Complete Guide to Facebook Campaign Budget Optimization (CBO)

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Facebook ads are not expensive when compared to other ad networks like Google and Amazon.

Generating relevant leads from Facebook is easy once you know how to run effective Facebook ads.

To further help advertisers get as much benefit as possible from their ad budget, Facebook rolled out the campaign budget optimization (CBO). Campaign budget optimization helps you spend your budget efficiently, so you get the maximum possible return on investment.

In this article, I will explain what CBO is and how it works. I will also show you how you can use CBO to your advantage and its best practices. Let’s get started!

Contents

What Is Campaign Budget Optimization?

Campaign budget optimization helps you automatically distribute your budget to the best performing ads at the campaign level (rather than the ad set level).

Though CBO was first made mandatory for advertisers, Facebook reversed the decision to provide marketers the flexibility and choice in their buying strategies.

Related: Top Facebook Advertising Tools

Note: Conversion budget optimization is different from conversion optimization (CO). In CO, Facebook optimizes the ad delivery to display it to the best people. However, in CBO, Facebook adjusts your budget to make the most efficient use of your spending.

How Does Campaign Budget Optimization Work?

Campaign budget optimization distributes your funds between the ad sets on a campaign level. In simple words, it allocates more money to the ads that have higher conversion rates and less to the under-performing ones.

Here is a graphic by Facebook that explains how campaign budget optimization works. The left-hand side displays without CBO, your budget is evenly distributed across ads, even to the underperforming ones. But, with CBO, your budget is allocated based on the ad’s performance to maximize conversions.

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CBO considers these three things when distributing budgets amongst the ads:

Budget and bid strategy: CBO allocates budgets based on your bid strategy and objective. For example, if you choose the “lowest cost” bid strategy, CBO will allocate more budget to the ad that generates the highest ROAS.

Audience sizes: CBO allots more budget to the ads with the largest audience. For instance, if you create two ad sets, with the first one having an audience size of 100,000 and the second one 120,000, Facebook will allocate more budget to the second ad set.

The number of ad sets: When distributing your budget throughout the campaign, CBO considers all the active and scheduled ads. However, if you have turned off certain ads, Facebook will not reserve any budget for those ads.

When used effectively, CBO can help you acquire more customers at a low cost per conversion, thereby improving your return on ad spend (ROAS). Besides, conversion budget optimization works in real-time to ensure you are getting the maximum possible returns on every dollar invested. Don’t forget that CX is the most necessary aspect of running successful campaigns.

Related: Facebook Marketing Stats

Using the Campaign Budget Optimization

Now that you know what campaign budget optimization is and how it works let’s take a look at how you can use it to your advantage.

Create Ad Campaigns

Visit Facebook Ads Manager from your business account. Click on “create” in the main dashboard. Switch to the “Quick Creation” workflow (if it does not open automatically).

Name your campaign, and select your objective from the drop-down list. Since it is about campaign budget optimization, it’s recommended to choose “conversions” as your objective.

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Click on “Save Draft” to add the campaign to your Ads Manager dashboard.

Set Your Bid Strategy

The next step is to select your bid strategy. When you click on the “campaign budget optimization,” you will see a drop-down menu with options to choose the bid strategy. It includes:

Lowest cost
Cost cap
Bid cap
Target cost

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In the beginning, choose the “lowest cost” option as it automatically adjusts your budget. Select “cost cap” or “bid cap” if you want to scale the campaign with more aggressive manual bids.

Complete Your Ad Campaign Setup

Click on the Ad Set button on the right side of the screen to move to the Ad Set level. It is where you can complete the setup of your ad campaign.

The primary component of the setup is the location. You can create custom audiences, select a lookalike audience to target people with similar interests, or retarget audiences who have previously engaged with your brand.

Other data that should be included are the location and age group of people you want to target. The more accurate your targeting is, the more the conversions will be.

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You can create various ad copies with different sets of audiences to test, which brings the best results.

Choose Your Ad Optimization and Delivery

Which action do you want to optimize your ad for? Links? Landing page views? Or conversions?

By default, the optimization for ad delivery is conversions (as I’ve chosen conversions as the objective).

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When it comes to ad placement, you won’t have to choose anything as Facebook automates it when selecting the conversion objective. Moreover, you can use any of these Facebook automation tools to streamline all your Facebook marketing tasks.

Related: Best Facebook Automation Tools

Decide Your Budget

Next, decide on your budget. You can choose either a daily or a lifetime budget. In CBO, you can set spending limits per ad to control the ads’ budget distribution within your campaigns. Also, select the timeline of your ad.

The “Budget & Schedule” allows you to set a minimum and maximum spend per ad set. However, you should use this only if you are testing audience targeting effectiveness. If not, Facebook will assign more budget to the winning ad sets.

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For example, if your total budget is $200, and you are testing four audiences, you could set a minimum of $40 per ad set. The remaining budget will be distributed to the best performing ads.

Create Facebook Ad

Lastly, create a new ad or boost an existing post. To do so, open the ad level of your campaign, choose your ad format, creative, copy, title, link, and CTA. You can also set URL parameters for conversion tracking.

If you are testing CBO’s effectiveness, create another similar ad, duplicate it using the duplicate button. Just change the creative, such as the headline or CTA, and you’re good to go. You can find the “duplicate” option in the “Account Overview” section under the “Ads Manager.”

