Facebook Campaign Budget Optimization [CBO]: The Ultimate Guide 2020

We wrote this article back in February 2020, when Facebook decided to switch all accounts onto the CBO AKA Campaign Budget Optimization. The feature has been available since September 2019 and finalized in this last step of the roll-out.

Now, Facebook decided to pull back this update and CBO is not a mandate anymore. You are free to choose whenether use it or not for you ad campaigns. WE have updated the info in this article, to help you decide – do you need it, or not?

No idea what Campaign Budget Optimization is? – No worries. That’s why we explain it all in just 2 paragraphs below. 

We decided to created a super-detailed guide, to explain everything nicely for you, and it came up quite long. We'll use cute gifs here and there to stop your mind from wandering and help you concentrate. Like this one:

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Facebook Ad Building Blocks

Technically speaking, the Facebook Business Manager system’s far from simplicity, so we are not covering the building blocks of Facebook from the technical point of view. Let us just quickly glance at the most often used psychological triggers, Facebook advertisers take advantage of to make people click their ad.

So what are the powerful triggers that serve as Facebook ads building blocks?

Wants & needs

By addressing the desires of a user, by providing answers to their wants, many advertisers manage to resonate with users in the milliseconds of the attention span they are given.

Curiosity

Users are, including your humble servant here, dopamine junkies, who come to the social media for the thrill of fun and discovering new things. If you manage to strike that curiosity cord in their hearts – you have got that finger up in the air away from scrolling. The stage is yours. Or shall we say, the screen?

Authority

Customers now are the product, true, getting access to all that info on Google, Facebook, Instagram for free. But on the other end of the spectrum – we all get to use the multi-billion-dollar systems daily FREE. Google has created a unique mentality, when top experts share their knowledge free on YouTube, blogs, etc. – to be at the top of the search. If your product, your course lecturer, your company has some verifiable authority – using it in your ads is a sure-fire way to increase your Facebook ads CTR.

Fear

Scaring your customers into buying something is a trick every self-respecting affiliate marketer – or just a digital marketer - has resorted to. Using people’s most inner fears is an old and effective trick. You’ve probably heard of Neil Patel, and he admits to using fear in his ads and seeing his conversions grow. His team scared users into buying VPN, by showing some info about them available to all when they don’t use the VPN.

Call to action [CTA]

Good old call to action has been there since BC, we are sure. But it still works like magic. It is one of the major building blocks of Facebook ads and is not optional at all. So, it’s an order, sergeant.

The Facebook Ad Hierarchy

Also called as Facebook campaign structure, it includes 3 levels:

• Campaign: is the highest level where advertisers get to choose parameters, like an ad objective [traffic, conversion, etc].
• Ad set: There can be a few ad sets created in one ad campaign. At this level, users get to choose their schedule, budgets, targeting, bidding, and placement.
• Ad: is the final level of the Facebook hierarchy – of Facebook campaign structure – whereby advertisers can upload the creative for the ad and all the textual content.
  

What Is Campaign Budget Optimization?

Campaign Budget Optimization [CBO] is a feature by Facebook Ads Business Manager, that allows distributing the budget allocated to the Campaign level unevenly between the ad sets, giving more preference to the best-performing ad sets. 

So, yes, it’s less brainwork for the advertisers and more decision-making power to Facebook. Still, there are some reasons why it is not beneficial for Facebook to use this power for evil:

1. Facebook is a business = Facebook wants more of the client’s money.
2. Facebook knows the competition is strong [Hello, Google! Hi there, Amazon. How you doing, Snapchat?].
3. The social media giant knows the competition is growing [Hello, TikTok, Hi there, Telegram]
4. Facebook wants to stay in its leadership role in the advertising domain as long as it can. [Smart bunch as they are]. 
5. Facebook keeps inventing the ways, features, modes, algorithms, metrics, that will bring their advertisers most for their buck.

Logical, right? Let's dig deeper.

How it works

With the CBO feature on, Facebook distributes the budget set at the campaign level among the ad sets in a way, that will allocate more spend to the best-performing ad sets & ads.

This process is continuous and ongoing for the Facebook algorithm, whereby the system is on the lookout of best-performing ad sets so that to favor them with better funding.

Imagine you have a mission to inhabit your windowsill with 3 pots of plants, but you only have a limited amount of water per day. Nonetheless, you can keep discarding plants and buying new ones, as long as they are 3 on the windowsill.

Some plants look great but need lots of water. Some plants look great and need just some water. Some plants look OK and need almost no water at all. So as a trial and error, you will be going through plants until you find just the combination, when you spent least water and everything looks great. 

Similarly with this analogy, CBO will direct the funds allocated on a campaign levels to ad sets, that have the best conversion and bring the best results as per your chosen objective.

