Facebook campaign budget optimization (CBO) will not be mandatory

Facebook Campaign Budget Optimization
If you've been keeping up with Facebook ads updates recently, you've probably heard the acronym CBO (Campaign Budget Optimization).

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If you still haven’t heard of Facebook’s Campaign Budget Optimization then you will very shortly. Why? Because Facebook announced they would make this feature mandatory for all Facebook ads account slowly starting last September.

Beyond the fact that it will be mandatory, we’ve seen some tremendous results from using Facebook’s CBO in all our recent campaigns. It allows us to save time, make more money and be more consistent.

So you might have a few questions such as:

  • What is Facebook Campaign Budget Optimisation?
  • How can you take advantage of it?
  • What are its advantages and disadvantages?

In this article, we’ll answer all those questions.

The Facebook ads hierarchy

Before we dive into what is Campaign Budget Optimization, it’s important to understand the levels of Facebook ads.

Facebook ads have 3 levels:

  • Campaign level
  • Ad set level
  • Ad level

Campaign level

At the campaign level, you can choose the budget of your campaign (if you use campaign budget optimization) and you also choose the main objective of all the ads and ad sets inside your campaign.

Objectives can be clicks, impressions, conversions, video views, and so on.

Ad set level

At the ad set level, you choose the audience that you target, the conversion window, the placements as well as the budget if you don’t have Facebook CBO’s already mandatory on your Facebook ad account.

Ad level

At the ad level, you create your ad. You have multiple options such as image, carousel, video, Facebook instant experience & much more. If you need ideas, we made a list of Facebook ad examples.

Each level above can have multiple of the ones below. For instance, you can have one campaign and 12 ad sets inside with 24 ads inside the ad sets. Here’s how it looks like:

Facebook campaign, ad set, ads level

Now that you have a good understanding of what the campaign, ad set and ad level is, we can talk about Facebook Campaign Budget Optimization.

What is Facebook’s Campaign Budget Optimization?

According to Facebook on their website, “Campaign budget optimisation (CBO) makes the most efficient use of your budget spending to get you the overall best results, and ensure that the cost of those results align with your bid strategy.

A campaign budget is a budget you set at the campaign level (rather than the ad set level). The amount you set can apply to each day the campaign runs (daily budget) or over the lifetime of the campaign (lifetime budget). All campaign budgets use campaign budget optimisation.”

In summary, you can now choose a budget, for example, $100/day for your entire campaign and Facebook distributes it according to the objective you selected to deliver the best results.

How would this look like visually, well Facebook made an illustration of how your budget would work with Facebook Campaign Optimization.

The main advantage according to Facebook is that by setting a budget centrally at the campaign level, they can better optimize in real-time how the budget is spent. Since having someone change your budgets every second is impossible, this is where artificial comes in very handy.

People often underestimate how much money they are wasting by not having budget optimization in place or a team optimizing their ads every day.

How to set up campaign budget optimization?

Now that you fully understand what Facebook ads CBO’s are, it’s time to figure out how to set them up even if they are not yet mandatory for your account yet.

Step #1 – Go in the Facebook ads manager and click on Create which will open a new window inside your ads manager to launch an ad.

Facebook ads manager

At this stage, select quick creation if you can because that’s what we’ll use for this tutorial. If you selected quick creation, this is what you should see.

Facebook CBO

Step #3 – You’ll need to enter your Facebook campaign name, ad set name and ad name. You’ll also be able to choose your campaign objective and turn on the Campaign budget optimization toggle to choose your daily budget.

For the objectives, you have 3 main objective categories: awareness, consideration & conversion.

Awareness

This objective is about helping your brand gain popularity through impressions. You have two options: brand awareness & reach.

Consideration

This objective is to gather people’s information if they show interest in your product or service. Here are the options you have: traffic, app installs, video views, lead generation, post engagement, page likes, event responses & messages.

