Episode 190: How Facebook’s Ad Delivery System Works: Part 1

An understanding of how Facebook’s ad delivery system works is essential to mastering the platform.

In this episode, Ralph and Molly explain that Facebook is an auction and surprisingly, the advertiser who is willing to pay the most doesn’t always win. Here’s an in-depth explanation of how to win both the Facebook auction and the customer’s attention.

 

IN THIS EPISODE YOU’LL LEARN:

• How the Facebook’s Ad Auction works
• How Facebook uses their Pacing Feature to get you the best results for your ad goals
• The 3 factors that make up the total value of your Facebook ad—bidding, estimated action rate, and user value

LINKS AND RESOURCES MENTIONED IN THIS EPISODE:

Facebook Blueprint
Facebook’s Ad Policy
Facebook’s Policy on Low Quality or Disruptive Experiences
Avoid Creating Negative Experiences with Ads on Facebook
Pingdom
GTMetrix
Tiereleven.com/191
Episode 144: Why This is Still the Best Time to Be a Facebook Marketer (Plus… Insights from Facebook’s NYC Office)
Episode 183: How Facebook’s New Campaign Budget Optimization Tool Can Get You Leads Faster (Part 1)
Episode 184: Using Facebook’s Campaign Budget Optimization Tool to Increase Social Proof (Part 2)

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(NOTE: Need a helping hand with your digital marketing efforts? Or maybe you just want proven, actionable marketing tools, tactics, and templates to implement in your business? Check out the latest deal from DigitalMarketer, and you will be on your way to helping your business grow.)

FULL EPISODE TRANSCRIPT:

Ralph Burns:   Hey Perpetual Traffic listeners, this is Ralph Burns and I wanted to invite you to the Tier 11 booth at Traffic and Conversion Summit on Wednesday, February 27 where we’re going to be doing a live recording with none other than Mr. Ryan Deiss, the actual host of Traffic and Conversion Summit. Come on by the Tier 11 booth any time at Traffic and Conversion Summit, but make sure you don’t miss us on Wednesday the 27th at 10 AM where we’ll be doing a live broadcast from the booth answering your questions.

Ralph Burns:   Bring your questions, your traffic and conversion related questions to Ryan to have him answer them live on the Traffic and Conversion Summit floor. February 27, 10 AM at the Tier 11 booth, that’s booth P325 at TNC, can’t wait to see you there.

Darren Clark:  You’re listening to Perpetual Traffic.

Molly Pittman:            Hello everybody, Molly Pittman here and I would like to welcome you to episode 190 of Perpetual Traffic. I’m here today with my amazing cohost, Mr. Ralph Burns. How are you doing my friend?

Ralph Burns:   I’m doing great, how are you doing Molly?

Molly Pittman:            I’m doing awesome, so Ralph’s been going through Facebook’s free Blueprint course. You were just telling me about it Ralph, what is that, and what’s your experience been?

Ralph Burns:   Well, it’s a lot of courses, If you want to get really, really, really in the weeds about everything that we talk about here at Perpetual Traffic, definitely check it out at facebookblueprint.com. There’s a real certification that they have now, which is pretty good. Then you get an ad buyer or an ad planner badge. The Tier 11 agency, we forced all our media buyers to go through this. I think they came out the other end mangled and twisted and somewhat confused at certain points, because what Facebook tells you and teaches you, and what actually happens in the real world is a little bit different, which is what we’re going to be talking about today.

Molly Pittman:            That’s why we’re here.

Ralph Burns:   Yeah, exactly, it made us really all understand how this whole thing works that we call the algorithm, the delivery system, the auction, as well as thousands of other things which you’ll probably never use as an advertiser, but they’re really good to know. That’s what I would say about Facebook Blueprint. I’m glad I went through it and I’m glad and proud of the team for passing it. We’ve got a lot of certified ad buyers in the Tier 11 team, which is really cool.

Molly Pittman:            Nice, yeah, it sounds like it’s good to learn the tactical, the insides of how Facebook works, maybe not as much on the marketing side, which we know is probably the most important. I brought that up, because today’s episode … I know you guys are going to enjoy this, because I believe that to become better advertisers on a platform like Facebook, the first step is to understand how the platform actually works, right?

