How Does The Facebook Ad Auction Work in 2022?

Hello and welcome to another dose of your daily social media digest. Today we will talk about Facebook ad auction. How it works, what it is, and how to use it to your advantage. 

Facebook’s ad distribution system operates on an “ad auction” mechanism. This means that Facebook’s process for determining which adverts appear in a user’s news feed operates automatically. 

Have you heard the typical auction principle – the “highest bidder wins”? This is how bids normally work. Facebook’s ad auction, however, does not operate in this manner. 

Great! So how does it all work in the end? We won’t keep you waiting – continue reading to learn more about the auction’s many components.

Let’s start with Facebook’s aspect ratio when serving ads.

Facebook is always striving to strike a balance between two factors when advertisers create ads and start serving them. The first one is to provide value for people who are paying for Facebook advertising. Advertisers may count on the platform to help them reach and convert their target market. As a second aspect, consider the real users. Facebook relies on ads to generate revenue. These ads, however, must also provide Facebook’s users with a useful and enjoyable experience. Ads that are shown to a specific individual should be tailored to their interests, behaviors, and so on. According to Facebook, individual users tend to see advertising they are more likely to find relevant. This way, marketers reach the people who can help them fulfill their business objectives. 

So what is the Facebook Ad Auction?

Remember, Facebook’s objective is to strike a balance by showing the appropriate ad to the right person at the right time. This is accomplished via an automated ad auction. As previously stated, this is not a regular auction in which the highest bidder wins. So let’s take a look at the three components of this auction to see what Facebook refers to as an ad’s Total Value:

• 👉🏻 Bid
• 👉🏻 Estimated Action Rate
• 👉🏻 Ad relevance/quality

The main part of the auction is the bid. You may utilize the lowest cost and target cost bidding techniques on Facebook. The lowest cost is the most automated of the two, allowing Facebook to bid on your behalf in an effort to get your desired outcome at the lowest possible cost. Target cost is more manual and instructs Facebook to accomplish an outcome at a certain cost.

The estimated action rate indicates how likely Facebook’s algorithms believe a person will react when they see an ad. Facebook is checking to see whether your ad is relevant to the broad public or if it will really encourage people to perform the action you want them to take. These “predictions” are based on prior ad performance and the activities of the person you’re trying to reach.

Last, but not least, we have Ad relevance and quality. This one should go without saying. Facebook looks to determine whether the individual who sees your ad will find it interesting and relevant. To assist the assessment of this, the algorithm looks at factors like positive and negative comments. Negative comments on an advertisement might lower its total worth. Keep in mind that the relevance score isn’t taken into account. Improving your relevance score will not always improve your Total Value, thus it should not be your primary focus.

Because this is an auction, a user’s bid influences who sees their ad. Just remember the other factors as well. For example, an advertiser with a greater estimated action rate, ad quality, and relevancy may easily attain a higher Total Value over a higher bidder. 

What happens after users click on your ad?

The user’s post-click experience on your website is one factor that is also important for your Total Value. It might even go under the estimated action rate, and it could also be its own criterion. Facebook is checking for an advertiser’s website performance (for example, load speed) as well as a user’s network connection. According to Facebook, the ads are served to users who are interested in the topic or content of your advertisement and have a network connection that can promptly load the post-click content. This is their effort to assist people in having pleasant ad experiences with marketers. This approach should also aid in lowering the overall bounce rate of your website. It is beneficial to both the user and the advertiser if someone who clicks on an ad can load a website fast. User interaction with the information on the page is vital for a successful advertising campaign.

What are the key takeaways? 

In short, to have Facebook’s ad auction working in your favor you should consider these main points:

1. Target your campaigns right – using the correct interest, audiences, etc.
2. Create great quality, relevant content for your ads.
3. Provide a very good post-click experience for your audience. 

Don’t forget that Facebook strives to strike a balance between a positive advertisement experience and a positive user experience. This is possible via an ad auction that emphasizes Total Value above the highest bidder. It allows for more relevant adverts to be shown and allows those with less budget to participate in the auction. Finally, don’t overlook the post-click experience of your users; invest in creating a speedy website with intriguing content.

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Sounds great, right? 👌

This was our brief overview of Facebook’s ad auction process. If you like what you read, don’t forget to keep our blog in your bookmarks, or simply follow us to stay up to date with the latest news.