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CBO for Facebook Ads

Meaning of CBO within Facebook Ads

CBO within Facebook Ads (Campaign Budget Optimization) is a set of algorithms for adjusting ad spend. It’s available to all Facebook advertisers. Rather than daily spend allocated in a fixed proportion to various ad sets, CBO monitors the performance of each ad set. It will then shift more of your advertising spend in the direction of the best-performing ones. It was launched as an option in 2017. Facebook announced that it would be making CBO mandatory in 2019. Then Facebook pushed back the transition date to 2020 and finally, after some complaints from advertisers, abandoned the plan to require advertisers to use CBO, leaving it as optional.

As reported in Search Engine Land, Michelle Morgan, Director of Client Services at Clix Marketing reports variable results from using CBO: “At the moment, I’m seeing very mixed results with it and I’ve heard from many that their traditionally budgeted campaigns are out-performing CBO on the regular.” She found that, on average, 40% of campaigns performed better or at the same level on CBO but 60% performed poorly compared to manually-budgeted campaigns. Her response was to constantly monitor which campaigns benefited from CBO and switch it off for those that did not.

Facebook is no doubt working on improving its algorithms for budget optimization and it’s not hard to see why. If CBO works perfectly, it’s a win-win situation for both parties. Advertisers will be happy that they are getting better results for their budgets. In addition, Facebook’s reputation as a great place to advertise will be enhanced, resulting in increased revenue from new advertisers.

Let’s look in closer detail at the meaning of CBO within Facebook ads.

How Does CBO Within Facebook Ads Work?

When you allocate a budget manually within Facebook Ads you’ll need to set various parameters. These include:

  • Daily spend: This is a guide figure and can vary in practice by as much as 25%.
  • Total budget: You can set a hard cap, meaning that your budget won’t overrun.
  • Schedule: The date your campaign goes live and ends. You can leave the end date somewhat open in case you reach a budget cap early.
  • Ad sets: This is where you define specific audiences based on audience demographics and interests.

For CBO to work, you need to have selected at least two ad sets. For example, if you are advertising accessories for electric bikes, you may decide to target both city commuters and weekend trail riders. These groups might have very different demographics, may live in different regions, and have different related interests. You don’t know in advance which group you’ll sell the most products to. CBO can, in theory, track the success of your ad’s appeal to both these ad sets and push more of your budget towards the ad set that’s providing more conversions (or clicks or engagements, depending on what result you are seeking).

Much depends on the strategy. In the above example, you may be trying to position your bike accessories brand towards mountain bikers, rather than city commuters. If your ad spend is working in the opposite direction, rather than letting CBO push you further off-brand, you could halt it, change the ad creative accordingly and restart the process, to see if the campaign now runs more effectively in your desired direction.

Note: you cannot edit the creative of a boosted post once it goes live. You can however edit various elements (title, photos, videos, text) of a standard ad midway through a campaign.

Budget Setting

You can set either a daily spend budget or a lifetime budget for CBO. The benefit of the latter is that you can be sure you will be getting prominence for your campaign throughout the scheduled period, which is particularly useful for time-specific campaigns such as sales or seasonal advertising.

If you have many campaigns to run at once, using CBO effectively can take some of the strain off constantly monitoring how effective your campaigns are and manually shifting spend between ad sets to optimize your budget.

Facebook’s CBO Recommendations

Perhaps in response to some of the criticism CBO algorithms have received, Facebook makes a number of recommendations for how to make CBO work best for its adopters:

  • Not to specify too rigorously how much of your budget is locked into individual ad sets, since this will limit CBO’s effectiveness.
  • Avoiding manually pausing ad sets, since this removes them from consideration and could skew the algorithms in unhelpful directions. If editing ad creative, it’s best to do this as quickly as possible, so have all the new creative elements ready to go before you hit pause and change the creative.
  • Make sure your selected audience is a realistic one. In other words, ensure that a sensible proportion of Facebook users fit into your selected categories. CBO won’t target unrealistic audiences.
  • Campaign settings changes should be altered in bulk. Piecemeal alterations will make it hard to analyze the real-time results since it will be harder to track which changes resulted in which improvements or problems.
  • Remember to analyze results at the whole campaign level, rather than individual ad sets, to get a better overall picture of how CBO is working for you.

Is CBO Right For You?

In summary, CBO may or may not be the best approach for you, depending on the nature of your campaign and goals.

CBO within Facebook ads is great for campaigns:

  • Targeting a range of competing ad sets
  • Making the most of a limited budget that needs to run over a specified time period
  • When the advertiser wants to find out to whom their products most appeal
  • Advertisers with small teams running multiple campaigns, who would benefit from automation

CBO is not so helpful for:

  • Single, well-specified ad sets or a few, too-similar ad sets
  • Budgets that are heavily restricted per ad set
  • Advertisers with a very well-defined and successful audience
  • Advertisers who would prefer a manual approach to ad set targeting

In Conclusion

The best methodology might be a cautious and experimental one. Follow Facebook’s best practice guidelines and run a test campaign across multiple ad sets. You might just be pleasantly surprised and if it doesn’t work out, you haven’t risked much. CBO isn’t a magic fix for advertisers but, if used appropriately, could help reduce wasteful and misdirected ad spend.

Reach out to us if you’d like to learn more about how to use CBO in your campaigns.

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