We Spent $35,880.34 Testing CBO Ads (Facebook’s Newest Ad Feature), Here’s What We Found Out
Campaign budget optimization.
I’m sure you’ve heard about it.
If you haven’t, you need to pay close attention.
In 3 short months, Facebook is going to be forcing a platform-wide change that will dramatically alter how you run ads.
Starting in September, Facebook will begin automatically shifting ad accounts over to campaign budget optimization.
So what does this mean for you?
- You’ll need to use bigger budgets
- You’ll spend less time manually shifting those budgets
- You’ll give up almost complete control to machine learning.
We’re unsure how long the roll out will take, or how many accounts will be affected at first, but rest assured, this will affect all of us.
One of SMART’s core value’s is being customer oriented. We pride ourselves for doing all we can to make sure you succeed.
So to ensure that you are prepared for, and succeed at, this dynamic shift, we conducted a month-long research study on campaign budget optimization for one of our products.
Our results were nothing short of amazing, so if you stick to our plan, I am confident you’ll see the same success.
As you can see, our total amount spent was $35,880.84 and our return was $70,183.12.
However, our breakeven point was 1.4 return on advertising and we also experienced a 25% loss in sales on our Ads Manager dashboard due to tracking errors.
So, in total, our gross sales were approximately $87,728.90 and after the cost of good’s and ad costs, we profited approximately $45,619.03 while testing campaign budget optimization.
So if you want to learn how to tackle campaign budget optimization I suggest you follow closely – I’m going to take you through the same exact steps that got us our 2X return, so when your account is automatically switched over, you can see the same results.
Before we dive into the steps you need to start taking, I’m going to cover:
- Basic Facebook Ad Building Blocks
- What campaign budget optimization is
- Why Facebook Is Forcing This Change
- How to adjust to the change
- Our Findings & Steps You Need To Take
Facebook Ad Building Blocks
If you are brand new to eCommerce, as well as Facebook ads, I recommend checking out our Ultimate Guide on Facebook Ads for eCommerce.
In that article, you will find everything you need to know about what to include in your ads, how to set them up, and dissecting ads that have gone viral.
For those of you who are pretty familiar, let’s go over the structure of a campaign.
The Facebook Ad Hierarchy
The best way to show you how campaign budget optimization works, I need to show you a breakdown of the campaign structure.
The campaigns are the umbrella collection of ad sets that contain the ads. This is the level at which the budget will be set moving forward with the change.
The ad set is a set of ads that share the same targeting, bidding, and scheduling. This is where we had set the budget and manually adjusted it, traditionally.
The ads are the creatives that are shown directly to your audience and drive sales.
As you can see in the visual above, the ads reside in the various ad sets within a single campaign. It will help to reference back to this image when I go over what campaign budget optimization is.
What Is Campaign Budget Optimization?
Campaign budget optimization (CBO) is an ad strategy that allows you to maximize campaign results and spend less on underperforming ad sets.
By harnessing Facebook’s machine learning, your campaigns will automatically and continuously yield the best results based on open opportunities.
Previously, Facebook’s built-in optimization improved ad delivery through a learning phase which happened at the ad set level. This is where the budget was also previously set.
Now, budgets are set at the campaign level, which allows Facebook’s system to automatically adjust the budget and allocate more of it to better-performing ad sets in real time.
According to Facebook,
“We optimize your campaign budget in real time on an opportunity-by-opportunity basis. Our goal is to get you the most results possible, and for the cost of those results to align with your bid strategy.”
Instead of having to go through and manually shift budgets between ad sets, Facebook’s machine learning assesses all data points and adjusts the budgets for you.
Once the machine learning quickly assesses the data points and shifts the budgets, it then passes the information off to an automated system that will place your ads.
In short, CBO optimizes the budget as well as the reach.
Why Facebook Is Switching To Campaign Budget Optimization
Last year, strategists at Facebook noticed that advertisers were hitting a wall when it came to making profits on their platform. They had also noticed that machine learning could outpace what marketers could do manually.
So, in order to help advertisers improve their return on investment, Facebook decided to create campaign budget optimization ads that would automatically distribute the ad spend to top performing ad sets in real time.
So what does this mean exactly?
Facebook’s machine learning takes on most of the workload by adjusting budgets you set on the campaign level throughout the ad sets.
So you won’t have to go through each ad set and manually adjust budgets based on performance, the machine learning will look at multiple data points throughout each campaign and adjust the budget so that the best performing ad set gets more of the budget distribution.
So overall, this will shave off a significant portion of your ad monitoring and will also yield profitable results.
I know it sounds scary to let an algorithm take the reins on something so reliant and dependant on nurturing, like manually shifting budgets, but if you keep reading you’ll see how effortless this change will be.
How To Adjust To The Change
Once September comes around, Facebook is going to begin automatically shifting ad accounts and their current campaigns over the campaign budget optimization.
This shift won’t affect all ad accounts immediately, however, all accounts will be switched over eventually.
Since this will be affecting everyone who advertises on Facebook, we figured it would be best to tell you the best ways to begin adjusting.
This is not a suggestion or a recommendation, this is something you need to start testing out now.
Your account will be switched over, and you need to start preparing before it’s too late and you have no other options.
Facebook says the best way to let the machine learning effectively optimize your campaigns is by setting broad parameters.
These larger parameters will give the system to the room to actually learn proper placements for certain ad sets and access as many opportunities to meet campaign goals.