Molly Pittman:            I think that we have had a culture in the marketing industry over the years of wanting to find hacks or ways to trick different forms and systems, so that we can get more of what we want. That’s just not an evergreen way to do business or marketing in my opinion. I have always come from the place of, let’s figure out how the platform works, and let’s use the platform in a way that they want it to be used, because that’s how it actually works, right?

Molly Pittman:            I know that’s how we’ve both found success Ralph, and it’s also evergreen. You don’t always feel like you’re running from the cops.

Ralph Burns:   Right, it’s true.

Molly Pittman:            I think I’m feeling passionate about that right now Ralph, but I wanted to throw that in as a precursor to what we’re discussing today, which is how Facebook’s advertising delivery system works. That’s what Facebook calls this whole machine that is Facebook, right? That is ads manager, that is the auction, that is the algorithm, and all of these things that come together to basically judge the success of our ads, right?

Molly Pittman:            Does it work or is the ad a success or is it not? It’s much more complicated than most people think, so Ralph, I’m excited for you to enlighten us today on how this works. Something that we’ve called the algorithm, but I think we really should start at the concept of an auction.

Ralph Burns:   Yeah.

Molly Pittman:            What do you think?

Ralph Burns:   Yeah, I mean, I think the algorithm is the underlying components, it’s the artificial intelligence that powers the delivery system for the Facebook advertising platform, and the actual thing that determines whether or not your ad is shown in the newsfeed or in an Instagram story is this thing called the auction. When we talk about the algorithm, I think we’re talking about everything together, right? It’s a broad brush, it’s like Facebook’s so smart, they know everything about all their users, and they know how to optimize ads for different objectives and all these other sorts of amazing things that this platform does.

Ralph Burns:   Great targeting abilities, all these sorts of things, that’s like the platform itself, the guts, the brains that power that. We refer to it a lot of times on this show as the algorithm, when in fact it’s the ad auction and delivery system really is what it is. Hopefully today we’ll shed some light on that, because I do think that it’s really important when you’re using something …

Ralph Burns:   You don’t have to know exactly how it works. It’s like I throw my clothes in the washing machine, I don’t really know how it all works, actually I have my kids do it most of the time. I don’t get my wife to do it by the way, but the point is, is that I don’t really know how the thing works, but I know it comes out in the end. I know there’s water and there’s soap and there’s some things and then there’s a dry cycle and there’s rinsing.

Ralph Burns:   You don’t have to know everything, but I think the more you know about a platform or a delivery system that you’re using every single day, I think can help you make some really good educated decisions on how to become a more successful marketer, a more successful advertiser. I would agree with you is that 10, 15 years ago … I come from the SEO world, and there was always this white hat SEO, which was mas.com way back when.

Ralph Burns:   Then there was Black hat SEO and there was all these other guys. I love those guys, and so I would marry the two of them. I still think that there’s Black hat/Facebook people out there that are like, “Oh, don’t do whatever Facebook tells you to do.” Then there’s others that say, “Oh, you have to do everything that Facebook tells you to do.” I think there’s an in between ground there. I don’t think we’re black hat or white hat when it looks at it that way.

Ralph Burns:   I think we’re grayish, whitish hat, which is gray hat is what they used to call it in the SEO world. You take what Facebook tells you to do, but you apply it in a real-world setting, because results speak louder than what your rep might be telling you. Still, take what your rep or your partner manager tells you, and apply it, test it, figure out how it works best. That’s what we try and educate you all here on, not only how Facebook wants you to do it, but what are the real world applications of it.

Ralph Burns:   Hopefully we’ll explain a little bit of that today in today’s show.

Molly Pittman:            Totally, and Ralph I think when I was speaking to that, really what I was meaning … I see a lot of people who, for example, will go create a new campaign and they make a decision about the objective. They’re immediately thinking about how can I go around Facebook’s algorithm, right? How can I hack it with this type of bidding together to force Facebook to give me these results?

Molly Pittman:            I think there’s a lot of common sense that comes with a lot of this is what I was saying. With Facebook getting smarter, we don’t have to do as much forcing of Facebook to get the reach and the things that we want, just because the platform’s a lot more developed than it was many years ago.

Ralph Burns:   Yeah, for sure, and I think one of the most interesting developments is what you talked about back on episode 183 and 184 is a new tool to use called campaign budget optimization. Like we said in that episode, we didn’t really know how to use it at first. We’ve figured out how to use it over time, but I think the more you use something and the more you get iterative learnings of it, you refine it and get better and better at it and produce the results that you’re looking for.

