I am constantly asked by clients “how does Facebook determine which ad they will display?”

Facebook uses an auction method to determine which ad will take the available inventory (ad space available). However, the auction isn’t solely based on whom bids the highest. Facebook aims to deliver a good experience for their users so they continuously monitor as they login to Facebook a million times a day. Facebook also takes into account how interesting and relevant they think the users will find each of these advertisers’ ads, and how likely they would take an action such as clicking or making a purchase after seeing the ad.

Facebook auction then ranks each eligible ad by its Total Value, and the ad with the highest Total Value will win the auction. Total Value is a numeric value calculated using several factors including the bid you submitted when you set up your ad, Facebook predictions about how the people in your audience will react to your ad, and how relevant Facebooks thinks your audience will find your ad.

Check out Facebook’s  E-learning course for more information on this: https://www.facebookblueprint.com/student/activity/176651