If you use Facebook as a marketing platform, you must know about campaign budget optimization.
If you don’t, then it’s best to familiarize yourself with it now.
Campaign budget optimization is the future of Facebook advertising; what you know now about running ads on Facebook will be irrelevant in the coming months.
You’re going to start setting budgets at the campaign level as opposed to the ad set level. Facebook’s machine learning algorithm will then distribute that budget to the ad sets.
A semi-hands off approach to running ads which will also optimize budget allocation and in turn, reach.
So to set you up for success, I’m going to teach you how to dominate campaign budget optimization (CBO).
If you don’t know how to run a successful CBO strategy by now, you will by the end of this article!
About 6 months ago, we rolled out our first CBO test campaign, and the results were nothing short of promising:
As you can see, our total amount spent was $35,880.84, and our return was $70,183.12.
However, our breakeven point was 1.4 return on advertising. We also experienced a 25% loss in sales on our Ads Manager dashboard due to tracking errors.
Our gross sales were approximately $87,728.90, and after the cost of goods and ad costs, we profited approximately $45,619.03 while testing campaign budget optimization.
So there are no doubts that this change will be a good one.
The only caveat is the new structure of your campaigns.
Because with CBO campaigns, you relinquish the majority of control over the ads and pass it along to Facebook’s machine learning algorithm.
Additionally, CBO requires that you start with larger budgets.
But don’t worry! I’ve devised a few plans for tackling CBO at any budget!
In the following paragraphs, I’m going to walk you through:
If you are brand new to eCommerce, as well as Facebook ads, I recommend checking out our Ultimate Guide on Facebook Ads for eCommerce.
In that article, you will find everything you need to know about what to include in your ads and how to set them up.
For those of you who are already pretty familiar, let’s go over the structure of the campaign.
The best way to show you how campaign budget optimization works, I need to show you a breakdown of the campaign structure.
The campaigns are the umbrella collection of ad sets that contain the ads. The campaign level is where you’ll set the budget.
The ad set is the group of ads that share the same targeting, bidding, and scheduling. Before CBO, the advertisers set the budget at the ad set level.
The ads are the creatives that are shown directly to your audience and drive your sales.
Putting It All Together
As shown in the visual above, the ads reside in the various ad sets within a single campaign.
It will help to reference back to this image when I go over what campaign budget optimization is.
Campaign budget optimization (CBO) is an ad strategy that establishes the budget at the campaign level. The budget then gets dispersed to the different ad sets by Facebook’s machine learning algorithm.
The campaign actively monitors each ad set’s targeting and performance.
The campaign attempts to allocate budget to the best-performing ad sets based on the objective or pixel even you’ve applied.
It uses real-time data, every day, at the ad and ad set level to distribute the budget most optimally.
In short, Facebook’s machine learning allocates the campaign budget to the best performing ad sets.
According to Facebook,
“We optimize your campaign budget in real-time on an opportunity-by-opportunity basis. Our goal is to get you the best results possible, and for the cost of those results to align with your bid strategy.”
Additionally, instead of manually shifting budgets between ad sets, Facebook’s machine learning assesses all data points and adjusts the budgets for you.
Once the machine learning shifts the budgets, it passes the information off to an automated system that will place your ads.
In short, CBO optimizes the budget as well as the reach.
Last year, strategists at Facebook noticed that advertisers were hitting a wall when it came to making profits on their platform.
They had also noticed that machine learning could outpace what marketers could do manually.
So they devised a solution to optimize ad delivery through CBO, as well as to eliminate the workload that comes along with manually adjusting budgets.
The machine learning achieves this by looking at multiple data points throughout each campaign and adjusts the budget accordingly.
So overall, this will shave off a significant portion of your ad monitoring while yielding profitable results.
I know it sounds scary to let an algorithm take the reins on a task dependant on nurturing. But, if you keep reading, you’ll see how simple this change will be.
The shift to CBO is supposed to finalize within the first few months of 2020 officially.
Since the effects will be widespread, we’re going to show you the best ways you guys can adjust to the mandate.