The difference between Conversion Optimization Objective and Campaign Budget Optimization

Although both terms contain the word "optimization", below are the major differences:

1. CBO has been rolled out recently in September 2019 and was finalized in February 2020. The conversion optimization objective has been part of the system for much longer.
2. We don’t get to pick and choose CBO settings. You can still use your campaign objective though – if you want to get traffic, engagement, video views or conversion.
3. CBO allocates your budget on a campaign level and redistribute funds between the ad sets, favoring the better-performing ones. The conversion optimization objective will work to optimize within an ad set.
   

Is CBO a better option after all?

Well, the answer is "not for the all cases". CBO learns to optimize ad spend, delivering best result possible. Different tests conducted by advertisers, got somwehat controversial results. In this article by Adaptly, Jonathan Yam says, it was proven to be a good tool for lowering CPM. Still, it affected the engagement rates for the audience.

In this article auhtors warn us about bigger budgets needed for successful experiments.
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Every project is unique, so if you are looking for a robust answer – run a small experiment by yourself. CBO gives advertisers, who are new to the platform, easier start: you have less points to worry about, so if you are all-new, try to run it first, and then you could with your results try to repeat the success with manual settings.

How To Prepare & Start Running CBO Facebook Ads

Below is a step-by-step algorithm of how to manage a CBO Facebook ads campaign:

Create a Facebook Ads Campaign with CBO

1. Go to your Facebook Business Manager.
2. Select the green "+ Create" button to create a new campaign.

3. Click Switch to Quick creation.
4. Name your campaign.
5. Choose Conversion in the Campaign Objective field.
6. Set the radio button Campaign Budget Optimization to ON mode.
7. Specify your daily or lifetime budget.
8. When done with completing the ad sets and ads, click on Save Draft.
   

Setting Campaign Bid Strategy in the Facebook Ads

In the next step users get to choose their bid strategy between the following options:

• Lowest cost
• Target cost
• Cost cap
• Bid cap
  

We recommend opting for "Lowest cost" to start with and try experimenting with either of the cap bidding strategies when scaling the mature campaign.

Complete FB Ad Setup

1. Click the ad set button to navigate to the ad set creation page
2. Choose your audience
3. Choose the location of the target audience
4. Choose demographic parameters of the audience
5. Users are recommended to use the automatic placements as they are using the Conversion Objective in this case.
   

Setting Facebook Ad Optimization & Delivery 

In this step, you will have to select the ad optimization

• Conversions
• Landing Pageviews
• Other options /link clicks, daily unique reach, impressions/.
  

We'll be choosing Conversion, but the illustration below has been made to demonstrate the entire drop-down menu for the reader's kind attention.

Create Your Facebook Ad

Congrats, almost there! Create your ads as usual, by adding the creative, choosing the format, text, headline and all the necessary links. After finishing your first campaign with the CBO feature, it is time to go back to the ad set level and duplicate it to create another test ad set.

Advantages of the CBO

The opinion that CBO is a great innovation is shared and expanded by a seasoned media buyer, Savannah Sanchez of the Social Savannah at AWC Affiliate World Conference in Bangkok. Please see the print screens and the experts from the speech below for your convenience:

1. Zero time managing budgets while lowering CPA.

CBO feature saves the time for advertiser, who doesn’t have to micromanage and tweak all those time-consuming hourly optimizations.

2. Decisions are made off of future outcomes.
   

No individual advertiser, however savvy or deep-rooted, has the algorithmic possibilities of the Facebook machine learning, which can predict it’s users' behavior, based on multiple users' interactions with hundreds of other business accounts. 

While individual advertisers can only base their decision on the past data, Facebook has the power and algorithms to leverage future interactions to bring you more conversions at a lower cost.

3. Campaign Budget Optimization de-duplicates audiences.
   

If there are multiple audiences with a CBO, there is no worrying about the audience overlap. If one person belongs to different audiences, the advertiser is never in position when those 2 audiences compete against each other and drive the CPA up.

So in such a case to optimize costs, Facebook will just move the budgets to one of the audiences and exclude another one from the auction altogether in real time for such a user.

4. Avoid restarting the learning phase.
   

Facebook requires at least 50 Facebook Pixel events to end its learning phase. So with the CBO feature in place, once the advertiser is sure the campaign and its structure from copy to all settings, are perfect and sets the campaign live, it needs no further revisiting but can be left with the Facebook algorithm.

Previously though, many changes would trigger a new learning phase, like a change of creative, change of targeting, pausing for 7+ days, etc.

You are doing a great job – you have already same trhought he bigger part of the guide. Let's enhance that "I learned a lot and got even smarter" vibe with a very suitable gif:

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Downfalls of CBO

1. It needs quite some volume of Facebook pixel data
   

To be able to make conclusions, the algorithm needs data to base those conclusions off. It is more complicated for Facebook to bring the best results in case your website hasn't had much traffic or purchases completed yet.

