Smartly.io: How to Improve Campaign Performance in a Single Click with Facebook's Campaign Budget Optimization

What is Campaign Budget Optimization?

Campaign Budget Optimization (CBO) is a new feature by Facebook that optimizes the allocation of spend across all of your ad sets in a campaign, and gives you control of the budget on the campaign level, no longer on each ad set’s settings.

CBO allows Facebook to optimize your ad delivery in real time based on your ad set targets. In a way, across all ad sets’ audiences, Facebook finds the optimal people to deliver the total campaign budget, regardless of ad set boundaries.

In short, CBO can improve your campaign’s performance in a single click! If you have used the Smartly.io Predictive Budget Allocation, you can expect similar performance and time savings from CBO — it makes sense to test which one works better for you.

How to Apply Campaign Budget Optimization

Campaign Budget Optimization brings fundamental changes to how you should run your ads on Facebook. Using it properly requires understanding how it works — so we’re going to dive into a lot of detail here. Trust us, it’s worth the read.

Using CBO is delightfully simple: enabling the feature requires just one click, and your budgets will be magically optimized. Create the other parts of the campaign, such as audiences and creatives, as you normally do. If you optimize all ad sets toward the same goal and use Lowest Cost bidding (without bid caps), you’re safe. If not, set the bid amounts according to the true value of each conversion.

To decide how to spend your budget. Facebook determines which ad set should get more delivery through subtracting the estimated cost of the next conversion from the bid amount in each ad set. This margin represents the value to the advertiser — the difference between the value and cost of a conversion or you could think of it as a profit margin. The larger the margin, the higher this ad set’s delivery will be prioritized.

This means that bids have a big impact! Bidding differently in each ad set informs Facebook of  how valuable conversions in each ad set. For example, you can bid higher per conversion for audiences that have higher Average Order Value (AOV) or Lifetime Value (LTV). You should bid your “true value” — the value of one Facebook-reported conversion for your business, all costs taken into account. This way you get most delivery where conversions have the highest value.

We recommend that you create a separate campaign for each funnel step, and optimize all ad sets toward the same conversion goal. If cost per conversion is radically different across ad sets, your whole budget will likely be delivered in the ad set with the lowest cost per conversion. For example, retargeting audiences always have the lowest cost per purchase since this audiences already have high purchase intent. On the other hand, if one ad set is optimized toward product views and one toward purchases, the budget would be mainly spent on getting product views, which are cheaper. You still need to maintain manual control of budget allocation across funnel steps, but you don’t want to focus only on retargeting or content views; thus it’s safer not to mix funnel steps or different conversion goals in a single CBO campaign.

Taking the above points into consideration, it’s still possible to bid toward different conversion goals in each ad set. If you do, it is important to specify bid caps according to the values of each conversion in each audience, for example: more for purchases than product views, more for prospecting than retargeting, more for high-value users than low-value users. This requires deep analysis of the true values and lift percentage in each ad set. If in doubt, separate different goals into different campaigns and use Lowest Cost bidding.

Performance Benefits Aside, What Else Can Advertisers Expect?

CBO also brings workflow improvements. Traditional ad set level budgets deliver using only the budget from currently active ad sets that contain active ads. With CBO you can run, pause, create or archive ads and ad sets as much as you like, and the campaign total budget will stay stable. This is especially useful with Smartly.io automation features, such as the Automated Ads feature, which add and remove ads and ad sets automatically over time. As an added bonus, these new ad sets will be delivered to your audience if they’re effective — so you don’t have to monitor the performance of newly added ads and ad sets or make budget allocation decisions on the fly.

Campaign Budget Optimization makes it very easy to add dozens of ad sets with all kinds of complex targets — almost too easy. However, you still shouldn't split your audiences more than is necessary! If you split your audiences too small, Facebook’s delivery system might struggle to get enough data and learnings for each ad set, and conversion optimization will not work optimally.

What About Cross-Campaign Optimization?

Smartly.io has a handy Budget Pool feature that lets you allocate budgets optimally across several campaigns. You can let Facebook optimize the spend across ad sets, while Smartly.io optimizes across campaigns. We can even optimize toward 3rd party metrics such as Google Analytics goals or Mobile Measurement Partner data. What is more, you can use Budget Pools with Budget Scaling to spend as much as is possible while reaching your performance target.

Now that we’ve got all of the introductions out of the way, you might ask yourself — does CBO cause you to lose control of your campaigns altogether? Not quite. In the second part of this series, we take a closer look at how advertisers can prepare for this seismic change. Stay tuned!

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