1. Set broad parameters
Facebook’s machine learning algorithm needs time and space to learn. By setting broad parameters for audience sizes and budget allocation, you’re allowing it to optimize to its fullest potential.
These parameters give the algorithm an adequate range to discover proper placements and access as many opportunities to meet your campaign goals.
2. Align goals with realistic outcomes
You should continue to optimize your ads for conversions and purchases. However, be realistic with the time allowance and amount of money you budget to yield the best results.
The system can navigate towards the goal entirely on its own; it just needs the proper foundations to do so.
3. Each ad set requires at least 50 conversions for stable delivery
Variables such as the time of day and the day of the week can affect your delivery.
So don’t lose hope when you launch your ads, and the metrics aren’t promising.
It can take up to a week to see accurate reporting.
So sit back and let the machine learning do its thang.
4. Set minimums and maximums
Setting budget minimums and maximums is relatively new.
Sometimes the machine learning can over-allocate the budget to a single ad set while not leaving much money for the rest.
So to make sure this doesn’t happen to your ad sets, take advantage of this feature.
Remember our fun little photo at the beginning of this article?
The one that showed our 2.5X return during our trial phase.
Well, I’m going to give you the exact blueprints that we use to dominate our CBO campaigns so you can see the same results.
The first outline will be for your test trials, and the second outline is for your CBO launch!
Just keep in mind, the algorithm takes time to learn, so don’t get discouraged if your results don’t meet your expectations at first.
Before we get into how you should structure your CBO test trials, let’s cover the key takeaways that will set you up for success.
Step 1: Optimize for the purchase or conversion objective goal
Step 2:Create your CBO campaign with grouped audiences you want to test
Step 3: Create the ad sets
Step 4: Set a minimum budget for each ad set
Step 5: Select placements for newsfeed only
Step 6: Use the same ads in each ad set
Once you collect the proper amount of data, you can then take your best performing variables and plug them into your CBO campaign.
Step 1: Start with a $150 Daily Budget
Step 2: You should have 4-5 ad sets per campaign
Step 3: Launch your campaigns at 3 a.m. EST and give them at least one to two days to stabilize their delivery
Step 4: When your campaigns have a consistent 2X return on ad spend, scale up by 20%
If you don’t have $150 at your disposal daily, don’t worry, many of us don’t.
So we recommend starting with one campaign that contains 2 ad sets, with one ad in each ad set.
Start with a daily budget of $25, and don’t worry about setting a minimum.
I do want to warn that the data tends to look pretty depressing when the campaigns start.
So don’t compulsively check your metrics each hour.
We recommend checking once in the morning and once in the evening. Remember, give the system time.
The point of CBO is to learn more about Facebook’s machine learning than human interference.
It’s going to take a lot of patience to let Facebook’s system do the heavy lifting but trust the system.
With our experience, CBO has been extremely effective and has accomplished what Facebook has intended to do.
We’ve profited on the front end, which has allowed us to retarget more and bring in a profit on the back end.
CBO becomes more consistent as it scales.
So increasing the budget on a CBO campaign doesn’t affect the performance as much as it would on the ad set level.
Below is a checklist to guide you through constructing and launching your own CBO campaigns.
All ad accounts will begin getting switched over to CBO permanently.
The most significant changes to note are:
The change will take over all ad accounts within the next six months.
You need to begin testing out CBO’s of your own.
Reference our steps in this post and use the checklist we’ve made to guide you.
Now is your chance to get a head start and learn what works best for you before having no other options.
And if you want to succeed with campaign budget optimization, make sure to download our free Copywriting Bible.
The Copywriting Bible is a breakdown of the best copywriting techniques used across multiple 7-figure eCommerce stores such as Urban Outfitters, Zappos, and Apple.
You can use these same techniques in your ads to hook browsers and drive sales.
If you have any special CBO techniques of your own, share them in the comments below!
Patricia is a self-proclaimed dog enthusiast who also happens to spearhead the content marketing efforts at Skup. When she’s not petting dogs or writing about the industry insights, you can find her on a yoga mat or reading anything that feeds her bibliophilic needs.