Facebook’s Campaign Bid Optimization (CBO) or How I learned to stop worrying and love CBO.

For experienced Facebook advertisers, the structure of your account and campaign build creates the foundation of your campaigns. This helps you determine your testing protocol and your optimization structure. Later this year Facebook is planning to make Campaign Bid Optimization (CBO) campaigns mandatory.

black and white animation, man with glasses reaching for his collar to loosen it

What is CBO? What does this mean for you?

Prior to Campaign Bid Optimization (CBO), Facebook ad budgets were determined at the Ad Set level, meaning that no matter how effective or ineffective your Ad Set was, your Ad Set would spend its budget and you the advertiser would have to make manual adjustments to the Ad Set to optimize based on performance. With Campaign Bid Optimization (CBO), the ad budget is determined at the Campaign level and distributed to Ad Sets on a daily basis based on performance. This change also removes lifetime budgets from Ad Set control. If Ad Set 2 is performing better than others, it will receive the lion’s share (up to 90% in some cases) of the budget. The other Ad Set budgets in the Campaign will decrease if and when their performance declines. On paper it sounds like a great thing, but is it?

How do you set it up?

Creating a CBO campaign from scratch is similar to creating a traditional campaign.

Select create → then your objective → and once you’ve named your campaign using proper naming conventions → toggle on Campaign Bid Optimization ad → then click continue and you’re in CBO business. The campaign budget will override any ad set budget and Facebook’s algorithm will optimize your spend daily for better or worse.


If you have an existing campaign, you can turn it into a CBO pretty easily assuming you are not running multiple bid caps within your campaign. Go to the campaign you’d like to switch → select edit → then Try Campaign Bid Optimization → set your daily budget and you are done. One note on budget setting, we have experienced performance dips with CBO campaigns when the daily budget exceeds $2,000 per day. We assume this is a short term issue with the algorithm and expect it to be corrected soon, but for now, we keep our campaigns at $2k or below.

Is CBO a good thing? Well, that depends. Are you an individual or small business owner with little time to manage your Facebook campaigns? Then, Yes. Facebook’s ad platform is designed to be easily accessible and CBO is definitely another step in that direction. However, for experienced agencies like Round Barn Labs, it can cause more obstacles than benefits. This change is all about control, and as with most changes Facebook makes it puts the control on their side, which can rub experienced performance marketers the the wrong way. We like control. We have tested it and had mixed results on overall performance. The major issues we’ve encountered have to do with accurate testing and optimizing beyond a single metric in a single moment. Facebook’s algorithm is notorious for determining which ad, or in this case, which audience is performing better and quickly shifting budget in that direction, sometimes to the detriment of overall performance. This type of behavior by the algorithm has been the bane of creative testing for years. These issues are exacerbated for campaigns that are optimizing toward a higher funnel objective that correlates to a lower funnel “North Star Metric” but is not directly linked. We are working on our own methods to ensure that our tests continue to provide accurate results and that important variables like spend are isolated so we are ready for the September switch. Some of the tools we are utilizing are Ad Set minimum and maximum spend limits which help control the always important variable of spend.

Animation, George  C. Scott, as General Patten, making a sarcastic smile.

Here are some of the overall benefits we expect from Campaign Bid Optimization (CBO) implementation:

  • Less audience overlap but forcing budget away to similar audiences. Typically in an optimization scenario, there are only one or two winners.

  • Audience optimization based on real-time events. Holidays or seasonality lend themselves better to certain audiences.

  • Less wasted spend. Allowing Facebook to self-run its own best practices for you.

  • More inventory. Or, more inventory? We don’t know if this will prevent advertisers from misusing the platform and running fewer ads to the same budget simultaneously. This plays into…

  • Lower delivery costs for the ad community. Ultimately a world where optimization is coming from the top down allows Facebook to control its efficiencies better and (hopefully) benefit ad campaigns as a result.

There are inherent negatives associated with some of these benefits but as a whole, it should improve overall performance. The only constant in growth and digital marketing is change. As a result, updates like CBO are just like another day at the office. Facebook’s main goal is to balance the needs and wants of their users with those of their advertisers and they feel that CBO campaigns are another step in that direction.

Black and White Animation, Slim Pickens, Major Kong riding the bomb

So when is this a done deal?

According to Facebook, CBO campaigns will be rolled out in September of 2019. We recommend testing with it now so you are ready when the change happens. Our advice, try it for yourself and see how it works for your business.

Additional Sources:

https://socialfiremedia.com/facebook-campaign-budget-optimization-cbo-will-be-mandatory/

https://adespresso.com/blog/facebook-campaign-budget-optimization/

The RBL Flywheel

Jim Collins wrote about the flywheel concept in Good to Great and is often referenced inside and outside Amazon.

