With over 2.1 billion daily users, Facebook remains a powerhouse for online advertising. From Facebook Feed ads to Facebook Marketplace ads, businesses have multiple placement options to reach shoppers where they’re most active. To help advertisers maximize visibility, Facebook offers two primary ad-buying methods: auction and reservation.
Auction buying involves real-time bidding for ad space, whereas reservation buying allows marketers to reserve places in advance at a fixed fee.
This blog explores the fundamental differences between auction vs. reservation buying, their applications, and how to select the optimal strategy for your Facebook ads‘ objectives, budget, and audience reach.
Before we delve into the differences, let’s understand how these buying methods work.
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What Do These Buying Methods Mean & Why Are They Important?
The two buying methods dictate how you want your ads to reach your audiences and control your ad budgeting.
Choosing one of the buying methods helps you manage your budget, focus on targeting, offer a flexible way to plan ads, and give you more power over ad delivery.
So, depending on the priority, you can select either auction or reservation. Auction is more bidding-centric and displays ads organically to your audience, while reservation guarantees a spot in the ad placement.
While deciding ‘which one to choose,’ focus on the following:
- Your ad budget – Depending on how much you can spend on ads. If you have a limited budget, you can opt for ‘auction.’ If you’re established and can expend on ads, ‘reservation’ can be a good option.
- Target Audience – This factors in how important it is to display your ads.
- Ad Quality – Usually, in the case of the auction buying method, ad quality plays a key role in deciding if the ad gets a good spot.
Auction vs Reservation Buying Types: Key Differences
Auction & reservation buying methods help advertisers obtain ad space effectively, matching their advertising objectives with audience reach and budget limits. These buying methods play a key role, especially when you’re selling products/services on Facebook.
Let’s explore the key differences between the two:
| Factor | Auction Buying Method | Reservation Buying Method |
| Cost Structure | CPM (cost-per-mille) is dynamic & depends on the highest volume of bidding. It can result in lower costs depending on the competition. | Fixed pricing with predetermined costs per impression, promising a position in the ad space (automatic bidding). |
| Targeting Options | Offers multi-country targeting and works well for small audiences (excludes dynamic audiences). | Similar to auction ads, it lets you target multiple countries and works well for small audiences (excludes dynamic audiences). |
| Flexibility | High flexibility with real-time adjustments to bids and targeting. | Lower flexibility; requires advance reserving and is less adaptable once set. |
| Scalability | Suitable for campaigns of all sizes, accommodating various budget levels – daily, lifetime, and works well for Advantage campaign budget. | Best suited for large-scale campaigns with substantial budgets. Major focus on lifetime budget. |
| Predictability | Only provides prediction of the daily reach. | High predictability with guaranteed placements and costs. Provides prediction for frequency, daily spend, reach, and placement distribution before purchase. |
| Available On | Instagram, Facebook, Messenger, and Meta Audience Network. | Instagram and Facebook only. |
Note: You must know about the Meta Advantage+ Suite to understand where the Advantage campaign budget is used.
Each method has its own benefits and can be used for a range of marketing goals and budgets. Here’s how you can access them while creating an ad:
Let’s explore both in detail.
What Is An Auction Buying Method In Facebook Ads?
The auction buying method on Facebook is the most common buying method; it is a real-time bidding system where advertisers compete to show their ads to a specific audience. This buying type is flexible and more choice-based.
Since it’s based on competition and dynamic factors, results may be less predictable compared to fixed pricing methods like reservation.
When an ad opportunity comes up, an auction decides which ad is displayed, taking into account the bid amount, ad quality, and expected user engagement.
How the Auction Buying Process Works
The auction process consists of several essential components:
- Bid Amount: This is the highest amount an advertiser is ready to pay for a specific action, like a click or impression. Advertisers can set their bids manually at a low budget or use Facebook’s automated bidding strategies.
- Estimated Action Rate: This metric indicates how likely a user is to engage with an ad, considering factors such as past behavior and the ad’s relevance. Higher estimated action rates show a higher chance of user interaction.
- Ad Quality: Facebook evaluates ad quality by examining its relevance to the target audience, user feedback, and overall engagement levels. Ads that are relevant and of higher quality are preferred during the auction process.
The aforementioned components work together to calculate a “total value” for each ad, determining its placement priority. A high-quality and relevant ad can outperform higher bids, ensuring users get content that matches their interests.
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Latest Update: AI-Driven Bid Strategies
AI-driven bid strategies analyze user behavior, engagement trends, and historical campaign performance to optimize bidding in real time, aligning with specific campaign objectives such as maximizing reach or conversions. These strategies enable advertisers to:
- Predict User Engagement: AI algorithms assess user behavior patterns to forecast interactions with ads, allowing for more precise targeting.
- Automate Bid Adjustments: AI helps modify bids dynamically, keeping ads competitive while staying within the set budget.
