you spend $5,000 in a day, you're not really spending $5,000. What you're spending is five sets of $1,000 or 10 sets of $500.

And every time you increase your budget, you're very likely to decrease your efficiency. Everybody knows this that spending more money against the same ads decreases their efficiency as a general rule. Okay? Even if you have more scale left, that like efficiency, which is why there's some cap to the amount of spend. Maybe you're a mature brand and you've got this ability to spend a bunch of money and so you're like, "Oh, we can spend 50 grand a Okay.

Well, if you try to spend 70 grand instead of 50 grand, your rorowass is going to come down. Which means, let's go back to my $5,000 a day. Of your $5,000, okay, if you have that money allocated in the budget, then what's very likely happening is that the first $500 you spend has a very different return profile than the last $500 you spent, okay? Or let's the first $1,000 versus the last $1,000, okay? And let's call each of those $1,000 spends a bucket.

So bucket one of your spend is the first 10,000. Bucket two is the second one, second thousand dollars, etc. Okay, so bucket five, the last $5,000 you spend is almost certainly giving you the lowest return on your ad spend than bucket one. The problem is you can't actually see the difference in each bucket in your spend. And so it all just comes out in some blended number called rorowass. And you may be able to see the campaign level or whatever, but let's say you're getting a 2 to1 rorowass on your $5,000 spend.

If that's the case, by definition, you are getting an average of a 2 to1 return. Which means if you are spending in bucket five, you are almost certainly spending at a lower number than 2 to1 because it's blending down your average because it's your least efficient spend. If that's the case, then maybe bucket five is spending at like a one to one return. And what manual bids have a way of doing is honing in on that spend and cutting it aggressively for you.

Okay? And that is the reason why it is really good. And that's perhaps the reason why you shouldn't spend because a 1:1 return, another name for a 1 to1 return in nearly every business besides like supplement businesses with massive LTVs. A 1 to1 return is called a cost center in your business and you should eliminate it. You should cut it. And the manual bid is a way of doing that. So you might switch from an auto bid 5K to a manual bid and at least initially you might go down to $4,000 a day or whatever and that might be the best thing for you.

And maybe it'll be a much more efficient $4,000 a day than if you'd auto bid that $4,000. In fact, I believe it would be very likely. But what it will eliminate primarily is that poor spend. So, I think it's the way to maximize your dollars. But also, the reason you experience yourself spending less with manual bids is because you should spend less. And I want to be really clear about this. The return on your marginal ad dollars is very likely a cost center in your business in some way because almost nobody thinks about this clearly enough, right?

And it's very likely that you ought to be spending less money. So, I want you to consider that possibility. Be okay with it. Grow a little slower, grow more profitably, build over the long term. Stop worrying about the rocket ship stories. Use manual bids. Get a good return on your money. And build a great business. That's the way you do it. Number two, okay, manual bids are not volatile. Everybody says manual bids are volatile.

That's the myth, okay? But they're not volatile. Uh they're not volatile as long as you define volatility correctly. They do spend different amounts of money every day. And they do sometimes have big swings in how much they spend per day. That's true. But that is because manual bids are responding to the available demand relative to your current creative and offer set. And therefore, there is varying amounts of demand all the time.

This is an argument I made to Jordan Manard in my podcast with him and it's something I've come to think is a really helpful way of thinking about this. Here's the way I'll frame it, right? Everybody recognizes that it is normal that their brand spends less money at 12 midnight than they do at 12 noon. Okay, 12:00 noon you spend more ad dollars than you do at 12 midnight. And there's a really obvious reason for that, which is that people are asleep at 12 midnight.

And so there is less available demand for your ad spend to soak up. So you might spend 10x your midnight spend at noon. Okay? you might spend a huge amount difference, but nobody calls that volatility. Everybody recognizes that there's varying levels of demand at varying times of the day. So, but then you go daytoday and people see different levels of daily spend. And when they do that, they say, "Oh, that's super volatile." But actually, it's not really volat.