He states: “A flywheel is an incredibly heavy wheel that takes huge effort to push. Keep pushing and the flywheel builds momentum. Keep pushing and eventually, it starts to help turn itself and generate its own momentum--and that's when a company goes from good to great.”

Flywheels are becoming more critical to leading growth teams looking to develop loops to identify how they can effectively grow their product.

Source: Bezo’s Virtuous Cycle (Amazon)

Source: Bezo’s Virtuous Cycle (Amazon)









Ok so you are familiar with the concept of a flywheel, but can this be applied to a performance marketing agency?

We think so.

As RBL has evolved from a one-person consultancy to a team of experts that has served hundreds of startups and large consumer brands, we have found that there are three core pillars of our business:

  1. Conversion Rate Optimization (CRO) & User Experience (UX)

  2. Affiliate/Influencer/Partner Marketing

  3. Paid Social Marketing

Before we talk flywheel, let’s review each of these core channels we provide.

Conversion Rate Optimization (CRO)

A lot of paid marketing teams have applied landing page improvements to their work, but only recently are some offering Conversion Rate Optimization (CRO). This is a more technical and scientifically disciplined test-heavy approach to learning and improving conversion rates across a site. Once a product/site’s conversion rate is improved, this can have compounding positive gains across paid, earned and owned marketing. We’ll elaborate on how this compounding effect works in a later section.

Source: Optimizely

Source: Optimizely

User Experience (UX)

This is a significant part of the product development process and touches CRO and even areas of Paid Marketing in the form of the landing page experience. "User experience" encompasses all aspects of the end user's interaction with the company, its services, and its products. - Norman | Nielsen Group. Our team can provide UX experts (not just performance marketers), wireframes, mockups, coaching, design support to improve both paid marketing experiences as well as core site experiences. Every role I have had in-house I have identified and improved the conversion funnel saving a lot of wasted media investments.

Source: Interaction Design Foundation

Source: Interaction Design Foundation

Here is a brief illustration of how improving conversion can save capital resources over time. We recently made some key UX recommendations for a mobile client. Providing them with detailed wireframes to improve the customer experience. As a result, the conversion rate from download to paying accounts increased from 8% to 12%, a 50% increase.

This improvement is illustrated in the graph and red bucket below. The red group of customers represents estimated revenue increase as a result of the UX changes we made and the yellow bucket is an estimate based on future UX changes.

Source: RBL client growth projection.

Source: RBL client growth projection.













Here is another illustration illustrating how UX improvements and CRO can significantly improve revenue gains.

Source: RBL client growth projection.

Source: RBL client growth projection.

15% conversion rate increase, in this case, can yield an incremental $81k in revenue!

As you can see, a 15% conversion rate increase, in this case, can yield an incremental $81k in revenue!

Affiliate/Influencer/Partner Marketing

This is an area near and dear to our heart. I started my career at Commission Junction working on a number of affiliate marketing programs for brands like StubHub. After growing their program I was recruited by eBay to lead the eBay Motors affiliate program and one of the more sophisticated affiliate programs ever created. Our team has worked with brands like Amazon, ModCloth, Hims, CapitalOne, Hotels.com, Wolverine World Wide, Inogen, WorldMarket, Carhartt, Petal, and Experian.

Source:  TUNE

Source: TUNE

We bring an in-house perspective to affiliate marketing. We intend to stay small, objective, and open to alternative solutions that meet the needs of our clients. We can apply UX improvements and a more rigorous data-driven approach than other options at significant cost savings over a full-time hire.

Paid Social Marketing

Since launch in 2014, nearly every one of our engagements has involved paid social. We have gravitated toward this work and we enjoy delivering great results for clients across channels like Facebook, Instagram, LinkedIn, Twitter, Pinterest, Reddit, Quora, and Snap.

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Our efforts were central to exceeding HIRED growth goals and launching Nextdoor’s Real Estate Product and their presence and growth in Europe.

Layered on top of these three core channels that can positively influence each other is a knowledge of Growth (capital G) that few agencies and digital consulting firms possess. As we have outlined in our process, Growth is a relatively new discipline made famous by Facebook’s growth team. Andy Johns VP of Growth (Facebook, Twitter, Quora, Wealthfront), outlines this process to explain the often misconstrued concept of growth and growth teams.

We think of it as applying a scientific process to Key Performance Indicators (KPIs) looking at qualitative and quantitative data across product, engineering, marketing, sales, and operations to sustainably grow the business. Why does this matter? Many teams focused on linear channels are great but they do not know the limits of each tactic and strategy nor how they can interact for maximum impact.

