An insight into how ads work on Facebook

Many brands and businesses nowadays are looking for more online options to connect with their consumers. Social media platforms are playing an important role in helping various brands establish their online footing by providing ad services.

Facebook advertising services are quite famous for generating great revenue, as well as targeting the right audience.

Recently, Facebook has given a refresher on how its ads system basically works.

As per Facebook, the two major factors for Facebook to determine which ads to show to the users are:
  1. Targeting the right audience for the product/service/brand and providing this audience info to the advertisers. Then Facebook determines who is eligible to watch which ad?
  2. Another key factor for Facebook is its ad auction process, which is based on the factors like bid price of the ad, ad quality, and individual user engagement.
The process of targeting the audience first involves the advertisers who choose their audience through Facebook’s self-service tool. This tool gives them the information about the type of ads that a particular set of people click on, and the audience’s interest through the types of Facebook pages they like.
"Advertisers can also use information they have about their audience, like a list of emails or people who’ve visited their website, to build a custom audience or a lookalike audience".
Once all this information is collected, advertisers make lists of their audiences based on categories like age, gender, their liked Facebook Pages and Apps, etc.

Through Facebook’s in-depth audience targeting tools, these advertisers then try to match the profile of their audience and people with similar traits through Facebook’s usage and data systems.

They also use the option of Lookalike Audiences. They use Facebook’s systems to match the profile data of their existing email or customer list against profiles on Facebook to see who shares similar traits and interests with whom.

The accuracy of Lookalikes is questionable, and it depends on how much data do users give to Facebook and several other factors.

After choosing the audience to target, the advertisers submit their ads to Facebook, and then Facebook reviews their ads and decide the people eligible to see that ad based on several factors like Advertiser Bid, Estimated Action Rate and the Ad Quality.

Through the Advertiser Bid, Facebook determines how much money the advertisers are willing to spend on their Facebook ads. The more they spend, the more is their chance of outreach.

Through the Estimated Action Rate, Facebook estimates whether users will take action by seeing the ad or not. It all depends on factors of individual behaviors too. Facebook uses machine learning models to assess the likelihood and predict a person’s behavior based on the action that users take in response to the ads.

Facebook assesses the Ad quality by the feedback from users after seeing the ad. If they report it, or hide it, or watch it, Facebook determines if the ad is of low quality or high.

Advertisers cannot control people's behavior, but by improving their ad bids and ad quality, they can surely get the right response that they are always looking for while promoting their product or brand.

A business tool called the Facebook Pixel is also helpful in providing more contextual data to Facebook based on the actions that people take on the advertiser’s company website.

If you are an advertiser, and if a user visits your company’s website and takes an action like buying something from the site, Facebook Pixel is triggered and reports this action to Facebook. That is how Facebook gets better at delivering targeted ads to people who are more likely to take some action on your site.

So, Facebook Pixel can also help the advertisers in improving their ad performance.

Apart from these points, Facebook says that ads with the highest bid do not always win the auction if their quality is compromised, and lower bidding ads can still win if they can reach more people and garner more response from the.

Also, an important point to remember is that Facebook does not sell public data to advertisers. And Facebook does not listen to the private conversations of people or read their texts or get information through their phone’s mics to show them relevant ads or change what they see in their News Feed.

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