Here’s what’s actually going on

Quick Overview

The Facebook ad serving algorithm prioritizes user value based on an auction system that multiplies the advertiser's bid by the quality/relevance score and estimated action rate/user value, meaning engagement (likes, saves, shares) drives lower costs (CPMs) and higher efficiency, effectively making ad creative the primary targeting mechanism, especially as interest targeting declines in 2024.

Key Points: The Facebook ad serving algorithm functions as an auction system where ad ranking is determined by a formula involving Bid x (Quality & Relevance Score) x (Estimated Action Rate & User Value). High engagement metrics like likes, saves, and shares directly drive lower ad costs (CPMs) and increase overall ad efficiency. In 2024, creative content becomes the primary targeting mechanism because interest targeting is effectively dead and being removed from Facebook. The speaker has spent over $150 million on Facebook ads in the last 10 years and made every mistake possible. Restricting ad delivery by narrow demographics (e.g., only targeting females or only 50+) excludes potential incremental conversions from other groups (e.g., males or ages 18-50). Facebook knows user location and who they spend time with, which contributes to the data used for ad serving, fueling conspiracy theories about listening in on conversations. When optimizing campaigns, choosing 'purchase' as the objective directs the algorithm to find people most likely to buy, whereas optimizing for 'traffic and clicks' finds people who only click.

Context: This video features a speaker, who claims to have spent over $150 million on Facebook ads over the last decade, aiming to expose the core mechanics of the Facebook ad serving algorithm. He addresses common user suspicions, such as Facebook listening to conversations, and transitions into explaining the mathematical formula that determines ad placement and cost within the platform's auction system, emphasizing the shift in importance from traditional interest targeting to creative quality.