How the Facebook Ads Auction Works

If you’re going to be successful with Facebook advertising, you need to have a deep understanding of the Facebook Ads Auction.

So many people that run FB ads probably couldn’t even explain to you what this is, or how it works. But, it’s an incredibly important concept. If you don’t know how to cater to the auction, you are playing at a disadvantage.

I’ll cover how the ads auction works, along with how you can tailor your ads to get the greatest results possible. 

What is the Facebook ads auction?

The majority of campaigns you run are using this auction system. Every time someone is shown an ad on the platform, an auction actually takes place. But, Facebook’s auction system is not like others, such as Amazon PPC. You can’t just win with the highest bid.

Facebook is always trying to find the best user/ad fit. At the end of the day, Facebook needs both parties to be happy. That means showing relevant ads to the right users and keeping costs low for advertisers.

Why is it important that you know how the auction works?

Bidding on Facebook ads has a huge effect on the results you see with Facebook ads. If you aren’t setup for success with the auction, two things can happen:

You will pay too much for ad results, making your campaign unprofitable. If you fail to place the right ad bids, this is almost a guaranteed outcome.

The other thing that could happen is your ads will never get delivered. If you fail to meet the criteria for bidding, you won’t even have the chance to be profitable. People will be unable to see your ads in the first place.

How does the facebook ads auction work?

The Facebook ads auction works by computing the highest total value. They use an algorithm for this, that is comprised of three parts:

Bid

Facebook ad bid

The most obvious aspect is the bid you pay. When you set up a campaign, you tell Facebook how much you are willing to pay for a conversion or desired outcome. You tell this to Facebook through bidding strategies, such as:

  • Highest value or lowest cost – Get the most volume of results or purchase value for your budget.
  • Cost cap – Control your costs while getting the most volume results for your budget.
  • Bid cap – Control your bid in each auction.
  • Target cost – Get a consistent cost per result.

You set your bid at the ad set level, so you can play around within campaigns. But, bidding is just one component of the facebook ads auction.

Estimated action rates

Facebook is the king of data. They are able to use their data to figure out the probability that someone has of engaging with your ad, or performing the designated action that you want. They examine a targeted user’s history. From this, they can determine whether they are a good candidate to view your ad or not.

This goes back to Facebook wanting to create the most value for both people. If they can show a relevant, useful ad to someone at a low cost to the advertiser, they will do it.

But, make sure you aren’t telling people to engage with or post. You also should avoid clickbaiting, as both of these tactics will land you a low ad quality score.

Ad quality

Facebook Ad quality

The third and final aspect of the ads auction is your ad quality. Ad quality is determined by a number of factors. One of these is the type of feedback people are giving after seeing your ads. Users have the ability to hide ads they don’t want to see. This is considered negative feedback.

Negative feedback will drive your ad costs up significantly. Perhaps worse, however, negative feedback affects your account reputation. You may see an increase in cost across all your ads as a result of negative feedback on one.

On the flip side, if you have a really high-quality ad, it will get tons of shares and engagement, such as people tagging their friends, without you having to ask for it. This is essentially free advertising!

The other things Facebook looks at when determining ad quality are content and landing pages. Low-quality content can be described as:

  • Withholding information in the copy
  • Sensationalism
  • Engagement bait

A low-quality landing page can be considered any website that has:

  • A high bounce rate
  • No original content
  • Tons of pop up ads
  • Unexpected website experience

If you have a low ad quality score, you will know about it. Facebook will send you a warning message or penalize you. Just avoid doing anything that results in a poor user experience, and you should be fine.

Want to learn how to win the FB ads auction in a profitable manner?

Now that you know a little more about the Facebook Ads Auction, you’ll be better prepared when setting up ads. In fact, you should even know how to tailor your ads to give you the best chance of success in the auction.

Implement a solid bidding strategy and make sure you have a high ad quality score. If you do these things, you can trust that Facebook will show your ads to the right people, at the right cost.