DISCLAIMER: This article is for Facebook indie hackers who want to up-their-game, or are looking into the power of Facebook advertising. If you aren’t one of these categories, you might still find the information here interesting; but it’ll be far less useful.
Let’s kick this whole thing off by dispelling a myth about the Facebook ads algorithm:
Facebook does NOT rank the order of ads on their newsfeed purely based on the cash bid of an advertiser.
Ranking ads by their advertisers cash bid used to be the case (once upon a time), but it isn’t anymore. And the more you understand about the reason why, what the Facebook ads algorithm is, and what it uses as key ad ranking signals, the sooner your audience will see your optimized ads (and therefore, the more chance it has of converting).
This is because Facebook aims for long-term growth and dominance. In order for them to do that, they must have their most valuable commodity at the core of their aims: the users.
If the number of active users on Facebook declines, it means fewer people to advertise to and less revenue from advertisers (like you and me).
The short-term gains of optimizing newsfeeds for the highest bidders, is LESS important than the (average) user’s experience, which directly affects the likelihood of users returning over and over again to view more ads.
Think about it…
…would you rather have £1 today and nothing tomorrow, or 50p every day?
Of course, Facebook is still a business that’s trying to be as profitable as possible. It will show ads from the highest bidders to their users, but if the ad isn’t optimized to appeal to the Facebook ads algorithm, it will appear lower on newsfeeds and selected placements.
So, that’s the basic logic. Let’s dive into how we got there.
Why Is It Important For You to Appeal to the Facebook Ad Algorithm?
Before discussing why it’s important for your ad to rank higher, you must understand why users are actually logging on to Facebook.
These are my top three reasons people visit Facebook:
- They’re bored and have time to kill.
- They want to catch up with their Facebook friends and see what they’ve been up to.
- They want to share something new with their friends.
But as advertisers, there’s one thing we can be sure they aren’t there to do: View, interact and take action from Facebook ads (unless they’re FB ad geeks like me).
When you understand this, you can begin to see why it’s so important for you to appeal to the Facebook ad algorithm and rank as high as possible.
The higher you appear, the more attention you stand to gain (especially from users who have scrolled a long way through the feed and are already fatigued from the content).
But not just that: if your competitors are appealing more to the algorithm and appearing higher on the feed, they stand a better chance of converting viewers than you! That’s because even if your ad was lined up to appear next (as an ad), it won’t be seen by that user if they leave Facebook and follow the action of the higher-ranked previous ad.
It’s crucial to your ROAS (return on ad spend) that your ad appeals to the Facebook algorithm and ranks as high as possible for your target audience.
The Facebook Ad Algorithm Competition
I promiseI’ll tell you exactly how the Facebook ad algorithm works very soon, but before we get into it, there’s one more thing you need to know:
You aren’t only competing with startups in the same industry as you.
As a Facebook advertiser, you’re actually competing against businesses in tons of different industries, making your job even tougher. The life of an advertiser would be so simple if people only had one interest, but unfortunately that just isn’t the case.
If I visit my Facebook newsfeed now, I will see ads for marketing tools (tons of them), Facebook ad tools, fitness related products, nutrition, fashion, Shopify (plug-ins), sports, furniture (I recently moved house and have been placed into loads of custom audiences), books, holidays…
….and that’s because my interests overlap in a wide variety of different categories.
But don’t just take my word for it. Go to your Facebook newsfeed and see how many different industries are targeting you! If you’re an active Facebook user and internet shopper, I’m sure you’ll see at least three. In fact, Facebook lets you see what you’ve been targeted as in your Settings function.
What makes it even more difficult is that you aren’t just competing against other advertisers who are using the same audience type.
If this still doesn’t make sense, go back to your Facebook profile, look at all the ad placements and scroll through your newsfeed. All of those advertisers are targeting you specifically, and the ads that appeal most to the Facebook ad algorithm appear at the top (and have much more chance of achieving their objective).
The Facebook Ads Algorithm
It’s been a long (and very important road) to this point in our Facebook ad algorithm article, but it’s finally time to analyze the top factors that will affect your ad’s rank.
As a Facebook advertiser, your ads are placed into an auction based on how you score for all three of these factors (not just your monetary bid!). The higher your combined “score”, the higher your ad will appear on feeds.
Facebook cites three main components that make up their ad algorithm; each of these factors are as important as the last and none should be ignored. Let’s look at these three factors and explain what you can do to appeal to the Facebook ad algorithm:
- Estimated Action Rate
- User Value
Predictably, the cash bid that you place on your Facebook ads will affect it’s ranking.
There are three different ways to bid with Facebook ads:
- Lowest-Cost: This is the default bidding option (and the one I recommend highest). Using this option, you allow Facebook to spend your entire Budget (in your chosen time frame), for the lowest cost per action (e.g. engagement, lead generation, conversion). By allowing Facebook to bid for you, you allow their AI to prime your bids for the two other Facebook ad algorithm factors.
- Cost Cap: This option places a fixed amount as your highest average cost per action. It can be used if you have a set profit margin, or are unwilling to spend too much per action from your Facebook ads, but it will receive lower impressions, move you further down the pecking order and limit your capabilities.
- Bid Cap: The final option tells Facebook to never bid any higher than a fixed amount (chosen by you). Again, it works well for reducing spend per action (or impression), but again, it will negatively affect your impressions, reach, and ad rank in the algorithm.
If you want to appeal to the Facebook ad algorithm, it’s important that you choose the first option: Lowest-Cost. This is already selected as a default option and I strongly recommend that you do not change this setting.