Ralph Burns:   If you have a base knowledge of how the ads platform delivers ads, I guarantee you, you’re going to become a better advertiser. Let’s get right into it.

Molly Pittman:            Let’s do it Ralph. This concept of the auction that we are all participating in as advertisers, how does that work exactly?

Ralph Burns:   Yeah, so I mean taking a step back, the Facebook, algorithm, auction ads delivery system is what it really is. When Facebook shows ads, they’re trying to balance for two sides of this equation. They want to create value for advertisers like me and you. If we don’t get any value of what we do, we’re not going to continue to spend money on them, we’re not going to be in business as an agency or as a consultant like you are, or a teacher, do you know what I mean?

Ralph Burns:   You want to get some value out of it, but you also need to … Facebook has this balance where they have to balance that, as well as relevant experiences for people using all their apps and all their services, whether it be Facebook, Instagram, Messenger, soon to be coming to an advertising platform near you, which is WhatsApp, as well as Audience Network.

Ralph Burns:   That’s the first thing that you have to think of, is that yeah, Facebook is trying to balance those two things. The best way they do that is when they hold an auction in order to balance both of those interests. That’s where the auction comes in, so believe it or not when you place an order for an ad, you’re actually entering into a real auction, unless you choose reach and frequency, which is a whole other thing, which we won’t get into here, which is a different way in which you can actually bid on Facebook.

Ralph Burns:   It’s typically for much larger brands and very large budgets, brand awareness kind of budgets. For most of the folks that are listening to the show here, I mean, really you’re entering into the Facebook auction. It’s different than a traditional auction, because the winning ad isn’t necessarily the ad that bids the most. If you’ve ever gone to an auction, the highest bidder always wins.

Ralph Burns:   That’s not it, the ad that actually wins this auction and gets seen first in your Facebook newsfeed for example, is the ad that creates the most, what they refer to as total value. We’ll get into exactly what that is.

Molly Pittman:            Before we get into total value, which is very exciting, I think what’s important to point out about the auction too is that this auction, it’s not just about you showing up first in the newsfeed when someone logs into Facebook, right? Which means your ad is more likely to be shown, that also correlates to okay, you’re getting more impressions, and you’re getting more reach, which is a huge issue for a lot of advertisers, especially in the last year.

Molly Pittman:            That is because they are lower in the auction, right? They’re not able to get those impressions and the reach that they’re looking for because of that. I would also go to guess that a cost is correlated with this too. I would assume that the higher you are in the auction, it’s possible that you could have the opportunity to pay less for whatever result you’re wanting.

Ralph Burns:   Most definitely, the ad that wins, I’m air quoting that in the auction is the one that actually …

Molly Pittman:            We need a GIF of that Ralph.

Ralph Burns:   Yeah, Ralph air quoting. The one who wins is the one who creates this most total value, but they by a large … It’s a weird thing of how this auction works, they actually pay the least as a result, which is the counterintuitive as to a regular auction. For you statistician nerds out there, it’s called the Vickery Groves auction is how Facebook’s auction actually works.

Ralph Burns:   Getting back down to the real core here and how this can affect your Facebook ads, so when there’s an opportunity to show someone and ad, advertisers do compete for this one opportunity. The winning ad on Facebook is the one that maximizes value for you, the advertiser, as well as the person that you’re advertising too. You’re always trying to balance those things.

Ralph Burns:   Molly and I are going to talk about exactly how you balance those things and examples after we explain this. The other part to this is this pacing thing that you might’ve heard about. Pacing gives Facebook flexibility to get you the best results for your goals, depending on what they are. Facebook in essence adjusts your bid or which auctions your ad actually enters into based on how much budget you have and time left in your ad set.

Ralph Burns:   That’s a lot, but basically Facebook is, believe it or not, trying to get you the lowest cost result for whatever it is that your objective is. For example, if it’s conversions, they are really trying to get you the lowest cost conversion. Now, that might not be the one with the highest total value for you, but it still, if you’re bidding and you’re optimizing for a purchase event in a website conversion campaign, Facebook, by and large with very few exceptions, is trying to get you to your goal.

Ralph Burns:   That’s how they’re trying to deliver value to the advertiser, but they’re also trying to marry that with this user experience, okay? This part two, the algorithm or the platform that measures how happy people are with interacting with Facebook. You have happy users of Facebook and meaningful interactions, meaning balancing pictures of their grandkids and a funny picture of Larry the dog from Molly Pittman with an ad for something that’s relevant to where you’re at in your life right now.

