Difference between Bid cap and Cost cap

Bid Cap

Bid cap is to the maximum amount that an advertiser is willing to pay for a specific ad placement. It is an essential feature of many online advertising platforms, such as Facebook Ads, Google Ads, and other programmatic advertising platforms.
When an advertiser sets a bid cap, they are essentially putting a limit on how much they are willing to spend on a particular ad campaign or ad group. This means that the advertiser’s bid will never exceed the bid cap, even if the bidding competition increases.
For example, if an advertiser sets a bid cap of $2.00 for a particular ad placement, the advertiser’s bid will never exceed $2.00, even if other advertisers are willing to pay more.
Bid caps are an important tool for advertisers to control their advertising costs and ensure they do not overspend on their campaigns. By setting a bid cap, advertisers can also prioritize their ad placements and target specific audiences, ultimately improving the overall performance and return on investment of their ad campaigns.

How Cost Cap help advertisers reach a wider Audience

Cost cap is a feature used by many online advertising platforms, including Facebook Ads, that allows advertisers to set a maximum cost per optimisation event for their ad campaigns. Cost cap is ideal for a broader targeting focus. An optimisation event is an action that the advertiser wants a user to take, such as a click or a conversion.

A cost cap is an important tool for advertisers to manage their advertising budget and ensure they do not overspend on their campaigns. It works by setting a maximum amount that an advertiser is willing to pay for each optimization event, and the platform will automatically adjust the bid for each impression to ensure that the average cost per optimisation event stays below the set cost cap.

For example, if an advertiser sets a cost cap of $1.00 per click, the platform will automatically adjust the bid for each impression to ensure that the average cost per click stays below $1.00. This means that the advertiser can control the cost of their clicks while still achieving their desired optimisation event.

Cost caps are especially useful for advertisers who want to maximise their return on investment while keeping their costs low. By setting a cost cap, advertisers can ensure that their campaigns are profitable while still reaching their target audience and achieving their marketing goals.