What Is Facebook CBO? Budget Optimization Done Right [Tutorial]

Facebook CBO Ads in 2023: The Ultimate Guide to Automated Budget Optimization

Facebook advertising is a powerful way to reach your target audience and grow your business. But with so many campaign setup options and settings, it can be overwhelming to know where to start. One of the key decisions advertisers face is how to set campaign budgets and allocate spend across ad sets. That‘s where Facebook‘s Campaign Budget Optimization (CBO) comes in.

In this guide, you‘ll learn everything you need to know about CBO – from what it is and how it works to best practices and advanced strategies for getting the most out of this automated budget optimization tool. Whether you‘re new to Facebook ads or a seasoned pro looking to improve your results, understanding CBO is essential.

What is Facebook Campaign Budget Optimization (CBO)?

Campaign Budget Optimization is a Facebook advertising feature that automatically manages the budgets for your ad sets to get you the best results possible. With CBO, you set one overarching campaign budget, rather than individual budgets for each ad set. Facebook‘s algorithm then dynamically adjusts ad set spend throughout the day to direct more of the total budget to the highest-performing ad sets in real-time.

The goal of CBO is to maximize the results you care about – whether that‘s leads, purchases, downloads, or other conversion events – by distributing your campaign budget based on the best opportunities Facebook identifies across your ad sets. This automation saves you time from having to manually monitor ad set performance and shift budgets yourself. It also often leads to better results and return on ad spend (ROAS) since the algorithm can optimize faster than humans.

How CBO Differs from Ad Set Budgets

To fully understand the benefits of CBO, it‘s important to compare it to the default budgeting option: ad set budgets (also known as Ad Set Budget Optimization or ABO). With ABO, you set a daily or lifetime spend amount for each individual ad set within your campaign. This gives you more direct control over spend and allows you to cap spend for specific audiences. However, the downside is that underperforming ad sets will continue receiving their full budget until you manually adjust it.

Let‘s look at an example to illustrate the difference between CBO and ABO:

Say you have a campaign promoting a new product line with a budget of $100 per day and three ad sets targeting different audiences: prospective customers, past purchasers, and engaged social media followers. Here‘s how that $100 would be allocated with ABO vs CBO:

ABO Budget Allocation:

  • Ad Set 1 (Prospective Customers): $40 daily budget
  • Ad Set 2 (Past Purchasers): $35 daily budget
  • Ad Set 3 (Social Media Followers): $25 daily budget

With ABO, the ad sets receive their full allocated budgets regardless of performance. So even if the past purchasers ad set is driving the bulk of conversions, it won‘t receive more than its $35 daily budget unless you manually increase it.

CBO Budget Allocation:

  • Total Campaign Budget: $100 daily budget
  • CBO distributes budget across the three ad sets based on real-time results

With CBO, Facebook‘s algorithm will allocate more of the $100 campaign budget to ad sets that are performing well. For example, if the past purchasers ad set has the lowest cost-per-conversion, CBO may give it $50+ of the daily budget to drive as many purchases as possible. The budget allocation adjusts fluidly as performance data comes in.

The Benefits of Using CBO

Now that you understand how CBO works and how it compares to ABO, let‘s dive into some of the key benefits of using this automated budgeting feature:

  1. Better results and ROAS – By directing more spend to your top-performing ad sets, CBO can help improve the overall results and efficiency of your campaigns. Facebook has reported that on average, CBO campaigns get 22% more total conversions and 19% lower cost per action than campaigns using ad set budgets.

  2. Time savings – With CBO handling budget management for you, that‘s one less thing on your plate as an advertiser. Instead of regularly checking ad set performance and manually adjusting budgets, you can invest that time in testing new targeting, ad creative, or offers to further improve your Facebook ad performance. CBO is especially helpful for advertisers with large accounts and lots of campaigns and ad sets to manage.

  3. Faster learning and results – In the first few days of a campaign, the delivery system goes through a "learning phase" where it explores the best opportunities for results across your ad sets. With a larger total campaign budget vs individual ad set budgets, CBO gives the algorithm more to work with in seeking out top-performing pockets of opportunity. This can speed up Facebook‘s learning and optimization, leading to a faster path to stable, cost-efficient results.

  4. Flexibility to shift spend – Market conditions, audience behaviors, and competition can all change over the course of a campaign. CBO gives you the flexibility to automatically adapt to those changes and shift spend to the ad sets that are performing best in the current environment vs being locked into fixed ad set budgets. As different ad sets become more or less efficient over time, CBO will adjust accordingly.