In 2018, RBL made a shift from a practice of completely channel agnostic growth to focusing on executing three pillars-our collective superpowers: 1) CRO/UX, 2) Affiliate/Partner/Influencer, and 3) Paid Social. The shift has proven effective as we are seeing our best period of revenue growth for our own business.

When utilized properly, combining these three pillars of RBL can create a flywheel for consumer brands.

RBL FlyWheel

As you can see from the above graphic we are offering select consumer brands an opportunity to boost their paid marketing performance with a more customer-centric (UX) approach to partner marketing and customer acquisition. It combines elements that are currently part of many Direct to Consumer (D2C) brands’ playbooks.

For RBL and many of our clients, we often start out focused on just one of these three core pillars.

For example, we might kick off a client focusing on affiliate/partner/influencer. Once we demonstrate impact with new partners and optimizing existing, testing a landing page, homepage, or product page A/B test can yield an increase in conversions and efficiency, giving the compounding returns on traffic moving forward. This then increases affiliate adoption as high conversion allows partners to have higher trust in advertiser offers. This increases the ability for partners to take on the risk of CPA (Cost Per Action or Pay Per Action) deals.

Of course, affiliate partner adoption is driven by a number of factors like commission rate, brand, Earnings Per Click (EPC), affiliate network ranking, relevancy match between brand and partner, as well as conversion rate to name just a few.

Bottom line, if a partner has skin in the game, and you just removed the friction, you just helped yourself and your partners. You just got a better performing partner.

Source: NPR

Source: NPR

So what do you get if you deploy the RBL Flywheel?

  1. Frequent testing and continuous improvement to a landing page, product, onboarding and customer experience utilizing UX and CRO experts and scientific A/B testing.

  2. Data-driven brand-centric partner marketing recruiting relevant third party content and rave reviews for your brand

  3. Targeting segments of your ideal customer allowing third-party reviews and influencers to tell customers how great you are rather than doing that yourself which is not as effective

Let’s Grow

Why did I start RBL?

Back in 2014, after managing the eBay affiliate program and running acquisition marketing for various Silicon Valley startups, founders began asking me for help.

They needed a better way to manage marketing and understanding growth.

Very few companies truly understood growth. Companies of all sizes were applying a siloed approach to marketing and growth and struggled to make sense of the array of options and competing opinions. They were eager to address these concerns with a hack, tactic, or “growth hacker.”

Founders, CEOs, CMOs, VPs of Marketing, Directors of Marketing, would ask questions like...

  1. Should I hire an agency, consulting firm, or full-time hire?

  2. What marketing channels should we focus on?

  3. What should our CAC (Cost of Customer Acquisition) be? How do we properly calculate it?

  4. How do we manage Facebook Ads?

  5. Is my site optimized for SEO?

  6. Do we have have an effective A/B testing strategy and plan in place?

  7. Do we have the right people, tools, and strategies to grow our product and manage paid marketing?

They were faced with a massive amount of channels, technology options, and tactics to acquire customers efficiently and were looking for answers.

From these challenges, Round Barn Labs (RBL) was born in April 2014.

Some of the factors that marketers are faced with...

Tenures of marketing leaders were lower than their non-marketing counterparts and declining.

People are job switching at an increasing rate, especially in Silicon Valley

The technology stack options continue to grow. I will spare you the full image of the Martech 5000, but as you can see the tools just keep coming. Having someone to sort through them and know them certainly helps.

Having been an in-house marketer for years, I understood the challenge of managing multiple vendors and working to align incentives and remove friction. Marketing leaders work to prioritize channels and tactics, mitigate ad fraud, and wrestle with the cost of hiring full time-not to mention those full-time roles can change or be redundant after 6 months.

Paid marketing channels change significantly in just months. Facebook’s platform and algorithm changes in the past year. Instagram continues to take market share for product discovery,

41619_3.png

Channels will rise in cost, get more competitive, tactics and strategies are copied. One minute a channel has a ton of users and should be managed and optimized and the next it is gone.

MySpace marketing (yes it was a thing), Google+ and the decline of organic traffic reach on Facebook due to algorithm changes.

Easy SEO fixes are no longer as easy as they we pre 2010 as Google has prioritized UX, brand, site speed. Mobile and taken over a larger percentage of the Search Engine Results Page (SERP).

Source:  Hubspot

Source: Hubspot

More recently, reports of a reach of only 2%  (down from 16% in 2012 are common.

Pre-2010 SEO fixes were much easier than they are now as Google has prioritized UX, brand, site speed, and mobile. They have also taken over a larger percentage of the Search Engine Results Page (SERP).   

