How Do Facebook Ads Actually Work?

So many people and businesses run social ads without actually having a basic understanding of how the ads work. 

I don’t mean in terms of features, what makes good copy, and that sort of thing. I mean at a foundational level, how are the ads being served? Why you pay per click, what the “algorithm” is, why does it matter?

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What we’re going to walk through now, is a top-down view of how these platforms actually work, when it comes to running ads. 

Why is this important? Because I believe it gives you a massive edge over your competition on the platform, if you actually have an understanding of that platform, and how the ads are served. 

We don’t need to get too bogged down in the techy details, that isn’t really my cup of tea personally, and I suspect it isn’t yours either, so let’s keep to plain English. 

The first thing to understand is that FB and IG are businesses, and they want to make profit. Just like anyone else, they have their own goals, and they have their own targets, shareholders, stakeholders, and need to make money. 

The PRIMARY way they make money is through ads. To the tune of billions. The only reason they’re able to do that, is because of how widely used their platforms are. This is important to understand, and is something you should bear in mind, and can benefit from when you’re running ads, because USER EXPERIENCE is EVERYTHING on FB.

They want people to spend as long as possible on the platform. The moment someone logs out, or isn’t online, they aren’t making money from them. So FB has a delicate balancing act of serving ads to people at the right price, so that they make money, but also don’t lose all their users because they’re left the platform, had a bad experience, or are sick of seeing loads of ads!

This is why FB is very strict, but it is also why they heavily reward advertisers that provide a positive experience, and punish those that offer a negative experience…

Look at it like this. Let’s say you’re running an ad that people aren’t interacting with particularly well. FB is going to interpret that as it being weak content, and not a positive user experience. Your ad will be served less favourably, you’ll get less valuable users seeing it, and you’ll have high CPCs. In this situation, FB couldn’t give a rats arse about you and your campaign. They wouldn’t care if you stopped marketing it because your costs were too high. If anything, you’d be doing them a favour. 

This is not the situation we want to be in. 

Second to this, let’s say we’re running an ad for an app, and we have an ad that’s killing it, getting tones of engagement, and people are landing on the app store and downloading at a 50% conversion rate. Crushing it. But, let’s say once people have downloaded the app, they’re using it for 2 minutes on average, and never opening it again, or even deleting it after downloading. Facebook will be tracking all of this if we have our pixel set up, same with our websites. We could be getting tonnes of people to our website, but no one buying our product, or even adding it to their cart. 

In this situation, FB once again would interpret this as weak content, and a poor user experience. It doesn’t want its users to be having a bad time, going to places outside the platform that they’re evidently not happy with, so again, you will get bad ad placement, high CPCs, and FB won’t be doing anything to try and ensure the success of your campaign, because it doesn’t want to. 

Now, on the other hand, lets say you have a great ad, and a great website/experience that people are spending time on, having a proper look about, buying things, completing contact forms, using your app, whatever it may be. FB interprets that as good content, and a good user experience. So in this instance, you will get good traffic costs, and favourable ad placement, which can translate into profits. If you have a campaign running profitably, what are you going to do? Scale it right? Spend more each day to keep getting results, you’ll probably spend as much as you can, strike whilst the iron is hot, make hay whilst the sun shines. FB knows this, and FB wants this, so in in this instance their algorithm will do whatever it can to keep you spending money, and engaging their users. Everybody wins. This is where you really benefit from the intelligence of FB ads manager, and can run massively successful campaigns. 

See, no one is going to tell you this stuff because it isn’t sexy and exciting. Everyone wants to talk about how you can target people based on their post code and what colour pants their wearing with dynamic contextual bullshit. But I am telling you, forget all the flashy nonsense and secret strategies, because the real secret to marketing on FB is just having a proper understanding of how the platform works…

Let’s dig into this just a little deeper. The way that this actually works is by very clever machines/computers, commonly known as the FB algorithm (#QuickMaths). The actual ad platform is run by what you could call a bidding marketplace. The space on the platform, is what we as advertisers are bidding for.

