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Facebook Adverts cost

About the delivery system: Ad Auctions

Important: This article is about the principles of our ad auctions. It doesn’t directly address the cost of advertising, budgets or pacing.

When showing ads, we try to balance two things:

  • Creating value for advertisers by helping them reach and get results from people in their target audiences
  • Providing positive, relevant experiences for people using the Facebook family of apps and services

The best way for us to do this is to hold an auction in which both interests are represented. That way, advertisers are reaching people receptive to their ads and users are seeing something they’re interested in. Our goal is to match the right ad to the right person at the right time. This is different than a traditional auction because the winner isn’t the ad with the highest monetary bid, but the ad that creates the most total value.

An auction takes place whenever someone is eligible to see an ad. The “participants” in an auction are ads targeted to an audience the eligible person falls into. Billions of these auctions take place everyday. In this article, we’ll explain how they work.

What factors are considered in an auction?

The ad that wins an auction and gets shown is the one with the highest total value. Total value isn’t how much an advertiser is willing to pay us to show their ad. It’s combination of 3 major factors:

  • Advertiser bid
  • Estimated action rates
  • Ad quality and relevance

Advertiser bid

You represent how much you value the result your ad set is optimized for with your bid (or you let us do it for you with automatic bidding). We recommend bidding your true value or higher for best results. Keep in mind that you often get charged less than your bid.

Estimated action rates

Each ad set is optimized for an action. Estimated action rates represent how likely we think a given person is to take that action. This helps differentiate between an ad being generally relevant to someone’s interests and it being likely to cause them to take the action you’re optimizing for.

We base our estimates on the previous actions of the person you’re trying to reach and your ad’s historical performance data. We recommend optimizing for an action that happens at least 15-25 times per week (though more than that is better) for best results.

Ad quality and relevance

We represent how interested we think a person will be in seeing your ad with measures of its overall quality and specific relevance. For example, if your ad has gotten lots of negative feedback, that can decrease its total value. Or, if the person has a history of being interested in what you’re advertising, that can increase its total value.

To get an idea of how users are reacting to your ad, check its relevance score.

How are these factors combined to determine a winner?

When an auction occurs, we standardize the factors above to account for different optimization goals, then combine them into a total value. The ad with the highest total value wins and gets shown.

This means that an ad that’s high quality and very relevant can beat an ad that has a higher advertiser bid, but is lower quality and has less relevance. However, to get the most out of advertising on Facebook, you should strive to maximize all factors – bid at least your true value for the result your ad set is optimized for, create compelling ads and target them to the right audience. Doing so allows us to show your ad more, which allows us to learn more about your ad and its audience, which leads to even more efficient and effective delivery.

How do you determine what the winner gets charged?

Total values determine who wins an auction, but not when or how much the winner is charged.

You get charged when the result you’ve chosen to be charged for during ad set creation occurs.

The amount you get charged is the minimum amount you would’ve needed to set your bid at to win the auction. This means two things:

  • You’ll often be charged less than your bid.
  • There’s no advantage to underbidding. In fact, doing so may lead to losing auctions you would’ve otherwise won at no additional cost.
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