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Buying Channels and Ad Auctions

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Digital Marketing - Study Notes:

There are two ways to buy ads on Facebook. The first is through the self-serve tool, Ads Manager. You can create and deliver campaigns to meet business objectives by themselves through this system.

The second way to buy ads on Facebook is through a Facebook Marketing Partner. Facebook Marketing Partners are Facebook-approved companies who either give technology to advertisers to enhance their advertising, or run campaigns for businesses as a managed service.

It is important to know how the auction works in the Facebook Ads System. An ad that wins an auction and gets shown is the one with the highest ‘total value’. A 'total value' is assigned to every ad competing in the auction. Your ad competes with others, and the one with the highest total value wins the auction.

The ‘total value’ number is based on:

  • The amount you have bid.
  • The likelihood of your ad leading to your desired outcome.
  • The quality of your ad.

Bidding affects the delivery of your ads as follows:

  • Bid type and amount can dictate whether an ad gets a large amount of delivery or not.
  • Low bids tend to result in slow delivery to a small percentage of the selected audience.
  • High bids tend to result in speedy delivery to a large percentage of the audience.

So how do you win a spot in the ad auction? The ad that wins an auction and gets shown is the one with the highest ‘total value’. The total value isn't how much an advertiser is willing to pay Facebook to show their ad. It’s a combination of the following three factors:

  • Advertiser Bid, Lowest Cost Bid, and Target Cost Bid. You select your cost goals with yourbid strategyand the system will bid for you to help you meet that goal. This may include a bid cap (for the lowest cost bid strategy) or cost target (for the target cost big strategy) to guide the system bidding.
  • Ad Quality and Relevance. For this second factor, targeting and quality of creative are important to get right in order to win the auction.
  • Estimated Action Rates. The system estimates the likelihood of an audience reacting positively or negatively to the ad.

The system gives ads a ‘Relevance’ score from 1-10. This is calculated differently depending on the objective set, and is based on positive and negative feedback the system expects from the people seeing it, and how the ad is performing. The Relevance Score can be a useful benchmark to see how ads are being judged by the auction system.

By selecting automatic placements in your ad set, you tell the system to find the most relevant optimization events available across all of these placements. Taking advantage of every placement is the most efficient use of your budget.

The system optimizes delivery of your ads to get you the lowest overall cost per optimization event. This optimization takes place in the context of the full range of opportunities available.

Facebook Marketing Partners are trusted third-party partners that provide both self-serve tools to make advertising easier, and managed marketing services to create custom solutions for your advertising campaign. They act as a partner to drive success.

Whether it’s managing campaigns at scale, improving measurement, reaching new audiences, or more, they tend to work with big advertisers who need to scale their advertising across many markets. Examples of FMPs are Smartly, Stitcherads, Kenshoo, and Nanigans.

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Dave Morrissey

Dave Morrissey is a Client Solutions Manager in the Retail and eCommerce division at Facebook. A seasoned digital marketer who specializes in social media, Dave now helps his clients achieve their marketing objectives through identity-based, data-driven marketing that's grounded in measurable business results.

Data protection regulations affect almost all aspects of digital marketing. Therefore, DMI has produced a short course on GDPR for all of our students. If you wish to learn more about GDPR, you can do so here:

DMI Short Course: GDPR

The following pieces of content from the Digital Marketing Institute's Membership Library have been chosen to offer additional material that you might find interesting or insightful.

You can find more information and content like this on the Digital Marketing Institute's Membership Library

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    Dave Morrissey
    Skills Expert

    This module focuses on Facebook and how the platform’s features can be leveraged by digital marketers to develop a successful marketing strategy. It begins by describing how Facebook works as a platform and outlines the Facebook terminology marketers need to be familiar with. It then provides best practices for setting up a Facebook Page and creating Facebook Page Posts. It goes on to cover the different platform features on Facebook and explains how to use the Facebook Ads platform effectively. Finally, it provides you with the knowledge to plan and deliver a Facebook advertising strategy, and to analyze its performance.