Setting a bid cap can save your ad set from overspending for an event but, at the same time, if you set your cap too low Facebook may struggle to spend your budget, and this will negatively impact the distribution of your ad.

If your primary goal is to get as many results for your full budget as possible, you should not use a bid cap. If your primary goal is keeping your cost per result below a certain amount, go for the bid cap strategy.

To start setting your bid cap use an average cost per result from prior campaigns and a daily budget that is at least five times higher than your bid cap. This is because Facebook needs at least 50 events (the learning phase) within a week to properly optimize.

If you don’t set a Bid Cap, Facebook will use the Pacing method to optimize your bid for the best results.

Pacing gives Facebook the flexibility to get you the best available results for your goals.

If you choose the lowest cost bid strategy Facebook will raise or lower your bid on an auction-by-auction basis; it’s called “discount pacing.”If you pick the target cost bid strategy, Facebook’s pacing will consist in deciding which auctions to enter and which to skip; this is the “probabilistic pacing.”

Since you’re trying to get the lowest cost per optimization event possible, Discount pacing lowers your bid when appropriate to help you get the least expensive results available. This is balanced against ensuring Facebook spends your full budget by the end of your ad set’s lifetime.

Here’s a simplified chart showing how this works with a $10 bid cap:

Since the target cost bid strategy is about stability rather than lower costs, Probabilistic pacing enters your ad set into only a selection of auctions based on the likely cost of their optimization event. Here’s a simplified chart showing how this works with a $10 cost target:

In practice, budget pacing and bid pacing are one process. Facebook adjusts your bid or which auctions it enters based on how much budget and time are left for your ad set.

Similarly, Facebook may increase how much budget it spends if there’s an opportunity to get many optimization events with costs aligned with your bid strategy.

Facebook may also decrease how much budget it spends if there are few available optimization events with costs aligned with your bid strategy.