By using this option, you set a “Daily” or “Lifetime” Budget (I’ve always found that Daily is better) and allow Facebook to bid for you. This gives their AI the opportunity to bid higher for users who are more likely to interact with your ad (and learn while doing this).
Even if you do have a slim budget (or margin) that you’re prepared to spend on Facebook ads, it’s better to track their performance than set a fixed ‘cost’ or ‘bid’ cap.
Estimated Action Rate
The estimated action rate is exactly what it says on the tin: it’s Facebook’s guess at how well your ad will achieve your desired objective.
The ‘action’ in this factor depends on your campaign objective. If you were running a conversion campaign, Facebook would estimate how successful your ad will be at converting. The same goes for engagement, traffic generation, lead generation, etc.
In case you're worried about putting this much faith in Facebook’s AI, this estimate isn’t based on blind guesses. They track how well your ads are performing and adjust your Estimated Action Rate as they continue to run, as well as looking at your ad set, the quality of your campaign, and your account history.
There’s a lot to be learnt from the Estimated Action Rate and a lot you can do to increase Facebook’s estimate.
Let’s start by looking at Facebook’s new and improved relevancy scores.
This crucial Facebook ad algorithm metric historically ranked your ad from 1-10, with 10 being the highest relevancy score.
A relevancy score is Facebook’s metric for showing how well your target audience are responding to your ad. If you have a rubbish relevancy score, you either have an issue with your targeting (ie. audiences) or your ad content.
Facebook has recently split its relevancy score into three separate metrics:
- Quality Ranking: A ranking of the ad’s perceived quality. Measured by feedback and the ad’s post-click experience.
- Engagement Rate Ranking: A ranking of your ad’s engagement levels, measured by likes, comments, clicks and shares.
- Conversion Rate Ranking: A ranking of your ad’s conversion rate, measured by conversions.
All of these factors are ranked against other advertisers who have competed for the same audience. Conversion Rate Ranking will only rank you against others who are using the “Conversions” objective.
The metric has also changed from the traditional 1-10 score. It now ranks by averages (e.g. Below Average, Average, Above Average… to name a few).
When you run ads, it’s crucial that you keep a close eye on these relevancy scores, especially the metric that’s most relevant to your campaign objective. If you have an ad that is performing ‘below average’ for your desired objective, it’s an indication that the Facebook ad algorithm won’t rank your ad highly. At that point, it’s probably a good idea to stop running it and analyze what went wrong.
While the relevancy scores give you a great opportunity to learn what works, analyze performance, and improve for the future, it’s only a reactionary tactic. A relevance score will not appear immediately on ads, Facebook need time and impressions to figure out your score. Keep this in mind while running your ads, and stay vigilant for things to improve that you can spot on your own.
Another huge factor that will affect your Estimated Action Rate is negative feedback on your ad. Negative feedback is measured in terms of your target audience hiding, reporting, or unliking your page.
Negative feedback can be avoided by showing your ad to highly-targeted audiences (that will definitely find your ad useful) and tightening your ad creative and copy, so it speaks directly to these audiences.
An irrelevant ad being shown to broad and poorly targeted audiences will be seen as spam, and will receive lots of negative feedback. This tells the Facebook ad algorithm that they should bump it down in their order.
Another tactic you can implement that will help improve your Estimated Action Rate is your account history. If you’re responsive to users who engage with your post and drive lots of new page likes, it tells Facebook that you are well-matched to your audience and you’ll appeal much more to the Facebook ad algorithm.
Make sure you respond to as many comments as possible; try to use comments to create conversations. The simplest way to do this is to ask a question of the user who commented.
When it comes to Estimated Action Rate, it’s important to think about why Facebook doesn’t rank ads purely by cash bid. Facebook wants to run ads that engage people, improve user experience, and, most importantly, won’t damage their platform. Keep this in mind when creating ads and targeting audiences.
User Value measures the actions a user takes after they click on your ad. If this metric scores poorly, it may completely tank your campaign, ad ranking, and cause a huge spike in your cost per acquisition.
While Facebook is unable to directly measure a user’s emotion, they can track their behavior by looking at the amount of time a user spends on your landing page, tracking back-clicks and immediate exits.
Facebook measures User Value to avoid running click-bait or misleading ads, since these types of ads will negatively impact their reputation and user experience.
To avoid a poor user value score, you must ensure that your landing pages match your ad as closely as possible. This means you should use congruent colors and branding, match your ad copy language, and not make any false claims in your ad creative, copy, or headlines.
Remember: getting users to click on your ad is only half the battle. The quality of your landing pages is just as (if not more) important than the ad itself.
If you’re promoting content, make sure you don’t use clickbait headlines and try to encourage movement (around your website) from your visitors. A video is a great way to immediately engage a visitor and have them stick on your landing page for longer.
Think of your ad and landing page as a journey. The start (your ad) will only be viewed in a positive light if the user doesn’t have a negative experience further down the line (on your landing pages).
Make sure you go through the entire journey of your prospects (from your Facebook ads); consider what you can do to improve their experience, make your pages as relevant to your ad as possible, and ensure there are no irrelevant or hidden surprises.
Facebook is the world’s largest social network because they’re smart. The more users they have, the more money they can make in the long term. That means not emphasizing the highest cash bidders in favor of advertisers who improve their user’s experience.
So, that’s how the Facebook ad algorithm works, why you need to appeal to it, what you can do to improve your rank and how it works. Hopefully I’ve covered all the bases, and if I didn’t, drop me a line in the comments.