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The Future of Budget Management on Facebook

Petteri Jalonen May 22, 2020 6:40:59 AM

Facebook recently announced that Campaign Budget Optimization (CBO) will not, after all, become a mandatory budget management option moving forward. In other words, you can still choose to control budgets on either campaign or ad set level in the future. 

However, the change does not mean that you should stop using Campaign Budget Optimization altogether. In fact, using CBO is still the best practice in many situations, and the change does provide leeway in how to manage your budgets optimally in different use cases.

In this blog post, we’ll go through when you should (and shouldn’t) use campaign budgets to get the most bang for your buck, and how you can manage your budgets in the best and most efficient way.

What Is Campaign Budget Optimization (CBO)?

Note: If you are not familiar with the details of CBO, we highly recommend you to read our earlier blog post detailing the solution. 

Instead of having a budget for each audience (ad set), with CBO, you set a total budget on the campaign level and let Facebook decide how much to spend on each audience. All you need to do is to specify how much you are willing to pay for a conversion in each audience (or use Lowest Cost bidding), and Facebook’s powerful machine learning will ensure your campaign budget is spent optimally to maximize total conversions. 

In fact, when you are optimizing towards Facebook metrics in a campaign, using CBO is usually the way to go to maximize results.

CBO

How to Use Campaign Budget Optimization?

The main rule for using CBO is the following scenario: When you are optimizing towards a Facebook metric (e.g., a pixel or app event) in an individual campaign. This is especially true if the conversion event you are optimizing towards (purchase, website visit, video view, etc.) happens quite quickly after the ad impression or click (approximately within 0-7 days), which is the case for the majority of advertisers.

As Facebook has access to real-time user-level data, it can deliver your ads to different users in an optimal way - especially when you bid your true value, differentiated for each ad set. Facebook can take this into account and prioritize audiences with higher bids. Also, if you want to add new ad sets and pause old ones inside a campaign, while still keeping the total spend stable, CBO can be very helpful.

Smartly.io customers can use additional powerful optimization layers together with CBO to further improve results. Smartly.io Budget Pools allows users to optimize their budgets across an entire portfolio of campaigns and even scale the total budget up or down depending on how you hit your performance metrics. For example, you could optimize all campaigns belonging to a certain funnel stage automatically to maximize results. The pools can even be optimized using your 1st or 3rd party data if they are your source of truth (e.g., internal attribution or Google Analytics).

When to Use Audience Level Budgets?

You might want to use audience level (ad set level) budgets in the following situations:

  • Your main KPI / source of truth is not a Facebook metric
  • You get a low amount of end conversions
  • There is a long delay from impression or ad click to the conversion event you are optimizing for
  • You have strict budgets on audience level (e.g. local advertising for specific market areas or stores)

Your Main KPI or Source of Truth Is Not a Facebook Metric

The above statement is a fairly common scenario. Even if you are optimizing using Facebook pixel or app data, the overall metrics you are evaluating are based on in-house attribution models or third-party analytics, such as Google Analytics, Adobe Analytics, Mobile Measurement Partner data (Adjust, Appsflyer, Branch, etc.), or similar solutions. 

In these cases, you want to maximize your performance against these metrics, but you can’t use them in Campaign Budget Optimization to allocate budgets. In a situation like this, it might be better to handle the budget allocation per ad set yourself based on the results from your analytics. 

Smartly.io can help you tackle this problem - Our machine learning technologies, such as Predictive Budget Allocation, allow you to send your 1st or 3rd party analytics data to our platform.  We can then automatically control budgets across campaigns and audiences, so you are spending the most money where you are getting the best results – based on your ultimate source of truth.

PBA-1

You Have a Low Amount of End Conversions

If you want to optimize towards your end conversion (such as purchases of your products), but find it hard to get a sufficient amount of events, you might struggle to deliver your ads optimally. Facebook’s algorithm typically works best when you get 50 conversions within a relatively short time. If you are not reaching this amount, CBO might not be the best alternative for you.

In a situation like this, you need to check that you are not unnecessarily splitting your audience, as increasing the audience size can often take care of the problem for you. If this is not the case, you might be better off controlling budgets on the ad set level.

Smartly.io can help you with these cases. In addition to supporting 1st and 3rd party data, our optimization algorithms also work with lower conversion amounts: we automatically assign the biggest budgets to ad sets that are most likely to deliver the highest number of conversions in the future.

Long Delay from Ad Impression or Click to End Conversion

A scenario we typically see with brands whose products have a longer purchase journey, such as big-ticket items (e.g., cars or homes) and services such as insurance or banking. It can take weeks (or even months) for the final conversion to happen, and as such, it becomes problematic to use the purchase event as a basis for optimization. Unless you have strong evidence that an interim metric (such as people filling a contact form) forecasts the end conversion, it doesn’t make sense to control budgets on campaign level with these long purchase cycles.

If this applies to you, take a look at the end conversions, and allocate budgets based on where you are getting the ultimate performance. Smartly.io can ingest your business data, even when the final conversion happens with a long delay, and automatically help you do this allocation so that you maximize results.

You Have Strict Audience-Level Budgets

Strict audience-level budgets are common with more local advertising. Retail chains, grocery stores, and real-estate advertisers often have specific budgets for specific audiences. For example, a grocery store chain promotes a specific store around its physical location.

However, you probably want to promote, and drive people to, all your stores instead of spending your budget on the promotion of specific stores just because the performance was somewhat better. 

A more advanced use case would be weather-based campaigns: you only want to run specific types of creative in specific weather conditions (which are highly local). If you have audience-specific spending targets, remember to control budgets on the ad set level.

Smartly.io customers can run local advertising at scale with our Automated Ads - you can create campaigns with hundreds of location-specific creatives, targeting, and budgets in minutes.

Taking Budget Management and Planning One Step Further

In addition to campaign or ad set budgets, many advertisers also need to consider periodic spending targets (e.g., weekly or monthly budgets). Monthly budgets are easy to hit for a single campaign on Facebook, provided you don't make many adjustments; just set the campaign to have a daily or lifetime budget that achieves the target when entirely spent. 

However, often advertisers need to hit a spend target across a portfolio of campaigns, and adding or stopping campaigns in the middle of the period only adds complexity. When some campaign ends up under-spending, where do you increase the budgets to hit your targets while maximizing your results?

We listened to our customers and built a solution for doing all of this automatically: with Smart Budget Scheduling, advertisers can now choose a set of campaigns, define a spend target, and a specific time and our platform will automatically ensure the target is hit as closely as possible with the best possible results. For example, if you have a prospecting budget of 600,000 USD for the next three months, you can simply tell our system which campaigns you want to spend it on, and that's it. 

If you want to learn more, contact your Customer Success Manager or contact us to get started.

 

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Author
Petteri Jalonen
Product Marketing Manager at Smartly.io

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