(Campaign Budget Optimization) – What’s The Big Deal? Spoiler: Not Much
Updated: Sep 8, 2023
Campaign budget optimization (CBO) was partially introduced by Facebook in early 2018 and was set to permanently take place on all ad accounts by September 2019. It’s now estimated that campaign budget optimization will become permanent by mid-2020 on all ad accounts.
If you are not familiar with the term, all it means is that instead of selecting your budget for each ad set individually, you will select your budget on a campaign level and all ad sets will share the same budget.
Yes, I know it’s a bit late to discuss a topic that has been widely analyzed by thousands of different marketing agencies and businesses. But I am not writing this post only to discuss whether or not using campaign budget optimization works, I am here to discuss it from a rational point of view.
The nature of advertisers forces them to always be looking for the next hack or early access to a feature that will give them leverage other advertisers. Just like when carousel ads were first available and Facebook wanted to push this format, it gave incentives by giving priority to advertisers using the format. The same thing happened with stories placement when it first launched, and the cost per impression was lower than other placements.
Taking advantage of new opportunities is extremely valuable for marketers, but campaign budget optimization is not an opportunity. It’s simply a change in budget structure. I read a few months ago that an expert said he had a secret weapon to skyrocket his performance in 2019. He said that the secret weapon was CBO ?. Saying CBO is a game-changer is like saying the automatic placements feature and automatic delivery are game-changers.
Here is Facebook’s definition of campaign budget optimization: “it makes the most efficient use of your budget spending to get you the overall best results, and ensure that the cost of those results aligns 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 the lifetime of the campaign (lifetime budget). All campaign budgets use campaign budget optimization. For more detailed information click here
Essentially, the campaign budget optimization was designed to let you maximize results from your entire budget instead of limiting yourself to the ad set level. Instead of telling Facebook how much you want to spend per ad set, select the budget you want to spend on all ad sets combined and let it allocate delivery between ad sets while staying within your total budget.
It was designed because not all ad sets have the same opportunities cost. In some cases, some ad sets have more low conversion costs than others, and that’s why it makes sense to let Facebook control how the budget will be spread across ad sets.
The proper way to evaluate your campaign budget optimization would not be based on an ad set level, but a campaign level. For example, one ad set might initially have a higher cost per purchase than others, but more conversions overall. It happens because Facebook detects that overall, this ad set will have more opportunities, more steady results, better average cost per results and more volume than other ad sets.
The reason you shouldn’t turn off your ad sets with a higher cost per result in the campaign is that you will be missing out on possible opportunities in the future. If Facebook sees that its delivery predictions were wrong, it will slowly shift budget to the other ad sets and will adjust bidding to only deliver when the right opportunities arise. Therefore, if you are running a campaign budget optimization, only adjust bids and campaign budget and don’t mess around with pausing and enabling ad sets.
We all thought it was a big deal, but essentially all it is is another step towards complete automation. Similar to the default option where Facebook suggests that you select auto placements (all placements) in your ad set settings, they want to do the same with budget optimization. A few years back, there were ongoing discussions about separating placements in different combinations or running them together, and research concluded that giving Facebook more control using auto placements allows it to provide a better cost per result in the long run.
BACK TO THE FUNDAMENTALS: MORE FREEDOM FOR THE OPTIMIZATION ALGORITHM.
The reason all these automations (including campaign budget optimization) are being added is because the optimization algorithm outperforms humans in virtually all cases. Facebook wants to have as much flexibility and freedom as possible to ensure they have the ability to alter between audiences, placements, countries and ad formats. The more freedom it has, the better it can deliver results over time. Budget optimization is just another feature added to expand automation and control, similar to worldwide targeting, automatic placement, dynamic languages. and creatives.
WHEN IS CAMPAIGN BUDGET OPTIMIZATION MOST EFFECTIVE?
The short answer would be for small budget advertisers who use lowest cost (no cost control) method. The reason is that advertisers who use the lowest cost already give Facebook complete automation to optimize for the lowest cost, so there is no reason to dictate your ad set level. Simply allow Facebook to optimize your budgets on a campaign level as well. When you work with small ad set budgets that normally spend their full budget daily, it makes no sense to keep using ad set budgets and not go for full budget automation. The worst thing that can happen to you as an advertiser is to have amazing results and be limited by a low budget. Pooling your ad sets’ budgets together will help you maximize the potential of your full budget without segmenting it based on your instincts.
DISADVANTAGES OF CAMPAIGN BUDGET OPTIMIZATION.
Campaign budget optimization doesn’t really help when you have large ad sets budget with bid caps. Your goal as an advertiser is to maximize your results by getting conversions at a good cost while spending around 75-85% of your ad set/campaign budget. Why 75-85%? If you are getting good results and spent 100% of your daily budget, you probably overpaid for conversions and could have gotten them cheaper. Large advertisers aim to create the perfect balance between the number of conversions, cost per result and amount spent. If you are already using large ad set budgets with bid caps that don’t spend their daily budget, campaign budget optimization won’t help.
Bulk editing has gone missing. If you are an experienced advertiser, you will notice the extra work that you have to do when working with campaign budget optimizations. With ad sets budgeting and bidding, you could easily edit multiple ad sets and change bidding from no cost control to cost control, switch the type of cost control and change from conversions to value. With campaign budget optimization you need to edit them one by one and if you have a lot of different campaigns running, it can be very time-consuming.
If you have just one ad set for your best targeting based on previous data and best practices, obviously the budget optimization doesn’t make a difference since there is nothing to optimize here in terms of budgeting between ad sets. Advertisers who spend millions of dollars are armed with data that helps them minimize the number and ad sets they use as they can pretty much sniper out their relevant targeting.
USING CBO DOESN’T GUARANTEE BETTER PERFORMANCE.
Yes, I hate to break this myth to some people, but based on tests conducted on many different large scale ad accounts, campaign budget optimization doesn’t always create a lift in performance. In some cases, we noticed that the budget optimization took longer to optimize and didn’t work as effectively when it was tested with ad sets that were promoting different creative formats/demographics. Obviously, campaign budget optimization is an evolving feature that will change and improve and in any case, will become your only option to manage budgets on Facebook ads.
With the announcement of the release of campaign budget optimizations on Facebook, some advertisers went crazy, swearing it’s the next big thing. CBO is simply an update to structure that moves budget specification and allocation from your ad set to your campaign. The main benefit of using budget optimizations is that your budget will be allocated automatically between your ad sets and you can get more conversions for a better price. Campaign budget optimization is another step towards complete automation of ads. CBO is more suitable for advertisers who use limited budgets with automatic bidding (no cost control) and is not always helpful for advertisers who use one ad set per campaign with bid caps and large budgets that don’t reach their full daily budget. Using CBO won’t necessarily mean better ROI, but it’s expected to become the only option for managing budgets in 2020.