The Facebook Ad Algorithm: How to Maximise Your (Budget and) Reach Without Increasing Spend

by Josh Barney

DISCLAIMER: This article is for Facebook advertisers who want to up their game. It won’t help users who do not run FB ads.

Let’s kick this thing off by dispelling a myth about the Facebook ads algorithm:

Facebook does NOT rank the order of ads on their newsfeed purely based on the cash bid of an advertiser.

Ranking ads by an advertiser’s cash bid used to be the case (once upon a time), but it isn’t anymore. And the more you understand why, what the Facebook ads algorithm is and what it uses as key ad ranking signals, the sooner your audience will see your FB ads (and therefore, the more chance they have of converting). 

Why Aren’t Facebook Ads Ranked By Cash Bid? 

Whilst it might sound like perfect sense to please the highest spending advertisers (by placing their ads above everyone else’s), Facebook’s ad algorithm actually uses other signals to rank ads.

This is because Facebook aim for long-term growth and dominance and in order for them to do that, they must have their most valuable commodity at the core of their aims, the users.

If the number of active users on Facebook declines, it means fewer people to advertise to and less revenue from advertisers (like you and me).

facebook monthly active users
Facebook have seen a growth in Monthly Active Users in every quarter since 2008. Source: Statista

The short-term gains of optimising newsfeeds for the highest bidders is LESS important than their user experience. This is because a user who returns time and time again is worth much more than somebody who only logs in once.

Think about it…

…would you rather have £1 today and nothing tomorrow, or 50p every day?

Of course, Facebook is still a business that’s trying to be as profitable as possible. They will show ads from the highest bidders to their users, but if the ad isn’t optimised to appeal to the Facebook ads algorithm, it will appear lower on newsfeeds and selected placements…

Why Is It Important For You to Appeal to the Facebook Ad Algorithm? 

Before discussing why it’s important for your ad to rank higher, you must understand why users are actually logging on to Facebook.

These are my top 3 reasons people visit Facebook:

  1. They’re bored and have time to kill
  2. They want to catch up with their Facebook friends and see what they’ve been up to
  3. They want to share something new with their friends

But as advertisers, there’s one thing we can be sure they aren’t there to do:

  • View, interact and take action from Facebook ads (unless they’re FB ad geeks like me)
facebook ad examples
Nobody is logging onto Facebook in the hope of making a purchase or sharing their contact information!

When you understand this, you can begin to see why it’s so important for you to appeal to the Facebook ad algorithm and rank as high as possible.

The higher you appear, the more attention you stand to gain (especially from users who have scrolled a long way through the feed and are already fatigued).

But not just that…

…if your competitors are appealing to the algorithm and appearing higher on the feed, they stand a better chance of converting (for whatever their objective is) than you! That’s because even if your ad was lined up to appear next (as an ad) it won’t be seen by that user if they leave Facebook and follow the action of the FIRST ad.

It’s crucial to your ROAS that your ad appeals to the Facebook ad algorithm and ranks as high as possible for your target audience.

The Facebook Ad Algorithm Competition

facebook ad

I will tell you how the Facebook ad algorithm works very soon (promise!), but before we get into it, there’s one more thing you need to know…

…you aren’t only competing with brands in the same industry as you.

As a Facebook advertiser, you’re actually competing against businesses in tons of different industries, making your job even tougher.Click To Tweet

The life of an advertiser would be so simple if people only had ONE interest, but unfortunately, that just isn’t the case.

If I visit my Facebook newsfeed now, I will see ads for marketing tools (tons of them), Facebook ad tools, fitness-related products, nutrition, fashion, Shopify (plug-ins), sports, furniture (I recently moved house and have been placed into loads of custom audiences), books, holidays…

facebook ads competition

….and that’s because my interests overlap into a wide variety of different categories.

But don’t take my word for it, go to your Facebook newsfeed and see how many different industries are targeting you! If you’re an active Facebook user and internet shopper, I’m sure you’ll see at least 3.

And, what makes it even more difficult, is that you aren’t just competing against other advertisers who are using the same audience type.

For instance, my custom audience could overlap with another advertiser’s interest-based or lookalike audience.

BTW: Learn how to build targeted Facebook audiences and implement them into high-converting Facebook ad campaigns in the Einstein Marketer Studio (for free).