Your bids for the best part are all done automatically, but there is some smart stuff you can do by manually managing your bids, which is advanced stuff and often not worth the hassle (certainly not these days as the algorithm is so bloody good), but generally speaking in most instances you are best letting your bids be managed automatically by Facebook. This is all done by the process we just talked though. If you have a good ad, good offer, then you will get a good audience at a good price, and vice versa.

It’s also important to understand is that the users on FB have different values. What do I mean by that?

Well, certain users on the platform have a lot more money than others, or some people are more likely to buy pet-related items, some are more likely to book flights, there are many factors that contribute towards this, and what you are trying to market to them, will impact your costs. Low-value users are people on that platform that don’t really take action on ads, but they will snap up free stuff, comment on videos, like posts, that sort of thing. 

A good example of a high-value user, could be someone that is a business-owner, that likes buying luxury brands, and spending lots of money on personal development programs. People that fall into that bracket, are going to cost a little more to market to than someone that sits on the platform all day every day at home but never buying anything. 

Where as it’s important to understand this, it doesn’t mean to say that it will have a negative impact on your campaigns. Not if we follow the methodology we laid out earlier. Regardless of user value, if we are providing people with a great experience, a great offer, and our ad converts, then FB will keep our CPCs as low as it can. 

Obviously, there are some differences between FB and IG. IG generally has a slightly younger crowd, where as FB has a slightly older crowd. But it’s a complete myth that young people these days don’t use FB, because the data shows they’re still a growing audience on the platform.  

So, I’m hoping now you’ve got more clarity on how these platforms operate when it comes to ads, and what we need to have in mind when creating our campaigns. Having this understanding allows us to be better marketers. You always need the fundamentals!

When is The Right Time To Optimise/Edit A Campaign?

One of the skills that people don’t speak about much when it comes to managing paid media campaigns is knowing when and when not to make changes to a campaign.

It’s one of the most common mistakes, and in fairness, when there’s so much at stake, and emotions are involved, it’s difficult not to tweak and fiddle with the campaigns.

Scaling a campaign too fast and too hard, can result in a lot of wasted ad spend.

Making changes to a campaign before its had time to settle and gather data can mean you never get a foothold or build any momentum.

Let’s assume you’ve built out a campaign with a testing framework similar to below:

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If many of these components haven’t received a meaningful amount of data, how can you conclude that they aren’t working, or need to change?

You have to make data-driven decisions with paid media.

You cannot do that without data!

Testing is a big part of the process, as is gathering data. You have to take a measured approach to campaign management, and let the campaign make the decision-making process easier for you.

So this begs the question, how often should you make changes, and what are the signals to make changes?

These are the general rules that we follow, that we’ve established over many years, and have found to be an affective approach for us when it comes to changes and timeframes:

  1. Never make multiple significant changes at once.

If you were to change your copy, creative, landing page, and bid, all at the same time, and then your campaign shoots into new realms of profitability, then that’s fantastic. However, you aren’t able to say with confidence, which of those changes had that effect…

By making large changes once at a time, it makes it much easier to understand and witness the impact of those changes, which is something that you can hen possibly apply to other active campaigns, or any campaigns in the future.

Having profitable campaigns is brilliant, but understanding WHY they’re profitable, is just as important.

  1. Give the campaigns time

Our general rule of thumb is 72 hours as a minimum. You cannot judge a campaign based on 1 days worth of data.

If it’s a new campaign, then 72 hours isn’t even enough, the 72 hour rule only applies if you know what your baseline is. If a change hasn’t improved your baselines after 72 hours have passed, then perhaps that wasn’t a good change.

There have been countless times we’ve made a change to a campaign, and the following day is totally in the toilet, but after a few days, the campaign is performing better than ever. You have to give your campaigns time to gather data and find their feet after a change.

  1. Make changes right at the start of the day, or ideally at late in the day as possible.

When you edit a campaign, they’re essentially paused for a brief period, then trying to get back into the mixer. It’s much easier for them to do this at the start of the day than it is in the middle.