It's only volatile if you really care a lot about spending precisely the same amount of money every day. If you don't care about that, if you care more about weekly and monthly spend trends, well, it's not very easy, but it is very possible to keep manual bids spending to a certain spend goal or spend profile. I do it all the time for clients, okay? We run manual bids, but it's not like we are constantly having crazy swings in ad spend or something like that.

And our clients have inventory constraints like everybody else's. Like you h you can't actually spend huge insane amounts of different different amounts of money all the time. You need some ability to control the volume of your ad spend for a whole bunch of different reasons. And you could totally do that with manual bids. It just isn't the same amount of money every day. The most obvious example of this that we see the most repeatedly is that weekend ad spends when you run manual bids tend to be much higher than weekday ad spends.

That's because people aren't at work on the weekends and so there's more demand on the weekends than there are on weekdays. And that's a good thing. And manual bids do a really good job of capturing that as long as you give them budget room when you do it. So I don't think manual bids are volatile. I think that it's only if you define volatility at a daily level that they become volatile. If you actually want to look at monthly targets, etc.

It's very possible to run them in this way. Common thread collective is like the best forecasting agency in the game and they run a lot of manual bids. They build it according to a plan and it works. So there's that. Okay. So they're not actually volatile. It's just it's just you're measuring volatility wrong. I think some of this is owing to the sort of daily reporting mentality which has a lot of upsides like daily forecasting, daily reporting.

There's a lot of things I really like about that. But one of the downsides is it sort of forces it gets people thinking a little bit wrongly about some of this stuff. If you are running meta ads and you need creative, you should be talking to my friends at behindthe-scenes studio. BTSstudio.co. It is the Philippines-based design and video editing agency that I use at AF Growth. The majority of my own team is actually done through Behind the Scenes Studio.

My clients know that. I don't hide it from them or anything like that because I'm nervous about telling them that they have Philippines based team members or something. I actually bring that front and center because they are so freaking good. I love them. They can be a great extension of your design and edit team. Even can bring creative strategy um from some of the things that they are doing with me. I was on a call this morning with their CEO AC Gardner talking about sort of what we're doing, what we're building, creative strategy, how to help them succeed as well.

So they're hearing things from me directly, learning from me directly as part of their service as well. Very simply, if you need meta ads made, you need graphic designers, you need video editors, they have built an incredible operational system to supply you with those people getting talent out of the top four Philippines universities as well as other great Philippines talent with people with really deep design and edit frameworks.

And the thing I can tell you is like if you still think of Philippines based talent as just like lowquality, super cheap, like you're just thinking about the whole thing wrong. You should be looking for great people there because your dollars do go really far hiring talent in the Philippines. So you can actually apply a a whole lot of human leverage against your team in a way that's really good. And at the same time, you could be getting incredible people.

Like I can just show you video edit after video edit that is just really really awesome. I had one client a while back actually say like, I've never been able to find great editing talent in the Philippines and maybe you guys can't service this because he didn't like an ad that I had sent them. And you know what? I said, hold on. Just give me the feedback you want about your ad. Give me a round or two of feedback. You just have brand standards that are different than what the editor had in mind.

Just communicate and I promise you we'll get there. And within an edit or two, not only did that client say, this is like, you know, [music] probably 2 years ago or something like that. Not only that client say, "Holy cow, this person is really good." They said, "Okay, actually, we'll keep working with you." They've been working with me for 2 years and now they love our video edits and ongoing. Like, they're just really good. btsstudio.co.

Go sign up. Take a call. See what's available. If you need design and edit help for your brand, go check it out. All right. Number three, and I don't even know how to call this a myth. I think this is just something something people don't know about this, but I'm going to just state it like this. Okay. Number three, manual bids distribute intraday spend differently than auto bids do. So, this is just something people don't understand.

Again, I don't even know how to name the myth. I don't think it's a perceptive. I think it's something people just don't are not aware is actually happening in their business when they run manual bids versus auto bids. But here's the way this works. When you run auto bids, you tend to get relatively more consistent spend through the day, hour by hour. And so, you tend to spend the same amount of money at different hours.

Okay? Or not the same amount of money. I just I just said in number two that you spend really different amounts of money, but it tends to be a little bit of a flatter curve. Okay, manual bids tend to distribute ad spends really differently. So, I have one client, for example, that consistently has a whole bunch of afternoon and evening spend, and it seems to be something about when their customer is online scrolling, making purchases, etc.

