As 2020 unravels and the 9-5 office work culture evolves, more and more of us are looking for new ways to reach our audiences. Our commute to and from the office used to be filled with advertisements plastered onto billboards, subways, busses, and stations. But with a rise of people working from home and a decrease in commuters, doesn’t online advertising seem like an even better option than it was before? Platforms like Google, LinkedIn, and Facebook have made online advertising a real possibility for anyone who wants to advertise through pay per click (PPC) campaigns. A PPC campaign is a productive and cost-effective way for any business to target and reach specific and targeted online audiences.
In this post I talk about:
- Facebook Ad auctions,
- what Facebook charges us (the advertiser) for, and
- a breakdown of Facebook’s Total Value Score.
Every platform varies but essentially, for Facebook, when you’ve set up your free account, you create your ad, select the audience you wish to target, and choose the amount of money you’re willing to spend per day. When your ad is approved by Facebook, it goes live. Your ad is placed into the appropriate Facebook ad auctions, of the billions that take place each day. You can pause and unpause your ad at any time, this activates and deactivates its participation in the auctions. When paused, your ad cannot be shown, and you won’t be charged.
What does Facebook charge us for?
Each time a Facebook user logs in to the platform (or any of Facebook’s partner apps), an ad auction takes place. If this user is in your selected target audience, your ad becomes part of the auction. You and your ad are up against advertisers who share the same target audience. If you win the auction, you pay the bid fee and your ad is shown. If you’re using the Lowest Cost bid strategy and you set a daily budget, Facebook chooses the amount of money to bid on each auction without going over your budget.
When it comes to advertising, Facebook seems to be pretty serious about making sure ads are relevant to Facebook users. I’m sure we’ve all had the experience of seeing ads pop up on our newsfeeds that we have no interest in, and that have little or nothing to do with us. To make sure this doesn’t happen (or at least happens less), more than half of the weight in a Facebook ad auction is based on how relevant your ad is to the people who will see it. This prevents the highest bidder from always winning. The advertiser with the highest Total Value Score is the winner of the auction. Your Total Value Score is based on three things: how much you bid, the quality of your ad, and estimated action rates.
Here is the quick breakdown of Facebook’s Total Value Score:
Your bid is the amount of money you’re willing to spend on your ad(s). There are a few different bidding options available. If you use lowest cost bidding, Facebook will automatically split up your selected daily budget among the auctions.
Your estimated action rate is based on how likely a person in your target audience segment is going to take the actions required to reach your pre-set goal.
Facebook uses several factors to gauge the ad quality of your ad including:
- Historical performance of your ad account;
- Positive feedback from target audience (clicks/ likes/ positive results from pop up surveys, etc.);
- Negative feedback from target audience (report ad, hide ad);
- Assessments of low-quality attributes in the ad / policy violating.
So, what does this mean?
When it comes to Facebook advertising, it’s important to take the time to strategize about the audiences you are targeting and how you are targeting them. Instead of simply putting forward a big budget.
Ads that are more relevant cost you less money and deliver better results!
An effective ad strategy means that more of your targeted audiences are seeing more of your ads and, ideally, clicking on them. Ads are intended to drive conversions of some kind, be they sales, or signatures, views or votes. Facebook can help deliver your desired outcome.
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