How to Set Up CBO in Facebook Ads Manager

Ready to get started with CBO? Follow these steps to enable it for your campaigns:

  1. In Ads Manager, click the green "+ Create" button
  2. Choose your campaign objective, name your campaign, and click "Continue"
  3. At the campaign level settings, find the "Campaign budget optimization" toggle and turn it on
  4. Set your total campaign budget as a daily or lifetime amount
  5. Optionally, set minimum or maximum spend limits for individual ad sets
  6. Continue setting up your ad sets and ads as usual
  7. Publish your campaign and let CBO handle the budget management

Facebook CBO Best Practices and Pro Tips

While CBO automates budget allocation for you, there are still strategic decisions and optimizations you can make to set your campaigns up for success. Here are some best practices and pro tips to keep in mind:

  1. Use broad targeting for each ad set – To give CBO the most opportunities to find high-performing pockets of users, keep your ad set targeting relatively broad. If your audiences are too narrow or specific, the algorithm will have less data and flexibility to optimize.

  2. Set strategic spend limits – While you can choose to give CBO full control over budgets, you can also set minimum and maximum spend limits for each ad set. This is useful if you want to ensure certain audiences receive a base level of spend or if you want to cap spend to a subset of your full budget. Just be careful not to set spend limits that are too restrictive and prevent CBO from optimizing effectively.

  3. Give the algorithm time to learn – As mentioned, Facebook needs a learning phase to identify the best optimization opportunities across your ad sets. Be patient and resist the urge to turn off CBO or make major edits to your campaign in the first few days. Aim to get at least 50 conversions per ad set before drawing conclusions.

  4. Consider campaign budget optimization rules – If you want additional control over budget allocation beyond min/max ad set spend limits, you can implement CBO rules. Rules allow you to automatically redistribute budget between ad sets based on performance criteria you set (e.g. if CPA is over $50 for an ad set, reduce its spend by 10%).

  5. Test ABO vs CBO – While CBO is a powerful tool, it doesn‘t always make sense for every advertiser or campaign. If you have a limited budget to work with or are promoting an offer to a niche audience, you may prefer the fixed ad set spend of ABO. When in doubt, run an A/B test with ABO and CBO campaigns to see which budgeting option performs better for your specific goals.

  6. Keep ad set edits to a minimum – Because CBO works by dynamically allocating budget based on real-time ad set performance, every time you make substantial edits to an ad set‘s targeting, bid strategy, or other settings, the learning and optimization process resets. Make as many of your ad set structure and setup decisions upfront to avoid disrupting CBO.

CBO Updates and Changes in 2023-2024

Facebook is always evolving and updating its ad platform, and CBO is no exception. Here are some of the key changes and new features related to CBO that advertisers should be aware of in 2023-2024:

  1. 7-day click attribution – Previously, CBO only optimized for actions that happened within 1 day of ad clicks. Facebook has now expanded this to 7-day click attribution, giving the algorithm more behavioral data to work with for optimization. This is especially impactful for advertisers focused on down-funnel conversions with longer consideration cycles.

  2. Improved campaign budget allocation – Facebook has made updates to its CBO budget allocation methodology to more accurately predict future ad set performance based on past results. This should help further improve efficiency and results for CBO campaigns. Expect to see budgets shift more quickly to high-performing ad sets.

  3. Simplified min/max spend limit setup – Setting up ad set spend limits to guide CBO used to require a fairly complex process of adjusting spend percentages at different levels. There is now one simplified section at the ad set level to specify min/max spend in dollar amounts vs percentages.

  4. More granular performance metrics – In 2022 Facebook released Ads Insights Overlay, an enhancement to the Ads Manager reporting interface that allows advertisers to better visualize and compare ad set performance differences. Expect additional improvements along these lines in 2023-2024 to help advertisers analyze and extract insights from CBO campaigns.

Getting Started with Facebook CBO in 2023

As you can see, CBO is a powerful tool for automating and optimizing your Facebook ad budgets. If you‘re not yet using it in your campaigns, now is the time to start testing it out. Begin by setting up a CBO campaign using the steps and best practices outlined in this guide. Remember that CBO works best with sufficiently large audiences and budgets, so it‘s perfect for prospecting or remarketing to sizable groups.

If you‘re already using CBO but not seeing the results you want, analyze your current setup against the best practices shared here. Are your ad set audiences broad enough? Are you using strategic spend limits that give CBO flexibility to optimize? Have you given the algorithm enough time and conversion data to exit the learning phase? Often, small tweaks to your campaign setup or strategy can make a big impact with CBO.

To further enhance your CBO strategy in 2023-2024, stay up-to-date with the latest changes and feature releases from Facebook. As new CBO capabilities roll out, consider how you can use them to drive better performance and efficiency from your ad campaigns. And don‘t be afraid to think outside the box – test different CBO strategies, budget setups, and optimization goals to see what works best for your business.

By mastering Facebook CBO and staying on top of the latest best practices, you‘ll be well-equipped to drive strong returns from your social media advertising in 2023 and beyond. Happy optimizing!