Okay, I have another client that spends disproportionately in the morning and nearly every client has a low amount of spend in the middle of the workday because almost everybody's busy in the middle of the workday to some degree and they have much higher spends on the morning and afternoon and evening relative to that. Now, with auto bids, a lot of times what you see is actually a flatter spend profile. So, I actually pulled one brand's data.

I took like the last seven days and just pulled the hourly spend of manual versus auto campaign. So, these are not the exact same products that are in these two, but I'll just tell you I've pulled this data a lot of times at this point. And I can just tell you that that what I'm about to show you is reflective of the same uh of something I see really consistently across the board. Okay, so here it is. Here's the data.

This is hourly distribution by type. Don't worry about the volume spent. I just kind of set that aside um so it's not on the y- axis. Uh but uh the relative volume is what I want you to see. So you can see the red line here, if you're only listening, not watching, the red line here shows this brand on their manual bids, is spending really differently than the blue line, which is the auto bids. Okay. Um, and so they're both it's spending material amount of money in both.

The red line is showing that uh that the spend on this uh on this ad account on the on manual bids has a big bump in the morning, a big drop in the early afternoon. And the lowest uh spend per hour is like 1:00 p.m. and then a huge bump into about 6 7 8 p.m. again when s where people are home from work. And so there's it's it looks like a camel, right? There's like two two big spend humps and then a big dip in the middle.

Whereas the auto uh bid line here in blue is showing a sort of flatter spend. There's still some uh morning bump, there's some camel effect here, some morning bump, and some evening bump, but it's not nearly as extreme. And again, like this is just like a random data set that I've pulled um a few times. I've pulled for this particular thing to illustrate the point, but I see this over and over and over again. And it's one of the ways I think that manual bids produce a bunch more efficiency than auto bids in a sort of sneaky way that people don't really think about enough.

I've come to think of it as a really, really big value here. Auto bids, right? Because they have to budget pace throughout your day. If you give them, let's say, $1,000 on a campaign for the day, then the auto bid has the job of spending about $1,000 throughout that day, which means it needs to keep spending every single hour. But the manual bid does not can ignore the budget pacing. And so the manual bid has more ability to go capture more spend because you take that same $1,000 campaign, put it at $5,000, put the manual bid on it, and it's only going to spend $1,000 or $1,500 or whatever it is.

Okay. When it does that, the budget pacing is no longer as much of an issue. And because the budget pacing is not an issue, it can actually go capture a bunch more demand in the morning if it's there. Or it can stay low in the morning and go capture a bunch of demand in the evening if it's there because it has space and it has room to do that. In my estimate, this is just something people don't understand. But you should do this.

If you've run manual and auto both, go pull this report. Just go build a report in meta time of day report and pull it over whatever time period you want and see if you see any difference in distribution with auto spend versus manual spend. If you've run both campaigns at some point, I bet you'll be I bet you'll see something similar to that. Maybe even that same shape of revenue because of different demand availability.

Again, just like people are asleep at midnight, right? People are at work during the middle of the day. And so, it might be a little bit different. Doing that is the way you get more efficiency in your spend, which is the first thing I said in this. Again, I think that's the pathway to the most scale. Capturing the most demand when it's available. Suppressing spend when the demand is not available. Okay. Number four, here is a myth.

The myth is that manual bids are something different than highest volume or highest value bidding at the level of optimization. And in fact, they are not. There are only two kinds of conversion optimization and really any kind of optimization. Uh well, let's just say conversion optimization. There are only two kinds of conversion optimization in meta ads and that's you can optimize for the highest volume or you can optimize for the highest value.

Highest volume is what people used to call lowest cost and [snorts] the highest volume bid right would be um would be where Meta is optimizing for the lowest CAC possible. Highest value bid is where Meta is optimizing for the highest AOV possible and for high converting customers at the same time relative to those AOVs. And uh and those are two different optimizations. It's really important that you recognize that there are both.