Ralph Burns:   Maybe it is an ad about marketing or Facebook or something like that. They try and balance those factors to give value to the advertiser, as well as to maintain value for you, the user, whatever the platform is. Whether it’s Facebook, whether it’s something that you see in the Audience Network, whether it’s something that you see in Messenger, or whether you see it in Instagram. Does that make sense Molly?

Molly Pittman:            Absolutely, and this total value, this number, I mean FYI guys, these are not things we can see in ad accounts, right? Just for those of you that are going to find total value and add a column to ads manager. Unfortunately, this isn’t anything we can see, right? To understand it means that we can become better advertisers. We’ve got this total value Ralph, and you told me earlier there are three things that make up this total value.

Molly Pittman:            We understand total value pacing, now what are the three actors that really make up this number? I guess it’s a number.

Ralph Burns:   Yeah, and there’s a little bit of a black box in a couple of these, because we don’t really know. Basically there’s a formula as to how Facebook determines which ads to show. This formula, the end result is this total value, whatever this thing is. I don’t know if it’s a number or whether it’s some …

Molly Pittman:            They’re animal characters maybe.

Ralph Burns:   Could be completely, some geometric figure or formula. I don’t know exactly what it is, but in essence the total value is three things. We’ll get into each one of these three things. First off is the advertiser bid, the second is the estimated action rate, okay? The third is user value, so the way that Facebook describes this, it’s advertiser bid multiplied by estimated action rate, plus user value, equals total value.

Ralph Burns:   What the hell does that actually mean? Let’s break it down.

Molly Pittman:            We just know they all matter.

Ralph Burns:   All right, so let’s break it down. Bidding first off is your bid, okay? It’s something that you control. This is one of the advertiser controls that you as an advertiser have complete control over. You can do lowest cost with no bid cap, or auto bidding as I still have to call it auto bidding, sorry guys.

Molly Pittman:            Yeah, I still do too.

Ralph Burns:   You could do lowest cost with bid cap. You could do lowest cost bid strategy or cost target. This is either target cost bid strategy to guide your bidding. For example, if you’re trying to get a $20 CPA for a tripwire or some sort of low priced product, the point is if you can actually add in your bid at $20, you’re controlling that. Now if you put in a higher bid than $20, you will actually enter more auctions, okay?

Ralph Burns:   Probably the best one is the one that we use by default, is lowest cost without a bid cap, which is in essence we’re putting it into the hands of Facebook. Enter me into as many auctions as you possibly can, and hopefully I’ll come out on the other side with the lowest cost per acquisition. The auto bidding feature is the one feature that we tend to default to in very few cases.

Ralph Burns:   There’s some circumstances where we will do manual bidding, but the point is, is that is something that is a factor in the auction. If you are outbidding yourself, let’s say you have a $20 cost per acquisition, but you’re bidding at $10 as your manual bid, you’ll enter into less auctions. Therefore, that will affect total value, it’ll affect your outcome, and it’s the first component that you have to keep in mind.

Ralph Burns:   By default, we keep on lowest cost. Molly, I don’t know how you do it these days, but I think you’re pretty much the same.

Molly Pittman:            Absolutely, I would say 98% of the time I’m using lowest cost, auto bidding, whatever you want to call it. Whatever Facebook’s default is for bidding for that objective, I just use it, unless it’s a very specific scenario where I’m troubleshooting and trying to fix something. Yeah, 98% of the time using auto bidding, and mainly for the reason that I always find it more sustainable, right?

Molly Pittman:            If you run a test between two types of bids, on the first three days manual bidding might beat auto bidding. I guarantee you if you go back 10 days, 14 days later, your auto bidding just allows you to scale in a much better way in my opinion.

Ralph Burns:   Yeah, and it allows you to enter more auctions, and win more auctions provided that the other two parts to this are in line.

Molly Pittman:            Facebook knows how this algorithm works, we don’t. I mean, we know what we’re telling you today, but we don’t note the very specifics, so let them do the bidding for you. It’s easier for you too.

Ralph Burns:   Yeah, for sure.

Molly Pittman:            Awesome.

