Facebook originally launched CBO in 2017 to help advertisers manage their ad budgets more efficiently. As the algorithm has improved, Facebook has made attempts to make it the standard in ad buying within Ads Manager. We wrote about and tested it when it first came out, but most recently, Facebook has announced that CBO will become the default budget allocation option as soon as February 2020. 

Before this, only those accounts that were primarily running Campaign Budget Optimization were transitioned to CBO-Only in September 2019.

Now, all ad accounts will lose the ability to allocate budgets to ad sets and must run all of their advertising using CBO campaign structures.

Facebook has been relatively quiet about this change, it’s implications and how to navigate it to maintain your current performance KPIs.

So, with the help of our Facebook Representatives and actual tests run on the ad accounts we manage, we’ve put this CBO guide together to prepare you for the change and help you succeed.

We believe that by understanding CBO’s role in the overall ad buying system, we can become better advertisers.

What Is CBO?

Campaign Budget Optimization, abbreviated as CBO for short, is when budget is set at the campaign level, rather than the ad set level, leaving the actual allocation process to Facebook.

Here is Facebook’s official definition:

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, [by placing your budget at the campaign level, rather than the ad set level].

CBO is the 3rd “automatic ad tactic” Facebook is perfecting in its Power5 Initiative to make online advertising easier than ever for brands using its platform.

With CBO, Facebook is betting that their algorithms can do a better job than you at identifying which of your audiences are most likely to make a purchase on a given day and allocating the budget accordingly.

How Is CBO Different From What I Do Now?

Whereas with Ad Set Budget Optimization (ABO) you can allocate $20 to 5 ad sets and manage each ad set’s budget individually, CBO requires you to put that $100 ($20/ad set x 5 ad sets) budget at the campaign level, leaving Facebook to decide where to most efficiently allocate that budget.

It will not automatically distribute your ad spend evenly.

Facebook is certain that this will simplify your job as an advertiser by spending less on underperforming ad sets and maximizing your returns.

How Does Campaign Budget Optimization Work?

When you create a campaign today, you’ll be shown a toggle button labeled “Budget Optimization” that allows you to set a centralized campaign budget to be distributed algorithmically across all the ad sets within a campaign.

Once active, CBO uses the data it receives to automatically distribute your ad spend to the best ad sets in real time.

Because some ad sets perform better than others depending on the audience you use and the ad being served to that audience, Facebook uses CBO to save you time and effort in trying to figure out which ones work best and the right combinations of budget to allocate to each one.

With CBO, Facebook makes these decisions on your behalf in real time, 24/7/365. 

It allows you to:

• Stop Manually Hacking Ad Sets

• Stop checking on ad sets continuously throughout the day

• Avoid inefficient spending and maximize campaign results

• Simplify your account structure

How Do I Run CBO Campaigns Successfully?

So far everything you’ve read sounds like Facebook Advertising just got super easy right!? 

Not so fast.

Because CBO leaves all the decision-making to algorithms, there are certain parameters that will make CBO work best and a few things that you should absolutely avoid.

Letting CBO run wild out of the gate with the same mindset you had towards managing your Ad Set Level campaigns could hurt your account’s performance.

We’ve tested best-practices for CBO and received insight from our Facebook Representatives on how to structure your CBO campaigns for maximum success.

We’ll touch on everything we’ve learned here.

CBO Tip #1: Size Matters

If you are going to leave ad set optimization to the machines, data matters. And the more people in ad set CBO has to serve your ads to, the more data it can gather. Naturally, this leads CBO to favor big audiences over smaller ones.

One downside we’ve noticed to CBO is that even though it makes things easier when working with ad sets similar in size, this size favoritism leaves smaller, qualified ad sets (especially in prospecting) behind.

With Ad Set Level budgets, this wasn’t an issue because you could manually allocate budget according to how you wanted.

With CBO, it’s best that you allocate your ad sets into campaigns based on size, not just where your customers are in the buying cycle.

This may mean that you end up having more than one prospecting or retargeting campaign when compared to how things were previously done, but it will ultimately benefit you in the long-run.

To illustrate this in an example, consider the following CBO test we ran using our top 5 ad sets. After spending $2,500, CBO gave $2,000 of that to our larger audiences (2% and 3% Lookalike Audiences) and only $500 to our 1% Lookalike Audiences, despite those audiences giving us consistently good results when using ABO.

To mitigate this, we’ve seen the following optimizations work:

• Split ad sets up (especially prospecting ones) into CBOs by size: Groupon all ad sets that are within 10% range of each other in size into their own CBOs gives you a clear picture of which ones actually work. At Jeero Media, we’ll split up ad sets by Lookalike Size, Interest Audience Sizes and set a standalone CBO for broad, no targeting campaigns.