You should be running both in your ad account. They both reach different customers. If you want to maximize your reach, you should be using both in some way or another. But some people think like bid caps and cost caps and target rows do something different than those two things. But they don't. They're actually the same thing. Manual bids are the same thing as that. It's not a change of conversion optimization. It's just a governor of your spend within that.

So bid caps and cost caps are CAC optimizations. They're CPA optimizations within highest volume bidding. Target rowass is a governor. It's a bid that is going to let you control the value optimized ad spend. And so yeah, that's that's basically the idea. There's no there's only two ways to optimize. You can optimize for value. You can optimize for volume. And you can then put the governor on that spend in three different ways.

Target rows, bid cap, cost cap. That's it. Okay? But they're not separate from anything. They don't target customers differently. They don't do anything like that. I've seen some people misunderstand this a lot of times. There's volume, there's value. You should know how to use both. You should know whether or not you want to use a manual bid on both. And that's that. All right. I can all but guarantee you that you are wasting money in your Google Ads account right now.

That one of the cost centers in your business that you do not realize is there. And often it's like tens of thousands, maybe even hundreds of thousands of dollars a year is in your Google Ads account. The reason I know that is because I've audited a lot of Google Ads accounts and I've seen all of the bad use of brand search running at way too low of an efficiency. Brand terms making it like sneaking into non-brand campaigns.

That's a classic hallmark of poorly run Google Ads accounts. [music] stupid use of money on PMAX campaigns that aren't careful and thought through with no idea about incrementality or anything like that. And over and over again, I see this and with my own clients when they come to me, I tell them, "I can't run your Google ads, but I have someone for you who can." And that is my friend Kirk Williams and his marketing agency, [music] Zato Marketing.

Kirk and I and Zato's team, I think, currently combined to work on three out of my four clients. Maybe it's two out of the four. It's previously been three or four at a time, like of the four clients that I'm running all the time. and I am constantly sending them more business because I really trust them and they're one of the only Google Ads agencies that I have consistently worked with that I really trust. There's a lot to love about Zeto.

One of the things to love about them is they will not overpromise you. They are not going to get on a call with you and tell you if you just do what they say you can scale endlessly to the moon with Zato marketing. [music] They just won't promise you that unless they think it's true. Then they would tell you that that's what's going to happen. But in most cases, they think that's not what the place Google Ads has in your ad account. and people are lying to you in a sales process to get you to buy their service and that's the reason they tell you that.

They also are really attentive to detail and they're a small team. So like AJF Growth, Zo's pretty boutique. They're five or six team members or something like that. Most of the people who have been working [music] there have been working there for like a whole bunch of years now. So they've got a deep experience. You're not going to get put with some junior team member. I really strong it's just like it's just high integrity team.

So I just really strongly recommend that as you go into this next year 2026, you look at your Google Ads account. If you're not crystal clear about how your money is being spent in that Google Ads account, if you don't know for sure that it's a good use of money, get on a call with Zato. Have them audit your work, [music] your agency's work, whatever it is, have them tell you what they see. And I'm just I'll just tell you, you can trust them to give you a good audit in their sales process, and they won't lie to you.

And see if there's money being wasted and if they can help you. [music] They're affordable. It's just great. If you're running Google Ads, and you should be, you should go to Zetto Marketing and check it out. zoomarketing.com. Links in the show notes. Huge fan of Kirk, friend of mine. He's awesome. Go check it out. Number five, the myth manual bids are only lowerfunnel. This makes me crazy. This is insane to me. First of all, nobody even knows what anybody means by lowerfunnel or upperfunnel anymore.

These terms get thrown around. Like, does upperfunnel mean people who have never heard of you? If that's the case, then like every conversion optimization approach is going to reach people at the top of the funnel. It's going to reach people who have never heard of you before. Do you know how I know that? Because I've run manual bids on ad accounts that like launched six months prior. Literally almost nobody has heard of them.

And guess what? We've reached new customers over time. And in fact, I've looked at the role at like the reach reports and and checked because you can you can sort by reach and seen that at key moments we spend we reach more people than we have ever previously reached for brands that did not previously reach those people. I can see brands have been running manual bids that went from reaching 6 million people over some time period to 20 million people over some time period.