Conversion

Finally, this category covers the objectives of making a final sale. The options lying ahead of you are conversions, catalogue sales or store traffic.

You then have to choose between a lifetime budget or a daily budget.

A lifetime budget tells Facebook the entire amount you want to spend over a certain period while a daily budget tells Facebook how much you want to spend every day indefinitely (or you can choose a date to stop your ad). For instance, you could choose to spend $500 over one week with a lifetime budget.

Daily lifetime budget Facebook ads

Step #4 – Choose your campaign bid strategy & spending limit

When it comes to campaign bid strategy, you have 3 options: lowest cost, cost cap & bid cap.

The lowest cost is to let Facebook optimize for you to get the most results for your Facebook ads budget. Cost cap is to control your costs while generating the highest amount of results for your budget. Bid cap controls the bid you ask for the result you are aiming for.

We recommend starting with lowest cost but eventually testing cost or bid cap can be a good strategy to scale your budget.

Campaign bid strategy Facebook Ads

As for your campaign budget limit, we recommend not touching it unless you want to make sure your campaign turns off after you spent a certain amount of money. All you have to click is the little “more options” under your campaign bid strategy.

Campaign spending limit Facebook ads

Step #5 – Choosing your audience, optimization & ad delivery

For your audience, it really depends on your strategy it comes down to knowing Facebook ads targeting.

To have access to this section, you have to go under the tab “ad set” of the campaign you created.

You can choose between a custom & lookalike audience, locations, age, gender, detailed targeting & connections.

Custom audience Lookalike audience Facebook ads

Custom & lookalike audience

If you haven’t built any Facebook custom or lookalike audience yet don’t worry, but make sure to check out this article that teaches you everything you need to know about Facebook custom audiences. You can click on create on the right side of custom audiences.

Facebook ads targeting

Location

Under custom audience or saved audience which enables you to use audiences you’ve created in the past, you can choose the location. You select a region, a country, a continent or even the entire world. You can also choose different types of criteria’s about the activity people had in these locations.

Facebook audience location

Age & gender

Those options are pretty straightforward, you can choose between the age of 13 to 65+ as well as men or women for any of your ad. We recommend targeting a larger spectrum of people unless you know exactly who likes your product.

Detailed targeting

This is where you would add your entire array of interests which you can layer. Layering Facebook ads interests means that you want to target people who like X and Y at the same time. You have a three options when it comes to detailed targeting: demographics, interests and behaviours.

Demographics are relationship status, education level, work and so on. Interests represent things people like in general. Finally, behaviours represents anniversaries, ex-pats, politics, and so on.

Facebook ads interests

Connections

This last option is one a lot of people often forget. You can target friends of people who like your page, app or even event. It’s really good for festivals and events since they are often social events.

Facebook connections

Step #6 – Crafting your actual Facebook ad

It’s that time. To get there, you have to under the ad tab under the ad set for which you’ve chosen all the things above.

First you need to choose a name and connect your Facebook & Instagram page to run your ads from them.

Facebook ad set up

Then you can choose between creating a new ad, using an existing post or using a mockup. If you want to boost a post you made on your Facebook page or a Facebook dark post then choose “use existing posts” otherwise choose “create ad“.

Facebook ads formats

We recommend starting with a single image or video, but you can also create a carousel with multiple videos and images or a collection if you have a creative idea. You can also create a full-screen mobile experience which is also called a Facebook instant experience.

Facebook ad creative

At this stage, just add your photo(s) or video(s). You can also transform your images into a slideshow but it often looks really bad.

Facebook ads creative

The primary text is what appears above your image or video, the headline is the bold text at the bottom left of your creative and the description is the text that appears under the headline. You can add multiple options under each which enables you a chance of A/B testing which is key with Facebook ads.

Finally, choose the destination of your ad. Unless you host a Facebook event, choose website and enter your URL. The display link is how you want your link to appear. You can then choose the most relevant call-to-action.