Ralph Burns:   That’s the first part, so we’ve probably just overshot that a little bit. I mean, the point is, is that we tend to use automatic bidding or lowest cost with bid cap.

Molly Pittman:            This is great.

Ralph Burns:   Without bid cap rather. The next part of the auction is this estimated action rate, okay? What is estimated action rate? Estimated action rate is a little bit of a … Some of these are definitely, are black box. Bidding we can control, estimated action rate, can’t control it quite as much. Your history of your ad account, your history of your page, your history of your ad set, your campaign history, your account history, like I said before, user characteristics of who you’re actually showing your ad in front of, recent activity on your ad.

Molly Pittman:            Social proof.

Ralph Burns:   Social proof, we’ve also found out that the user action of whoever is seeing your ad for ads, as well as organic, like let’s say if you’re actually showing an ad and you’re entering into the auction. The person who’s seeing your ad is somebody who just comments on everything, whether it’s organic post, she shares it all, and then she also looks at ads and shares those as well.

Ralph Burns:   That’s also factored into the equation here, so there’s a lot of factors that are a little bit beyond your control, but that does come back to make sure that your targeting is dialed in. You’ve had some instances of that this year with a certain high volume advertiser where their targeting got less and less dialed in over time, and their ads actually weren’t doing quite as well.

Ralph Burns:   It’s just as important now as it ever was to make sure that your targeting is both … There’s a match to your message and the audience that your targeting, but not too broad, so that the algorithm has to work too hard.

Molly Pittman:            Yeah, I would say the action rate sounds like it’s really there to ensure that relevance for the end-user like we talked about Ralph. For example, if they know that someone’s looked at your Facebook page, they visited your website, they’ve watched a video, you are so much more relevant to them, right? Not only that, but also things like social proof.

Molly Pittman:            I mean, things like shares, especially on ads are so powerful, because it shows Facebook wow, this is an ad and people enjoy it so much that they’re going to share it. It’s fascinating, because this is really the part of the algorithm that I think protects the end user in terms of their experience with ads.

Ralph Burns:   Yeah, for sure, so this goes right back to your social proof. One of the things that we mentioned as far as estimated action rates is the history of the ad. A history of sharing, a high like to share ratio, which we’ve talked about here on the show many times. Great social proof, positive experience, less X outs and hide this ad and report this is spam.

Ralph Burns:   All those things, these are the social proof aspect of it, that’s one part of estimated action rates. Facebook is basing their estimates for estimated action rate on previous actions by the person that you’re showing it too. That’s important too, so they’re trying to match up the history of the ad with the person that is actually viewing the ad, which is a weird concept to get your head around.

Molly Pittman:            Not just their history with you, right? Not just that your target and they visited your website before, that obviously shows relevance. Also, things like you have clicked on ad before and purchased from a Facebook ad. You’ve shown Facebook that you’re likely to be a purchaser. Facebook’s not just looking at your relationship with a brand, but also your overall activity and what actions you’re most likely to take.

Ralph Burns:   Yeah, for sure.

Molly Pittman:            It’s fascinating.

Ralph Burns:   Yeah, so we get that question I think a lot, does my ad account, does my campaign, does my ad set matter as much as my ad? Absolutely, it all matters.

Molly Pittman:            Yeah, and Ralph I know this is really black box, but this is a question that I get a lot that I don’t really know how to answer. Things like account history, or we say a lot seasoning a pixel, or when we talk about the activity on your Facebook page mattering to your ads, do you know how that works at all, or just that it’s calculated into this?

Ralph Burns:   Well, I think we’ve seen this firsthand. We’ve actually done this in many cases where we’ll take on a new customer account at Tier 11, then we’ll create a new ad account for them as a secondary account. If the first ad account has been performing at least well enough, probably not where the customer really wants it to be, that’s the reason why they’re hiring us, what we typically will find is that brand new ad accounts with no history perform a whole lot worse.

Ralph Burns:   Sometimes one and a half times, two times, three times as worse, to such a point where because there’s no ad account history, because that pixel that’s on that ad account … Now we can share a pixel from the first ad account too, we could also do that. The point is, is when you’re starting fresh with Facebook, it really does seem that you’re starting from ground zero and you have to build up over time.

Ralph Burns:   I would say this is something that they won’t come right out and say, but ad account history … The history of your pixel, not necessarily seasoning of your pixel, but when we tend to scale up campaigns, we try to keep the same campaigns that were getting good results after we even test. We might do a split test on a campaign and then we might migrate it over to campaign budget optimization.