I don't know what about that is not top of the funnel. Somebody who has never heard of your brand is at the top of the funnel. They're actually outside the funnel. They don't they don't know about your product. Okay. And there's this other thing that people mean sometimes by top of the funnel which is like people who have not only not heard of your product but are also unlikely to convert on a conversion optimization.

And so it's just sort of like an awareness play or something like that. I don't really know what the point of making that distinction is. I know for some brands they need to go reach those people. They are more expensive to reach than people who are in conversion optimized audiences. I understand there's a limit at very very large amounts of spend to how many people you can reach. At some point when I was at Kao and we were selling silicone wedding rings, we had reached like you know a huge number of the married people in the US like 50 times on average or something like that.

And you could actually see how many people were married in the US and how many people we' reached. we're targeting only married people like and so yeah there was some like eventually we' sort of tapped out the audience and there was some reach limitation that we had had but like that took a long time and almost and very few brands are actually in that scenario. First of all stop worrying so much about quote unquote top of funnel advertising conversion optimization is the way to generate the highest return on your ads for a very very long time.

If you are a member of marketing operators podcast, if you're one of those guys and you are spending money at those levels and you're reaching that many people, go ahead and worry about top ofunnel. Totally fine with that. If you are not, it's pretty unlikely that you really need to be thinking this way in general. But even if you did, there is zero evidence that I see that bid caps, cost caps, or target ROS ads only go to like engaged customers or retargeting or something like that.

Okay? So listen, meta ads is a reach machine and every advertiser has some limitation to their reach. There are two options to how you limit your reach. You can limit your reach with budget. You can limit your reach with a bid. Okay? Pretty much all I'm suggesting is that a bid is a better way to limit your reach than a budget because a budget is sort of a weird way to do it. You're guessing at how much you should spend instead of saying to Meta, "Here's how much money I would like to spend to acquire a customer.

Spend if you can do that." Okay? Whichever one you choose, you have to limit your reach. You do. You can't spend endlessly forever on meta ads. And so there's no evidence that like one of these only reaches lower funnel if you are not reaching enough people. Okay? And you are getting a return on your ad dollars that is above your target. Okay? So you're more efficient than you need to be. You need a two to one rorowass and you're getting a 3 to1 rorowass and you're running manual bids.

The problem is not that you should stop running manual bids. The thing you need to do is just change your bid. Right? If if you're like, "Oh man, we're getting a $100 CAC and that $100 CAC is producing a $300 AOV. Great. We're getting a three to one return." Well, you know what you can do? You can change your bid to $150. And guess what? You'll reach more people. The point is there's some kind of limitation on how you reach people and you can use this tool as a way to to set where that limitation is.

And that's it. Uh I have again run many accounts that have reached many new people over time with manual bids with no problem finding additional reach, with no problem. And if I wanted to reach more, guess what? I can just raise the target. I This is my comment every time anybody tells me this kind of thing. Oh, you're not reaching enough people with many bids. Fine. Raise the bid. Make the bid more aggressive. Okay.

I don't know if you should do that. I think probably most people shouldn't. I think most people again are being too aggressive with their bids uh or with their with their spend and ought to spend less money. But that's the issue. Okay. All right. Number six. Now, I'm going to switch to two myths that people like me who promote manual bids often get wrong. and that we communicate in a way that is unhelpful to people. Okay, so I'm kind of turning the tables here.

The fi first five I just gave you were sort of oppositions to manual bids or frustrations with manual bids or whatever. Let me voice your response to people like me. Okay, and here's the first one. The myth is manual bids work perfectly. Okay, they do not. Manual bids do not work perfectly. And what I mean by that is manual bids do not deliver the expected return perfectly every time. They don't. There are plenty of times in ways they do not do that.

For example, Meta might have a bug and might blow through your budget. Okay? So, there's like the sort of weird outlier things like that where once a year or something like that, Meta breaks and for some reason Meta burns through your spend your budget and if you've got a $50,000 budget on your campaign, but you really only know how to spend five and you want to spend $5,000 and Meta just suddenly burns 40 grand, you might hate manual bids forever.