- Enhance Cost Efficiency: By optimizing bids based on predicted outcomes, AI helps achieve desired results at lower costs.
When to Use Auction Buying
The auction buying method is particularly advantageous in the following scenarios:
- Smaller Budgets: It lets advertisers with small budgets compete for ad placements without needing to spend a lot upfront.
- Dynamic Targeting: The auction system’s flexibility supports real-time adjustments to targeting parameters, catering to evolving campaign needs.
- Performance-Driven Campaigns: For campaigns focused on specific outcomes, such as lead generation or sales conversions, auction buying offers the flexibility to optimize strategies based on performance metrics.
This approach provides the adaptability required for campaigns that demand responsiveness to market conditions and audience behaviors.
Advantages of Auction Buying
The auction buying method offers several benefits:
- Flexibility: Advertisers can modify bids, budgets, and targeting criteria in real time, allowing for swift responses to performance data and market changes.
- Cost-Effectiveness: The auction’s competitive nature can lead to lower costs per action, especially when targeting audience segments that have less competition.
- Broad Accessibility: The absence of minimum spending requirements makes this method accessible to businesses of all sizes, promoting inclusivity in advertising opportunities.
These advantages make auction buying a versatile and appealing option for a wide range of advertisers.
Challenges of Auction Buying
Despite its benefits, auction buying presents certain challenges:
- Cost Unpredictability: Fluctuations in competition can lead to variable costs, complicating budget forecasting and management.
- Potential Competition: High competition for specific audience segments or ad placements can escalate bid amounts, impacting cost efficiency.
How can this be fixed? To mitigate these challenges, advertisers should employ strategic planning, continuous monitoring, and campaign optimization. The auction buying method on Facebook is a dynamic and flexible approach that enables advertisers to reach their target audiences effectively.
| Further Reading: Learn about the differences between Google Shopping Vs. Facebook Ads. |
What Is the Reservation Buying Method?
The reservation buying method on Facebook enables advertisers to secure ad positions in advance at a fixed price, guaranteeing reach for their campaigns. This buying type offers a structured and dependable approach for high-visibility campaigns and promises a spot.
When you make a reservation, you buy ad space from Facebook ahead of time, usually at a set cost per impression (CPM). Advertisers who set up their campaigns ahead of time ensure that their ads will be shown to the right people within a certain amount of time.
How the Reservation Process Works
Advertisers can start the order process according to the following steps:
- Campaign Goals and Planning: Advertisers write down their objectives, like promoting a certain product, raising brand recognition, or getting people to interact with their ads. Advertisers often use reservation buying for goals that require repeated viewing.
- Defining Target Audience: Advertisers list the types of people they want to reach, including their age, gender, location, and hobbies. Facebook then ensures that these rules are followed throughout the campaign.
- Securing Ad Inventory: Advertisers book ad spots ahead of time to lock in prices and make sure they will be delivered. This is especially helpful for efforts that are timed to coincide with important dates or holidays.
- Setting Frequency Caps: Marketers can manage how many times the ad is shown to their target audience in a certain amount of time, ensuring the message gets across without being too much.
- Cost Agreement: Advertisers know exactly how much reservation ads will cost them from the start because they use a fixed CPM model. In sales campaigns, prices change based on the competition.
| Also read: Learn about Meta Partnership ads and run brand-creator collaborations. |
Facebook has made it easier to buy reservations so that brand awareness efforts can work better. The new reservation model focuses on premium ad slots to offer consistent reach and engagement.
Note: The old model was called “Reach and Frequency” buying. Now that advertisers have more control over their ads, they can fine-tune settings for frequency and know what will happen.
When to Use Reservation Buying
Reservation buying is most effective in the following scenarios:
- Product Launches: Reservation buying ensures that ads for new products reach a large number of people over a certain amount of time during campaigns to promote them.
- Seasonal Promotions: Advertisers can get the best ad spots during busy times, like holidays or big shopping events, to get the most attention.
- Campaigns with Set Deadlines: Campaigns with set dates, like event sales or brand rebranding efforts, benefit from reservation buying because it is reliable and predictable.
- Large Audiences: This method works best when you want to reach large groups of people (usually over 200,000) and ensure they see and interact with your content regularly.
Advantages of Reservation Buying
- Predictable Costs: With a fixed CPM, advertisers can accurately plan their marketing budgets. This makes it easier to plan your finances, and you don’t have to worry about costs going up and down.
- Guaranteed Placements: Advertisers can be sure that their ads will appear where they’re supposed to, which helps them meet their marketing goals.
- Improved Exposure: Booking a reservation gives you access to high-quality ad placements, like prominent spots in user feeds or stories, which boosts your brand’s credibility and exposure.
- Strategic Planning: Advertisers can book campaigns in advance to ensure that their ads are delivered at the right time and with the right message.
Challenges of Reservation Buying
While reservation buying offers numerous benefits, it also presents some challenges:
- Higher Initial Costs: Advertisers have to make bigger investments than when they buy at an auction, where they can spend as little or as much as they want. This could make it harder for small businesses or campaigns with tight funds to use.
