Anyone trying to reach customers online needs good ads and insights into how Facebook’s advertising system works. A new blog post clarifies.
In 2020, smaller companies will increasingly try to reach their potential customers online. This was particularly encouraged by the corona crisis. Facebook now wants to help these companies and publishes a blog post that explains how the Facebook Ads system works. Finally, in order to achieve a greater reach and better results, it is necessary to understand the factors by which Facebook plays ads to its users.
How does Facebook decide which ads it plays?
In the “Good Questions, Real Answers” series, Facebook now gives an overview of how the advertising system works. Two factors play the main role:
- the target group approach
- the auction process of the ads
The first point should be relatively clear. Knowing which target group you have and who you want to address is the first step in placing ads on Facebook or anywhere. Facebook supports this process:
Audiences are created based on categories like age and gender, as well as actions people take on our apps such as liking a Facebook Page or clicking on an ad. Advertisers can also use information they have about their audience, like a list of emails or people who’ve visited their website, to build a custom audience or a lookalike audience.
After this step, a bill will decide which users will actually see the ad. This auction process is a little more complicated. Facebook calculates the total value of an ad:
We find advertiser value by multiplying an ad’s bid by the estimated action rate. This is an estimate of how likely that particular person is to take the advertiser’s desired action, like visiting the advertiser’s website or installing their app . We then add the ad quality score, which is a determination of the overall quality of an ad.
Facebook uses machine learning to perform this calculation. As a result, the forecast of which advertisement is well received by the respective user is constantly improved. The invoice is intended to ensure that the advertiser with the highest budget does not necessarily win. If an ad with a higher ad quality and estimated action rate is in the auction process, Facebook tends to play it out for the user, even if the budget was low.
While Facebook does not give any particularly new tips, it again shows how important attractive advertisements are. For small companies, the focus should also be primarily on good creatives that reach the target group. Then they will be played out and business objectives will be achieved sooner.
The full report can be found on the Facebook for Business Blog .