There can be literally 1,000’s of advertisers competing for the same audience member, so you MUST do everything in your power to appeal to the Facebook ads algorithm and give your ad the best chance of succeeding (by reaching the most likely users to convert, at the perfect time).

If this still doesn’t make sense, go back to your Facebook profile, look at all the ad placements and scroll through your newsfeed. All of those advertisers are targeting YOU, and the ads that appeal most to the Facebook ad algorithm appear at the top (and have much more chance of achieving their objective).

The Facebook Ads Algorithm

It’s been a long (and very important road) to this point in our Facebook ad algorithm article, but it’s finally time to analyse the top factors that will affect your ad’s rank.

Facebook cite 3 main components that make up their ad algorithm, each of these factors are as important as the last and none should be ignored.Click To Tweet

As a Facebook advertiser, your ads are placed into an auction based on how you score for all three of these factors (not just your monetary bid!). The higher your combined (metaphorical) score, the higher your ad will appear.

Let’s look at these 3 factors and explain what you can do to appeal to the Facebook ad algorithm:


facebook ads bidding algorithm

Predictably (and as already mentioned) the cash bid that you place on your Facebook ads will affect its ranking.

There are three different ways to bid with Facebook ads:

  1. Lowest-Cost: This is the default bidding option (and the one I recommend highest). Using this option, you allow Facebook to spend your entire Budget (in your chosen time frame), for the lowest cost per action, e.g. engagement, lead gen, conversion. By allowing Facebook to bid for you, you allow their AI to prime your bids for the 2 other Facebook ad algorithm factors.
  2. Cost Cap: This option places a fixed amount as your highest average cost per action. It can be used if you have a set profit margin, or are unwilling to spend too much per action from your Facebook ads, but it will receive lower impressions, move you further down the pecking order and limit your capabilities.
  3. Bid Cap: The final option tells Facebook to never bid any higher than a fixed amount (chosen by you). Again, it works well for reducing spend per action (or impression), but again, it will negatively affect your impressions, reach and ad rank in the algorithm.
facebook ad bid strategy

If you want to appeal to the Facebook ad algorithm, it’s important that you choose the first option, ‘Lowest-Cost’. This is already selected as a default option and I strongly recommend that you do not change this setting.

By using this option, you set a ‘Daily’ or ‘Lifetime’ Budget (I’ve always found that Daily is better) and allow Facebook to bid for you. This gives their AI the opportunity to bid higher for users who are more likely to interact with your ad (and learn whilst doing this).

Even if you do have a slim budget that you’re prepared to spend on Facebook ads, it’s better to track their performance than set a fixed ‘cost’ or ‘bid’ cap.

Estimated Action Rate 

The estimated action rate is exactly what it says on the tin, it’s Facebook’s guess at how well your ad will achieve your desired objective.

The ‘action’ mentioned in this crucial three-word factor, depends on your campaign objective. If you were running a conversions campaign, it would be Facebook’s estimation of how well your ad will convert. The same goes for engagement, traffic, lead gen…

…but Facebook’s estimate isn’t based on blind guesses.

They track how well your ads are performing and adjust your Estimated Action Rate as they continue to run, as well as looking at your ad set, the quality of your campaign and your account history.

There’s a lot to be learnt from the Estimated Action Rate and a lot you can do to increase Facebook’s estimate.

Let’s start by looking at Facebook’s new and improved relevancy scores.

facebook ad relevancy score

This crucial Facebook ad algorithm metric historically ranked your ad from 1-10, with 10 being the highest relevancy.

BTW: A relevancy score is Facebook’s metric for showing how well your target audience is responding to your ad. If you have a rubbish relevancy score, you either have an issue with your targeting (audiences) or your ad content.

Facebook has split their relevancy score into 3 separate metrics:

  • Quality Ranking: A ranking of the ad’s perceived quality. Measured by feedback and the ad’s post-click experience.
  • Engagement Rate Ranking: A ranking of your ad’s engagement levels, measured by likes, comments, clicks and shares.
  • Conversion Rate Ranking: A ranking of your ad’s conversion rate, measured by conversions.

All of these factors are ranked against other advertisers who have competed for the same audience. Conversion Rate Ranking will only rank you against others who are using the ‘Conversions’ objective.

