How the Meta Ads Algorithm Actually Works

Let's take this scenario:

Your ad looks good.

The product works.

You’ve got budget.

You’re targeting the right audience.

Still—zero traction. No conversions. No scale. No clue why.

Here’s what’s really happening: You’re ads are misunderstood. Not by your audience.

But... By the algorithm.

How the Meta Ads Algorithm Works (Technically)

At its core, Meta’s algorithm is a prediction machine.

Every time someone opens Instagram or Facebook, it runs a real-time auction to decide which ad to show them, and why.

It doesn’t just pick the highest bidder—it considers 3 key elements:

1. Bid – How much you're willing to pay

2. Estimated Action Rate – How likely that person is to take your desired action

3. Ad Quality – Based on engagement history, user feedback, and relevance

Meta combines these into a Total Value Score, and the ad with the highest score 'wins' the impression.

That means the highest budget doesn’t always win.

The most relevant ad does.

Why Ad Budget Isn’t Everything

Meta says this a lot—and it’s true: budget alone doesn’t win the auction. Just because someone’s spending €5,000/day doesn’t mean they’re getting results.

Even action rate isn’t the full picture—it’s just a prediction.

So what really matters?

The one thing you CAN control: ad quality. And ad quality, in Meta’s world, is ad relevance.

Ad Quality ≠ High-Production Ad

Super cringey UGC often beats perfect, polished video.

If your ad is:

• Aligned with user intent

• Clear and engaging

• Not getting negative feedback

…then Meta will reward it—even on a small budget.

If not?

It’ll quietly "kill" your ad, no matter how much you’re spending.

That’s why some €50/day campaigns outperform €10K/day ones. Relevance beats spend. Every time.

The Algorithm Doesn’t Guess. It Detects.

Meta’s system isn’t creative. It doesn’t understand nuance or psychology.

It’s looking for: Signals. Patterns. Alignment.

All of that is expressed in metrics like:

• CTR

• Hook Rate

• Hold Rate

• CPM

• Frequency

Want a refresher on what these metrics really tell you? Read DAS #41 – Why Facebook Ads Metrics Are Clues, Not Just Numbers.

So when your ad says one thing… Your landing page says another… And your CTA adds a third twist?

The algorithm gets confused—and pulls back.

Why You’re Getting Misunderstood

Weak messaging = weak signal. And weak signals don’t scale.

If Meta can’t confidently match your ad to the right person, it buries your ad—even if the creative looks great.

This usually comes down to one thing: Misalignment between your creative, your offer, and your outcome.

Clarity Check for SMBs

If someone scrolls past your ad—no sound, two seconds of attention—can they tell:

• What you’re offering?

• Who it’s for?

• Why it matters?

If not, you’re not just losing conversions.

You’re losing impressions, your's losing distribution.

The algorithm Rewards Clarity

This isn’t about dumbing it down. It’s about tightening your message.

When your ad, headline, and landing page reinforce each other, Meta’s system "gets it." It finds the right user. It delivers impressions. And your campaign starts working.

Clarity scales. Clarity gets rewarded.

P.S. Want help improving the way your messages match your audience?

Read DAS #11 - How to Segment Your Facebook Audience with Different Messaging, where I broke that down step by step.

🍩 Snackable Challenge

Before launching your next campaign: Go look at your ad, headline, and landing page.

Ask yourself: Is this ultra-clear—or just kinda clever?

✅ Make your message obvious

✅ Align it across every step

✅ And earn your reach back

Then hit reply and show me the update. I’d love to see the before & after—and maybe feature it in a future issue.