The more seasoned your Facebook Pixel is, the more data it has accumulated, the more chances there are of successful optimization for your Facebook Business Manager account.

2. Less control
   

The advertisers gave up all of the control in terms of budget allocation and distribution on the ad set level, basically entrusting Facebook to dispose of their budgets in their best interest.

3. Requires trust in Facebook having advertisers’ best interest
   

This gets deduced from the previous clause of loss of control. So the idea, that we have put forward at the beginning of this piece is also shared by this savvy digital marketer, Savannah Sanchez. She mentions that Facebook is very much aware of the competition, like Snapchat and TikTok, so to be competitive they have to be guided by the advertiser's best interest.

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Best Practices for Campaign Budget Optimization

The guiding Ad Set structure if you have some $$$ and want to spent it more effectively

This is great for those who just start with the CBO and those who are not super tight on budgets.

1. Duplicate your best performing ad set from a campaign with LookAlike audiences [LAA] or interest settings into a new campaign.
2. Create a new audience that is much broader than the one in the initial campaign: leave as broad age, gender and GEO parameters as possible in line with your user persona. Leave out settings concerning LAA and interests.

Such a structure will allow an advertiser to take advantage of the full scope of Facebook's new optimization feature. It will allow the algorithm to acquire quickly the required minimum of 50 conversions per week and start filtering the database for your very best match at the lowest CPA.

Low on budgets? Use your best Ad sets

Pixel might be pretty expensive to train, we agree. No budgets for Pixel education? Well, then throwing your top performing 4-9 ad sets into one campaign might be an option.

The only thing is that they should not be too different in terms of targeting not to confuse the system. This method is rather useful for scaling campaigns too.

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Only introduce changes to a duplicated campaign

Do you want to double your budget? Make a copy of the campaign and double your budget.
Do you want to change the targeting? Duplicate the campaign first.

It allows you to reverse any changes. If you monitor your new campaign and it delivers as expected or vice versa. Remember, Pixel needs to do a lot of learning anew after you have introduced a significant change.

You can always switch off the old campaign once you are positive the new one performs as expected.

Mind your segmentation

Try to still take care that the ad sets within one campaign are not entirely different so that FB is left comparing apples to apples. Do not confuse the system with incomparable choices, this will result in unreliable outcomes.

Strategy before Tactics

As in any mission, here in social media advertising, strategy defines half of the battle. Make sure to plan out why you need each campaign, ad set, and ad.

Break down the overarching goal into smaller digestible missions, like you would define what goal you need to achieve in a year-long war, battle, lasting for days and the small 2-hour fight. Similarly, you must know exactly how this creative helps this ad achieve the mission of the ad set, which in turn, helps the campaign.

Ad account – overall mission of the company – business development.

Campaign – departmental missions: 

• engagement
• video views
• lead generation
  

Ad set – tactical levels:

• retargeting
• interest targeting
  

The importance of the Right Ad Objective

Even though it may seem too basic, it is important to make sure to choose the ad objective that corresponds with your strategy and tactics.

One big reason: the algorithm only does what you tell it to do. Pay attention to your orders.

Start with a "Lowest Cost" Bid Strategy

Use a proven bidding strategy first before you feel comfortable enough to advance to more adventurous and risky settings. 

"Lowest cost with bid cap" and "Target cost" require seasoned skills on the part of the advertiser as well as the pixel. Stay on the safe side while a novice.

Triple-check that SDK event tracking and Pixel are properly set up

Imagine the Olympic games, where the jury watched all results in slo-mo – or on the time-lapse mode. That would not be the Game, that could be compared to the previous historical results, right? No champs in this game then. 

Similarly, you have to verify that your pixel data corresponds to that of Google Analytics. Setting up events is one of the rather complex missions development teams face and if failed, it can convert into lots of wasted resources. Be attentive, and remember that hard work always pays off:

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Facebook Campaign Budget Optimization Era: CBO natives vs immigrants

If you are a CBO immigrant, it will be easier for you to understand how the feature is impacting your campaigns. You will have had all the historical data and metrics to compare with.

For the CBO natives, we are looking forward to seeing new tricks from this upcoming generation in a year or two – as their knowledge will be purely CBO-wired.

Facebook CBO strategy is no rocket science but is rather a complex matter, we'd say. Are you a visual learner? Why not check out a few vids we found helpful in terms of getting a glimpse of the expert insights on the topic? The great news is that many of them share their personal Best Practices on CBO strategies in 2020! So below are our top picks of YouTube CBO videos: 

• Campaign Budget Optimization From Facebook: How to Get It to Work for You by Social Media Examiner‍‍
• #1 CBO Strategy For Facebook Ads by Ben Heath‍‍
• 0-$10k/Day CBO Strategy Update by Noah Brewer‍‍
• Facebook Campaign Budget Optimization by Paid Media Pro‍

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