Digital Landscape: Ad Algorithm
There have been recent changes to the Facebook advertising algorithm that may have an impact on upcoming advertising campaigns. In order for you to fully understand success rates of your digital advertisements, we wanted to break down the Facebook ad auction, reach, and how this ultimately will affect your ROI.
The Ad Auction
Facebook advertising is set up like an auction. Your campaign is competing with tens of thousands of other ads, so if you’re not optimizing your ads for the best bid point, it doesn’t matter how witty the copy or beautiful the ad design is; you won’t see any return or you’ll see very expensive returns. The highest bidders will usually get better placement.
There are three elements to keep in mind while building your campaign:
This is the amount you’re willing to pay for each goal (click, conversion, impression, etc.) It’s better to bid high because Facebook will still charge you the lowest amount possible, so you rarely end up paying the amount you bid for.
The more relevant your advertisement is to the audience you selected, the better chance it has at having a higher relevancy score. If this score is low, it will reach less people, resulting in smaller conversion numbers.
Estimated action rates
This rate is how likely a person will act on your ad. When deciding who to show your ad to based on your target audience, Facebook will estimate how likely it is for a person to take the action we are aiming for.
Since we’re headed into a busy holiday season, bid prices are going up because there are more advertisements running with people willing to pay more money for more impressions. As Facebook is getting more competitive and adjusting its algorithm to keep relevant ads to the right, interested people, we are seeing decreases in total paid advertising reach. While a change in budget isn’t absolutely necessary, keep in mind that heading into a gift-buying months that there could be affects (large or small) to the results of your campaigns.