About ad auctions

We use an ad auction to determine the best ad to show to a person at a given point in time. The winning ad maximises value for both people and businesses. Understanding the ad auction can help you understand your ad performance.

Each time there's an opportunity to show an ad to someone, an auction takes place to determine which ad to show to that person. Billions of auctions take place every day across the Facebook family of apps.

When advertisers create ads, they tell us who they want to show their ads to by defining a target audience. A person can fall into multiple target audiences. For example, one advertiser targets women who like skiing, while another advertiser targets all skiers who live in California. The same person (in this case, a female skier who lives in California) could fall into the target audience of both advertisers.

When there's an opportunity to show someone an ad, the ads with a target audience that the person belongs to are eligible to compete in the auction.

To ensure that the winning ad maximises value for both people and businesses, the winner of the auction is the ad with the highest total value. The total value is a combination of three major factors:

• Bid: The bid placed by an advertiser for that ad (in other words, what the advertiser is willing to pay to achieve their desired outcome). There are multiple ways to manage your bid in the ad auction. To learn more, see About bid strategies.
• Estimated action rates: An estimate of whether a particular person engages with or converts from a particular ad (in other words, the probability that showing an ad to a person leads to that desired outcome of the advertiser). Note: Engaging in clickbait and engagement bait does not improve ad performance.
• Ad quality: A measure of the quality of an ad is determined from many sources including feedback from people viewing or hiding the ad and assessments of low-quality attributes in the ad, such as withholding information, sensationalised language and engagement bait.

Together, estimated action rates and ad quality measure ad relevance. Because these are components of the auction, an ad that's more relevant to a person could win an auction against ads with higher bids. Use ad relevance diagnostics to diagnose whether the ads you ran were relevant to the audience you reached.

We may use data about you and your ad account to make adjustments that could affect auction outcomes and prices, such as to improve ad quality and relevance, test or support ad types and ad products, optimise the auction or comply with the law, enforce our terms, policies and other standards including fostering a safe and trustworthy environment on our platform. But we won't charge you more than your bid to show your ad. To learn more about tools to manage your ad spending, see About budgets and About cost and bid controls.