Facebook Ad Algorithm

First off, did you know there was an ad algorithm? Did you know it was different than the “regular” Facebook algorithm? Knowing which ads provide a great experience for your audience is a must. This module was created to help you understand how the ad algorithm works and how you can use it to your benefit.


Module Outline and Objectives:

  • Why the ad algorithm exists

  • The Facebook ad auction

  • Understanding the relevance score

  • How to optimize your Facebook ads

  • Ad transparency and why it’s important

  • 10 Tips for Staying Competitive in the Auction

Why is there an ad algorithm?

Getting your ad settings right from the start will help your budget. Outsourcing your ads to someone who is going to run “tests” and tell you that it takes time to see a return on Facebook is … for lack of a better words, don’t do that.

Why would Facebook prioritize certain ads over others if they are both paying the same? They want people to have a positive experience with meaningful interactions and RETURN to Facebook.

Think about it this way. You have two lenders that want to co-brand with you and give you the same amount of investment. Your ads go to print, social media, video and more. One ad provides value that resonates with your audience and brings them back, the other doesn’t. Therefore, you push one ad over the other because it is working better for you. Facebook pushes one ad over the other because it is working better for the Facebook community.

Facebook does not want everyone’s News Feed filled with information they don’t want.

Two things to remember when running ads:

Source: Facebook

Source: Facebook

  1. Abide and understand the advertising policies

  2. Create meaningful interactions that provide value

Facebook “weighs” these equally and refer to them as Maximizing Advertiser Value and Optimizing Consumer Experience.

Time for an auction

The best way for Facebook to measure value and experience is to hold an auction in which both interests are represented. That way, advertisers are reaching people receptive to their ads and users are seeing something they're interested in. The goal is to match the right ad to the right person at the right time.

This is different than a traditional auction because the winner isn't the ad with the highest monetary bid, but the ad that creates the most total value. All ads on Facebook compete against each other in this process, and the ads that Facebook determines will create the most total value will win the auction.

The highest value is the winner

An ad’s total value has three components: cost control, estimated action rate, and quality and relevance (also known as user value).

Cost Control: When you advertise on Facebook, you can bid in three ways: Lowest Bid, Cost Cap, and Bid Cap.

Screenshot 2019-05-22 23.39.06.png

Lowest Bid: This is the default and the one that most advertisers use. Using this option tells Facebook to aim to get the most out of your optimization and spend your entire budget.

*Remember, Facebook wants to drive meaningful interactions. Allowing Facebook to control your costs allows Facebook to automatically show your ad to those who are creating value.

Click Show Additional Bid Strategies to find the following:

Cost Cap: By entering a cost control amount, Facebook will automatically select cost cap bid strategy for you.

Bid Cap: If you use the bid cap bid strategy, you'll enter a bid control. This option controls how much you’ll spend. Choosing this option will limit your cost per lead, however, it will result in lower impressions.

Relevance Score

Several factors contribute to how well your ad will run. Activity in the ad (likes, shares, comments, video views, clicks to your website or back to the page, reactions, and more) matters.

Screenshot 2019-05-23 00.13.27.png

These make up the relevance score, which advertisers see after the ad has reached over 500 impressions. A lower score can be an early sign of trouble because it’s a lagging indicator that tells an advertiser how much positive or negative feedback an ad has received.

Negative feedback is especially detrimental to your estimated action rate (and thus your relevance score). The more negative feedback an ad receives, the worse the ad will potentially do. Negative feedback includes a person hiding your post or unliking your page.

You can find your relevance score under the ads tabs in your ads manager. Locate the ad you want to look at and then scroll to the right on the table. You can also click the words Relevance Score to organize your ads by highest or lowest score.

Word of Advice: If your ad is receiving a lot of negative feedback, either your ads message or the target (most likely) is off. This is why you shouldn’t aim to reach the most people with an ad as much as you should try and reach the most targeted people, for example, using custom audiences.

Anyone can generate a high converting ad with the right budget. But, if the ad is not creating engagement and value your other ads in the future will suffer.

Facebook tracks user time on site and how quickly people abandon things as a way of identifying and avoiding clickbait. As an example, if users click an ad to a landing page and then the Facebook pixel recognizes they quickly abandon the page, Facebook probably determines that sales page isn’t a high-value target.


Users immediately back-clicking works against you. Facebook is trying to control the user experience with the ad, as well as the experience after users click the ad. Facebook understands what back-clicking means on its platform. Users who immediately back-click often leave negative comments, unlike, or hide the ad indicates the ad is not valuable.

Work backwards to save money

Start by thinking about the result you want from your ads because that determines the actions you want users to take. Perhaps you want the right person to opt into a lead form at a specific cost because you know you can monetize that action.

In other words, choose the right objective for your ad. If you want people to watch your video, run a campaign with a video view objective. If you want a conversion such as a $5 lead, you’d probably use the website conversions objective. The conversions you get impact your estimated action rate and thus factor into the auction.

An ad that accomplishes your goal gives Facebook positive reinforcement.

10 Tips for Staying Competitive in the Auction

  1. Be clear about what you want your ad campaign to achieve

  2. Use constraints to guide your bid strategy and control your costs

  3. Select broader targeting filters, or allow the delivery system to explore more options by enabling Targeting Expansion (if your audience is too small for the budget, Facebook will not have people to send the ad)

  4. When your campaign objective is to maximize conversions, optimize towards the highest intent event that has enough data (you are looking for a small win. Don’t send someone to a page asking them to fill out a huge form… they won’t, and your relevance score drops)

  5. Optimize your placements by allowing Facebook to choose where your ad appears

  6. Turn on campaign budget optimization

  7. Pay attention to the user experience: monitor feedback and improve your landing page

  8. Improve the quality of your audience (Excluding people is imperative. Don’t waste money on people who will not engage and convert… ie. other real estate agents)

  9. Make more informed delivery control decisions with Estimated Daily Results

  10. Understand campaign budget optimization reporting when using the lowest cost bid strategy


Key takeaways

  • The Facebook ad auction is built to ensure that advertisers reach the people who are most likely to react positively to their ads. High quality ads and specific audiences may help you achieve the greatest ROI.

  • Go with a bidding strategy that fits your business goals.

  • Your auction performance depends not only on your stated bid, but also the expected results against your optimization goals, and the ad's relevance to people in your target audience. Together, these factors determine the total bid that we use to enter your ad into the auction.

  • Use the tools provided by Facebook, such as Audience Insights and Estimated Daily Results to compare audiences and plan your campaigns.

Sources: Facebook | DigitalMarketer | Tier 11

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