Understanding Facebook’s Advertising Delivery System

You are one of 4 million advertisers who have turned to Facebook to grow their business, and for good reason. Facebook has over 1.86 billion users, each who provide valuable information about themselves that help you target the right customers at the right time. You had a vision, developed the creative, and are now ready to step into the Facebook’s ads interface to create your ads for delivery.

But what’s the first step? Before jumping into things, it’s important to understand Facebook advertising basics…and this blog is just for that.  We will look at Facebook’s ad delivery system, the total value of your ad, what determines who wins a delivery auction, and the best practices to use to ensure the success of your Facebook ads.

Facebook’s Ad Delivery System 101

The Facebook ad delivery system was designed to maximum advertiser experience by helping them reach and get results from their target market while optimizing the consumer experience through positive, relevant experiences.

Advertisers have specific goals, and because of this, not all impressions are equal.

Related: Facebook Releases In-Stream Video Advertising Placement

Facebook maximizes results based on the set of goals and restraints set by the advertiser so it is important to select the objective you really want to achieve from your target audience. These objectives can include awareness, such as reach, consideration, such as traffic, or conversions.

To achieve this balance of optimization for both the advertiser and the audience, Facebook holds an auction whenever someone is eligible to see the ad. Rather than a traditional auction where the winner is the ad with the highest monetary bid, the winner in a Facebook ad auction is the ad with the highest total value.

The Total Value Of Your Ad

The equation for an ad’s total value is: advertiser bid x estimated action rates + relevance and quality. We will take a look at each of these different components and see how they play into optimizing your ad for your specific delivery objectives.

Advertiser’s Bid

The first element, advertiser’s bid, is the specific dollar bid that is placed for that ad. You can choose this amount manually or select the automatic bid calculated by Facebook.

An automatic bid is provided on an auction-by-auction basis and is created by looking at your entire spending budget and the specific goal your ad is set for.

A manual bid, on the other hand, tells Facebook the maximum amount you’re willing to pay for the result your ad is optimized for.

Estimated Action Rates

The second component is estimated action rates, which is a measure of how likely someone is to take the actions you have optimized for. In other words it is the predicted click or conversion rate your ad is likely to bring in.

Related: 7 Tips for A/B Testing Your Facebook Ads

Some factors that can affect your estimated action rate are the recent activity on the ad, the user characteristics, the ad set campaign or account history, and your page or app history.

Ad Quality & Relevance Score

The last element in the calculation of  your ads total value is its’ relevance and quality score.  This component is ranked on a scale of 1-10 and represents how Facebook believes a person looking at your ad will interpret its quality.

Examples of how your relevance score can be negatively affected include bad feedback, many people hiding the ad, or a high bounce rate.

Your relevance score can be found at the Ad Level within the Ads Manager.

Winning The Auction

During the auction, Facebook standardizes each of the components in the total value equation to  factor in each advertiser’s different optimization goals. The ad with the highest total value wins the auction and gets shown to the user. This means that an ad with a higher bid may still lose the auction to an ad with a lower bid based on its relevance and quality.

So you’ve won the auction, but what are you actually charged? Surprisingly it’s not always the bid you set while creating the ad. You are charged the minimum amount you would have needed to win over the person ranked below you.

Facebook Advertising Best Practices

Facebook’s advertising platform is built around providing the best experience for both the advertiser and the user. In order to optimize your ads delivery and increase the chances of winning each auction, it is important to maximize all factors that come into play when calculating the ad’s total value.

Related: Facebook Traffic & The Buyer’s Cycle: Best Practices

Although a higher bid does not guarantee an auction win, underbidding may also have negative effects and lead to more losses. Make sure to target an audience that matches you ad’s objective and continue to improve the relevance of your ad.

This can be done through occasionally refreshing your creative and producing content that resonates with your audience. And lastly, you must constantly be testing and changing elements of your ad to ensure its positive performance and delivery.

For information from Facebook, visit this link.