By avoiding big edits in the middle of the day, you also reduce the impact of any disturbance or inconsistency the campaigns might display on the day of the changes.

Are these rules the only way to do things? Of course not, but this is what’s worked well for us and our clients, so we’d encourage you to utilise them too!

Retargeting: Your Lowest Hanging Fruit

It’s very annoying when you get followed around the website by a business, but it bloody works! 

Retargeting campaigns are an absolute MUST for any online business, and offer the lowest hanging fruit of any opportunities for sales that you have. 

So what is retargeting, and how does it work?

A very common example would be abandoned carts. 

You go to a website, add some items to your cart, but for whatever reason you don’t complete your purchase, perhaps you get distracted, or decide against the products. 

Then, conveniently, you see an ad for those very products the following day, and they’ve even included a 10% discount code in the ad! You go back to the website, enter the code, and get your items with a discount, result! 

That’s the goal of a retargeting campaign. It delivers specific ads, to specific people, that have/haven’t taken a specific action. 

So let’s say your generating leads for your business. By utilising tracking pixels on your web pages, you can create an audience of people that visited your website, but didn’t take action. 

You can then serve ads exclusivity to those people, giving them reasons to come back and take action. 

Not only is this powerful as it can sometimes just act as a reminder of sorts, but it also gives you the opportunity to handle objections, further promote your product, show testimonials, reviews, and any content you feel that will help sell your brand. 

They’re also very cheap campaigns to run, compared to prospecting campaigns, as you’re running to a specific set of people, rather than millions of potential users (unless you get millions of website visitors a month of course). 

You can also get quite strategic with your retargeting, it’s not just simply about getting people to come back and take an action. Some other users for retargeting are:

  • Upselling other products or services
  • Nurturing content before a scheduled call or meeting
  • UGC content of other people using your product 
  • Press content to build credibility 

If there’s anyone you should be marketing to with digital campaigns, it’s the people who already know who you are, and have considered purchasing from you.

Paid Social Ad Targeting (the basics): Go Broad or Go Home

Targeting is an enormous topic when it comes to Facebook ads. So much so, that there is a galactic amount of misinformation out there about targeting on FB, a lot of outdated information, and frankly most people have a very distorted understanding of it.

So I’m going to ask you to approach this with a clean slate in your mind. Because despite the amount of misinformation out there, targeting on FB is probably the easiest, and simplest part of building a successful campaign.

There are countless ads out there from people saying that targeting is the be all and end all, and that you need to be using their secret strategies, their 4 simple steps, or some other crap. It just isn’t true. Yes, in its early days, you could really exploit the targeting features of Facebook, but these days things are much more simplified and there’s a number of reasons for that.

General rule of thumb, if anyone ever tells you that they have some kind of secret sauce, hidden technique, or any other nonsense that suggests that they have some kind of edge over FB or that they someone know how the platform works better than FB do themselves, just steer clear of them. The people that really thrive on this platform, and the people that have a track record of actually managing successful campaigns, understand that targeting success comes from understanding how the tools work, and how Facebook works as a platform.

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So what targeting options are available? Which should you pay attention to?

You can target people based on:

  • Their location (at that moment, or where they live)
  • Demographics, their age and gender
  • Their device (iPhone, Android tablet, etc)
  • Day and time (most people run their campaigns 24/7, but you can run on selected times and days with lifetime budgets vs daily budgets)
  • Placement (FB feed, IG reels, IG stories, etc)
  • Interest and behaviours (E.G., vegans that also like cooking, parents that like to travel, etc).
  • Custom audiences (your followers, website visitors, people that watched a particular piece of content, customers, etc)
  • Lookalike audiences (a very powerful tool where Facebook will essentially provide you with a list of people that are highly similar to a custom audience you provide)

With such a plethora of options available, it’s easy to understand why some people would get overwhelmed with the options, or get VERY granular with their targeting.

As said before, in the past, being very precise was the way to go, and very effective. However, in this day and age, the broader your audience can be, the better, as it gives the algorithm complete freedom to deliver your ads to whoever is responding best to them.

