There are over 2 billion people on Facebook, Instagram and the Audience network, with millions of advertisers trying to reach them every day. The ad’s delivery system of Facebook is designed to maximize the advertisers value & optimize the consumer’s experience. Therefore, it’s crucial for advertisers to perfectly understand how Facebook’s algorithm is working if they want to manage successful campaigns.
Important to know, is that there is a fundamental difference between Facebook ads delivery and other ad delivery systems. The difference lies in how the budget optimization (pacing) works. This article will explain in short how the Facebook ad algorithm works, and how you, as an advertiser can benefit from this.
The algorithm explained
The Facebook delivery auction takes 3 factors into account:
- Budget
- Bid
- Timeframe
Every available impression, that fits your audience constraints, has a different value based on the auction. You have different possibilities, if you don’t trust Facebook to optimize your ad pacing:
- Accelerate for delivery & optimize for impression: this method will deliver every impression available that falls below your bid. The danger is that it will blow up all your budget extremely quick, which isn’t something you will strive for of course.
- The randomized distribution will ensure that your budget is distributed proportionally throughout your timeframe. This method brings consistency, but the negative point is that it sacrifices value.
The best response bidding is based on your remaining timeframe & budget. Facebook will adjust your bids to win the lowest possible cost auction. Even though raising the budget, CPM would stay the same.
Ad rank
Facebook ranks ads based on the total value for each ad. This total value consists of:
- The advertiser bid, or willingness to pay in CPM, CPC or CPV
- Estimated action rates, with for instance having a lot of likes and comments if your objective of the post was ‘post engagement’
- Relevance score (positive and negative feedback) and quality of the ads
Therefore, Facebook maximizes the advertiser value through the advertiser bid & the estimated action rates. Finally, it optimizes the consumer experience by looking at the relevance & quality of each ad.
The main question is “How valuable will an impression be in front of a specific person, as for you an advertiser?”
Advertiser bid
The advertiser values the outcome he’s optimizing for and has two possibilities regarding the bidding. The default bidding option is automatic bidding, which is a good option if he wants the system to have as many results (he’s optimizing for) as possible. The other possibility is to use manual bidding, which can be done via:
- A maximum bid, where the ad is only shown to people if the system thinks it can find conversions that are lower than the bid that has been set by the advertiser.
- An average bid, where the advertiser specifies the average cost per result he would like to have.
Estimated action rates
Before setting up an ad on Facebook, it’s essential to know for which objective you want the ad to be bidding. You can run ads that are optimizing for awareness (e.g. reach people near to your business), consideration (e.g. get installs of your app) & conversion (e.g. increase conversions on your website).
“What’s the probability that my desired outcome will occur for every impression served?”
This depends upon different factors.
These factors include:
- Recent activity on the ad (very important for conversion optimization)
- User Characteristics (e.g., age, gender, clickiness, conversion history)
- Ad set, Campaign, account history
- Page/app history
- Other factors
All these factors together, is what makes your CTR & conversion rates. Important to know is that Facebook’s optimization model can work better if it possesses more data.
Ad relevance and quality
“How useful and thoughtful do we think it will be to an individual you’re targeting?”
Facebook defines the quality & relevance of an ad through a list of criteria. Ads scoring good on this, have a bigger chance to appear on a better place in the ad ranking. This can be done by creating relevance to the people in your target audience, and considering quality elements like text in image or landing page performance. You can also monitor positive and negative feedback for your ads. But our experience learns that the Facebook algorithm tends to make decisions a bit too quickly sometimes, when it comes to the creatives of the ad.
Conclusion
It’s probable that a lot of advertisers are not aware of this complex working of the Facebook’s ads delivery, and that a lot of budget has been used to run campaigns that are not very efficient. The main goal of this article is to clarify, in a nutshell, how the system works and how campaigns with Facebook ads can be runned in a smooth and efficient way. The possibilities are endless, but by choosing the right objectives and having relevant creatives, you have a bigger chance to have the efficient Facebook campaign you wanted.
Stéphane Van Blerk
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