You boost posts. You might even manage ads in Facebook Ads Manager (pat yourself on the back). But do you even know why Facebook charged you $0.21 for that click?
Facebook Ads run like an auction. Every time you see an ad on Facebook (or Instagram), that ad won an auction. Every single time.
These Right Column Ads won an auction.
This Desktop News Feed Ad won an auction.
This Video Ad won an auction.
EVERY SINGLE AD you see on Facebook (and Instagram) won an auction.
I’m still confused… what are advertisers bidding on?
Plain and simple, Facebook advertisers are bidding on you.
You’re tagged with a hundreds (if not thousands) of different interests and demographic / behavior details. You’ve been accumulating these since the moment you joined Facebook.
Let’s say you’re tagged with the following:
- Yoga (a presumably highly competitive industry)
- Cheese castles (a product that no one sells)
A yoga mat advertiser wants to target users who are interested in yoga. They have to compete in an auction against all other advertisers targeting yoga. If the yoga industry is highly competitve (which I’d imagine it would be), the cost per action should be higher. When you see the yoga mat ad in your News Feed, that advertiser won that particular auction– the auction for your eyeballs.
Let’s say a cheese castle advertiser (a super duper niche product) wants to target users interested in “cheese castles” (whatever that is). It should be a lower cost-per-action because who the heck is targeting “cheese castles”…. right? WRONG.
The cheese castle advertiser and the yoga mat advertiser are in the same competition for your view.
Your value on Facebook for advertisers
Imagine you have a score attached to your user profile. This score reflects how valuable you are to advertisers.
- James is only tagged with “cheese castles” = LOW SCORE
- Freedia is a millennial, into “cheese castles”, income > 100k, NYC-based, parent = HIGH SCORE
The cheese castle advertiser is running a Website Traffic Ad. They’re targeting users interested in “cheese castles”. It might cost this advertiser $0.02 for James’ click. It cost $0.30 for Freedia’s click.
Why? Freedia is being targeted by more advertisers, and only has so much available space in her News Feed for ads. It’s going to cost more to reach Freedia because she’s tagged with a lot more valuable targeting options (her score is HIGH).
Note: as far as I know, there isn’t an actual score– this is just to explain the concept
Still don’t understand… watch my video “Facebook Ads Auction Explained”
I put together this super casual screencast (notice the backwards hat) that explains the basics of the Facebook Ads auction.
Feel free to comment on this post or the YouTube video comment section with any questions you might have.
Why did we create this post? This post was written to provide an answer to a common misconception about Facebook Ads. It also serves as repurposed content– the video was created first, but needed a place to live on our website.