Ralph Burns:   We keep that history in the campaign, and we have seen that in many cases outperform campaigns that we’ll start from scratch that are outside of that initial test.

Molly Pittman:            Interesting.

Ralph Burns:   It all works together, I think once again, I mean, there’s no exact, and nobody really will answer this question, but we’re taking what Facebook is telling us, applying it to what we’re seeing, spending millions of dollars a month in Facebook outspend, and try to explain it to you as best as possible. Yeah, I would definitely say brand new ad account, something that’s unproven with an unproven pixel, is probably gonna perform less than something that has good account history, good campaign history, and the page that is being advertised with has been reputable and posts and has good response times and occasionally does a Facebook Live.

Ralph Burns:   All those things all factor into how well your ad does.

Molly Pittman:            Yeah, Ralph I had an experience last year with a new client who had never run ads before. I started a brand new ad account, which I hadn’t had to do since I started DM’s Facebook ad account probably. I started running ads, and I was trying to do a bit more direct response, lead gen., style ads, and it just wasn’t working at all. I had a hunch that it had something to do with the newness of this account.

Molly Pittman:            I’d run ads in this market before, I was confident in the offer. I had them run ads to content for about six months. They spent about five grand a month just boosting posts even from the page, running ads to some videos, running ads to some content. Then in January, I went back in, set up almost the identical ads, and it performed so well. Of course, there are always other factors in this stuff guys.

Molly Pittman:            I would say there are hundreds or thousands of factors that really go into the success of your traffic campaign. I couldn’t agree more with you Ralph. I wish we knew more, but yeah, it’s just good to even know that all of it matters. It’s not as black-and-white as you’re giving Facebook a dollar, you expect two dollars back, right? This is showing how much goes into this, right?

Molly Pittman:            I think the lack of understanding of this is what leads to a lot of Facebook doesn’t work, right? It’s just a misunderstanding of the platform, so all right, the next one, what is number three? We’ve got bidding, we’ve got estimated action rate.

Ralph Burns:   No, it’s actually a mathematical formula, I don’t know why it’s bidding multiplied by estimated action rates, plus user value, which we’re going to talk about here. I’m not sure exactly why that is, because there is a numerical formula that we can’t really get to, no one will really tell us that, but we do know all these factors actually.

Molly Pittman:            If we knew the numbers, we could work it backwards, but we don’t.

Ralph Burns:   This is the algorithm in essence. The platform is confusing, so but we don’t have to know every little thing to be good advertisers here. Bidding is the first one, multiplied by estimated action rate, okay? Which we just described in fairly long detail, plus this other thing called user value. What is user value? Take a step back, just remember what Facebook is trying to do when they deliver ads.

Ralph Burns:   They’re trying to optimize the user experience for people by matching them with the ads that are the most relevant to them. If we can understand that, we can understand what user value is. For example, ads with higher user value get more delivery and lower costs. Facebook will come right out and tell you that. Ads that have lower user value, get less delivery and higher costs.

Ralph Burns:   Stands to reason, right? It’s not necessarily the ad that outbids everybody that wins, it’s these other factors. User value, for example, what is actually user value? What we found is that … I think we talked about this way back in episode 144, is that we went to an algorithm meeting in New York and met with one of the guys who talks pretty extensive knowledge about the Facebook algorithm, auction delivery system, all the things that we’re talking about here.

Ralph Burns:   This was the first time we had ever heard that they actually have what’s referred to as an ad quality panel, which is a third-party company that actually samples FB users based upon ads that they’ve seen. These people actually either … You might even see them in your newsfeed every now and then. I actually saw one the other day, it was a response to a survey of an ad that I had supposedly seen. I couldn’t remember what it was.

Molly Pittman:            Yeah, same thing Ralph, the ad customer feedback score that Facebook rolled out that we’ve talked about here where they’re surveying people after they purchase from someone’s Facebook ad, right? It’s not just surveying about the ad, they’re also surveying hey, what was the product quality like? What was the shipping speed? Customer service? This is a score out of five that Facebook is using to score us as advertisers.

Ralph Burns:   Yeah, absolutely, and you might see these in your newsfeed too, brand awareness campaigns are predicated upon estimated recall. Recall of your ad two days after you see it, so you might actually see a survey in your newsfeed today or tomorrow about an ad you probably saw two days ago that you may or may not remember. That’s a whole objective that’s about brand awareness.