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Pros and Cons of Campaign Budget Optimization

Since Facebook has not made CBO mandatory, it is essential to analyze both the positive and negative sides of it. Let’s take a look at them:

Campaign Budget Optimization Pros

Easier to manage.
Can be scaled effortlessly.
Gives more ROAS compared to manual bid management (unless you are a pro and can spend time optimizing your ad budget continuously).
Facebook’s machine learning algorithms are pretty good. It can make counter-intuitive decisions that work in favor of your business goals.
Identifies the ads that are not performing well (so you can optimize the ad copy) and automatically reduces your budget for it.

Campaign Budget Optimization Cons

You won’t be able to target MQL (marketing qualified leads).
Limited control over your ad budget distribution.
The minimum and maximum budgets at the ad set level are not as effective.

When Conversion Budget Optimization Is the Right Choice?

The primary aim of CBO is to help you manage your budget efficiently without any manual interference. CBO is more effective when it aligns with your ad strategy. Here are some situations when CBO would benefit you the most:

You Want to Generate More Value With Your Campaigns

As mentioned above, CBO helps get the most of your ad budget. If you are looking to increase your ROAS, reduce the CPA while converting as many leads as possible, CBO is for you. It finds the lowest-cost opportunities based on your objective, optimization, budget, and bud strategy.

Simplify Your Campaign Management

With CBO, you won’t have to manage the ad campaigns manually. Facebook finds the best possible opportunity and adjusts your budgets accordingly. You can use this time to create better ad copies to increase the conversion rate.

Leverage Automatic Placements

When it comes to running ads on Facebook, there’s a high competition. CBO can help you combat this by displaying your advertisements to more people on more placements (where people are more likely to convert).

For instance, if you are running ads for holiday ecommerce marketing, you would want the ad to be visible to the target audience depending on where they spend the maximum time (news feed, Instagram feed, marketplace, Instagram explore, etc.). CBO does this automatically for you, thereby reducing costs while generating high-quality leads.

When Is Conversion Budget Optimization Not the Right Choice?

Till now, I have discussed why CBO is a great feature. But, it is essential to mention that CBO is not a good fit for every ad campaign. Here are some situations when CBO might not be the right choice for your Facebook ad campaigns:

If You Have Strict Budgets Separated by Region or Markets

For businesses with strict budgets for different regions, markets, or submarkets, CBO isn’t a feasible option because it allocates more budget to ads with a larger audience. This means Facebook may exceed your regional budget restrictions (though the overall budget will remain the same).

You Need More Control Over Budgets Across Ad Sets

If you want to control how much budget to allocate for each ad set level, CBO is not a good option. Though it allows you to set minimum and maximum ad spends, there are some restrictions on it, such as:

When you add the minimum budget, there is no guarantee that Facebook will pace to spend that amount. Besides, the more ads you have in the campaign, the harder it is for CBO to spend a minimum on that ad.
If the algorithm exceeds your maximum amount before time, you will have to increase your budget to continue running the ad (or increase the maximum budget).
When you use both minimum and maximum budgets across various ad sets in a campaign, it limits CBO’s effectiveness to distribute your budget. As a result, the campaigns might under-deliver or lead to a higher CPA.

You Want to Target a Specific Niche

If you wish to reach a particular audience (or a niche audience), it is better to manually manage your budget, ad placement, and audiences that are a high priority.

Here’s why:

Let’s suppose you created two ads with two different sets of audiences. You want to target both audience groups. But, CBO allocates more budget to the high-performing ad, thereby eliminating the purpose of your ad campaign.

Campaign Budget Optimization Best Practices

By following the below mentioned best practices, you can get the most out of campaign budget optimization.

Customer research is one of the best ways to improve the performance of your Facebook ads. You can survey your existing customers using tools like Jotform that lets you create engaging online surveys. Based on the data, you can optimize the content strategy of your ads to generate the maximum ROI.

If you want to drive traffic to your website, choose the cost-per-click strategy instead of impression-based pricing. However, if you wish to boost brand awareness, CPM strategy could be a better choice.

Related: Ways to Improve Your SEO Fast

Analyze your results at the campaign level and not ad set level. View ad level performance to determine which ads are not generating the desired results.

Allow CBO to gather enough insight into what type of users are likely to engage with your ads at a lower cost. Facebook needs at least 50 conversion events (e.g., purchase, sign up, visit the website, etc.) in a seven-day window. You can enable the Facebook learning phase by choosing “7 days click” as the conversion window.

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Give your ad campaigns a week or more time before analyzing the results or making any changes.

Create broad audiences and merge similar audiences. If you target the same audience via different ad sets, you will likely compete with yourself, leading to inefficient spending and higher CPA. Use the “Audience Overlap” report to determine if your audience targeting overlaps.

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Related: 15 Best Native Ads Networks

Is CBO Effective? Examples and Results

Seer ran two ad campaigns: one with CBO and one without.

For campaign without CBO, there were two ad sets:

The first ad is targeting audience #1
The second ad is targeting audience #2

For the CBO campaign, Seer combined the audiences with the same goals, creatives, and audience sizes into a single ad. This restructuring aims to enable Facebook to determine which audience performs most efficiently based on the shared goal.

So, there was only one ad that’s targeting audience #1 and audience #2.

After two weeks, with flat spending over the period, the campaign with CBO outperformed the one without it. Here are the key results:

CTR increased by 29%
CPC decreased by 18%
Conversions increased by 133%
CPA decreased by 57%
CVR increased by 91%

Conclusion

Campaign budget optimization is a new feature that helps you use your advertising budget more efficiently. However, it is better to test the effectiveness of CBO before allocating all your budget to it.

Have you tried campaign budget optimization yet? Did you see positive results? Let me know your experience with it.

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SEO Sandwitch

Complete Guide to Facebook Campaign Budget Optimization (CBO)

What Is Campaign Budget Optimization?

How Does Campaign Budget Optimization Work?