Facebook language

The language section allows you to create your ad in multiple language. It’s a nice option if you have a website in more than one language such as French & English.

Facebook pixel tracking

When it comes to tracking, you should always set up a Facebook pixel on your website. It allows you to know if someone clicked on your ad and became a lead or a customer depending on what they can do on your website.

Step #7 – Create new ad sets inside your campaign

For Facebook campaign budget optimization to work, you need to have multiple ad sets within one campaign. You can do that by duplicating your ad set inside the ads manager and edit everything to target different audiences to not have audiences overlapping.

Now let’s dive into the big question about which budget optimization is better. We found a lot of companies who ran test and we added our own data to make sure we weren’t getting odd results.

Are Facebook CBO’s better than ad set budgets?

It’s not black or white, we think it’s a good thing for new advertisers and those who are just starting out with their Facebook ads. For agencies like us, having mandatory optimization is never good. Our strength comes from our ability to do as many things manually.

Google has employed a similar type of optimization in the past decade. For beginners or small businesses, it might finally give them a chance to succeed with their Facebook ads and stop wasting their budget. These individuals will clearly benefit from Facebook’s move, but agencies that are killing it with manual optimization will not get positively affected.

Now, it’s not to say that results can’t be better. Maybe on certain occasions, Facebook CBO will work better than manual optimization, but in general, agencies optimizing manually their Facebook ads should do better because optimization is not only about data.

The advantage of Facebook CBO

  • Less audience overlaps: audience overlap is when you target the same audience within two ad sets. Now Facebook will control your budget to reduce that happening.
  • Constant budget optimization: by letting Facebook control your budget, you will allow it to spend on the right audience during Black Friday or Cyber Monday for instance.
  • Reduce wasted ad spend: Facebook will optimize your budget to not spend on ads that are clearly draining your budget when there’s a better opportunity.
  • Less competition: with optimization, we hopeless people will launch the same ads on the same audience multiple times. This makes Facebook ads more competitive for no reason.
  • Scaling faster: no more worrying about the best scaling method, now you can just slowly increase your budget every day if you wish and Facebook will distribute the budget accordingly.

The disadvantage of Facebook CBO

  • Testing new audiences: when testing new audiences, you generally want to control your budget so that Facebook actually spends and gives you insight. Now, Facebook might never spend on an audience you added because another ad is eating all your budget.
  • No more manual optimization: if an ad seems to be outperforming the other but another one has more data from Facebook, maybe Facebook will never spend on this ad. Of course, the goal is that Facebook’s Campaign Budget Optimization resolves these issues.

The breakdown effect of Facebook ads

The breakdown effect is often hard to understand. Essentially, it’s that Facebook ads seem to have an easy time managing small budgets because they can go find not expensive bids and give you quality results.

What happens later is that when you scale, Facebook doesn’t have low priced bids anymore and needs to go find more expensive bids. You’ll then see Facebook ads start shifting their budget towards other more expensive ad sets, placements or age groups.

Facebook Breakdown Effect
Facebook Breakdown Effect

As you can see, you might look at your two placements and be like why did Facebook spend more on Instagram stories if it was more expensive. The reality is quite different.

You might have gotten cheaper results with Facebook at the beginning, but as time went by, the Facebook results went way higher than Instagram. This is why Facebook might have ended up spending more on Instagram.

For more information on Facebook’s breakdown effect, check out their article.

How to prepare for the mandatory Facebook ads CBO?

When it comes to Facebook CBO, it’s key to choose the right ad set structure you want to use. There are four main structures we recommend:

  • Using the guiding ad set structure: this structure is the one recommended by Facebook. You take your best lookalike audience (generally a 1% lookalike) and add a Facebook interest audience that is very broad.
  • Using your top ad sets: you just have to add your top ad sets and bring them under one campaign with the same objective. You can even duplicate your ad sets multiple times to see which one performs better (referred to as the Michigan method)
  • Adding your best lookalike audiences: we recommend testing all lookalike audiences within that campaign so that Facebook optimizes your budget. Make sure you exclude audiences within your lookalikes otherwise you’ll have a lot of audiences overlap.
  • Adding your best lookalike audiences, interest audiences & retargeting audience: you can also put all your audiences inside one campaign which could still drive you awesome results for your CBO campaign.

