Winning Meta Ads: Spend Smart, Not More

There's two worlds of Meta advertisers: Big Spenders and Smart Spenders. They have different budgets, but compete in the same auction. Most buyers don't realize that small brands can win in the auction w/o bidding more.

The auction algorithm is run on a simple equation:

Total Auction Value = Bid 💰 x Estimated Action Rate 📈 + User Value 😍

Bidding more is one way to win, but that only works if you have more money to burn than your competition.

If you increase your estimated action rate (expected ad performance) and your user value (positive user experience) you can out perform High Rollers while bidding substantially LESS than them.

Here's how.

Meta wants to favor ads that are performing well (to ensure a positive ad experience for advertisers). The more it sees that your ad is converting with volume and efficiency, it will increase your Estimated Action Rate score and your auction performance will increase.

Increase Estimated Action Rate:

1️⃣ Have a very efficient funnel that has high conversion rates
2️⃣ Send better data to ensure 100% of all conversions are being recorded

Meta also wants to favor ads that are a positive user experience (to ensure users keep clicking more ads). The more it sees a high number of positive signals (like clicks and spending time with videos) and the less it sees negative signals (like people hiding ads), it will increase your user value score.

Increase User Value:

1️⃣ Create ad creative that is personal, relevant, and human
2️⃣ Invest in great landing pages and a fast-loading website

What is the impact? If you do a better job at boosting Estimated Action Rate and User Value scores, you can compete with brands that are spending and bidding 4x more than you.

Here's the math:

Advertiser A is a Big Spender. They're willing to bid $120 per purchase. But they have an only average click through rate and conversion rate.

$12.00 CPM = ($120 bid) X (1.00% CTR) X (1.00% CVR) X 1000 (impressions)

Advertiser B is a Smart Spender. They're only able to bid $30 per purchase. But they have a 2x higher click through rate and 2x conversion rate.

$12.00 CPM = ($30 bid) X (2.00% CTR) X (2.00% CVR) X 1000 (impressions)

So which advertiser do you want to be: the one who spends more, or the one spends smarter and wins?