The metric has also changed from the traditional 1-10 score. It now ranks by averages: e.g. Below Average (bottom 10%), Average, Above Average…to name a few.

facebook ad relevancy score

When you run ads, it’s crucial that you keep a close eye on these relevancy scores, especially the metric that’s most relevant to your campaign objective. If you have an ad that is performing ‘below average’ for your desired objective, it’s an indication that the Facebook ad algorithm won’t rank your ad high…

…and it’s probably a good idea to stop running it and analyse what went wrong.

The relevancy scores give you a great opportunity to learn what works, use the data to analyse performance and improve in future, but it’s only a reactionary tactic.

BTW: A relevance score will not appear immediately on ads, Facebook needs time and impressions to figure out your score.

Another huge factor that will affect your Estimated Action Rate is negative feedback on your ad. Negative feedback is measured in terms of users (your target audience) hiding, reporting or unliking your page.

facebook ad negative feedback

Negative feedback can be avoided by showing your ad to highly-targeted audiences (that will definitely find your ad useful) and tightening your ad creative and copy, so it speaks directly to these audiences.

An irrelevant ad shown to broad, poorly targeted audiences will be seen as spam and will receive lots of negative feedback, which tells the Facebook ad algorithm that they should bump it down in their order.

Another tactic you can implement that will help improve your Estimated Action Rate is your account history. If you’re responsive to users who engage with your post and drive lots of new page likes, it tells Facebook that you are well-matched to your audience and you’ll appeal much more to the Facebook ad algorithm.

Make sure you respond to as many comments as possible and try to use comments to create conversations. The simplest way to do this is to simply ask a question of the user who commented.

facebook ad engagement

When it comes to Estimated Action Rate it’s important to think about why Facebook doesn’t rank ads purely by cash bid.

Facebook want to run ads that engage people, improve user experience and most importantly, won’t damage their platform. Keep this in mind when creating ads and targeting audiences.Click To Tweet

User Value

If you thought the only thing that affected your rank in the Facebook ad algorithm was your Facebook ad, you were wrong.

User Value measures the actions a user takes AFTER they click on your ad and if this scores poorly, it will completely tank your campaign, ad ranking and can cause a huge spike in your cost per acquisition.

Whilst Facebook is unable to measure a user’s emotion, they can track their behaviour by looking at the amount of time a user spends on your landing page, tracking back-clicks and immediate exits.

user value landing page

Facebook measures User Value to avoid running click-bait or misleading ads, as again, this will negatively impact their reputation and user’s experience.

To avoid a poor user value score, you must ensure that your landing pages match your ad as closely as possible. This means using congruent colours and branding, matching your ad copy language, and not making any false claims in your ad creative, copy or headlines.

Getting users to click on your ad is only half the battle. The quality of your landing pages is just as (if not more) important than the ad itself.Click To Tweet

If you’re promoting content, make sure you don’t use clickbait headlines and try to encourage movement (around your website) from your visitors. A video is a great way to immediately engage a visitor and have them stick on your landing page for longer.

Think of your ad and landing page as a journey. The start (your ad) will only be viewed in a positive light, if the user doesn’t have a negative experience further down the line (on your landing pages).

Make sure you go through the entire ‘journey’ of your prospects (from your Facebook ads), consider what you can do to improve their experience, make your pages as relevant to your ad as possible and ensure there are no irrelevant or hidden surprises.


So, that’s how the Facebook ad algorithm works, why you need to appeal to it, what you can do to improve your rank and how it works…

…hopefully, I’ve covered all the bases. If I didn’t, drop me a line in the comments.

Facebook is the world’s largest social network because they’re smart. The more users they have, the more money they can make in the long term…

…that means sacrificing the highest cash bidders in favour of advertisers who improve their user’s experience.

Use the tips and advice in this article to up your game…

…and just in case that wasn’t enough Social Media Marketing knowledge, check out:

Josh is the Founder of We Imagine Media, an award-winning content marketer, best selling author and creator of the He creates and strategises content, sharing the most successful tactics with his lovely audience. He hates writing in the third person, follow him on the social links so he can get back to writing as himself.

4 Responses

    1. Hey Sharon, thanks for the comment.

      A boosted post is a Facebook Ad, but Facebook choose the ad options for you.

      Creating your own Facebook ad will be much more effective than hitting the ‘boost post’ button.

  1. Hi

    This is informative and useful. Could you please suggest some strategies for maximize conversions and reach without increasing amount when using google adwords?

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