As of 27 February, Campaign Budget Optimisation (or CBO as known in the industry) for Facebook and Instagram Advertising is mandatory.
However, there are only a few who understand what this means for their Facebook and/or Instagram Ads Budget.
It basically means the budget is now set at CAMPAIGN level (top level) and Facebook optimizes the budget across anything below it. Although Facebook is getting better at optimizing this, it’s not always perfect.
WHAT LIFE WAS LIKE PRIOR TO CAMPAIGN BUDGET OPTIMISATION
Firstly, we need to understand the hierarchy of Facebook Advertising.
There are three main areas:
- CAMPAIGN LEVEL
- AD SET LEVEL
- AD LEVEL
Prior to CBO, your budget would be set at Ad Set Level.
On your Facebook Business Manager Account – the Ad Set level is shown below, highlighted in blue.
Therefore, If I sold Sunflowers via Facebook Advertising, I would set the budget at Ad Set Level.
This would enable me to control who, where and when the Facebook Ad was placed in front of.
I would create up to 3 different Ad Sets for 3 different target markets that I have identified. Each target market would have a different message, addressing their specific need for Sunflowers and I would allocate a budget to each Ad Set accordingly.
I would then test and analyse my results, even while the ads were running. If one wasn’t performing well, then I would be able to manually allocate more budget to the ad producing the best results.
In this example, I would move Ad Set 3 budget (not receiving adequate conversions) to Ad Set 2 budget (people are responding to this ad adequately).
I have control.
However, I won’t be able to do this anymore.
As of Feb 2020, Facebook announced changes to where we allocate our budget.
WHAT LIFE IS LIKE NOW WITH CAMPAIGN BUDGET OPTIMIZATION
The budget is now set at CAMPAIGN LEVEL (top level) and then Facebook will optimise accordingly.
Facebook states: Campaign Budget Optimization (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.
Therefore, Facebook will spend your budget based on the type of objective you choose. And the daily budget will be spent across the ad sets within your campaign.
Facebook will use their AI (artificial intelligence) to quickly understand your audience and then allocate the money accordingly, as shown below.
HOW IT WORKS:
With Facebook using your campaign budget together with your bid strategy, it will find the best opportunity to spend your money.
Depending on your objective (for example, my objective for Sunflowers was Conversions), you will get a list of possible ways to optimise your budget (via Campaign Bid Strategy), as shown below.
Facebook’s default setting is Lowest Cost.
When you’re starting out, I suggest you stick with Lowest Cost method first.
- Lowest Cost – Get the most results for your budget
- Cost Cap – Control your costs while getting the highest volume of results for your budget
- Bid Cap – Control your bid each auction
- Target Cost – Get a consistent cost per result
Therefore, if Ad Set 3 is starting to see conversions from the ad, Facebook will spend more money on Ad Set 3.
Facebook will automatically distribute your campaign budget based on your nominated objective and how well your audience responds to your Ad.
Facebook uses its algorithm to better understand your audience, to deliver the best results. Over time, this algorithm becomes more accurate. However, accuracy is not perfect. So best to monitor your budgets at all times.
BUT I WANT FULL CONTROL OF MY FACEBOOK BUDGET
If you want FULL control of your budget and want to split test different ads (ie: Carousel Ad v Video Ad v Single Image Ad), then create your split test at CAMPAIGN LEVEL (not Ad SET Level).
WHAT ABOUT SPLIT TESTING?
Your budget will be split amongst all the AD SETS under your CAMPAIGN.
Therefore, if you have 1 Ad Set – all the budget will go to that Ad.
If you have 3 Ad Sets, your budget will be distributed according to what Facebook believes to get the best results for your business, amongst those 3 Ads.
Therefore, you will need to watch which Ads or Ad Sets are performing best.
For FULL control of your budget when Split Testing different variables (ie: Carousel Ad v Video Ad v Single Image Ad), then create a separate campaign for each of your ads (I suggest this until CBO works quickly and correctly).
The devil is in the detail and there is no one simple answer for all businesses. You will need to make a decision based on your business objectives, who your audience is, your budget and what you are trying to achieve.
SOME RECOMMENDATIONS TO CONSIDER:
Have each Ad at CAMPAIGN LEVEL – to test each Ad individually with control of your budget
Have each funnel stage at CAMPAIGN LEVEL – place all Ads relating to the funnel stage as this will enable you to budget based on your funnel stage and let Facebook redistribute money accordingly.
In the long run, Facebook will have enough data to make correct decisions and then you could run all items from one campaign. Time will tell.