The Facebook Ads Advertising Algorithm Explained

Have you ever talked about something to a friend or family member and then seen ads about the exact same thing on Facebook and Instagram the next day?

If it happened once you might think it’s just a coincidence…

But if it keeps happening, you might start to think Facebook is listening to what you say or type on your phone

See the video below for a quick explanation as to how the Facebook ads algorithm works:

YouTube player

Is Facebook tracking what you say or type on your phone?

Facebook denies that it listens to anything you say or type on your phone when using messaging apps like Whatsapp or Facebook Messenger. But a lot of people think Facebook are lying and they ARE tracking what you say on your phone.

Is there any evidence of Facebook tracking what you say?

No, there is no evidence that Facebook is tracking what you say or type on your phone. Interestingly, a cyber security company in the UK tested this in 2020 by buying two brand new iPhones and two new Samsung Android phones.

What did they do?

They opened the Facebook app and kept two phones in silence and the other two were played a series of pet food adverts over 3 days.

The results?

They found no related ads to pet food and no technical evidence of Facebook listening.

So the results indicate it doesn’t look like your phone IS listening to you… (at least from this test)

So the big question is…

How does Facebook show you relevant & targeted ads?

It all comes down to using a combination of big data and Ai.

Here’s how it works…

1. Facebook tracks millions of data points on each of its users

This includes what websites you visit and what apps you use on your phone.

Even though they don’t know what you say or type on a granular level, they can see what websites you visit and what text those websites contain.

They can also see what apps you use and (depending on how much information the app shares with Facebook) Facebook can also see certain types of activity inside those apps.

2. Based on these data points it creates different interests for each of its users

Facebook uses these data points to target people when advertising on Facebook ads.

If you advertise on Facebook, this is what you see under “Interest Targeting”.

See also: How to target people searching Google with Facebook Ads

For example, if you’re a business owner looking for lead generation services, you might search for lead generation content on Google. Facebook will then add you into a Facebook Ads interest called “Lead Generation”.

Facebook Ads Lead Generation

You can then target people who are searching for “Lead Generation” through Facebook ads (and this is something I actually do and it works very well!)

In your business, you can do the same thing.

You can target people with almost any interest you like through Facebook Ads.

See also: How to target business owners on Facebook ads

WAIT! Before you start advertising on Facebook it’s important you don’t waste your money. To get the best results on Facebook Ads, you need the right strategy. So watch this video I recorded here that goes through the best strategy to get predictable leads & appointments each month on Facebook Ads before you spend a penny on paid advertising.

3. Facebook looks at how you engage with the ads you see

When you crate an ad, Facebook reads the text on the ad and can even understand what the image or video is about (yes, it has technology to read what’s in an image – for example, if there are people smiling, or if there are animals or what location the image is showing).

As Facebook shows ads to different people on Facebook, Instagram and other Facebook owned properties that match its interest targeting, it looks at how people engage with the ad.

What Facebook looks for in its ads:

Do people skip the Facebook ad? This shows the person is not interested in this type of content.

Do people click on the Facebook ad? This shows they are somewhat interested.

Do people convert into a lead or customer from the Facebook ad? This shows they were REALLY interested in this ad.

For example, let’s imagine Jill is looking for help with retirement planning. She starts looking at different retirement calculators online. Then she sees an ad about planning for retirement, clicks on it and schedules an appointment with a financial advisor (this is actually how we generate leads for financial advisors).  Facebook will know that this person converted from seeing and engaging with a Facebook ad about retirement planning.

4. Facebook looks for similar behavior with other users

Facebook then looks at Jills behavior BEFORE she showed any interest in retirement planning. For example, maybe 1 or 2 months ago she was looking for retirement healthcare options, reading retirement planning blog posts or even searching for the best locations to live when retired.

Facebook looks at all data points of that person’s past behavior and then finds other people that are doing the same kinds of things.

Then it shows those other people the same ads that converted with Jill.

And Facebook will sometimes show these ads to people BEFORE they even search for retirement planning services because their past behavior already indicates they will be interested in retirement planning.

This is why someone might talk about retirement, but not search for anything straight away and then still see ads about retirement planning and think that Facebook or their phone is listening to what they say.

Can you see how powerful this technology is? Can you now see how Facebook can show you very targeted ads at the right time?

This is called “Prediction Technology”.

It’s not just Facebook that uses prediction technology

Facebook is not the only company using big data combined with Ai to predict what you want.

All major companies including Google, Amazon, Target, Walmart, etc do the same thing of thing.

In fact, theres a story on Forbes where the store Target figured out a teen girl was pregnant before her father did. How did Target know this person was pregnant? Again, target was looking at the buying behavior of previous people who were pregnant and it matched the buying behavior of the girl too.

In the end, Target didn’t want to creep people out, so they started mixing their personalized coupons with other random coupon’s they knew the person would NOT be interested in so that it LOOKED like the products were all chosen by chance instead of through targeted ads.

How does the new Apple privacy changes affect Facebook Ads?

Contrary to popular belief, not much has changed. There are a few extra steps you now need to take to ensure your ads are reporting accurate data by using the Facebooks Ads Conversion API, but apart from that, Facebook Ads still works the same way.

If you can show the right message, to the right people at the right time, then Facebook ads is an excellent channel to grow your business.

The reason most people fail when using Facebook Ads is because they don’t use it the right way or they have the wrong strategy. Click here to see the strategy we use for Facebook Ads.

If it helps, I’ve also recorded a video that goes through some of the new Facebook and Apple related privacy changes and how this affects business owners here:

YouTube player

How you can best use Facebook Ads to grow your business

Facebook ads is an excellent marketing channel to grow your business. And the more you use Facebook Ads, the better the algorithm gets at optimizing your ads.

Do you want to learn how to use Facebook Ads to generate leads, appointments and clients in your business each month, in a way that is automated, predictable, scalable and profitable? If so, click here to watch this video.