As discussed previously, Facebook advertisers are pitted against each other in an auction to determine when ads are served and ad what cost. Ad serving isn’t just based on cost, but on the relevancy of the content to that specific user.
Bid costs are easy to calculate. But how do you determine whether an ad is relevant to that 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 feature 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 at a lower overall serving cost. A low Total Value score is a major reason why your ads aren’t showing, or why costs are higher.
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 section to see a more detailed analysis on bidding, specifically around manual and automatic bidding.
2. Ad Quality and Relevance
Facebook only wants to serve content that people like. Ensuring relevancy and quality content is vital to Facebook’s continued dominance.
Ad quality and relevance is broken out into three parts:
Advertising Account History
Each Facebook profile includes relevant information about your ad account’s effectiveness. Historical performance matters. 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 express negative feedback through ads by hiding ads 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 and cause all ad campaign costs to be higher. That’s why it’s so important to ensure the right audience see’s your ads, and you aren’t delivery high ferquency ads too often.
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. Bad 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 an ad creative. Falling relevancy score means people are no longer interested.
- Determine which ad creative is more relevant. You can use the score to test your creative to help 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 on advertising, and you’re targeting people interested in online advertising. Just because they care about online advertising doesn’t mean those users likely to download the book. From the pool of people you target, Facebook tries to find the people who are most likely to complete a sign-up 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 to that user.
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.
The Auction System Learn how Facebook's auction model works, and how that leads to higher cost ads.
5 Things You Should Know About Facebook Ad Bidding Learn the ins-and-outs or Facebook bidding, and how bidding type can lower advertising costs.
Total Value Score And How it Impacts Cost Learn about a little-known score that will impact your advertising costs.
How to Lower Facebook Ad Costs In this section, we go through in painstaking detail, the different ways to lower advertising cost. By the end you’ll have all the knowledge you need to keep your ad costs low.
Lowering Costs With Budgeting and Timing Budgets and ad timeframes can impact overall ad costs. In this section, we review different budget and spending strategies, advertising timing and when you should increase and decrease spend throughout the year.