The Facebook Ad Algorithm: What Marketers Need to Know

Want to lower your Facebook ad costs?

Looking for tips to optimize your Facebook ad campaigns?

To explore the Facebook ads algorithm, I interview Ralph Burns.
More About This Show
The Social Media Marketing podcast is designed to help busy marketers, business owners, and creators discover what works with social media marketing.

In this episode, I interview Ralph Burns, a Facebook ads expert. He runs Tier 11, an ad agency focused on serving eCommerce businesses. He's also a co-host of the Perpetual Traffic podcast.

Ralph explains how your bidding and campaign objective settings can help or hurt your ads budget.

You'll also learn how the Facebook ads algorithm determines whether your ads provide a good user experience.

Share your feedback, read the show notes, and get the links mentioned in this episode below.
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Here are some of the things you'll discover in this show:
Facebook Ad Algorithm
Ralph's Story

Around 2007 or 2008, Ralph began running online ads on his sales and management blog. With AdWords, the blog had good pay-per-click traffic. In 2009, Ralph's blog led to his being fired from his corporate job in sales and management. To make more money, he became an affiliate, selling other people's stuff with pay-per-click ads via networks such as Yahoo! and MSN.

When Facebook started placing ads in the right column, Ralph began running affiliate ads on Facebook, too. Back then, the targeting wasn't nearly as good as it is today. The only targeting options were gender, age, where someone lived, whether someone was interested in men or women, and relationship status (single, married, or it's complicated).

With the targeting options available, Ralph thought he could be successful running a dating offer and became a super affiliate for the dating service Christian Mingle. Through this experience, Ralph learned that Facebook was a tremendous platform with an amazing amount of traffic.

When Facebook started running ads in the news feed, Ralph became one of the early adopters of direct response advertising and he's been doing it ever since. Along the way, Ralph started his agency, Tier 11. In the beginning, the agency worked primarily with information-based products such as coaching services.

Today, Tier 11 focuses primarily on eCommerce clients but still works with some information-based products. To sell physical products, Tier 11 uses a strategy called the eCommerce amplifier, which converts cold audiences into purchasers or even long-term customers. The agency has a large team, is rigorous about choosing clients, and has a close relationship with Facebook.

Listen to the show to hear Ralph and me discuss the pros of being fired.

Why Does Facebook Have an Ad Algorithm?

The Facebook ad algorithm works with the auction and is a big black box few people understand. Facebook uses the ads algorithm to determine the best ads to show the best audience while also creating a good user experience. In January 2018, Mark Zuckerberg said Facebook will prioritize meaningful interactions. This priority shift has changed how the algorithm and auction work.

The Facebook ad algorithm doesn't give highest priority to the highest bid because Facebook wants to create a good user experience. If advertisers monopolize the news feed, Instagram, the right-hand column, or wherever you're advertising on Facebook, people won't return to Facebook.

As a public company, Facebook needs more advertisers to generate the earnings that interest Wall Street. But it also has to keep its users happy. The auction manages these competing factors by way of the Facebook advertising algorithm.

I note that since the problems with political ads and Cambridge Analytica, Facebook is probably especially sensitive to ads that turn people off. Not all ads are created equal and therefore shouldn't necessarily be shown. Ralph agrees and adds that the news around Facebook's political ads has shown his...