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?
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!