How Facebook’s Ad System Works


Facebook was part of a gradual but significant change in online advertising over the past decade. As more people have moved more of their online activity from PCs to mobile phones, the lines between ads and organic content have continued to blur, particularly on popular social networking service like Instagram, Twitter and Facebook.

Why did mobile phones encourage this change?

Mobile phones offer less room on their screens for ads. Usually, there is only space for a single column of information, and that must accommodate both ads and other content. The result is that ads have moved into a more prominent position.

Consider the Google search engine. If you type the word “Samsung” into Google on a laptop, a Samsung ad is likely to appear at the top of the screen, above the list of search results chosen by Google. But if you do the same thing on a typical smartphone, the ad is likely to take up the entire screen.

Responding to the screen limitations, Facebook went further. It created a new ad system that made ads an integral part of the News Feed, which dominates the screen on mobile phones.

What exactly is a Facebook ad?

These are Facebook pages built by businesses and other organizations on the social network. Facebook allows businesses and other advertisers to serve pages straight into the News Feeds of people they had no other connection to, targeting their particular interests and behavior.

As these pages appear, people can comment on them and “like” them, just as they can with anything else that shows up in their feeds. And if people click the like button, these pages will continue to show up in their feeds — and the feeds of their Facebook “friends” — for free.

How closely can advertisers target ads?

On Facebook, people describe themselves and leave all sorts of digital bread crumbs that show their interests. Then Facebook matches these with other data it collects.

Facebook’s ad system provides ways to target geographic locations, personal interests, characteristics and behavior, including activity on other internet services and even in physical stores. Advertisers can target people based on their political affiliation; how likely they are to engage with political content; whether they like to jog, hike or hunt; what kind of beer they like; and so on.

If advertisers provide a list for email addresses, Facebook can try to target the people those addresses belong to. It can also do what is called “look-alike matching.” In this case, Facebook’s algorithms serve ads to people believed to be similar to the people those addresses belong to.

How does all that happen?

Like Google and others, Facebook runs an instant digital auction for each ad placement, considering bid prices from many advertisers. An advertiser might bid $2 to place an ad in a particular situation. Then Facebook weighs these bids against how relevant the ad is to that situation. If an ad is relevant, the advertiser need not bid as high to win the auction.

Unlike similar services, Facebook does not just consider how relevant an ad is next to the other available ads. It considers how relevant an ad is next to all other content, and it chooses ads based on how well they compete for attention with organic posts.

Aren’t ads and content supposed to be separate?

Google says it runs separate teams and separate technology for organic content and ads. The algorithm for organic content does not consider ads, and vice versa.

Facebook’s arrangement is a little different because the ad auction considers organic content as well. Ads are also reviewed by a mix of algorithms and human moderators to determine if they are breaking company policies. Facebook recently said it would add 1,000 more human moderators to the team that reviews ads.

What about Instagram and Twitter?

By the fall of 2015, the Facebook ad engine was also driving ads on Instagram, which the company had acquired three years earlier. Twitter works a bit differently from these services, but the dynamic is similar. Twitter ads are merely posts that business and others pay to place in the feeds of individuals who match certain criteria.

Is there no separation from regular content?

As all these companies point out, paid advertisements are labeled ads or “sponsored” or “promoted” content. Facebook executives add that ads also usually include some sort of call to action, such as “Liking” a page.

Rob Goldman, Facebook’s vice president of ads products, said in a statement that the people who manage content from regular users and people who manage ads coordinate their work but operate in separate organizations, with different goals and policies.

“Our goal is to make ads on Facebook just as useful and relevant as posts people see from friends and family,” Mr. Goldman said. “But we also want people to know when they’re looking at an ad, so we clearly label them as sponsored.”

But the line between ads and content has blurred in ways that may not be obvious. If you “like” an ad, for example, posts from the same account will turn up in your feed automatically, without paid promotion — and without the “sponsored” tags.

These posts are not just free advertising, Mr. Berman said, but also something that people see as more credible and that Facebook is more likely share in the feeds of these people’s “friends.” On a service like Facebook, the effect of an ad can extend well beyond what an advertiser paid for.

Is that what happened with the Russian ads?

It’s not clear. Facebook said about 10 million people had seen the ads.

Mr. Berman said that published academic studies, including one of his own, indicated that people were more likely to share sensational content — content that generates an emotional response. That could include posts related to gun control, gay rights or race relations.

If an advertiser posts an ad that is widely shared, this is still more free advertising. And from the perspective of the Facebook ad engine, that is a relevant ad. This means the cost of the next ad goes down. And the cycle continues.

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