For example the targeting for one of our campaigns (let’s say it’s for a baby product as an example) could look like:

  1. 20-60 year olds on Facebook, 7 days a week, 6am to 8pm.

Where as a less experienced marketer, may assume that it would be better to target:

  1. Mums of young children, aged 25-35, that are interesting in early learning centre, work part-time, and donate to charity (based on an avatar that has pulled together based on consumer research).

In theory, audience 2 should do better, it’s more “targeted” right?


Unless you’re using a tiny budget, all this targeting will do is limit the number of people your ads can be served to, increase frequency, and increase CPM’s.

Due to changes in privacy policies, cookies, and GDPR, FB cannot provide you as a marketer the level of specificity that it used to.

Sure, in that audience, some of your target market will be there. But what about the friends, uncles, and grandmothers that could buy it as a gift?

What about the mums that FB doesn’t have segmented as a parent?

What about the mums that donate to charity that also aren’t in that segment, or the early learning centre?

What about the mums outside of those age brackets, do you know for a fact they prefer your product to younger or older mothers? That they have more purchasing power or need for your product?

The Primary thing you should be focussed on with your campaigns, is delivering a great user experience (your website, page, product) and your actual ads, your creative, and your copy.

If your creative and copy get the attention of your customers, and get them to take action, FB will optimise your targeting far better than any human can.

Not to mention it’s FAR easier to scale with broad targeting.

Let the machines do the work! Focus your efforts on producing the best ads, and TESTING different assets and copy, so the market call tell you what your customers respond best to.

Why Campaign Objectives Matter

Any campaign that you run on social (as well as other ad platforms like Google) must have an objective. Not just from you as a business, as in what you want to achieve, but as an actual setting for the campaign.

This has a big impact on not just who sees your ad, but your costs, your results, and what your ads will automatically optimise for.

Objectives are set at the campaign level. In your ad set, you can change what your ad optimises for in more detail, but it’s typically best to leave that as the default setting.

The best way that I can communicate this to you, is to walk through some of the campaign objectives, and what they actually do. Some of them aren’t particularly useful, so it’s important to understand what objectives you should be using, so you can get the desired outcome for your campaign.

Let’s use Facebook ads as an example:

So firstly you can see that the objectives are broken up into 3 different sections. Awareness, consideration, and conversion. At a top-down level, these effectively mean exactly what they sound like.

The idea of awareness campaigns is to effectively get you eyeballs, put you in front of users. Consideration, is to get them interested, to engage with you in some way. Conversion, is to get them to complete and action like a purchase or sign up.

Let’s go through each of these 1 by 1:

Brand Awareness – The idea of this objective is to effectively put your brand/offer in front of as many people as possible. The idea here is mass number of eyeballs, for as little amount of spend as possible. Which may sound great, however there isn’t much taken into account here in terms of the quality of those users, or how likely they are to actually engage with you or be interested in what you’re offering. However, they can be good for introducing new people to your brand, and pushing out content.  Do not expect these campaigns to directly generate revenue for you.

If you’re looking to generate leads, website sales, appointments, anything direct response, you’re typically best just avoiding these types of campaigns.

For example. You’re a car leasing company running an ad about your new Range Rover Evoque offer, and want to generate enquires. This is not for you.

On the other hand, let’s say you’re Hellmans, and you’re releasing a new plant-based mayonnaise that’s going into stores next month and you want to make people aware of it, this is a highly cost-effective strategy that will in most instances get you more eyeballs than a TV ad could.

Reach – Same as above essentially but measured differently. Brand awareness has more of a focus on impressions (appearing on someone’s device) whereas Reach aims to ensure the user actually reads/watches what you’re putting delivering.

Traffic – Link Clicks – This will get you exactly what you’re asking for, clicks on your ads. They’re a bit of a trap in our opinion. Just because someone is willing to click your ad, doesn’t mean they’re willing to buy. Intent matters, and there are millions of FB users that will happily click ads, fill out enquiry forms, add things to their cart, but never buy.