Alongside broad parameters, make sure to align your goals with realistic business outcomes.
For eCommerce, storeowners should still be optimizing for conversions and purchases.
The system navigates towards the goal completely on its own, given it has broad enough parameters to steer itself.
Don’t lose hope when you launch ads and the metrics are less than pleasing.
Each ad set needs at least 50 conversions for a stable delivery.
Variables such as the time of day and day of the week can affect the delivery, so the best course of action is to just step back and let the machine learning do what it needs to.
Don’t compulsively track your metrics immediately after launching your campaigns, the results will be grim.
Some advertisers have said it’s taken up to a week for accurate results to turn out.
However, as you will soon see, our campaigns didn’t take that long for stable deliveries.
Lastly, a new feature rolling out with CBO is setting a minimum and maximum budget for the ad sets.
The reason Facebook has this feature is that early on, the machine learning may over-allocate the majority of a budget to a single ad set, while not giving much to the rest.
So to combat this unequal dispersal, set minimum and maximum budgets.
Our Research Findings & Steps You Need To Take
The shift to CBO is as new for us as it is for you, so we are literally learning side by side.
Our Chief Marketing Officer, Matt Schmitt, has campaign budget optimization turned on for his eCommerce ad account and has been testing this strategy for the past month.
The methods I’m going to go over, are what have worked best for us thus far.
We’re unsure if the machine learning will adapt more based off of the results of this trial period, however, we’ve formulated a strategy that will best fit the needs of your store.
Start With Winning Products & Audiences
When you begin testing campaign budget optimization, you want to test with winning products and audiences that are proven to convert.
Same goes with the ad creatives and copy – gather elements from previously successful campaigns and use it to construct and test out new CBO campaigns.
The campaign works best with a bigger budget, it gives the system more room to test budget allocations and ad placements.
Since you are advertising a winning product to a winning audience already, you should feel more confident in using a larger budget.
We recommend starting with no less than $150.
Ad Sets Per Campaign
Our best results came from campaigns that had 5 ad sets that contained lookalike audiences with big interests.
We recommend you do the same.
Just like Facebook recommends broad parameters, our best results came from a larger pool of the audience size.
As a general rule of thumb, don’t go beyond the size of the actual niche when creating lookalike audiences.
For example, if the niche size is 1 million, don’t target a lookalike audience of 4 million (a 2% lookalike).
If you do create a 2% lookalike or above, try targeting the broad interest of the niche as well as the lookalike audience. This is called “layering” and will help narrow your 4 million person pool down to be more narrow and precise.
Timing should remain consistent with traditional ad launches.
Launch your campaigns at 3 a.m. EST and give them at least 1-2 days to stabilize their delivery.
If you aren’t seeing optimal results at this point, don’t freak out.
Earlier I mentioned that some advertisers saw results after about a week of waiting.
It’s important that you allow your CBO to learn with time and budget spending – but also make sure you know your budget numbers and keep to your rules around killing off bad performing ads.
We’ve found it’s best to shut off ads rather than ad sets in a CBO campaign in order to keep things stable.
Remember, after every adjustment you make you should allow the machine learning to adjust again.
If you begin seeing results with the $150/$200 budget, then scale the budget up by 20%, or more, depending on how much success you are seeing.
You increase the budget at the campaign level now, which gets distributed throughout the active ad sets.
We’ve found you can scale a CBO campaign much more aggressively than old campaigns with a budget at the ad set level.
I do want to warn – the data tends to look pretty depressing when the campaigns start off, so don’t compulsively check the ads every single hour.
We recommend checking once in the morning and once in the evening. Remember, give the system time.
The point of CBO is to lean more on Facebook’s machine learning than human interference. It’s going to take lot’s of patience to let Facebook’s system do the heavy lifting but trust the system.
With our experience, CBO has been extremely effective and has accomplished what Facebook has intended to do.
We have profited on the front end which has allowed us to do way more retargeting and has brought in more profit on the back end.
CBO also becomes more consistent as it scales, so kicking up the budget on a CBO campaign affects the performance less than kicking it up on the ad set level.
Below is a checklist to guide you through constructing and launching your own CBO campaigns.
All ad accounts will begin getting switched over to CBO permanently, starting in September.
The 2 biggest changes to note are:
- The budget will be set at the campaign level
- Facebook’s machine learning will be taking over the heavy lifting
This is a new concept for all advertisers at the moment, including us. We will continue to update you as we discover more insightful information.
In the meantime, you need to begin testing out CBO’s of your own. Reference our steps in this post and use the checklist we’ve made to guide you.
Take winning ads that you already have success with, and separate them into campaigns based off of audience size, targeting, and funnel stage.
This is your chance to get a head start and learn what works best for you before having no other options.
And if you really want to succeed with campaign budget optimization, make sure to download our free Copywriting Bible.
The Copywriting Bible is a breakdown of the best copywriting techniques used across multiple 7-figure eCommerce stores such as Urban Outfitters, Zappos, and Apple.
You can use these exact same techniques in your ads to hook browsers and drive sales.
If you have any questions or comments about anything CBO, feel free to leave them in the comments section below.
Patricia is a self-proclaimed dog enthusiast who also happens to spearhead the content marketing efforts at SMART Apps. When she’s not petting dogs or writing about the industry insights, you can find her on a yoga mat or reading anything that feeds her bibliophilic needs.