As discussed previously, Facebook advertisers are pitted against each other in an auction to determine when ads are served and at what cost. Ad serving isn’t just based on cost, but on the relevancy and interest of that user to your content.
For Facebook, bid costs are easy to calculate. But how do you determine whether an ad is relevant to a user? Once you understand how Facebook calculates relevance, you’ll have greater control over your ad costs.
So let’s dive into a little known score that help determine Facebook ad costs.
The Important Score You’ve Never Heard Of
To determine relevancy, each ad is assigned a what’s called a Total Value Score. If an ad’s Total Value Score is high, your ad will be shown more oftern at a lower cost. A low Total Value Score is a major reason why your ads aren’t showing, or why costs are high.
You are probably wondering what makes up a Total Value score. Don’t worry, we’ve got you covered.
There are three factors that influence your Total Value Score:
- Bid amount
- Ad quality and relevance
- Estimated action rates
1. Bid Amount
Bid amount is how much you’re willing to pay for people to see your ads. Go the previous lesson to see a more detailed analysis on bidding, specifically around manual and automatic bidding.
Bid amounts are added at the ad set level.
2. Ad Quality and Relevance
Facebook wants to serve content that people will like. Ensuring relevancy and quality content is vital to Facebook’s continued success.
Ad quality and relevance are broken into three parts:
Advertising Account History
Each Facebook profile includes relevant information about your Ad Account’s effectiveness – in other words, the historical performance of your ad account and pixel matters a lot. Low interest in your ads means Facebook will increase the cost to serve your ads. This historical performance is included in the calculation of Facebook’s Total Value score.
People give negative feedback through ads by hiding or choosing not to see ads from you. Increased negative feedback will increase ad delivery costs.
Not only will higher negative feedback impact your ad campaign, it will negative impact your entire ad account by increasing the cost of all your ads. That’s why it’s so important to ensure the right audience see’s your ads.
Relevance Score is a score based on feedback, engagement and actions tied to each ad. The more positive interactions, the higher the relevancy score. Ads are given a relevancy score after the first 500 impressions. Poor early results can kill an ad’s Relevance Score and increase your ad serving costs.
Relevance Score helps you do two things:
- Know when to refresh ad creative. Falling Relevancy Score means people are no longer interested in your ad.
- Determine which ad creative is more relevant. You can use the score to test your creative and determine which message, image or video resonates most with your audience.
3. Estimated Action Rates
Estimated action rate is a measure of how likely a person is to take actions required to get the results you’re optimizing for.
So how does Facebook calculate this?
Facebook bases Estimated Action Rates on previous actions that target user has taken, the likelihood they will convert and your previous Ad Account performance.
For example, let’s say you’re running a campaign to download an ebook, and you’re targeting people interested in online advertising. Just because they care about online advertising doesn’t mean those users are likely to download the ebook. From the pool of people you target, Facebook tries to find people who are most likely to complete your action.
When an auction occurs, Facebook raises the value of the ad targeting that user – Facebook is actively making it easier for your ad to appear in that user’s feed.
Facebook Total Value Score
As an auction occurs, Facebook combines all this data into the Total Value score. The ad with the highest score wins and is shown to that user.
This is important – it means the highest bid doesn’t always win. In fact, the ad with the most relevant content will usually be shown first. Less relevant and lower quality ads are shown less frequently and cost more to deliver.
You now understand in detail how Facebook bidding works. With this knowledge you can start lowering your advertising costs.
The next section outlines other ways you can lower advertising costs.