In September 2020, Facebook introduced “Automated App Ads” or “AAA”, intended to automate Facebook advertising and level the playing field between advertisers large and small. The premise is that you will tell Facebook what is most important to your business. AAA will automatically make the bid and budget changes. Then target appropriate audiences with high-performing creative all on your behalf.
The thinking is that, over time, AAA learns what performs best and will continue to make media buying improvements without a human’s involvement. Facebook AAA then helps the marketer manage ads by creating multiple versions of their ad with unique creative to show the best performing version and tailoring audience options based on campaign goals and financial performance.
This further aligns with what we have seen as a continued shift of user acquisition (UA) day-to-day media buying. Thus, moving away from human-driven marketing teams over to Facebook and Google’s automated algorithms. Effectively, letting the algorithm do what they do best, leaving UA teams with the opportunity to focus less on media buying and spend more time on creative optimization to continually feed the automated algorithms.
That is right, but that is not all…. there is more.
Facebook AAA and Value Optimization Tools
Facebook has just announced, “Value Optimization with Minimum Return on Advertising Spend (ROAS) Bidding.” The promise is that this feature will provide marketers with more control over the value you bring to campaigns.
So, if Facebook AAA moves certain campaign controls towards automation, and Value Optimization moves certain controls into the hands of marketers, which one wins?
Facebook’s Value Optimization with Minimum ROAS bidding lets you set the lowest acceptable return on ad spend (ROAS). As a result, giving you more control over the value a campaign delivers to your business. After establishing a minimum ROAS, Facebook will automatically adjust bids to deliver the requested financial return of at least the minimum requested value or higher over the duration of the campaign (that is the AAA kicking in).
How Value Optimization with Minimum ROAS Bidding Works
- Define minimum ROAS and the lowest return on ad spend you want. Facebook will adjust bids in real-time to stay above this floor.
- To optimize ROAS, Facebook observes values passed by the Facebook pixel or mobile SDK. For Minimum ROAS bidding to work effectively, purchase values must be passed back into Facebook.
- Based on these values, Facebook estimates how much a person may spend over a one- or seven-day period. Of course, the seven-day period is all pre-IDFA loss.
- The Facebook platform optimizes ad delivery to audiences that are likely to help you achieve at least your ROAS floor.
- Your minimum ROAS value will influence Facebook by adjusting the bids so that the ROAS performance will always be above your minimum ROAS value.
Pro Tip: If the Minimum ROAS bid is too high, Facebook may not be able to meet this threshold to spend the campaign’s full budget.
How and When to Use It
Value optimization works best when you are reaching audiences of at least 2 million people within an ad set. And when you have a business goal of maximizing the purchase value from each conversion or mobile app install. Use the Minimum ROAS bid strategy if you want to reach a specific return on ad dollars. Or, more to keep your campaign running.
To get started using Value Optimization. Look for it within the following marketing objectives: Website Conversions, Mobile App Installs, and Catalog Sales. Once selected, you may elect to use a Minimum ROAS bid strategy. This will adjust your bids within the auction to reach or exceed that goal.
Additional Best Practices to Leverage
- Use recent historical average ROAS as a benchmark. Lower it by 10% to 25% (as it is a floor benchmark, not a target) to determine the appropriate minimum ROAS bid.
- Use the most recent average purchase value. Or, value as defined by the business/historical average CPA if there is no historical ROAS to reference. These averages should be based on a comparable campaign to the minimum ROAS campaign. And, the average value should be determined based on the conversion window chosen.
- For example, if you select a 1-day conversion window, then use a 1-day average. Should you use a 7-day conversion window, use a 7-day average.
- Start with a lower ROAS threshold to accumulate more conversions sooner. You will still retain the ability to increase the bid over time to maximize profitability and scale.
- Setting your minimum ROAS too high will hinder your ability to scale and perform as well as Value Optimization campaigns set for the highest value.
As always, if you have any questions or are looking for support with media buying on Facebook or developing fresh creative for video ads for your campaigns, please reach out to sales@ConsumerAcquisition.com.