Ralph Burns:   They are not averse to asking users what do you think of ads? Don’t be surprised when you see it, it could be the things that we’re talking about here on this show, it could be something completely different that they’re beta testing. I once heard, this is a non sequitur, but I once heard that Zuckerberg says, “At any given point in time on the Facebook platform there’s 10,000 different versions of Facebook being beta tested throughout the 2 billion active users per day.”

Ralph Burns:   You might see some weird stuff in your Facebook newsfeed that you might never see ever again, it’s because they’re constantly testing this stuff and figuring out what’s working, what’s not. Be that as it may, user value is actually a big part to how your ads are actually delivered. That ad quality panel, that third-party company, there’s people that are actually there to say, “Oh, I like ad A versus B,” and hopefully your ad is the one that they like.

Ralph Burns:   Then that gives them signals to affect this user value part of the delivery system. The second part to this is something that we discovered this about two or three years ago with one of our ad accounts, is the post click experience. Post quick experience, what’s that? Obviously, after somebody clicks one of your ads, what happens?

Ralph Burns:   Are they going to a landing page that’s congruent, or a website page, or wherever you’re actually sending your traffic to? Is it relevant to the ad experience? Is it something where they’ll click and immediately back click? Maybe there’s a pop-up that shows up, maybe there’s ads that are all over and they have to click out of those. Maybe there’s scarce content that’s on the page.

Ralph Burns:   If all those things happen, people are going to have a tendency to back click really quickly, and that will negatively impact your user value. Think of it as bounce rate, for any of you who have any experience with Google AdWords, this was a big deal going back 10 years ago. That if somebody clicked on your ad and immediately back clicked, that would be a bounce rate.

Ralph Burns:   In essence what? Within a few seconds I believe it is bounce rate, but anyway somebody who bounces off your page almost immediately. This could also be affected by site speed. This is a huge issue we see all the time with customers who come to Tier 11, is that they have site speed, pages that load 10, 20, sometimes there was one that was 30 seconds.

Ralph Burns:   Yeah, like super slow site speed, people are back clicking in a second on those. I think there’s statistics that show how a slow page can adversely affect conversion rates. In fact, Amazon did a study that stated that for every one second load time over three seconds, it causes a 10% drop in conversion rate. Let me say that again, for every one second your load time is over three seconds, three seconds or less is typically considered pretty good load time, not bad, you want to get it as fast as possible, causes a 10% drop in conversion rates.

Ralph Burns:   If you do the math backwards, if you have a landing page that loads in 10 seconds, you’re probably getting a 70% drop in conversion rates just based upon that statistic. Now whether that’s just Amazon, whether that’s your site, it all depends. The point is a slow page speed has a really bad effect on this user value component of the delivery system.

Ralph Burns:   The best thing to do is just do a site speed check on Google, run your pages through it, make sure that you’ve got compressed images. Make sure there’s not too much clutter on the page, if you need too, hire a dev or a designer to clean things up. It really does have a big impact on the effectiveness of your ads.

Molly Pittman:            Totally, I think just looking at this from a birds eye view Ralph, what’s cool and what you and I have been saying, especially in the last year, is that I think the Cambridge Analytica moment was a huge turning point for Facebook. Not that this algorithm didn’t exist in this form before then, but what I actually like seeing, even though I’m a marketer, is that really two thirds of this whole algorithm or delivery system, whatever you want to call it, is about the end-user, right?

Molly Pittman:            Whether it’s about their experience with you or another brand or your social proof or whether you ship your product in the amount of time you should. Facebook’s looking at as much as they can, right? They’re gathering as much data and they’re implementing new ways of measuring this user experience I think would be the best way to put it, right?

Ralph Burns:   Yeah.

Molly Pittman:            This just further affirms for me, it’s so awesome to understand how it works, but it just goes to show you that you absolutely cannot think of or use Facebook like a day trading platform. This isn’t you put in a dollar and you’re guaranteed to get two dollars back. This is about the humans on the other side of the screen. This is a social network, this is a social platform.

Ralph Burns:   Yeah.

Molly Pittman:            The more that you play into that, the most important thing is you have something that people want, right?

Ralph Burns:   Yeah.

