Let’s talk a little about all you need to know about the (soon-to-be) only option to allocate budget to your campaigns and why it’s important to understand.
In early 2019, Facebook introduced the concept of Campaign Budget Optimization.
This feature allows you to automatically allocate budget from campaign level to audiences (ad sets), which should reduce the time you spend managing your campaign while improving your campaign performance.
Experts assume that CBO will soon be the only way to allocate budget.
Therefore, it is important that you learn how the feature works and how it will affect your advertising.
What is Campaign Budget Optimization?
“A campaign budget is a budget you create at the campaign level (rather than at the ad set level). The amount you specify may apply to each day the campaign runs on a daily budget or for the duration of the campaign (lifetime budget). All campaign budgets use campaign budget optimization.”
This is how Facebook itself describes the Campaign Budget Optimization function.
For newer advertisers, this may sound like the most common thing ever, but the feature was actually, as mentioned, only rolled out in early 2019.
In a little more detail, CBO is budget allocation at the campaign level (the level where you usually only choose objective). You do not have to spend time and energy allocating budget between your ad sets (i.e. your audiences), as Facebook’s algorithm itself chooses which audiences they think are most interesting in relation to your campaign’s objective.
The image below shows examples of two campaigns. One campaign without CBO and one campaign with CBO.
Without Campaign Budget Optimization
In the example without CBO, a campaign with three ad sets (i.e. target groups) is seen.
All audiences have been allocated a budget of $10.
Thus, a total of $30 is spent, which is not moved across the target groups according to size and performance.
The result of the campaign is that the target groups have fetched three, five, and two conversions, respectively.
As a result, the campaign has fetched a total of ten conversions.
With Campaign Budget Optimization
In the example above, the budget has moved to the campaign level. No time has been spent on budget allocation, as the full $30 have been placed in the same place.
This means that the budget has been divided between the various ad sets where Facebook’s algorithm has taken into account the target groups size and performance.
This gives us a result with 15 conversions in total, which in this example is 50% higher than the example without CBO.
The most significant difference is seen in ad set 2, where $18 has been spent after the algorithm has assessed a greater potential for this target audience.
At the same time, the other two ad sets have performed the same—however for a lower budget, which means that we have avoided paying extra per conversion, since the budget has been automatically allocated to ad set 2, which had untapped potential.
How to Use Campaign Budget Optimization
It’s actually super easy to start using CBO.
All you have to do is start creating a campaign.
Here you will find “Optimization of campaign budget” and a button where you can “turn on” the function.
After you have “turned on” the function, you will have the opportunity to set a daily or total budget for your campaign. The budget allocation has now been moved from ad set level to campaign level and you are now using CBO.
From February 2020, CBO should be the only way to allocate budget.
If you do not use the feature now, you can expect it to be the only option in the future.
Therefore, again, it is important to have an understanding of how the feature works so that you do not waste unnecessary advertising dollars by not being ready for the conversion.
Recommendations for Campaign Budget Optimization
Once you have turned on CBO on your DPA campaign (or other campaigns), then the whole idea is that it should all run by itself, so you save as much time as possible, while getting an increased return on your advertising.
However, there are some things you need to be aware of as we can not yet leave all the handling and optimization to Facebook’s advertising algorithms.
When using CBO, it’s recommended you split the campaign into two parts at the campaign level, namely in a push campaign and a pull campaign.
One campaign should be a push campaign, in which we exclusively target new users who have not yet been in touch with our digital assets.
These will typically be interest audiences and lookalike audiences.
Compared to DPA, this campaign will typically target potential customers with the “automatic prospecting” feature. With “automatic prospecting,” the algorithm tries to find new customers based on their behavior and match it up with your product catalog on Facebook, which allows you to reach potential customers who have not yet had digital contact with your company.
The second campaign should be a pull campaign where we target people who have already been in touch with our digital assets.
This could for instance be classic DPA retargeting, where you target people who have already seen one or more products on your webshop.
Bonus Tips to Boost Your CBO
This is based on a general recommendation from Facebook, where we know that many people attribute too much value to their remarketing activities, where they hit people who would have shopped with them anyway, and thus they do not achieve any increased value of their advertising.}
However, there is such a big difference across companies—especially when it comes to the size of their remarketing audiences—that best practice is generally to keep an eye on conversions, CPAs, and the frequency of the push campaign.
At the same time, you should make use of the data-driven attribution in Facebook Attribution and review data from Google Analytics and adjust the budget based on this, so you ensure the optimal effect for your entire business, rather than focusing solely on numbers from a single channel and its normal attribution model.
It is often overlooked that different channels use different and immediately comparable attribution models. That is, as a cross-channel advertiser, you should make clear how you attribute the value of your digital marketing efforts.
Ad Set Consumption Limits
Another recommendation is to set a minimum spend for your ad set if you have multiple ad sets in the same campaign. This way, you avoid Facebook choosing an auction winner too quickly and thus not allocating budget to all the set up ad sets.
It is important to remember that even though Facebook has a lot of data and some super strong machine learning algorithms, there is still data that Facebook does not always have access to or have the opportunity to optimize for.
Therefore, you may miss out on additional conversions or higher value conversions if you do not force the system to test all audiences.
That way, you also collect more interesting learnings regarding your target audiences that you may be able to use to create value elsewhere in your business.
As a starting point, consider setting a minimum spend of around 20–30% of your campaign’s total spend within the first few weeks.
However, this recommendation depends a lot on the number of target groups/ad sets in your campaign as well as how large your daily consumption is.
If the budget is low, a longer period to test the ad sets might be better, so that some significance is achieved in relation to the data you need to analyze.
Perfect for Dynamic Product Ads?
This was a brief introduction to Campaign Budget Optimization and some recommendations for using this along with DPA and quite generally.
However, that’s not all.
Facebook is currently working on a concept they call “Zero Friction Future,” where they focus on reducing the amount of friction (e.g. unnecessary clicks, actions, ads) in the user journey, so it becomes easier and more fun from start to finish.
This vision places some demands on Facebook as a user- and advertising platform, which means they will have to make new tools available, so that targeting is more efficient.
Here, dynamic product ads is one of the major drivers, which Facebook also supports with the development of “automatic prospecting.”
CBO is also a feature that helps reduce friction for users so they avoid being overexposed by an advertiser with a poor budget allocation.
At the same time, the feature is time-saving and provides some more effective ads, which is why it is actually a win-win situation for both customer and company.
Therefore, in the future you might want to rely a little more on Facebook’s algorithms and letting them work with the optimization of the advertising.
In some cases, the algorithms are so sophisticated at present that without the help of individuals they can make far more effective advertising.
But that should keep you from helping them along by feeding them accurate data via Facebook Pixel and general budget management (via spending limits and differentiated campaigns), and then from there work to measure the value that the advertising creates across all platforms and initiatives—online as well as offline.