How The Facebook Advertising Algorithm Actually Works

 

There’s a saying among Facebook Marketers that goes, “Being a great Facebook Marketer breaks down to 30% technical skill and 70% understanding the algorithm and letting it run.” While at times it can be creepy how much Facebook knows about its users, it’s actually pretty fascinating how the platform distributes its ad content.

There are still many unknowns about the Facebook algorithm that the company does not disclose; however, there are certain principles that we do know that we can apply to our ad campaigns in order to boost performance. Since this algorithm is constantly changing, it’s our our job as marketers to stay on top of things if we want to remain effective.

We know that Facebook operates off of what is known as the BEAR algorithm. BEAR is an acronym for:

  • Bid

  • Expected-Action

  • Relevance


Let’s start with Bid…

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Facebook’s advertising system is basically a game of supply and demand. There is only so much ad space on Facebook’s platform, and everyone wants a piece. Facebook decides on the price of ads using an auction process. Advertisers bid against one another to get their ads in front of a particular audience. So if one advertiser is willing to bid higher for a particular conversion than another advertiser, Facebook will be more likely to serve the ad from the higher bidder than the lower bidder.

Bids are currently set at the Ad Set level under the ‘Optimization & Delivery’ section. Advertisers can optimize their bid strategy depending on their marketing objectives.



Next, we have Expected Action…

Expected action is where it becomes a bit more complicated. If two advertisers are competing for ad real estate for the same audience, Facebook will prioritize the ads whose target audience is most likely to take the desired action for that particular ad based on the historical data that Facebook has on the people in that audience.

Facebook is constantly collecting data on its users. It tracks messaging history, page post engagement (comments, likes and shares), ad engagement, purchases made on websites that contain facebook pixels, abandon carts made on websites with facebook pixels, email list sign ups, and much, much more. Every single time someone goes on Facebook, they are giving Facebook more data on how they are likely to interact with a particular ad.

Facebook uses this data to build a predictive model that measures the likelihood that you will take a desired action for a particular advertisement. If the likelihood that you will take the desired action on the ad from Advertiser A is higher than Advertiser B, Facebook will be more likely to serve you the ad from Advertiser A.



Finally, we have Relevance and Ad quality…

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Facebook’s main objective is to maintain a positive user experience. Irrelevant ads degrade the user experience, so Facebook works very hard to only serve ads that are very relevant to its users. This is very important for advertisers to know, as this is what allows advertisers with smaller budgets to compete with multi-billion dollar corporations such as McDonald’s and Coca-Cola.

Think about it, McDonald’s or Coca-Cola could easily outbid every other advertiser on Facebook with their massive budgets, but their ads will not necessarily be relevant to every user on Facebook, which would degrade the user experience.

Relevance is broken up into four sub-categories…

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  1. Targeting

    Targeting is pretty straight forward. How relevant are your ads and your Facebook page to the audience you’re targeting?

  2. Ad Account Quality Score

    Ad account quality score is very important to keep your ad costs low. If you have failed payments or lots of rejected ads, this will hurt your ad account quality score and, in turn, drive up CPMs.


  3. Ad Creative

    Ad creative determines how relevant the copy, photos or videos, and headlines in your ad are to your target market. Irrelevant ads will see higher CPMs.


  4. Funnel Consistency

    Funnel consistency is a very important (but often overlooked) area to focus on. Facebook’s ad review system doesn’t stop on Facebook. The entire funnel must be relevant to your audience. This includes landing pages and any other steps you may have in your marketing funnel. So if you’re targeting baseball players, your ad should say “baseball," your landing page should be about “baseball,” and your checkout process must be selling something related to “baseball.” Facebook will crawl your entire site to ensure that your pages are consistent with what you’re advertising.


So there you have it. Facebook’s algorithm operates off of the BEAR acronym. By understanding this and designing your ad campaigns around the algorithm, you can significantly improve your Facebook Ads strategy to lower ad costs and enhance your results.




 

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Steve KrakowerComment