Mahmoud is the Performance Marketing Lead for PointCard with a deep background in paid search and paid social. He has profitably scaled ads on Google, Apple, Facebook & Instagram, Snapchat, Twitter, and TikTok.
Campaign budget optimization (CBO) is a part of the automation mega-trend in the advertising industry. It's where tech giants like Facebook, Google, TikTok, and others build more automation into their advertising algorithms to help marketers save time and get a better return on their advertising dollars.
CBO improves your budget management by spending more on potential Ad Sets and Ads which maximize your returns. But how does it work? How can you leverage its full potential? Should you choose Campaign Budget Optimization or Ad Set Budget Optimization (ABO)? And what are the best practices when using CBO in one of your campaigns? That's what we intend to explore.
Let's get started!
The concept of CBO is very simple—you give your campaign level control over its Ad Sets' budget allocation. Conversely, Ad Set Budget Optimization is manually setting budgets for each Ad Set.
The advantage of CBO is that your campaign will be able to dynamically allocate the budget to best-performing Ad Sets in real-time, possibly yielding improved results. But how does the campaign allocate that budget?
Advertising algorithms are built based on a user's data and online behavior as they interact with ads from other businesses. They use such data to decide when and how to target a user and what ad to display. This makes online advertising very powerful.
For example, as a Facebook user, no doubt you've come across ads promoting something you were just talking about with your friends or colleagues. But before you panic, Facebook doesn't listen to your conversations. Advertising algorithms do complex analyses and use powerful models to predict what action a user will take when displaying a particular ad at a specific time. They learn and iterate based on the actions taken by the user.
CBO is built to leverage this tool by allocating more of your campaign budget to those powerful algorithms and prediction models to hopefully maximize campaign results and improve campaign performance.
CBO is a very powerful feature that can help unlock the full potential of your campaign and get better results or returns on your advertising dollars. Here are the top best practices to keep in mind when using campaign budget optimization:
Facebook announced that advertisers shouldn't exceed 70 Ad Sets in a campaign as this will limit the number of edits an advertiser can do after launch. While this is a generous cap that allows you to test many ads simultaneously, it's best to stick to two to three Ad Sets at a time. That way, each Ad Set gets enough budget to generate conversion and exits the learning phase quickly.
Every campaign starts with a learning phase, where the algorithm learns about every Ad Set and Ad within the campaign. The algorithm will be testing to find the best ads, exploring the best placements, and generating a certain number of conversions before this phase ends. The sooner the algorithm exits this phase, the better campaign performance.
Any major edits on your end, such as budget changes, bid changes, and added or removed Ad Sets, will reset the learning phase. This could waste valuable ad spend, so try to be certain of all your CBO parameters before launching your campaign.
If you need to make changes, CBO campaigns will return to the learning phase for two hours before they're up and running at full speed again. So make sure you do your edits in bulk to minimize the time spent in the learning phase and give the campaign enough time to re-exit it.
Ad Set spend limit is a way to ensure that an Ad Set will spend a minimum or maximum amount. However, using it actually removes the algorithm's flexibility and could over-allocate the budget. If necessary, use it on a small scale.
The audience size influences the dynamic budget management done by CBO campaigns. If one Ad Set has a significantly larger audience than the others, most of the spend will go there regardless of its efficiency.
If you want to target or test audiences with a significant difference in size (e.g., millions vs. hundreds of thousands), consider separating each audience into different campaigns or using Ad Set Budget Optimization.
CBO is better used when you want to give the algorithm freedom over budget allocation in real-time. CBO simplifies campaign setup, optimizes for cheaper results, and helps the campaign exit its learning phase faster.
ABO is better used when every Ad Set has a significantly different audience size and you want to control the spend manually for each audience. ABO is slower in exiting the learning phase because it relies on manual bidding and manual creative optimization.
However, every budget optimization strategy will have both positive and negative effects. Before shifting all of your campaigns to CBO or ABO, you should consider those effects.
For example, one of our ABO campaigns experienced an increase in purchases and a decrease in the cost per purchase after shifting to CBO, resulting in higher frequency, higher CPM, and creative burn.
On the other side, most of our CBO campaigns are still performing well with continued scaling. So, you need to test both strategies, analyze your data, and decide which budget optimization strategy to use.
CBO is an effective budget optimization strategy that can help boost campaign performance and drive higher returns on ad spend by allocating budgets to best-performing audiences, placements, and ads in real-time.
However, things to consider before jumping into CBO include high creative burn and an increase in CPMs. There is no roadmap for digital advertising, but with awareness, the right tools, and a strategy, you can bring CPM down and produce better performing creatives.
Finally, you should test both budget optimization strategies, analyze the data, and recalibrate to determine the right budget optimization strategy for your ad account. Many advertisers use a mix of CBO and ABO, so don't be averse to using both if it yields superior results.
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Strategies for conversion rate optimization include prequalifying traffic, PPC account structure, and optimizing your landing page experience.