About ad auctions: how Meta picks which ad shows, in Meta's words
Meta's auction ranks ads by total value: your bid, estimated action rates and ad quality. Meta sets the bid by default; the creative shapes the other two.
- Hristijan Jankulovski
- 11 min read
Meta runs an auction every time it can show someone an ad, and the winner "is the ad with the highest total value, subject to a price floor". Total value combines three things: your bid, Meta's estimated action rates (how likely this person is to do what you optimized for) and ad quality. A Meta post from 2020 spells out the arithmetic: bid times estimated action rate, plus an ad quality score. Only the bid is yours to control, and by default Meta sets it for you. The other two are Meta's predictions about how this person will respond to your ad, which is why Meta says "an ad that's more relevant to a person could win an auction against ads with higher bids".
About ad auctions: what Meta's help page says
Meta's help article About ad auctions is short and undated. It sets out when an auction runs, who is in it, and how it is decided:
Each time there's an opportunity to show an ad to someone, an auction takes place to determine which ad to show to that person. Billions of auctions take place every day on Facebook and other Meta technologies.
Who competes is decided by targeting: "the ads with a target audience that the person belongs to are eligible to compete in the auction." Then the rule:
the winner of the auction is the ad with the highest total value, subject to a price floor (minimum price) that may affect whether an ad is shown and the price paid. The total value is a combination of 3 major factors
| Factor | Meta's definition |
|---|---|
| Bid | "what the advertiser is willing to pay to achieve their desired outcome" |
| Estimated action rates | "the probability that showing an ad to a person leads to that desired outcome of the advertiser" |
| Ad quality | "determined from many sources including feedback from people viewing or hiding the ad and assessments of low-quality attributes in the ad, such as withholding information, sensationalized language and engagement bait" |
The page then adds that "Together, estimated action rates and ad quality measure ad relevance". The ad relevance diagnostics in Ads Manager report on that after the fact. They are a report, not an input.
Is total value bid × estimated action rate + ad quality?
That is how Meta described it, but not on the help page. The help article says only "a combination of 3 major factors". The multiplication is on two other Meta pages:
| Meta page | What it says |
|---|---|
| How Does Facebook Use Machine Learning to Deliver Ads? (Meta for Business, June 11, 2020) | "We find advertiser value by multiplying an ad's bid by the estimated action rate." Then: "We then add the ad quality score" |
| About bid cap (Help Center, undated) | "Bid Per Impression = Bid Per Estimated Action x Estimated Action Rate" |
| Meta's DMA compliance report (6 March 2025) | "Total Value is derived through a combination of three main components: (i) the advertiser bid; (ii) the estimated action rate … and (iii) the ad quality" |
The bid cap line is the most useful one. Your bid is per result (per purchase, per click), but the auction sells impressions. Meta converts one to the other by multiplying by the chance this impression produces that result. A purchase bid on an ad nobody is likely to buy from becomes a small bid per impression.
The newest source, the 2025 report, says "combination" and gives no formula. So treat "bid × estimated action rate + quality" as Meta's 2020 explanation, not a published spec of today's system.
What are estimated action rates?
The help page calls them "an estimate of whether a particular person engages with or converts from a particular ad". Meta's 2020 post says more about what goes into the estimate:
To find the estimated action rate, machine learning models predict a particular person's likelihood of taking the advertiser's desired action, based on the business objective the advertiser selects for their ad … our models consider that person's behavior on and off Facebook, as well as other factors, such as the content of the ad, the time of day, and interactions between people and ads.
"The content of the ad" is on that list. The estimate is per person and per ad, so two of your ads at the same bid get different totals for the same person. Only the higher one enters that auction (see auction overlap below).
The estimate also sharpens with use. Meta's About ad delivery page: "Each time an ad is shown, the delivery system's predictions of relevance become more accurate." That is why a new ad starts at a disadvantage against a proven one, covered in why new ads get no spend.
The help page also has a warning attached to this factor: "Engaging in clickbait and engagement bait does not improve ad performance."
What counts as ad quality?
Meta's About ad quality page: "Ads with a lower quality ranking tend to cost more, which may reduce distribution of the ads and lead to fewer results." Its companion page, Best practices to improve ad quality and performance, says which signals it watches:
- Hide ad, hide all ads from this advertiser, hide ad due to repetition
- Report ad
- Landing page bounce rate and landing page dwell time
And the three "low-quality attributes" of the ad itself:
| Attribute | Meta's description |
|---|---|
| Withholding information | "Ads that withhold information in order to entice someone to click a link to understand the full context of something." |
| Sensationalized language | "using exaggerated headlines or commanding a reaction from people to a degree that creates an unexpected experience when people click to a landing page" |
| Engagement bait | "spammy content that urges people to engage with it in an inauthentic way to get more likes, comments and shares" |
If an ad has any of these, Meta says "the ad quality component of an ad's total value may be relatively low". The landing page counts too: the same page lists pop-ups, a "disproportionate volume of ads relative to content" and "misleading experiences" as low-quality post-click attributes.
Quality can also stick to you. Meta: "In certain instances, if you repeatedly post policy-violating or lower quality ads, our systems may start considering all ads from your Page, domain, ad account or other associated entities as lower quality."
