How the Facebook Ad Auction Works

It has come to my attention that many people don't understand how the Facebook Ad Auction system works. While it may seem like a convoluted equation that is used to determine who sees your ad, I assure you that it is not. Today, I'm going to cover what the equation is, how it works and what you can do to make your ads perform better.

First off, let's start with the equation itself. The equation states the total value of an ad is determined by multiplying the Advertisers Bid amount by the Estimated Action Rate, or the rate in which Facebook believes a user will take said action, such as clicking an ad or purchasing. I expect that the first part is pretty straightforward, it's the price you're willing to pay for your ads to be shown. The second part deals with the user's previous actions and your ads historical performance. This part of the equation is designed to level the playing field against other advertisers. You can think of the second part as the estimated click through rate.

The last part of the equation is an addition to the score based on the value the ad has for a user. This part of the equation deals with how people are interacting with your organic and paid content, as well as its relevance to the user themselves. For example, if the ad image shows a picture of it raining and it's currently raining where the user is, the ad is more relevant to them. Or if the ad is talking about cat adoption and it shows an image of a cat and the user has an interest in cats they'll get a higher relevance score, while if they had had an interest in dogs instead the user would be removed from the pool of users the ad would be shown too.

On top of this, the experience the user has after they have clicked on your ad comes into play. Does the site load quickly, can the user navigate quickly between pages, were they able to achieve the ad's goal easily? Did the user get the content they expected, or was the ad deceptive?. All of these items come into play as the Post Click experience. If your ad is getting a lot of negative comments or reactions, or even users clicking the "I don't want to see this" on your ad, it will hurt its score. At the same time, lots of positive reactions will push the ad further. The quality of your ad is very important and the more relevant to the user the better it'll perform. You'll want to ensure that you're targeting users with the right interests and make sure that your video, graphics and copy are as engaging as possible.

So while the Facebook Equation is a bit confusing, following the above breakdown will allow you to focus on the right aspects of your ad campaigns. By focusing on these aspects, you'll be able to create effective campaigns and understand why your ads may not have achieved your goals. The better your audience fits the ad you present them plus the better the experience the user has on your website as it relates to your ad, the more likely you are to achieve your campaign's goals.