Advertisers can also just hit a ceiling. Google Search can be its own ceiling capturing existing demand in the form of brand and non-branded keywords. Facebook advertisers are running into ceilings more and more as their markets saturate or competition increases. As a result, traditional teams and “expertise” does not work. You need a combination of agility and deep knowledge. This is hard.

Pinterest has managed to enter the game of significant social channels for thousands of advertisers. Most direct to consumer, female-focused, and visual brands will continue to invest and learn to optimize this growing channel or allow their competitors to win in this space.

Bar Graph of Pinterest Revenue and Monthly Active Users

Not to be outdone, consumer brands need to understand Snap and how to utilize their image and video-centric platform and build for Augmented Reality (AR) and their Scan platform. Take a look at Snap’s global quarterly revenue from 2015 to 2018...

You get the idea. These things are changing quickly, often quicker than the tenure of an average employee at a company. So it makes sense to work with a trusted third party that is keeping up with these changes that can collaborate with your part-time and for a few months to build out a plan, execute and learn. The concept of marketing channels cyclical nature and recent rapid changes is illustrated well in Andrew Chen’s Law of Shitty Clickthroughs. Similarly, NfX’s James Currier shows how these channels evolve overtime...

Andrew Chen’s Law of Shitty Clickthroughs Chart

Just as it was in 2014...

Now in 2019, it is time for a team that can go very deep in specific marketing channels, understand in-house needs, be nimble enough to help the team course correct, but still offer an objective third party perspective.

A lot of agencies continue to add employees, clients, costs, and bureaucracy. This works for a for some teams, but it’s not for everyone. We often find that it misaligns incentives for higher fees, getting clients lower quality expertise, and less attention.

We have often helped organizations build out marketing expertise in growth strategy, affiliate/influencer, paid social, CRO, and UX with the intent for the business to own that internally at some point. While most companies should own that internally at some point, few are ready to do so. RBL takes pride in working with companies to coach them through these challenging questions, build out the systems and growth knowledge, then graduate.

We take it as a badge of honor when we are able to build up systems and learnings for a business that allows them to grow without us with their own internal team one day.

Our take is to provide more experienced operators, people that can make objective decisions rather than mindlessly following a playbook that suits the agency, not the client. These objective decisions do not always benefit RBL as a consulting firm but benefit the client. We are not in this business to lock you into long term deals or misalign incentives. We do not want to handpick tools that benefit us, but work with you and recommend the best possible solution for your business.

While this sounds obvious, it is surprising how often we hear from clients, former employees, and channel partners how even some of the largest fastest growing tech-savvy digital marketing agencies do not have the best interests of the client in mind. They have to serve their own scale and that often means predetermined tools and plans.

I wanted to offer advertiser clients a “dream team” of marketers that could be deployed as needed at a competitive price point versus other agencies, consultants, and full-time hires. I wanted to offer objectivity where agencies were incentives to pick certain software tools or vendors. I wanted a more “in-house,” customer, product, and advertiser-friendly solution to marketing agencies and consultancies. I wanted to give clients paid marketing channel analysis and performance but also deliver them a better User Experience (UX), Conversion Rate Optimization (CRO), and Growth.

After getting so many questions about what channel(s) to invest to acquire customers, how to interpret: LTV, CAC, ARPU, CTR, and CPA, I knew there was a need for someone to help make sense of a confusing landscape and also just take the massive amount of work off busy Directors and VPs looking to acquire customers efficiently. Marketing leaders that had a stronger understanding of core marketing and growth principles could look to us to take on a specific channel like Facebook and Instagram ads and know that it was managed with confidence, performance would improve, and reporting was clear and actionable.

Five years later, we are still at it. As they say, growth is never done.

Some of the great companies we have been grateful to work with...

Logos of companies Round Barn Labs has worked with

But why do you call the company Round Barn Labs (RBL)?

The name Round Barn Labs was inspired by my family name and an old barn.

I wasn’t born in a barn, but close. My last name DeGrange means “from the barn” in French and I grew up on a ranch and summer camp. Right next to my family ranch was the Fountain Grove Round Barn. Over time, I came to appreciate this Northern California (Sonoma County) historic structure. I learned that they were rare, looked cool and that the circular-shaped barns were big in the 1800s and had a greater volume and used fewer materials than traditional barns.

So round barns were more efficient than their square counterparts.

Diagram of a Round Barn

Aside from an homage to my family upbringing, I set out to create a “test and learn” and “growth mindset” culture. Hence the “Labs.” This is a central part of strong growth teams and a key tenet of the Round Barn Labs (RBL) team culture to this day.

The 2017 Tubbs fire destroyed the Fountain Grove Round Barn, but we like to think we are doing our part to keep the legend alive and thriving.