How Facebook ads work

21/04/2021 1 By indiafreenotes

Facebook offers a variety of paid ad options and placements, but all ads can be broken down into three elements:

  • The campaign houses all of your assets.
  • Ad sets. If you’re targeting separate audiences with different characteristics, you’ll need an individual ad set for each.
  • Your actual ads live within your ad sets. Each ad set can hold a variety of ads that vary in color, copy, images, etc.

As an advertiser on Facebook, you can choose the audiences you want for your ads. We offer tools that help you reach people based on traits and categories like:

  • Where they live
  • Demographics: Like age, gender and more
  • Interests: Like shopping, gadgets and more
  • Behaviors: Like shopper profiles and offline interests

When people are on Facebook, they may see your ad in News Feed the personal stream of updates from their friends, family and things they care about. Since your ads reach people based on who they are and their interests, they’ll be more relevant to the people who see them.

This is a fairly straightforward process and involves the following four steps:

  • Set Up Facebook Business Manager. First, you create a Facebook page for your business. From there you can create a Business Manager account that allows you to run ads for that page. To start go to the home page for Business Manager and click “Create Account” Then log in using the email and password you used to set up your business page account.
  • Install the Facebook Pixel. Go to your website and install the Facebook pixel that allows Facebook to identify people who visited your website, create custom audiences comprised of those visitors, and then show ads to them.
  • Create Audiences to target users. This tool allows you to create and save audiences that are most relevant to your brand. Go back into Business Manager and select the “Audiences” option from the assets column.
  • Create a Facebook Ad from a Facebook post. Now you can try it out. First decide what you want to accomplish do you want more clicks, sales, video views, or leads?

How each tool works is essential to shaping your campaign.

  • The Plan section contains tools that help you learn things about your audience and give you creative ideas for running your ads. With the Audience Insights tool, you can find out a lot of information about different audiences on Facebook.
  • Create and Manage. Here you find tools for creating your ad and managing your campaigns.
  • Measure and Report. When you want to analyze how your ads are performing, check out the tools in the Measure and Report section. For example, here you can create those custom conversions to track whether ads are meeting your business goals.
  • This section gives you quick and easy access to key assets that you’ve used to build your ads, including audiences that you’ve saved for ad targeting, images you’ve used, your Facebook pixel, and more.
  • The settings area is where all of your account information is stored. Go here to update payment information, your email, and so on.

How to Get Started with Facebook Ads

Ad transparency is important for figuring out the algorithm. The ability for any user to see exactly what ads a Facebook page or Twitter account is running is particularly useful for marketers and businesses. There are three key ways that marketers can leverage this information to their advantage:

  • Research competitor campaigns and consumer markets. Seeing all the ad campaigns your competitors are running is invaluable as you consider your own campaign. Visit their landing pages and assess their call to action. What special offers are they running? How long are their videos? Are they trying to attract clicks, drive purchases, or just create awareness?
  • Get inspiration for using new ad features. New ad features roll out all the time on Facebook and Twitter. Look to major brands like Home Depot, Target, or Airbnb to see how they’re using new ad features; it’s a good way to see what each feature does and how it works without investing your first dollar.
  • Share active campaigns with customers and prospects. Because users can engage with the ads in the same way they would if the ad appeared in their news feed, customers and prospects now have an opportunity to begin a purchase or a signup they might have missed out on.


  • Provide free content to warm up your audience. Content marketing is one of the most effective ways to differentiate your business and warm up cold audiences. Provide free valuable content that entertains, educates, or inspires your ideal customer. You could use videos, lead magnets (guides, checklists, coupons, etc.), or blog posts, for example.
  • Engage people on your email list. Delivering your message via your Facebook ads and email marketing is twice as effective. Customers will see your message in their inbox and when they browse Facebook.
  • Retarget website visitors. If you install the Facebook pixel on your website, you can target people who have recently visited your site.

Currently, Facebook says it has over 800 million users in the Marketplace. The plus of Facebook Marketplace is that it’s where people are actively looking for a specific good, which means you have immediate access to an audience that is looking for you.

  • Create a campaign objective. Marketplace offers five objectives: reach, traffic, conversions, catalog sales, and video views. Once you pick one you can give your campaign a name.
  • Choose placement. Where do you want the ad to appear? Scroll down to the Placements section and pick the settings.
  • Create a video ad. In the Ad Creation section, you can upload images as well as a video. Videos tend to outperform static images in Marketplace, so that might be your best option.
  • Analyze placement results. Check out how your ad is performing in comparison to other placements. You can do this by filtering your ad reports by selecting “Placement” from the Breakdown drop-down menu.


Several experts suggest that Facebook Ads acts purely as a tool to generate demand and spark interest. Generally, we don’t check Facebook with the same intention as browsing on Amazon, Ebay or other similar sites. We probably go to the latter with a clear intention to buy or at least find out more information about a specific product that we already have in mind.

Concerning targeting, possibilities on Facebook are pretty unrivalled. You have the option to narrow down your audience based on demographic variables, including:

  • Age
  • location
  • gender
  • spoken languages
  • relationship status

You can even choose your advertising audiences based on their level of education, field of profession, and occasion-based information like:

  • Birthday month
  • expecting parents
  • engaged for 1 year
  • expats, and many more

Bidding & performance

Similar to Google Ads and other advertising platforms, Facebook operates a real-time digital auction. However, Facebook auctions evaluate advertisements slightly differently – based on their competitive value.

Unlike other advertising platforms, this is not solely made up of the maximum amount you are willing to bid, but also the intrinsic value of the ad: level of engagement that the ad attracts, user experience (for example, likes, comments, negative feedback ). For example, should you bid €3 to have your ad shown at your chosen placement, the magical and mysterious algorithms of Facebook Ads then weigh your ad’s relevance against other competing ads and organic content. The more relevant your ad is to your target audience, the less you need to bid for its delivery.

How do you know if your ad is performing well?

Start with establishing what your goal with Facebook advertising is. Is it purely to maximise the number of clicks and landing page views? Alternatively, is your aim more concrete, and you want people to take a particular action once they get directed to your landing page?

Your next step once you have delineated your goal is to instruct Facebook Ads to begin optimising to deliver your adverts to people who are more likely to take the required action.

Once you have set up your campaign accordingly, the ad will then enter the learning phase, that does precisely what it says on the tin – Facebook uses its algorithms to learn whom to show your ads, to maximise your chosen results. Ad delivery during the learning phase usually is more expensive; however, it should normalise after reaching circa 50 conversions (i.e. your desired actions taken by Facebook users).

If you are only starting with Facebook Ads, you must know some basic terms, that help you  evaluate your ads’ performance:

  • Impressions: The number of times your ad gets delivered to a Facebook user for the first time
  • Reach: The number of people that your ad has been delivered to on Facebook
  • Clicks: The number of times your ad has been clicked on
  • CTR or Click Through Rate: This is the percentage of clicks on your ad out of all the impressions it has received
  • CPC or Cost per Click: The average cost that you have paid for each click
  • CPA or Cost per Acquisition/Action: Average cost per whichever action you have defined as a conversion. This can be a newsletter signup, website purchase.
  • Frequency: The average number of times that your ad was shown to a Facebook user
  • Attribution: Different marketing-related steps that a user takes before making a purchase