One discrepancy: the 2020 post lists "too much text in the ad's image" as a low-quality attribute. The current help pages don't mention image text at all; their list is the three rows above.
Can a lower bid beat a higher one?
Yes. Three Meta pages say it. The help article: "an ad that's more relevant to a person could win an auction against ads with higher bids." The 2020 post: "Ads with the highest bid don't always win the auction. Ads with lower bids often win if our system predicts a person is more likely to respond to them, or finds that they're higher quality." And About ad delivery: "ads with higher relevance can win ad auctions at lower costs."
That last sentence is about price, not just winning. The CPM you pay is partly a verdict on relevance.
Do you pay your bid?
Meta documents a ceiling and a floor, and says little about the rule in between.
- The ceiling. The help article allows that Meta may adjust auction outcomes and prices for many reasons, "But such auction adjustments will not cause us to charge you more than your bid to show your ad."
- The floor. The winner is chosen "subject to a price floor (minimum price) that may affect whether an ad is shown and the price paid."
- A bid is not a cost. Meta's Best practices for bid cap: your bid control "sets the maximum amount you're willing to pay to reach your target audience, it's not the cost you ultimately pay." And on the bid cap page: "We may bid lower than this if it would cause you to spend your budget too quickly."
The bid cap best-practices page adds one detail: "If you're bidding for conversions, you'll win auctions at your maximum bid amount", while the cost reported for the result itself is different. Beyond that, Meta's pages don't say how the price between floor and bid is set.
By default you don't enter a bid at all. Meta's About cost and bid controls page: "If you don't enter a control amount, we'll use the highest volume bid strategy", and Meta bids for you (see bid strategy). A bid cap is the only strategy where the number you type caps the bid itself. A reservation campaign enters the same auction, with Meta bidding for you at a CPM fixed when you book.
What happens when your own ads are in the same auction?
Only one goes in. Meta's Understand auction overlap:
When 2 or more ads from the same advertiser enter the same ad auction, we choose the ad with the highest total value to compete in the auction. As a result, other ads from that advertiser are not considered in this auction. This ensures that your ads will not bid against one another.
So you don't bid up your own price, but your other ad sets lose that impression. Meta warns this "can prevent an ad set from spending its full budget or achieving enough results to exit the learning phase", and that splitting across ad accounts "may not help you avoid overlap". The full entry is under auction overlap.
Does Meta weigh the auction factors equally?
Meta's marketing page The ad auction explained says: "Unlike traditional auctions that pick a winner based on the highest bid, Meta's auction system looks at a number of factors equally to determine which ad is displayed."
"Equally" is hard to square with the help center. The bid cap page multiplies the bid by a probability, which is not weighing factors equally, and the help article calls them "3 major factors" with no weights at all. Read the marketing page for the point it makes, that the highest bid doesn't automatically win, and the help page for the rule.
The same marketing page lists "five components" of ads that do well (objective, targeting, budget, duration and creative) and says the auction "will look at" them to evaluate an ad's quality and relevance. The help article names only three inputs. Read the five as setup choices that feed those three, not as extra factors with their own weight.
What it means for your creative
- The bid is the only input you control, and by default Meta sets it for you; the creative shapes the other two. Estimated action rates take "the content of the ad" as one input, beside the person's behavior and other factors; ad quality is judged from reactions to the ad and from its landing page. Beyond the bid, the creative and the landing page are how you move the score.
- Don't bait. Meta names withholding information, sensationalized language and engagement bait as the attributes that lower ad quality, and says clickbait "does not improve ad performance". A hook that tricks the click costs you twice: lower quality, then a bounce on the landing page.
- Watch hides and reports as well as clicks. They are named quality signals, and an ad people hide "due to repetition" is telling you about frequency.
- Fund a new ad with a test, not a rival ad set. Meta's predictions sharpen with impressions, so a new ad competes on a weaker prediction than your proven one. Meta's creative test funds new ads inside the campaign; a separate ad set is the fallback for a genuinely new concept, and one aimed at the same people causes the overlap in item 5. The details are in why new ads get no spend.
- Don't let your ad sets fight over one audience. Overlap means only your highest-value ad enters each auction; the rest sit out.
Sources
- About ad auctions — Meta Business Help Center (accessed October 24, 2026)
- Good Questions, Real Answers: How Does Facebook Use Machine Learning to Deliver Ads? — Meta for Business, June 11, 2020 (accessed October 24, 2026)
- About bid cap — Meta Business Help Center (accessed October 24, 2026)
- Best practices for bid cap — Meta Business Help Center (accessed October 24, 2026)
- Meta DMA Compliance Report 2025, non-confidential summary — Meta, 6 March 2025 (accessed October 24, 2026)
- About ad delivery — Meta Business Help Center (accessed October 24, 2026)
- About ad quality — Meta Business Help Center (accessed October 24, 2026)
- Best practices to improve ad quality and performance — Meta Business Help Center (accessed October 24, 2026)
- Understand auction overlap — Meta Business Help Center (accessed October 24, 2026)
- About cost and bid controls — Meta Business Help Center (accessed October 24, 2026)
- The ad auction explained — Meta for Business (accessed October 24, 2026)
Meta revises these pages without notice, so check the source before acting on any of it.
Terrads makes a batch of new image or video ads in one go, so you can compete on relevance with genuinely different creative instead of only a higher bid.