Testing Facebook CBO: Automation Lowers Costs, People Drive Results
CBO – Facebook’s campaign budget optimization tool – puts more control in the hands of Facebook’s algorithms. Starting in September, all Facebook campaigns will be mandated to run using CBO, which automatically optimizes budgets in real time to focus on the strongest opportunity for results.
Ahead of the mandatory CBO date, we tested the impact of CBO on advertisers and campaigns to determine what the positives and negatives would be compared to our manual optimizations. We found that, while CBO can be more efficient on a CPM basis, it does this by over-prioritizing the most broad, cost-efficient audiences, and is not as effective at reaching engaged audiences, driving ad recall, or delivering on real business goals. Read on for more details and to learn how CBO can be adapted to still prioritize your business goals.
How CBO Works
With CBO, all Facebook campaign optimizations are made at the campaign level. Advertisers are no longer able to manually control precise budgets at the ad set level. Instead, campaigns are automatically optimized in real time toward the best opportunities – typically the lowest-cost audiences – based on what the Facebook algorithms determine is most efficient. But what’s most efficient isn’t always what’s most impactful from a business standpoint. That’s what we wanted to solve as the mandatory CBO date approached. In the year leading up to CBO’s full implementation, our tests grew steadily, with over 80% of advertiser campaigns already using CBO by July.
Read More: An Introduction to CBO
Manual Optimization vs. CBO
As mentioned above, our first test – which compared CBO to manual optimizations based on a decade of experience and best practices – did result in a 4% lower CPM (cost per thousand impressions) using CBO. Ad recall and favorability, however, were higher for the manual optimizations. This shows that, although the cost was higher, the positive business and brand impact was too.
This is because CBO is explicitly designed to deliver the lowest cost per result. But that efficiency impacts the audience selection, and resulted in CBO prioritizing first-party (lower cost, owned by the advertiser) audiences over third-party audiences. Third-party audiences are more expensive, however they’re intentionally built to be narrower and more engaged than broad first-party audiences. This negatively impacted the engagement results for the CBO-run campaigns compared to the manual campaigns.
When we ran a brand study, we found that the manual campaigns delivered 18% higher ad recall and 59% better favorability compared to CBO. So while CBO may deliver the most efficient CPM for your budget, it’s less likely to deliver the kind of engaged, diverse audiences that will remember your brand and drive business results.
Two Different Ways to Use CBO
CBO is designed to use an algorithm to optimize spend based on cost performance, but Facebook still also offers the option to set minimum and maximum budgets for each ad set in the campaign. To use this feature, the maximum must be at least 10% higher than the minimum budget, and the algorithm will work to spend within that range (although minimums are not guaranteed). While this doesn’t offer the same level of budget granularity as before CBO, it does give back some of the control to advertisers, allowing them to shape the allocation of their budget to different audiences.
In the initial CBO test above, we compared manual optimizations against CBO. While the results were telling, it doesn’t change the fact that CBO will become mandatory (and those manual options no longer available) in September. So for this test, we used our learnings to look at CBO on its own vs. CBO with budget ranges.
As our first test showed, clients who use third-party audiences for targeting would lose out on spending against those more engaged, narrow audiences with CBO’s default spending decisions. By setting minimum and maximum budget for each audience, we were able to use CBO’s algorithm to funnel spend more evenly across all target segments (first and third-party). We found that cost performance was nearly identical between standard CBO and CBO with budget ranges, with less than a 1% difference in CPM. CBO with budgets ranges spent more efficiently on first-party audiences, however, while also delivering a 58% increase on spend toward third-party audiences. This increased the reach from third-party audiences by 31%.
With manual optimizations set to formally go away, our test results show that advertisers can still manually optimize CBO (using minimum and maximum budgets) to efficiently reach the third-party audiences that delivered higher ad recall and favorability metrics.
Best Practices for CBO
As with any auto-optimization, there are opportunities, challenges, and ways to manually circumvent those challenges. As a result of our testing ahead of the mandatory CBO update, our teams are able to move forward with a set of 5 core best practices for leveraging CBO in place of manual optimization:
1. Separate the ad sets in a campaign based on audiences to ensure more expensive audiences (like third-party) are allocated enough spend. Otherwise the CBO algorithm will allocate the majority of spend to low-cost, broad audiences.
2. Show caution when applying minimum and maximum budget limits on each ad set, as it can restrict the pacing and scaling of your campaigns. Use them as an opportunity to spend your budget more evenly and ensure that high-value, higher-cost audiences are still reached with CBO.
3. Increase bid caps when looking to push more spend into a campaign as it will help you spend your budget more quickly when necessary.
4. Apply minimum spend limits for top-performing ad sets, maximum limits for poor performers, and set limit values to fill in gaps for overall campaign pacing.
5. Pause lower-performing ad sets to maximize the performance of your campaigns when spending against a strict budget.
Campaign budget optimization is still relatively new, but these best practices will help advertisers get the most out of CBO campaigns. As the product evolves, we’ll share more to keep you updated on the latest features and best practices.