HOW FACEBOOK BIDS AUCTION WORKS & TIPS TO MANAGE YOUR CAMPAIGNS EFFECTIVELY.
I watched a Video that talks about how bids affects the ads and enables them to outrank competitors. This is not like Google Adwords where you bid to outrank competitors.

Advertisers are reaching people receptive to their ads and users are seeing something they're interested in. Facebook's goal is to match the right ad to the right person at the right time. This is different than a traditional auction because the winner isn't the ad with the highest monetary bid, but the ad that creates the most total value.

I would rather encourage advertisers (People) to create quality and relevant Ads. Relevance score is a relative metric. This means that it only measures how relevant your ad is compared to other ads targeting the same audience.

Now let me share with you how factors is combined together, to determine a winner.

When an auction occurs, Facebook standardize the factors (Bid Estimated action rates,Ad quality and Relevance, to account for different optimization events, then combine them into a total value. The ad with the highest total value wins and gets shown.

This means that an ad that's high quality and very relevant can beat an ad that has a higher bid, but is lower quality and has less relevance.

However, to get the most out of advertising on Facebook, you should strive to maximize all factors - enable facebook to bid competitively, create compelling ads and target them to the right audience. Doing so allows facebook to show your ad more, which allows facebook to learn more about your ad and its audience, which leads to even more efficient and effective delivery.

How do you determine what the winner gets charged?

Total values determine who wins an auction, but not when or how much the winner is charged.

You get charged when the result you've chosen to be charged for during ad set creation occurs.

The amount you get charged is the minimum amount we would've needed to set your bid at to win the auction. This means two things:

You'll often be charged less than your bid.

There's no advantage to setting overly restrictive bid caps. In fact, doing so may lead to losing auctions you would've otherwise won at no additional cost.

I hope this helps.

I remain Akinyemi, a Marketing Wizard at [url=climaxbox.com.ng]Climaxbox[/url].

Google Adwords & Facebook Ads Certified.

Top Contributor on Google Advertisers Forum(2017).