To determine which ad is best shown to one person at a specific time, Facebook uses the ad auction system.
The purpose of the auction is - to provide users with really useful and relevant advertising.
Put simply, advertisers pay for their customers' attention: the more you win auctions, the more often your ad will be shown and the more likely it will be. be shown to the right people.
But unlike traditional auctions, Facebook is not thinking about the highest bidder, but about the total value for the user. Artificial intelligence takes into account the various signals and factors, showing only to consumers advertising that is relevant to them. The most important factors for forming the final value: rate, relevance assessment and approximate frequency of action.
As a rule, the relevance score is calculated depending on how effective the ad is, whether it is interesting to the user and will depend on the user's response. Ratings range from 1 to 10, where 10 shows a high level of interest in advertising campaigns and 1 should be a warning, since ads are not interesting to the target audience.
Ratings are determined by positive and negative feedback from users and are displayed in the account after the ad reaches 500 impressions.
To add a relevance column in Ads Manager, select "Columns" - "Customize columns". Columns that need to be in the "Performance" section. Put a checkmark next to "Evaluate relevance."
1. Facebook uses a special formula to determine who wins an auction to get users' attention. This formula calculates the level of competition among advertisers and the likelihood that users will take actions on the website (click on the link, fill out the form, etc.) and how valuable the ad will be to the user. with that user.
If you win the auction, the actual cost of the ad will not be calculated by the amount of your bid, but by the amount of the second highest bid, called a two-level auction. That is, you spend more not to outperform your competitors, but to have more opportunities to participate in the auction. In fact, advertisers who pay more attention to the production of valuable content and relevance of ads can outperform large companies with large budgets.
2. Incentive system shows how much you spend and how much time Facebook spends on you. The incentive system ensures that Facebook will spend your budget equally on the entire advertising campaign. This approach ensures that you will spend money on investing effectively.
3. Advertisers can control the targeting, what type of ads and will show it to someone, etc. You set these criteria when creating an ad set and selecting your audience.
Automatic and manual bidding
When setting a budget for your Facebook ads, you can set your own budget for bids (manual bids) or choose automatic bidding (the default setting of Facebook).
Automatic bidding, Facebook will work according to its own algorithm to find the lowest price for your advertising goals. Bids automatically compares your bids with other advertisers and determines the level of competition to attract customers' attention.
The advantage of using automated bids is that they maximize your budget and use Facebook's intelligence to achieve the best results.
Here are a few cases where you may find it useful to use automatic bidding
- You are new to Facebook ads. It is safest to assign Facebook a budget allocation
- You are looking for a reference price to cost on advertising.
- If you want to determine the cost per conversion, automated bids will help you decide
- You have limited budget and you want wide coverage
Facebook's manual bids allow you to control costs depending on the goals you are pursuing. You set the price yourself for CR. You can only set bids manually for specific locations and with a clear budget. In this case, Facebook redefines the use of budgets at auctions and will use it to manage campaign costs and increase competitiveness.
When you set a limit price, it means that you notify Facebook that you are not ready to spend more than the price you set for a bet. Facebook will try to find many good results and will use the price specified as the average.Price limits are needed if you rely on certain budgets. Let's say you sell a large volume of products through an online store and you need to spend less than $ 8 on conversions to still make a profit. Price limits let you find conversions costing around $ 8.The downside of this method is that you may not get as many conversions as you want. Facebook will only try to find things that fit your marginal cost and you won't be able to effectively spend your entire budget.
When you limit your bid, you tell Facebook how much you're willing to spend on a bet. But because it operates at the secondary auction, the actual cost of the ad will not be reflected. For example, you increase your bid to 5$ per click and win against an advertiser that has increased by 3$.This is how the two-level system works
- Make the most out of the set price
- Improve your market competitiveness. If your goal is simply to attract customers before competitors do it, then setting a higher price may - scare them.
Remember that you do not need to spend your entire invested budget until the end of the ad, because Facebook may not use your maximum bid amount to win a lot of good auctions in your budget.