Getting better ROI from Facebook advertising

Understanding the Facebook algorithm results in better ROI on a buisnesses advertsing.

December 15, 2017

Facebook is an era defining company and it could be said that the 2.07 billion monthly active users are the Facebook generation. A generation typified by a desire to engage with and to be engaged by others. A generation where 50% of users aged between 18-24 log on as soon as they wake up (Source: The Social Skinny). A generation who on average spend 20 minutes on the site each time they log on (Source: Info Docket). A generation not to be ignored by those looking to promote their business.

 

It is not luck that Facebook is so compelling for users, it’s algorithm is designed to make it as compelling as possible and as such Facebook favours relevant creative content.

 

“Our success is built on getting people the stories that matter to them most. If you could look through thousands of stories every day and choose the 10 that were most important to you, which would they be? The answer should be your News Feed. It is subjective, personal, and unique — and defines the spirit of what we hope to achieve.”

 

Adam Mosseri, Facebook VP, Product Management, News Feed

 

When working with Facebook as a medium it’s vital that advertisers understand the technicalities of the sites algorithm in order to derive the best ROI from their advertising spend. Below is a high-level overview of what needs to be factored when devising a Facebook campaign:

An abundance of adverts

There are a multitude of adverts that could be served to your target audience at any given moment in time. As such yours needs to stand out from your competitors.

 

It uses an auction system

Facebook ensures it delivers the most relevant advert via an auction mechanism. The auction seeks to maximise the experience of your target audience by providing them with the most relevant content.

 

The parameters of the auction

The auction factors in how much you bid in order to reach your target audience and applies a relevancy score to the advert you submit.

 

Calculating relevancy

Thousands of parameters are used to calculate relevancy but ultimately Facebook looks at the positive and negative signals generated by an advertisement. These are then combined with the bid in order calculate the advertisements competitiveness in the auction.

 

If an advertisement gets a high click through rate and positive engagements this signals relevancy and as a result the advert would get better and lower cost delivery to the chosen audience. The opposite is also true. Negative interactions such as x-outs result in increased advertising costs.

 

Ultimately businesses will derive better ROI on their Facebook advertising through the creation of quality relevant creative. This will make them more competitive in the auction process and provide the opportunity to beat competitors who may be bidding more.

 

Capitalising on this opportunity is perhaps the biggest challenge for businesses with little in house experience of Facebook as an advertising medium.

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by

Ross Chesterfield

A motivated creative marketer, who has extensive experience working within the financial services industry for some the UK’s leading pension, advisory and investor service businesses.

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