That's fine. you should be using an account spend limit and or a campaign spend limit, maybe both, like I said, to make sure that doesn't happen. But that is one problem with manual bids that is real and that needs to be addressed and that you ought not behave as if that's not real. We use account spend limits on all of our accounts now. Shout out Andre Lunv for pointing that out to me. It is a really helpful tool. Go check it out.

Okay, so there's that. Okay, but even aside from those like error things, I'm just talking about in general, like you could put in a 2 to1 rorowass on target rorowass and only get a 1.5. That happens all the time. Okay. In fact, I'll say both cost caps and target rowass ads which can bid dynamically. Both of them I I have found at least especially at first need to very often you need to set your bid more conservatively than your true target.

Right? So if you want a 2 to1 return you might have to set your target rorowass at a 2.2 or something or a 2.5 or or whatever it is. And that's been a consistent thing I've seen with target ras ads for a long time. I don't really run a lot of cost caps so I don't you know see as much there but it's a real thing. And I don't know why that is something in the way the tools designed or maybe I'm doing something wrong or whatever but I've talked to plenty of other people who have seen the same thing and so it doesn't work exactly perfectly.

So there's that. Okay. Secondly, on top of any of the things about sort of tool design, dynamic bidding and whatever, right? There's also just a more fundamental thing which is that the point of the tool is that it probabilistically forecasts what's likely to happen at scale. So meta is functioning off of an expected conversion rate for your ads or an expected AOV for your ads, the target rows, expected click-through rates, etc.

Well, sometimes the clickthrough rate or the conversion rate or the AOV is different than meta expects and it takes time for Meta to update its forecast to get those kinds of things or just delivers and we or there's small sample noise or whatever it is. All these things can happen. And the point is manual bids I think are much better at probabistically forecasting the future, which is what you're doing when you're placing an ad, right?

You're guessing about what will happen next and you're hoping that your ad will deliver you a certain return, which means you're forecasting, you're forecasting the future. Every time you place an ad, every time you spend a dollar on ad ad spend, you're forecasting what's going to happen next. But anybody who gets who gets on here and tells you just set your manual bid, walk away, never look at your ad account again because it's just going to give you that return for forever and it's just fine.

They're just lying to you. There's all kinds of reasons it doesn't exactly work that way. And you have to decide all the time like uh do I would I do I want to miss on the side of being too conservative or too aggressive. You know, if I have more LTV, maybe more aggressive. If I have more um margin, maybe more aggressive. If I'm more cash strapped, then maybe more conservative. And so I'm going to set my bids to reflect that if it uh that you know misses one way or the other.

It's like a rudder in that way in in some respect. It's not perfect. It's just I mean I guess a rudder would be anyway you get the idea, right? You're directing the traffic in one way or the other. And uh and that's important to recognize. So it is not that perfect. And that leads to number seven. And this is something I've really really come to believe about this. Manual bids are an amazing tool, but the myth is they're easy and they're just not.

What I've come to really believe is that manual bids are in some ways I think auto bids are actually a lot easier because you just set the budget and you change things and it's just much easier to sort of stay on top of things, rein things in the way you want to. It feels like you have more control. Manual bids you're constantly looking at like it's can be sort of stressful. You're looking at like am I getting the return I want?

Do I need to change the bid? Do I need to change the budget? Like all these different things. And there's all kinds of little details too that can get messed up. For example, understanding your attribution really clearly. What does your one day click target need to be if you're optimized for one day click? Even if you're not optimized for one day click, let's say you're optimized for seven-day click, but you're making decisions on today's spend.

Well, what does your one day click target need to be? If you're going to generate the 28 day click or whatever the true incremental return on your ads is, that's a hard question to answer. It requires you to understand your LTV and your AOV and your unit economics and, you know, the the way attribution windows work and delayed purchase behavior and incrementality. Like there's all these factors here and doing a great job with media buying and great media buyers actually what they are really really good at is understanding all that stuff and then directing the machine to get them the outcomes they want while leveraging probabilistic forecasting in meta's machine learning to do that for them.