Engagement – These used to be absolutely fantastic, but given the non-organic way things have gone on FB in particular, and somewhat on IG, they’re nowhere near as valuable anymore. Particularly as encouraging people to engage with your post, particularly for giveaways or offers, is now against FB’s ad policy. Avoid.

App Installs – What it says on the tin. If you’re looking to get new users for your app, this is what you’ll want to use. However, once you’ve gathered enough data, be mindful of what those users are doing. Your campaigns could be better off delivering for a specific event in your app such as a sign up or purchase, rather than just an install…

Video Views – Similar to reach in the sense that they’re great for getting content out, with the added benefit of FB prioritising users that it believes will watch the content in full. These can be quite good for build retargeting audiences. Step 1: Deliver video content to users (an educational piece, a testimonial piece, a press-related piece) Step 2: Create an audience of people that have watched at least one of those videos in full, and deliver your offers to them.

Lead Generation – Facebook’s infamous lead forms. Many agencies have never touched these, and many marketers that have used them would advise you against it. In most instances, we would too, however they can work exceptionally well for particular types of offers or services. High volume recruitment is an area that we’ve used these very effectively. They wouldn’t be suitable for something more tailored or high-ticket though, like legal services.

Messages – Messenger campaigns have definitely had their time on stage. They can still be used very effectively but it takes a lot more work, and in most instances you’re better off getting users to your own websites and systems rather than FB’s. Having someone engage with your FB page and engage with them there can be a great approach for some businesses, particularly smaller ones that deal with less volume and can dedicate their time to the messages (automation is very much an option but has it’s limitations). Big business will not want to flood their FB page with messages in most instances.

So these objectives would typically be used to build audiences, increase your following, and get your content out there. There’s also some smart strategies you can implement that can get you different results to a conversion campaign. They won’t always be better, but they can be sometimes. In our personal experience, these types of strategies haven’t been as effective in the last 12 months as they have been previously. The vast majority of the time when we’re building a campaign (outside of apps and brand pieces), it’s a conversion campaign.


Now, this is where the magic happens! Conversion campaigns are all based around what are called “conversion events” these are all the different tags that are tracked by the FB pixel.

So why are these types of campaign the best? Because you can build your ads, and your sales page, your funnel, around this objective and what you are trying to achieve. Facebook also has a clear understanding of what you’re asking it for, and can utilise the pixel data to optimise the ads based on what you’re asking.

Let me break this down further so it’s crystal clear.

If your campaign objection is post engagement, then Facebook will show your ads to people that it thinks are most likely to engage with your post. However, just because they like your post, or leave a comment, does that mean they’re a likely lead or customer? Of course not, there’s tonnes of people on FB that like content all the time, or share it, doesn’t mean they’re going to do business with you.

So if your objective is traffic, you’ll get people that are most likely to click your ad. But that’s it, not the people that are most likely to buy, or submit an application, or book an appointment. You get the idea?

If your campaign objective is leads, then Facebook will show your ads to people that it thinks are most likely to complete that action on your website, and become a lead. So you need to chose the objective that’s relevant to your campaign.

So, how does this work with the Facebook pixel? Well, to understand that, we need have a good understanding of what the facebook pixel is, and how it works..

The Facebook pixel is the cornerstone, the lynchpin, the holy grail of marketing on FB and IG, so you NEED to have it set up.

So the Facebook pixel works by tracking how FB users interact with your website (it’s also doing this on all websites that a pixel is installed on universally, gathering spectacular amounts of data and intelligence) What actions they take, what pages they go to, and when it comes to apps they track in-app purchases, opens, deletions, drop-off rate, everything.

We don’t need to get bogged down into the tech side of this, what we need to understand is that the Facebook pixel is our means of not just gathering data, but also optimising our campaigns, and ensuring our ad targeting is on point. So the more events you have set up on your website for your pixel, the better. If there are multiple steps in your customer journey, you’re going to want to have those tags in place, so that you’re getting pixel fires for leads, sign ups, purchases, repeat purchases, everything.

