Intro to CBO: How Facebook’s New Campaign Budget Optimization Will Impact Advertisers

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For as long as Facebook advertising has been around, budget optimizations have been controlled by advertisers. This ability to adjust both daily and lifetime spends and bids allow advertisers to properly manage the pacing and performance of a campaign. Up until now, those adjustment options were only available at the audience, or ad set, level. Making optimizations at the audience level allows for more control over which groups of people you’re targeting and how often they see your ads. Facebook recently introduced a new option for campaign budget optimization to take the heavy lifting off of advertisers, leaving efficiencies up to Facebook’s algorithm.

What Is CBO?

CBO stands for campaign budget optimization and means that all Facebook campaign optimizations will be made from the campaign level. Advertisers will no longer manually control daily and lifetime spend at the ad set level. While running CBO, advertisers will not be able to set bids and budgets at the audience level. Instead, campaigns will automatically, in real time, optimize towards the best performing, lowest-cost audiences based on what Facebook deems most efficient and scalable. Starting in September 2019, it will be mandatory for all Facebook campaigns to run using CBO.

What This Means for Advertisers

CBO, which uses an algorithm to determine the best distribution and budget for a campaign based on predictive bidding, is intended to be the most efficient way of optimizing campaigns. However there are considerations not taken into account and challenges that will arise when performance is left solely up to the computer. Read on to understand those challenges and see the possible solutions.

– Secondary and Custom KPIs

A conversion campaign, according to Facebook’s algorithm, will look to acquire customers at the lowest cost per acquisition (or at the highest value, depending on the bidding structure). Many brands, however, value results beyond just acquisition. Brands may opt to have manual optimizations for dual or custom KPIs, for example. CBO does not allow advertisers to look at secondary or custom KPIs, and limits the ability to optimize to custom needs. CBO will also not take into account instances where brands need manual optimizations based on third-party reporting.

With these changes, Facebook is helping brands move towards a full-funnel approach, supporting all levels of business objectives with a single KPI per campaign. If Facebook’s optimization options don’t match a brand’s custom optimization needs (for example, a discounted ROAS or a custom engagement metric), partners like Adaptly are there to help brands find strategies that work within CBO.

– Qualified Spend

With CBO, advertisers will not be able to force spend in certain target groups. For example, take a campaign that is looking to drive traffic to site. Audience A has the cheapest link click cost, but audience B is more qualified for other business objectives. In this case, the brand wants to make sure audience B still receives budget, despite not having as efficient costs as audience A. For audiences that drive better downstream metrics, it’s important to have the ability to split out audiences and “force” some spend to those qualified audiences, which a CBO campaign will not take into consideration.

Brands that have strategic, full-funnel setups in place shouldn’t need to force spend, but in many cases advertisers want to stick with their tried-and-true strategies – which include forcing spend. One option advertisers might consider instead is to apply ad set floors and ceilings to manipulate spend levels. This means applying minimum and maximum budget guidelines for Facebook to spend between. The challenge with floors and ceilings is that there are very loose parameters that require large ranges (for example, the floor cannot be more than 90% of the ceiling), and these parameters don’t necessarily have to be met. A high level of strategy – either from an internal team or a marketing partner like Adaptly – is required to manipulate campaigns with floors and ceilings to deliver effective results.

– Manual Work for Advertisers

To ensure that qualified audiences have a sufficient amount of spend, we suggest grouping together similar qualified audiences. This means that all lookalikes would be in one campaign, all retargeting audiences in another, and so on. This forces spend to be put on each type of qualified target group, allowing each audience a piece of the budget, while still giving the algorithm free reign to divvy out the majority of the campaign’s budget based on what is most efficient and scalable.

This type of setup causes more work up front, in order to group campaigns based on both KPI and audience type, which could get challenging depending on brands’ needs. The more breakouts needed, the more campaigns there will be, and the harder to manage spend, pacing, and other optimizations needed outside of simple budget allocations.

The flip side to this is that the work done up front will outweigh the manual work done on day-to-day optimizations, which Facebook advises will drive the most efficient performance. Brands that keep full-funnel strategies and real-world business objectives in mind will be ahead of the curve and more prepared when CBO does become mandatory in the fall.

Testing the Impact of CBO

In a recent article, Facebook points out that, “When viewing the results of a campaign that used campaign budget optimization and the lowest cost bid strategy, you may see some numbers that are different from what you expected.” They recommend not judging CBO based on the average cost per optimization event, however. “You should judge it based on the total number of results for your campaign and the average cost per optimization event at the campaign level.”

Because CBO isn’t as straightforward as manual optimizations, advertisers have already begun putting the algorithm-optimized format to the test. Ultimately, that’s the only way to truly see whether CBO will be beneficial to your brand – by testing prior to the September date, when CBO will be rolled out and made mandatory for all advertiser accounts.

What This Means for the Future of Advertising

CBO is a step toward a purely automated advertising future, in which decision-making is left to an algorithm, rather than humans. While this is one example of a computer being used for more efficient advertising, the need for humans to set up, manipulate, and analyze performance is still far from being replaced. The need for a person to plan, organize, execute, and examine results – then repeat what’s working – will always be in demand and will not be going anywhere anytime soon.