Hot tip ?️: if you see an ad set that doesn’t get enough budget in your opinion, there’s something you can do. Just go edit the ad set and click more options under budget and schedule. You’ll be able to set a minimum and maximum budget. This is what you should see.

Facebook ads budget
Facebook ad set spend limits

Facebook CBO tips & results

Here are a few recommendations to crush it Facebook Campaign Budget Optimization:

Set broad audiences, ages & genders: Facebook CBO work with broad audiences because that’s where the artificial intelligence can truly have an impact on your results. Facebook will find rapidly which audience, age group or genders that deliver the best results.

Test multiple placements: by testing multiple placements while making sure your creative still looks good then Facebook will again use it’s artificial intelligence to deliver results.

Add each audience only once: make sure you don’t have multiple times the same audience as this would cause what we call audience overlap. You would compete yourself to bid on Facebook and end up paying more.

Have a high enough budget to make tests: when it comes to campaign budget optimization, we recommend a minimum budget to make it work efficiently. We still have a method to make it work for small budgets later.

Set minimum and maximum for individual ad sets: make sure you add a minimum budget to spend per ad set to make sure Facebook spends at least enough for you to draw conclusions from your tests.

When it comes to results, we decided to take the results from other agencies and compagnies and here’s what we found:

  • Social Fire Media: better results by manually optimizing their Facebook ads budget
  • Skup: total amount spent was $188,076.00, and our return was $425,338.99.
  • AdEspresso: their test was saying that Facebook CBO did manage the budget really well.
  • Sh1ftdigital: it worked really well for new ad accounts but it was bad for testing.

Essentially, Facebook CBO is well received by most advertisers and agencies. The only problem is that manual optimization can sometimes outperform Facebook’s optimization. Again, there are tons of factors influencing results thus any test will never be 100% perfect.

Facebook CBO’s SH1FT Method

#1 – Choose the right goal for your campaign (purchase, conversion, clicks, etc.) and the budget. We recommend $200 per day, but anything lower or higher can still work. Keep in mind that you want to have at least 50 conversions per week for Facebook to optimize.

#2 – Create your Facebook CBO ad sets with lookalikes, broad interest, saved audiences or custom audience. If you already know which audiences work best use those.

#3 – Create ad sets within those CBO campaigns with Facebook ads videos, images or carousel.

#4 – Set a minimum budget for each ad set to make sure they get at least a little bit of love.

#5 – Select all the placements that would fit your ad to give Facebook some testing room.

#6 – Wait at least 7 days before starting to slowly increase your budget.

When will Facebook CBO be mandatory?

Some Facebook ad accounts already have had Facebook CBO mandatory. Some would say that the percentage of accounts that have had this feature rolled out would be around 40% as we’re speaking.

Facebook is rolling it out slowly to make sure everything works best while giving them time to adapt for any problem that might arise. Since they make most of their money advertising, they wouldn’t want their clients spend to adversely affected.

In summary…

Facebook campaign budget optimization is performing well. Although marketers used to manage their budgets manually and getting some results might be negatively affected, most advertisers will see a positive effect. New advertisers can start and get better results. Don’t get too excited though, they are still tons of factors that can make your Facebook ads get no results.

The feature is being rolled out slowly. It might take some time before all Facebook ad accounts in the world have CBO as a mandatory feature. You should just get familiar with it so that when it comes to you, you are ready.

You still need to know how to run Facebook ads. Crafting the right creatives, targeting the right audiences, creating the right customer journey for your retargeting, etc. Those things will not be easier, you’ll have to be even better at them.

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