With Ecommerce you’re going to have add to cart, initiate checkout, purchase, value of purchase, everything that you need not just to assess your ads and track properly, but for FB to build an understanding of your customers, so that it can provide you with the best possible advertising experience.

On top of this, you can create your own custom conversions, and you can integrate the pixel with tonnes of third-party tools like Shopify, WordPress, Kajabi, Webinars, and all the event tags are handled automatically. Setting it up is a piece of cake but if you do get stuck, Google is your friend, and failing that just reach out to us and we will help!

Another amazing feature of the pixel is what it allows you to do with custom audiences, which is another post altogether (think targeting everyone that added to cart last month but didn’t purchase, i.e. retargeting) This is one of the biggest marketing tools to ever exist as far as we’re concerned and it is just flat out insane.

So, back to those campaign objectives. Typically, your objective should be what your goal is. Be cautious of bro-science and pretentions campaign structures, and people overcomplicating things so they can feel clever. Facebook is bloody smart, and it knows its ad platform better than anyone. As we’ve said before, if you have a good ad, and a good offer, FB will handle the most of the rest, trust us on that. Focus on delivering a good offer, and great experience, tell FB what your objective is, and let them do the heavy lifting.

Digital Marketing – In-house, or use an agency?

There is only one way to answer this question, and that’s every marketers favourite word: Depends.

It truly does though. For some businesses or projects, and in-house team is a far better option than hiring in an agency. In fact, if you can get your hiring right, in-house is more often than not going to provide better value for money than the vast majority of agencies can.

However, you could also say that hiring in-house comes with more risks than hiring an agency does. So what are the pros and cons of hiring a digital marketing agency, VS hiring staff, or using your current staff to run your campaigns?


  • Agencies aren’t as in tune with your brand and tone than you and your team will be, so it’s important you select an agency that’s either a specialist in your area, has a track record in your area, or has the ability to adopt to different sectors seamlessly. 
  • You don’t have 100% control over an agency. In fairness, that could be both a good thing and a bad thing! 
  • No skin in the game. Regardless of rhetoric, it’s very hard to find an agency that will care for your success or your outcomes as much as you and your team will.
  • Being number 1 priority. Good agencies will always have other clients, but it’s exceptionally rare for your staff to have other jobs! 
  • They aren’t at your full disposal in most cases. Weekly calls, emails, etc. It isn’t the same as having someone in the office, or that you can call anytime. With that said, it does make for more structured, strategic, and focussed actions (with the right agency). 


(this is all in the assumption that you pick the right agency) 

  • You get access to a diverse team with multiple skillsets. That’s what an agency is all about, you’re paying for access to talent, and for someone else to take responsibility. For the cost of 1-3 premium staff, you’re getting access to senior staff at the agency with years of experience, graphic designers, web developers, SEO experts, copywriters, and various other specialists. It can be a big shortcut. Hiring someone that’s an expert in Google ads, Facebook ads, AND Tiktok ads could be immensely challenging. 
  • If you get wrong and pick the “wrong” agency, it could prove to be a costly mistake. BUT you can at least usually change agencies in a 1 month timeframe. It’s not that quick and easy to replace staff. Bad hires can be far more “expensive” than the wrong agency, and take longer to recover from. 
  • Agencies tend to have better lines of communications with ad platforms given the sums of ad spend that they manage, this level of access can be highly valuable. 
  • Agencies also tend to be more in tune with current best practises and trends, given their level of involvement in various sectors and ad platforms.  
  • A generous and friendly agency will wine and dine you (or take you for a day at Newmarket races in our case), and never ask for an expensive Xmas party 😉

So what’s the right option for you? I’ll try to provide a proper answer. 

I think long-term, if you can build the right team, it really pays to be able to build an in-house team so that you aren’t reliant on agencies. However, this is a big challenge, and one that will likely need to be supplemented by agency support along the way. 

For most businesses, a talented, honest, and value for money agency is going to be the best way to go for support in areas like paid media and SEO, but that doesn’t mean you shouldn’t have a view to building your own in-house team for the long-term!