- Less Flexibility: Once a reservation campaign is made, it’s hard to change important factors like your target audience or when your packages will be delivered. This makes it harder to respond to real-time updates on performance or changes in the market.
- Narrow Use Cases: Reservation buying works best for certain types of campaigns, like boosting brand awareness or promoting a new product. It may not be as cost-effective for campaigns focused on results or with smaller budgets.
- Resource-Intensive Planning: The advanced reserving process needs careful planning and communication, which can take much time.
| Further Reading: Create retargeting Facebook ads utilizing the knowledge of auction and reservation buying methods. |
Auction vs Reservation Buying: Use Cases
Auction buying is great for marketers on a budget who want to be flexible and target their ads precisely.
For instance, a local restaurant that wants to promote a special on the weekends can use auction buying to reach nearby users during busy eating times, changing bids right away based on how well the ads are doing.
Reservation buying is ideal for large-scale campaigns that aim to reach and engage a large audience. For example, a global brand releasing a new product might choose reservation buying to ensure that ads are delivered consistently in many regions during the launch.
Performance Impacts
- Auction Buying: Competitive bidding and exact targeting can lead to excellent value-for-money results. However, costs can change because of different amounts of competition, which could affect return on investment (ROI).
- Reservation Buying: Reservation buying provides stable prices and ensures ad delivery, simplifying the maintenance of a consistent reach and frequency. This can make the ROI more stable, especially for campaigns that raise awareness of a company.
| Also Read: Explore Meta Partnership Ads to create ad partnerships across Meta platforms (Facebook & Instagram). |
Real-Life Examples
Let’s examine some real-life examples of when each can be used successfully to get a better idea of how the auction and reservation buying methods work.
Example of Auction Buying:
Using lead generation, video advertisements, and Reel formats, Mercedes-Benz USA applied Meta’s auction buying approach for its campaigns. Meta’s brand lift and conversion data revealed notable successes:
- 7.3x incremental return on ad expenditure based on lead-generating goals.
- 25% more incremental website leads than via more conventional approaches.
- A 3.5-point rise in brand consideration aligned with lead-generating goals.
Mercedes-Benz maximized performance by focusing on custom and lookalike audiences.
Example of Reservation Buying:
Hotels have used Facebook’s Reservation Buying Type to ensure ad placements in advance, assuring that their advertising shows at designated times and places.
This approach offers a predictable and under-control advertising environment, particularly helpful for time-sensitive campaigns or periods of maximum demand.
Reserving ad space helps hotels avoid the volatility of real-time bidding and guarantees that their campaigns reach the target audience at the best times.
Current Trends
Both auction and reserve buying strategies have witnessed major changes as Facebook’s ad ecosystem develops to satisfy marketers’ demands.
These patterns show the rising sophistication of platform ad buying.
1. Algorithmic Bidding in Auctions
Advertisers can use automated bidding tactics to optimize campaigns for specific goals such as purchases, app downloads, or conversions, ensuring efficient budget allocation by dynamically adjusting bids based on real-time data.
2. Growth in Reservation Buying for Seasonal Ads
Reservation buying can be used to secure premium ad placements during holidays or major events to ensure consistent reach and frequency.
Final Thoughts
When deciding between bid and reservation buying, advertisers should carefully consider their campaign goals, budget, and desired control over ad delivery.
Auction buying is helpful for efforts that must be flexible and target exactly what they want to reach. On the other hand, reservation buying is better for ads that need to be sure of their reach and frequency. Remember, the right choice can significantly impact the success of your campaign, so make informed decisions and stay adaptable.
FAQs
How does Facebook’s ad auction determine which ads to display?
Ads are chosen based on the “Total Value,” which includes bid, quality, relevance, and expected engagement. The highest total value ad wins.
What are the key differences between Facebook’s auction and reservation buying methods?
Auction buying is real-time and flexible, while reservation buying guarantees ad space at a set price for a fixed period.
In what scenarios should I choose reservation buying over auction buying for my Facebook ads?
Choose reservation for large, time-sensitive campaigns like product launches that need consistent reach.
How does the cost structure differ between auction and reservation ad buying on Facebook?
Auction prices fluctuate based on demand, while reservation has a fixed CPM, making it easier to budget.
Are there specific ad formats or placements exclusive to reservation buying on Facebook?
Reservation buying may offer premium placements like top spots in user feeds or stories.
Can I use both auction and reservation methods simultaneously?
Yes, combining both methods can balance guaranteed reach with performance-based goals.
Is it possible to switch an ongoing Facebook ad campaign from auction to reservation buying, or vice versa?
No, you cannot switch from one buying method to another when setting up the campaign.
What are the minimum budget requirements for Facebook reservation buying?
Reservation buying typically requires a larger budget, with specific limits varying by campaign.
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