The Relevant: Demystifying Facebook’s oCPM Algorithm And Relevance Score

Anyone familiar with advertising on Facebook knows that getting your ad seen, let alone converting, can be quite the arduous task.

bear attacking leo

Maybe not quite as arduous as dragging your bear­ mauled body 200 miles through a frozen forest, but still a challenge nonetheless. Competition for ad views on Facebook (public symbol: FB) increases every month as the network continues forward as one of the fastest growing direct response channels available. This advertising “gold rush” has led Facebook to vastly improve its advertising offerings and algorithms. These improvements and growth in scale and revenue contribution now rival even the juggernaut of Google Adwords.

In a landscape with much competition, and an equal amount of potential, how do you survive? The first step is to understand how to get ahead. And to do that on Facebook, you need to understand how to utilize the oCPM algorithm and your relevance score.

WHAT IS oCPM / HOW IT WORKS

Facebook provides advertisers with a variety of bid types. They are:

  • Cost Per Mille (CPM): Often used when the desired metric is impressions (reach x frequency).
  • Cost Per Click (CPC): Often used when the desired metric is an action (click­through, website clicks).
  • Optimized Cost Per Mille (oCPM): Allows for bidding based on desired end goal                                                             .

oCPM, or optimized “cost per mille” (cost per 1,000 impressions), is the least understood bid type but arguably the most versatile and powerful, as the algorithm is designed to converge on a target CPA (cost per action) or to auto bid (letting Facebook decide). oCPM bids allow advertisers to optimize their spending toward users who are most likely to complete one or more specific actions. To quote Facebook directly, optimized CPM allows an advertiser to prioritize their marketing goals, and then automatically delivers ads against those goals in the most effective way possible.”

In short, you can target your advertising dollars instead of treading aimlessly through the digital tundra.

leo walking through the mountains

Advertisers can direct Facebook’s algorithms to target against these goals:

  • Actions: These are actions that occur both on­ or off­Facebook, such as liking a page, setting up the app, or completing a transaction.
  • Reach: This is the number of times an impression was presented to a user for the first time.
  • Clicks: This is the number of actual clicks.
  • Social Impressions: These are the impressions of the ad, in a social context, such as a friend liking a page.

 

facebook ad budgets bidSo once you’ve set the parameters, how does the algorithm actually function? Typically, the following actions happen:

  1. Facebook presents the campaign in a burst in order to elicit as much data as possible in a short amount of time.
  2. From this, it will begin to gather conversion data.
  3. If the campaign cannot gather enough conversion data, Facebook will slow down your ad’s reach and delivery so that other and more profitable advertisers can take your impressions instead.
  4. If your campaign succeeds in gathering a significant amount of conversion data, it will begin investigating the attributes of these conversions and find others that are similar using its “lookalike” algorithm.

Now let’s take a look at how you can ensure that you set your oCPM campaign in a way that it succeeds, rather than underperforming and getting scavenged by the wolves (i.e. ­ other advertisers).

YOUR RELEVANCE SCORE

After fine­tuning the targets and goals of your oCPM campaign, you must develop a strategy to ensure that your ad is captivating. Worried on how to do this?

 

leo hiding in the woods

The task isn’t as daunting when you learn the basics of Facebook’s “Relevance Score.” Your ad’s relevance score is determined by Facebook using a variety of factors, including CTR    percentage, positive and negative engagement, and conversion rate percentage. In this case:

  • Positive Feedback: this is the number of times Facebook expects people to take a desired action with your ad, such as sharing, liking, or helping you achieve your objective.
  • Negative Feedback: this is the number of times Facebook expects people to hide your ad or indicate a negative experience such as choosing not to see ads from you.

facebook relevance score

Your ad’s relevance score is important as it determines not only the cost you pay, but also how explosive your ad’s reach will be. And if your ad’s relevance score is low, your ad reach shrinks, which increases your oCPM costs.

But there’s no need to give up hope just yet.

leo on top of a mountaintop

IMPROVING YOUR oCPM CONVERSION RATE AND RELEVANCE SCORE

How do you keep your Facebook ads relevant? Doing so not only improves and maintains your relevance score, but keeps your oCPM conversion high and your costs manageable. Here are 8 tips to consider when setting up your oCPM campaign on Facebook:

1. Hyperspecificity to Your Target Audience

When creating an ad, be as specific as possible when defining your target, looking at parameters such as interests, age, gender, etc. If you notice that your relevance score increases after these changes have been made, continue to fine­tune until you are targeting a very specific audience. Facebook provides a Custom Audiences tool for this purpose.

facebook custom audience

2. Run Seasonally Relevant Promotions

Be sure to run seasonally appropriate promotions, such as targeting North American customers with summer goods in June, while targeting Australian customers with winter goods at the same time. Keep an eye on the calendar and make sure to use it to your advantage when crafting your campaigns.

