Note: Prefer to watch a video? scroll to the bottom of the post
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. For example…
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.
Here’s a hypothetical example… let’s say you’re tagged as being interested in yoga and the country of Moldova. Yoga is a competitive industry. Moldova group travel, not so much.
You might think that the advertiser promoting Moldova trips will see lower cost per actions because it’s a less competitive market, but you’d most likely be wrong. The Moldova advertiser isn’t just competiting with other advertisers targeting “Moldova” interests… if they’re trying to reach you specfically, they’re also competiting against the yoga advertiser as well.
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 “Hungarian longbows” = LOW SCORE
- Freedia is a millennial, into “Hungarian longbows”, income > 100k, NYC-based, parent = HIGH SCORE
The archery advertiser is running a traffic objective ad. They’re targeting users interested in “Hungarian lonbows”. It might cost this advertiser $0.02 for James’ click. It cost $0.30 for Freedia’s click.
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 confused? 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.
Questions? Want to share your CPAs? Commen below.