Facebook Campaign Budget Optimization: What Marketers Need to Know

Posted on by Brian Bowman

facebookIn less than 30 days, Facebook will shift all advertising campaigns over to campaign budget optimization (CBO) for advertisers using AdsManager.  For advertisers using Facebook’s API (like AdRules) you have until September 2020 before the switch is mandatory.

If you do any advertising on Facebook, you will be affected by this change. It will apply to both new and existing ad campaigns.

If you don’t want a rude awakening on Sept. 1 when CBO activates in AdsManager and your Facebook campaigns start behaving very differently, you need to start testing Campaign Budget Optimization now.

While nobody likes mandatory, sudden changes, this is not all doom and gloom. You will have to give up some control over your campaigns after Sept. 1, but with there are elements of CBO that can work to your advantage.

Less to manage: If you spend hours adjusting bids every week, or if you pay someone else to adjust bids every week, much of that bid optimization work will be over.

When CBO is activated in AdsManager, Facebook automatically shifts ad budget to whichever ad set in a campaign is most effective. You get to control the definition of what “effective” means by specifying a goal for each campaign. Goals that are fairly late in your sales funnel, like a purchase or a download, tend to work best with CBO.

Because all that bid management work will be done by the Facebook algorithm, you may be able to hire less expensive people to manage your campaigns or have your team work on more networks or accounts. Or, if you’ve been doing those bid edits yourself, you may find you suddenly have extra hours free every week to develop new creative or keep up with what the competition is doing.

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Better potential return on ad spend: While there were some early reports of CBO not working as well as human-managed campaigns, the algorithm has gotten considerably smarter than when it first launched. If a campaign is set up properly and the bids are high enough, CBO generally can get better results than a human can get.

CBO will also reduce how often your campaigns are put into “learning mode.” That means you won’t get penalized when Facebook’s algorithm reassesses your campaigns.

But it does take time to work. The algorithm needs about 50 conversions per ad set, per week, before it accrues enough data to ramp up your campaigns. And speaking of ramping up campaigns… if you want to scale your campaigns, CBO can be extremely effective, especially if you keep feeding it new high-quality audiences.

More control over ad spending: If you set a minimum spend for an ad set, Facebook will dutifully spend at least that amount. And if you set a maximum ad set spending limit, Facebook will not go over that limit.

This is a way to set a “governor” of sorts on your spending. It will force Facebook to run ad sets perhaps longer than it might otherwise have, but if you’re not quite ready to relinquish control, ad set spending limits are a way to ease into this new campaign management approach.

Those that also advertise with Google’s App Campaigns may have an edge already—Facebook is in some ways following Google’s lead by requiring advertisers to shift over to automated budget optimization. You could, potentially, get around CBO by creating dozens or even hundreds of campaigns, each with on single ad set. But that would be working against the algorithm.

Time to Start Testing

The benefits of CBO are proven, but you need to start testing now to see how to make it work well for your accounts. There is still a couple of months until the change in AdsManager, but you may need to run multiple week-long tests to get the hang of this new budgeting strategy.

You may also need to shift how you’ve been defining goals. Using CBO for clicks is a waste of potential. Instead, look towards the end of the buyers’ journey. Consider optimizing not just for app installs, but for specific app events, like purchases of $20 or more.

As you begin to test and measure CBO, don’t get too attached to the results of individual ad sets—look at the campaign level.  And, get ready to bump up your creative. For CBO to work, it often needs several creative assets for each ad set. Including a few videos and elements for dynamic creative helps, too.

Pay close attention to your audiences, too. Many advertisers have found that CBO works best for them if they create separate campaigns for different audiences – like one campaign for cold audiences and another campaign for a “warm” audience, like a retargeting audience.

Get ready for things like the “breakdown effect” to make your reporting look a little strange at first. This occurs when discount pacing (how frequently your ads show) intersects with discount bidding and makes it look like the system is overcharging you for conversions. What’s actually happening is the system is trying to find the most affordable conversions first, then it tries to find more expensive conversions.

If you do a lot of testing, this breakdown effect pattern may be familiar. It’s similar to how one cell of a test can look like a winner at first… but as the data accrues, that early winner falls away and another cell is shown to perform better long-term.

Brian Bowman is CEO of ConsumerAcquisition.com.



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