The Secret Sauce to Dominating Your Market Using Facebook Ads: The Auction Process

It's so critical to understand the user value + advertiser value and the impact on winning the auction if you really want to win at Facebook ads in a cost-effective way.

The secret sauce to winning at FB ads and getting campaigns that you're going to be successful with lies in this post. This is how the system works. It's essentially an auction process. There are billions of auctions that take place every single day. For example, you might have someone living in Denver who, in their online traffic behavior, has indicated that they're likely to want or need to sell their home soon. Let's say there are two advertisers looking to target this guy. Advertiser 1 wants to target men 30 to 55, who are homeowners for a lawncare company. Advertiser 2 wants to target men 30 to 55 who are homeowners in financial distress for a real estate wholesaler. They're not direct competitors of one another necessarily, but they're vying for the same person's attention. This is what's happening every single day in the auction process. So how does FB know how to show ads to whom? How does it decide which advertisers will get this guy's eyeballs?

This is the secret sauce right here for advertising. BEAR. Bidding, Expected Actions, Relevance, and Quality. Your bid is how much you're willing to spend for an action. It might be a link click, a conversion, and page post engagement, or a video view. It's all about how much you're willing to spend to get that attention. This is impacted by what other advertisers are doing - if there are lots of high bids, you may not win out with a low bid. We'll go through bidding strategies later on, but this takes place at the ad set level where you can manually bid and you have easy control. So if you're not doing well when it comes to getting leads, you can increase your bid so you can win more of those auctions. Expected Action: This is how likely your adience is going to perform that action, whether it's converting, making a purchase, or requesting a quote or appointment. The best way to explain this is actually by talking about Google AdWords. Adwords has three components - search, display, and retargeting. Search is the most powerful aspect of adwords, because it relies on people who are already indicating interest via the keywords they use to search. FB also has the same function. It's also able to tell if someone is very interested in something. It can tell this because it's reading your emails, listening to you through your phone's microphone (oh, yes - this is a thing, well-known in advertising circles but denied by officials at Facebook), it's watching your behaviors online and what you're doing on FB. It's got a lot of data on you. You may have noticed that you might be shown ads of Greece in your newsfeed after you've been talking with a friend about your upcoming vacation to Greece. It also knows, based on that data, who is likely to purchase tickets to Greece, or who is likely to check out events going on in Greece. FB will identify what the expected action of this man if he's been engaging with a lot of content related to it. FB can identify what sorts of topics a person is interested in and identify this person's expected action based on behavior. Relevance and Quality is all about the quality of your campaign and the quality of you, as a company. FB scrapes landing pages and reading what's taking place there. So if you're running lead gen campaign and you're collecting emails, but you don't have a privacy policy in place, FB's going to notice that. If your headline on your landing page matches the headline of your ads, if your page is relevant and aligns with the ad you've placed, for instance, you'll get points for that, too.

There are new features that rolled out last May called microdata that collects behavioral data for those who view your websites that affect your relavance as well. Targeting is also massively important here - making sure that the people you're targeting will actually be interested in your products and have shown an interest is key to high relevance scores. Your creative matters and impacts the amount of positive or negative feedback visitors place on your ad, and even the maintenance of your ad account matters! If you've often got payments being declined or are switching out credit card numbers often, that can affect the quality of your ad account, resulting in higher costs per action. There are all these different factors that make an advertiser more favorable, and it'll be his ad that will be shown to that man in Denver. It's a tricky algorithm though, you don't have to nail each one 10 out of 10 in order to win the aucton, but it's worth noting there are some factors more important than others. You'll still lose to someone who has high quality and relevance even if you have a high bid. If the expected action piece is really high, the relevance won't matter so much. The key is that you have some level of control over most of these variables, and getting these right is the key to effective advertising. It's also the key to cost effective advertising, because whether you win the bid or not, you get charged. FB will charge you by impressions, which is actually the default, and usually that's what you'll leave this as, but you can also be charged by link clicks, post engagements, page likes, and 10 second video views. If you're wanting appointments booked, however, you can't bid by that. FB's still going to charge you even you get a purchase or a lead through the door.

These are points really worth thinking/meditating/reflecting on each time you're creating an ad or audience targeting.

First, is the audience the right audience for what you're looking to accomplish?

Do you understand their main painpoints/needs? Can you relate them to how your product/service solves the painpoints/needs in a way that's believable?

Secondly, can you construct that into a creative?

Get these two elements right and you're halfway there to winning in a cost-effective way and getting winning campaigns on the cheap.

The final part is getting your campaign objective and bid optimisation right. You want quality clicks to boost traffic? Social proof to layer onto a lead gen campaign? Close a deal with a prospect you've already spoken with? Emails for list-building? Select the right objective because the Facebook machine will order your audience based on the propensity to take that action.

Then ensure you get your bidding right from Clicks to Impressions and bid amounts. That in itself is a huge topic area - if I get enough interest I may write about that, as well.

Those that are killing it with cheap CPCs and high CTRs understand the above and systematically work towards nailing this process.

You can nail this, too. Hit me up with any questions!

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