Why Facebook Ads Are Likeable

Facebook ads are a fantastic way to maximize your all-mighty advertising dollar. When millions of consumers log on to the social media network, they aren't just bombarded with information, they are strategically shown information that is going to keep them on the site and scrolling. Have you ever noticed the option to hide a post? How about a request for your feedback about why you hid a post? Facebook is continually improving the experience for their users by providing them content from the internet, curated specifically for them.

So what does this mean for advertising? In short, it means that only people that will find your ad relevant will see it. This means a lot less time and money on your end and a seamless experience for Facebook's users. If you're a bald person, odds are you have little to no interest in looking at an advertisement for combs. If you're a comb company, odds are you probably aren't targeting bald people with your ads. That seems intuitive, but what about much more complex situations, where potentially thousands of businesses across hundreds of industries are competing for just a handful of ad spaces?  

Facebook Ad Auctions

Each time you create an ad on Facebook, that ad will be entered into online "auctions" that steadily roll throughout the day. Your ad will be pitted against a large number of other ads all vying for the valuable space in front of a consumer's eyes. You assign a "bid" to your ad, essentially the value you assign to how much that space is worth for your particular business, but that's not the only factor taken into account. In fact, it is quite possible for you to pay less than your bid to run your ad.

Remember above when we gave you the example of a comb company? That comb company is going to have a much better chance of winning an ad auction to appear in front of an individual who takes pride in their luscious head of hair. Relevance plays a key role in Facebook's algorithm to determine which ad is going to win. Your target audience is far more likely to see your ad and that's good for you and for Facebook. In the end, both of you are interested in clicks and purchases.

A Fair Marketplace for All - Why You Can't Game the System

When the marketplace is fair, the amount you bid for ad space is going to be directly proportional to the estimated value your business gets from a desired outcome. Desired outcomes can be clicks, impressions, installs, or conversions (sales). Say, for instance, you estimate you get 10 cents every time someone clicks your ad. You will want to run a campaign with a desired outcome of garnering clicks, and you would bid something like 5 cents to get your ad out there and start getting those clicks. Facebook will run this data through their algorithm that also takes into account a myriad of other factors such as: the specific ad's history, you company's ad campaign history, user characteristics, and page type.

Again, relevance to the end user is going to play a crucial role in deciding who wins the auction and the ad space. When all this is taken into account, someone who bid 4 cents to run the exact same ad may win because they have a higher expected click-through-rate or click-to-conversion rate with that specific consumer. That's why every time you run an ad, you want to put your best foot forward, because the best performing ads will run more cheaply in the end.

Perhaps the most interesting part of this process is that the winning bid pays the price of value lost to all the other bidders. Using a type of sealed-bid auction, this ensures bidders are assigning a true value to their bids. If it's impossible to "game" the system, businesses will put more effort into determining the true value of their desired outcome rather than how to cheat. This makes Facebook's ad auction system a truly fair experience that gets the end user, and the business, more bang for the buck.

Get out there and get bidding today! Facebook ads will get you a return on your investment that is hard to beat, getting you more clicks, more likes, more shares, and more business!

For all you visual learners, check out this handy infographic here

Are you interested in learning more about setting up your Facebook ads? Check out our Facebook Ads starter checklist that outlines everything you need to do to ensure your ads are a success.