• Group your ad sets altogether: If your ad sets have a lot of overlap or if they produce the same amount of results ROI-wise, grouping them into one large ad set will ensure that CBO is using the best people in each of those ad sets. Like we mentioned above, the more people to test your ads against, the more likely CBO will succeed.

• Run 1 ad set per CBO: While not recommended, if you are stuck on using one specific ad set and not grouping it into a larger audience, you can always hack CBO by having any one ad set get 100% of the budget.

CBO Tip #2: Qualification Matters

Size isn't the only thing that CBO favors. When grouped together in a campaign, CBO will also favor qualified audiences over non-tested, colder ones.

For the purposes of this guide, a qualified audience is any audience that has either previously taken action with your brand or has a proven track record in your ad account.

In the example above, the 2% Pixel using VC LLA audience was also the audience we’ve relied on the most. CBO knew that and optimized to go with a qualified audience versus new audiences we wanted to explore.

To illustrate that further with regards to retargeting, examine the snapshot below.

In this case, the Engagers ad set is actually our largest one with over 1 million people in it.

Yet CBO also took into consideration how qualified other audiences were and distributed just over 50% of the budget to audiences more likely to make a purchase - email subscribers, cart abandoners and product viewers.

Normally this would be a good thing, but if you are trying to increase the conversion rate of people who engage with your brand on Instagram but don’t visit your website, this could slow down that strategy.

To mitigate this:

• Break out your prospecting campaigns not just by size, but by how qualified your ad sets are. If you specifically want to test new audiences, don’t group them with proven ad sets. Create a separate CBO.

• Group your retargeting audiences based on their buying cycle stage. Those who have visited the site or taken an action on your website are more qualified than engagers who need a little push. Separate them into dedicated CBO campaigns so you can achieve your goals at every step of the funnel.

CBO Tip #3: You NEED To Change The Way You Approach Reporting

This may be the last tip on our list, but it is definitely the most important piece in this report. 

If you haven’t been paying attention until now, you can still successfully implement CBO if you follow this simple rule: don’t get trigger happy with your ad sets.

Working with a CBO campaign requires you to change the way you have been analyzing and editing your ad sets for the past 10 years. With ABO, you would set your ad set budgets, see how those ad sets performed and optimized accordingly by shutting off underperforming ad sets.

CBO requires you not to touch the ad sets within your campaigns, even if a given ad set is performing under your target ROI.

I know what you are thinking, “So you’re saying Facebook wants me to give them money even if one ad set in my CBO is performing poorly?!”

Not exactly.

In the past, you would focus on the scaling and winding down your ad sets to get the most performance. But CBO doesn’t make decisions based on how well individual ad sets perform, it optimizes based on how the overall campaign performs.

Say for example you have a set of core ad sets for prospecting that constantly deliver you a CPA of $7.5. 

If given 2 ad sets, one ad set may achieve a $5 CPA and the other ad set a $10 CPA within a CBO campaign. Blended as an average, CBO gets you a CPA of $7.50 ($10 + $5/2), matching the results you were achieving when working with ABO campaigns.

Approaching this from the old way of managing your ad sets would lead you to believe that turning off the ad set delivering $10 CPAs would improve your results even more.

But with CBO, it doesn’t. That’s because the algorithm expects to allocate budget across the original amount of active ad sets, and once switched, it loses its efficiency.

It may sound illogical, but here’s Facebook saying it officially on their CBO page:

“When viewing the results of a campaign that used campaign budget optimization and the lowest cost bid strategy, you may see some numbers that are different from what you expected. You shouldn’t judge how campaign budget optimization distributes your budget based on the average cost per result for each ad set and how much we spent on it. You should judge it based on the total number of results for your campaign and the average cost per result at the campaign level.”

If we could underline “at the campaign level” three times, we would.

Here is the principle in action, after testing $91,000 of ad spend almost evenly between an ABO and CBO campaigns:

As you can see, we split the budget pretty evenly for a clear test, and CBO averaged out to beat our top ABO campaign by 0.20 ROAS.

But here’s what illustrates this principle of CBO very clearly:

Previously, we would have seen the $11.48 cost and 3.34 ROAS in the Tier 2 Campaign and shut it off.

Similarly, in Tier 1, we would have shut off or decreased the spend of our Lookalike Audience and moved it to our interest audience delivering 5x ROAS.

But because playing ad set roulette inside a CBO campaign destroys scaling, we didn’t. We let CBO find the best spend allocation between those 6 ad sets that would deliver the best CPAs across the campaign.

And it worked!

In Summary

CBO can be a powerful tool if you know how to use it. There are many more tricks and tips you can use to improve performance with CBO that are out of the scope of this guide, but rest assured that these 3 tips are all a beginner will need to get started!