That's what a great media buyer actually is more than anything else. And it's somebody who understands deeply the targets and the goals and those kinds of things and then can can again use all of that stuff the way they're supposed to. But it's pretty complex like one day should you be optimizing for 7-day click or one day click and if you do how should you measure it and all that it's just really there a lot of things to get wrong.

Another thing people get wrong all the time is like they'll run their CPA they run bid caps or cost caps or highest volume as the case may be and they won't pay enough attention to the AOV they're getting versus the AOV they expected and how that CPA relates to the AOV which is expressed in the equation called rorowass. Okay, but it's hard to keep in mind that AO obs change. It's also hard to keep in mind small sample volatility.

Like our brains just are not used to that. People will see five purchases pile up in a day. They're running at a two to one on one day click. They're like scale it. Go unccor the bids. Meta's holding us back. But that's because they don't understand the way the small sample noise works and that actually that's not likely to replicate and that meta is really good at regressing to the mean and you're not. So there's all of these details.

It's part of what I think AJF Growth is really awesome at. Actually, I've come to think one of the things that makes us a great agency is that we're really good because we're really experienced at executing a manual bid media buying strategy. It's actually not that easy. And so, it takes learning and experience and all this. I've been doing it for a whole bunch of years. And that's before you talk about the challenges of running these in moments and spending into and during moments.

Black Friday, Cyber Monday with manual bids sucks. I hate it. I hate it every year because it's stressful and difficult and you can do it and there's tools and all these things like I try to put out content and we did fine this year like we usually do but like it's hard. It's really really hard. So anybody who tells you that it's super easy is just like lying to you. Anybody who tells you they work perfectly is lying to you.

And it's important to keep that straight so that people don't feel gas lit into saying like oh you know why don't you get it like this is like this is so easy and everybody else is just just clicking the button and making all the money. It's not it's not that easy. All right there's the seven myths. I'm gonna run them back one more time just so just so you've got them straight. Okay, number one, the myth. Um I'll just I'll say the good I'll say I'll say the positive version.

Okay, so here's my seven convictions about manual bids for you. Okay, number one, they're not just an efficiency tool. They're a scale tool because efficiency is the path to scale. Number two, they're not actually volatile. Uh they're only volatile if you measure them insist on measuring uh daily or you insist on consistent spend every single day. Number three, they distribute the spend throughout the day uh really efficiently.

That's something people don't understand. They do that in different ways than auto bids do. Number four, um they are not a different optimization than highest volume or highest value. They are they're variations of uh value and volume optimization. Number five, they're not only lowerfunnel. Please stop telling me that it's not true and you don't know what the funnel is doing anyway. Um number six, they're not perfect.

Uh they're not perfect. And number seven, they're not easy. They're not perfect because nothing is perfect. They're not easy because media buying is hard, at least at these levels. understanding economics and understanding how to use these tools for your outcomes is tricky and it's difficult. It's complex. It's the reason why agencies exist. So, there it is. Hopefully, that's helpful to you. Hit me in the comments with what I got right and what I got wrong and subscribe while you're at it.

I would love to hear from you on all of those things. Thanks so much for watching and for listening. I hope I've answered your questions. All right, I really mean it. Leave a comment. I read all of them, please. I will try to interact with you there as much as I possibly can about what you think about this episode, etc. Thanks again for watching and for listening. And a big thanks to my sponsors on this episode who are so great and make it possible for me to be making this content.

Those sponsors are, to repeat, behindthescenes studio, btsstudio.co, the same design and edit studio that I use for my clients do great work. Big fan btsstudio.co. Please uh go sign up with them. And Zet Marketing. I love Kirk Williams and Zato Marketing because they do a great job thinking about your spend, managing Google ads with real deep excellence and setting you up for success, not wasting your money. They pay attention to the details.

Go hire Zadomo Marketing if you need help with your Google ads. Zoomarketing.com zatomarketing.com. Links for both those are in the show notes as always. You can also email me podcastfgrowth.com and go to ajfgrowth.com to see everything that I am doing including at afgrowth.com. Give me a little bit of information about your business. If you want to see if AJF Growth is the right agency for you, maybe we can leverage manual bids to help your business be better.

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