Facebook’s Campaign Budget Optimization – An Introduction
Published: October 15, 2018
Author: Joe Stanton
Campaign budget optimization (CBO) is a new way of optimizing the distribution of your campaign’s budget across your ad sets/audiences. Facebook’s algorithm will automatically and continuously find the best available opportunities for results across your ad sets and distributes the budget in real time to get those results. It’s similar to how, within an ad set, Facebook automatically figures out which ad is driving the best results and shows that one more than the others.
How does it work?
The algorithm optimizes budget in real time across ad sets on an opportunity-by-opportunity basis, targeting what it believes will get the cheapest cost per result. After that opportunity is exhausted, it will move onto the next best opportunity regardless of how much it has already spent on an ad set. What this does is help your campaign reach an overall lower cost per result, as the budget is no longer being spent on less favorable opportunities.
Above is an example of how CBO works. The campaign has an overall budget of $30. Without campaign budget optimization (to the left), the budget is split evenly across the ad sets. Facebook optimizes to the best opportunity in each separate ad set and the campaign generates a total of 10 conversions. Ad Set 1 drove 3 conversions at a $3.33 CPA, Ad Set 2 drove 5 conversions at a $2 CPA, and Ad Set 3 drove 2 conversions at a $5 CPA.
To the right, the $30 of the budget is used with CBO. The campaign generated 15 total conversions, and spend varied between ad sets. As you can see, Ad Set 2 accounted for the majority of spend and drove 10 conversions at a $1.80 CPA. CBO favored Ad Set 2 because the algorithm determined it had the most favorable opportunities to drive conversion results. Overall, the campaign with CBO generated 5 more conversions than the campaign not using it.
Why use it?
There’s more than one reason. CBO optimizes for the best-performing ad sets/audiences and therefore saves you time by reducing the number of budgets you have to manage manually. When advertisers manually allocate budgets from ad set to ad set, they’re at a high risk of resetting the learning phase, which means a high risk of not hitting your client’s goals consistently. With CBO, there is no reset of the learning phase.
When should you use it?
CBO is useful for all campaigns running at one level of the funnel – i.e. prospecting only or retargeting only. We don’t recommend that you use CBO for campaigns combining both objectives, as this will likely deliver most of the budget to the retargeting ad sets and shortchange the prospecting ad sets, which will leave the top of your funnel empty.
How to set it up
- At the campaign level, turn on the budget optimization toggle
- Choose if you want your campaign budget to be Daily or Lifetime
- Set a budget
- Choose a campaign bid strategy
- If you choose the lowest cost campaign bid strategy without a bid cap, all ad sets in your campaign must have the same optimization event.
- If you choose the lowest cost bid strategy with a bid cap or the target cost bid strategy, you can optimize for different results and set different bid caps or target costs for each ad set.