Molly Pittman:            A lot of people say Facebook ads don’t work, and then I see that their offer isn’t something that people want, or they’re putting it in front of the wrong people. Not to mention copier creative that drives engagement, but not to go to big picture here Ralph, I just wanted to share that, because I think it’s just further proving the more you dive into how it works, well it’s just further proving that again, this is all about the consumers we’re actually marketing too.

Ralph Burns:   Yeah, for sure, and a way to look at this, and this is not a leading indicator, it’s a lagging indicator, just keep this in mind, is for user value that is. If you want to say, “All right, how do I increase my user value for my ads? What do I do?” Well, relevant score is a lagging indicator, meaning it’s not part of the algorithm, it’s not part of the auction, it’s not part of the bidding system or anything like that, it’s basically reporting back to you feedback through a lot of different ways, a lot of the things that we had talked about here is how your ad is actually doing.

Ralph Burns:   The higher your ads relevant score, the better it’s considered to be performing all things being equal. I have seen lower relevant scores, threes, fours, fives, do really well and hit CPA KPIs for our customers. I want $10 lead or whatever it is, and they’ve got a three relevant score and they’re getting a $10 lead. Does that mean that if we had a relevant score of eight or nine, we could get that down to a five or six?

Ralph Burns:   That’s what we’re always hoping for and what we’re aiming for at Tier 11 and you should too as an advertiser. The point is that, that does give you an indication of what this user value is. I believe out of the three parts to how the auction works, this is the one that you probably have the most impact on, because you can continuously test different hooks, different ad copy, different offers, all the things that you were just talking about to make sure that, that user value part of the entire delivery system is as good as it possibly can be.

Molly Pittman:            Yeah, absolutely, I would say that all of this algorithm stuff is more science, or it’s really engineering. The ways that you fix this if you’re having a problem or you get better, is you get better at marketing, right? Marketing in a way that users are responding to today in 2019. I always go back to really the five elements of your offer, it’s gotta be something people want.

Molly Pittman:            Your targeting has got to be relevant to your audience. Your copy and your creative, of course, have to resonate, and not just in a, you directly telling them to go do something. You want to use ads now that generate that social proof, that feel native. Then the fifth is ad set like we talked about in the user experience. What happens after the click?

Molly Pittman:            If you’re always focusing on bettering those five areas and then staying up to keeping your knowledge up and staying in tune with what’s going on with Facebook’s changes more from the engineering side, you will always succeed on this platform.

Ralph Burns:   Yeah, for sure, and when all is said and done you want to have the greatest total value for your ad, which comes from all these things that you can potentially impact, all the way from bidding, making sure that you’re entering as many auctions as you possibly can with the lowest cost bid, which is the default for us. Affecting estimated action rates by some of the things that we had discussed about like page history, other factors such as ad set, campaign account history.

Ralph Burns:   A lot of things that are a little bit out of your control like the user characteristics of your audience. Then you match that in with this user value component, which is making sure that your ads are really high quality, using relevant score as an indicator as to whether or not you should be testing new and different creatives, videos, images, ad copy, headlines, things that really resonate with your audience.

Ralph Burns:   Making sure that, that post click experience is as good as it possibly can be. Actually click on your ads and go through the whole thing and opt in and buy and do test purchases, and figure out where is my message and my advertising misaligned after they actually come off Facebook and come onto my site? All these things really do factor in, and I think if you understand how it works, there is a science behind it.

Ralph Burns:   It’s not like they just threw all this stuff in a blender and just mixed it up and said, “Here you go guys.” There’s a lot of intelligence that’s behind it, and hopefully today we’ve at least enlightened you to understand it a little bit deeper, so that you can become a better marketer. I would definitely recommend, if you haven’t done it already, is to go through Facebook Blueprint.

Ralph Burns:   Yes, it is long. Yes, it is not easy to get through, but I think you’ll come out of it on the other side a better marketer and a better advertiser and somebody that can really leverage this platform for the long-haul.

Molly Pittman:            Bam.

Ralph Burns:   There you go.

Molly Pittman:            We appreciate you guys listening as always. I mean, I can’t imagine a more important information for Facebook advertisers. Share this with your friends please, it helps us, and watch this a few times to make sure you truly understand how this works, and we’ll see you guys next week.

Darren Clark:  You’ve been listening to Perpetual Traffic. For more information and to get the resources mentioned in this episode, visit digitalmarketer.com/podcast. Thank you for listening.

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