Facebook Ads: The Ad Auction

Facebook has created an algorithm that helps audiences see only ads that are relevant to them. Facebook calls this an “Ad Auction” as value for advertisers is balanced with a positive experience for viewers. Therefore, ads that perform a better balancing act will receive a higher reach. The success of your ad is not based off of monetary input but rather relevancy.


Facebook Ad success is based off of relevancy, not money.

With all the content available on Facebook apps (Messenger, Instagram and Audience Network), only a few spaces for ads are available, to help keep audiences interested. When there is an opportunity for an ad to be shown, advertisers compete for this position. The relevancy of the ad, for the selected target market, determines what ad wins this space. In short, Facebook works hard to show ads only to the people who will benefit from seeing them.


The budget and timeline of your ad plays part in what ad spaces your advertisement bids for. When setting up your ad you can select your maximum spend amount. Facebook then determines, within the timeline you set, how much of this budget is spent. The rate of expenditure comes down to the relevancy of your advertisement to available ad spaces.

Advertisers (like Happy Dance Dave ^) influence the success and expenditure of the ad budgets through inputs and parameters determined in the setup phase (budget, placement, schedule, audience).


So how does Facebook decide who wins the auction?

With this formula: (Ad Bid) x (Estimated Response Rate) + (User Value) = Total Value

The ad with the highest Total Value wins the bid for the ad space.


Once your ad has reached 500 viewers or received 50 conversions, you are presented a relevancy score. This score is rated from 1-10 and effectively advises the success of your ad. We recommend running an ad set until you reach this number before making any changes.


FAST FACTS

⭐️ Remember that the relevancy of your ad is more important than the money you put into it

⭐️ Make sure your content caters to user experience (volume isn't too loud, graphic isn't blurry etc)

⭐️ Run an ad until you reach a relevancy score before making any changes


Have questions? Email Chelsea at hello@starmarketingsolutions.net for answers


Did You Know

Star Marketing Solutions offers Monthly Facebook Ad Management

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