3. Improve Your Call ­to ­Action

Does your advertising use call to action buttons? Is this a desired action of your oCPM campaign? If so, make sure you are giving thought to the words that you use on Facebook’s call to action buttons. Conversion rates improve when users clearly understand the ad’s objective.

facebook shop now call to action button

 

4. Avoid Ad Fatigue

Each of your Facebook ads have a “lifespan,” especially if your targeted audience is small. Ad fatigue is real and if your audience is seeing your ad multiple times, your chance of engagement decreases. Combat ad fatigue by refreshing your ads often.

5. Test Your Ads

Testing variations of your ads can be a simple, yet effective way to see what approach to which your audience responds best. With your images, test using human faces, mascots, logos, textual images, or funny images. You can also test the same ad on a variety of audiences, in small sample sizes, to see which group elicits the highest relevance score.


Facebook AB Testing

6. Avoid Offensive Content

Offensive or risque content might grab people’s attention, but having your ad flagged as inappropriate can do considerable harm to your relevance score. Avoid the risk by refraining from using offensive or controversial material in your Facebook ads.

7. Reign in Your Bidding and Budgeting

When it comes to your bidding and budgeting in regards to oCPM, keep in mind:

  1. That bidding too high will end up with your conversions costing more than they should. If you bid too low, you will not maximize the amount of possible conversions. Make sure you are bidding the amount at which you truly value the conversion.
  2. Refrain from changing your bids and budgets more than three times per day. Facebook’s algorithm needs time to work, and by changing your parameters too often, you create poor conditions for it to work properly.

8. Find out if oCPM is Truly Right for You

As mentioned, oCPM is a very versatile tool. However, it isn’t right for everyone in every circumstance. For oCPM to work well, the right candidate needs:

  1. A minimum of 25 conversions with a 0.5% conversion rate based on a 1­day click­through rate: This is the minimum volume Facebook requires to collect enough data for its algorithm to function properly.
  2. A budget at least five times the target value: Facebook’s algorithm needs to be able to buy a certain amount of impressions before estimating a conversion rate. If your budget is too small, the algorithm will again not be able to gather enough data to function properly.

GROWTH IDEAS

With all of the above best practices in mind, what are some things that you can do immediately in order to figure out how to squeeze the best performance out of your Facebook campaigns?

  • Keep a big queue of ads to rotate for your core audience. As soon as a certain ad doesn’t appear to be working (you can usually determine this in 2-4 hours), have something waiting in the wings that could take off
  • Keep in mind that Facebook ads are like comets: they can burn brightly and flame out quickly. Have a collection of backups with different products or offers in case fatigue sets in
  • Build your ads with an element of virality: if you have ad creative that is provocative or unique, you will likely get more clicks that can result in higher Relevance Scores & Reach
  • If it ain’t broke, don’t fix it. If a particular Facebook ad is taking off, don’t touch it and let the oCPM algorithm work its magic
  • If an ad set is taking off, keep increasing the budget so the Reach can be maximized
  • Try to manipulate ad delivery in the beginning stages: hook a refined custom audience, lookalike audience or a small home run customer segment and then expand the budget while loosening your targeting to get maximum Reach in a short amount of time
  • Piggy back on top of other viral elements that might be trending, such as major holidays, major news events, etc.

FINAL WORD

Knowledge, research, and a bit of patience are all required when trying to best use oCPM bidding on Facebook. Using best practices in advertising and constantly refining your target audiences based on the fluctuations to your relevance score will help you create and manage cost ­effective conversions in your advertising­­ allowing you to quickly outpace all of the others in the increasingly competitive world of Facebook advertising.

 

leo running through the forest

SOURCES

https://bn.co/howdoesfacebookocpmbiddingwork/
https://developers.facebook.com/docs/marketingapi/optimizedcpm/v2.6
https://developers.facebook.com/docs/marketingapi/lookalikeaudiencetargeting/v2.6
http://blog.adstage.io/2014/06/16/learnaboutfacebookocpmbidding/
https://www.facebook.com/business/a/adsrelevancescore
http://blog.qwaya.com/learnhowtogetmaxoutoffacebooksoptimizedcpm
https://adespresso.com/academy/blog/4strategiesimprovefacebookadsrelevancescore/

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