This our definitive Facebook ads strategy that exclusively uses campaign budget optimization.

So if you want to:

  • Learn what CBOs are
  • Create successful ad campaigns
  • Out best tips and tricks

You’ll love this brand new tutorial. We share our most effective advertising strategy, which you can start using right away.

Let’s dive in.

What is Campaign Budget Optimization

Campaign budget optimization is when you set the budget of advertising on the campaign level and not the ad set level. The CBO campaign will then automatically manage the budget across your ad sets to deliver the best results.

Here’s what the Facebook ads structure looks like:

Facebook ads structure

Currently, you most likely run ABO (Ad Set Budget Optimization) ads and set the budget of each ad set individually. In a CBO, you set the budget at the campaign level and not the ad set level.

Why did Facebook Introduce CBO ads?

CBO ads were first introduced in 2017 by Facebook to attract more advertisers into their platform.

The purpose of CBO Facebook ads is to make advertising beginner-friendly and easier.

Currently, the Facebook ads learning curve is high. You have to be familiar with the ad platform interface, campaign structures, and so forth.

To make it easier, CBO ads utilize the Facebook machine learning algorithm to deliver the best results.

Facebook’s machine learning algorithm is one of the main reasons why advertising on Facebook is so powerful. The Facebook algorithm will automatically learn and improve it’s ad optimization as it receives more data.

It uses the Facebook Pixel to collect data from potential customers.

Facebook pixel

Then with the data, the learning algorithm will automatically optimize your CBO to deliver the best results.

How Facebook CBO Ads Work

The algorithm decides how to allocate your daily campaign budget between your ad sets. It’s goal is to allocate the majority of your budget towards the ad sets that are performing well. This is done in real time, using your campaign objective, on both the ad and ad set level.

Let’s look at an example of campaigns without and with CBO:

This image shows two different campaigns: one CBO (campaign budget optimization) and one ABO (ad set budget optimization).

Each campaign has 3 ad sets and will spend $30 per day.

In the ABO:

  • Each ad set has $10 of budget allocated per day
  • The number of conversions per ad set seems to vary despite having the same budget (3, 5, and 2)
  • The overall cost per purchase of the campaign is $3 ($30 budget/10 conversions)

In the CBO:

  • The CBO is set to distribute $30 across the ad sets
  • Each ad set budget is different via the automatic Facebook algorithm
  • The ad sets spent $7, $18, and $5 respectively
  • The overall cost per purchase of the campaign is $2 ($30 budget/15 conversions)

Why did the CBO perform better?

Keep in mind, this is just an example. But in this case, the CBO performed better than the ABO because of the Facebook ads algorithm.

CBO ad campaigns start off by spending a little bit of the budget on each ad set. After a certain amount of time, it determined that ad set 2 was performing better than the others.

For this reason, the CBO campaign allocated most of its budget to ad set 2.

Remember, this is how CBO’s are supposed to perform on paper. In reality, you might notice your CBO ads behave very differently.

Sometimes, a campaign budget optimization allocates most of its budget towards an ad set with the worst performance. Furthermore, you may see fluctuations in CBO performance on a day-to-day basis.

Poor CBO performance can be because of a number of things:

  • Suboptimal CBO settings
  • Poor creative
  • Saturated product
  • Deficient ad account optimization

Why Should You Use CBO Facebook Ads

If you’ve read this guide fully until this point, the answer should be clear. Campaign budget optimization utilizes Facebook’s powerful machine learning algorithm.

Keep in mind, ABO ads also use the algorithm, but CBOs take it one step further by automating the budget distribution.

The CBO algorithm uses historical and real-time data. It then tries to deliver ads using the metrics it thinks will perform best.

Most of the time, machine AI is far smarter and efficient than any human. AI can process and read massive amounts of data.

For this reason, it’s in your best interests to give CBOs a try.

Campaign Budget Optimization (CBO) vs Ad Set Budget Optimization (ABO)

Although CBO ads sound incredible on paper, there is no right answer for which one is better.

It all depends on your product, target demographic, budget, and the dozens of other things that go into Facebook ads.

You should treat CBOs as another tool in your advertising arsenal.

It’s important that you test both to see which one delivers better results.

However, here’s our rule of thumb when thinking about when to use CBO vs. ABO:

  • CBOs are better for expensive products (more than $15)
  • ABOs are better for cheaper products (less than $15)

The reason campaign budget optimization is better for expensive products is because more data is needed to optimize.

How to Create Campaign Budget Optimization Facebook Ads

First, go to your Facebook ads manager.

Next, click to create a new campaign. We recommend always choosing “Conversions” as your campaign objective if you’re running a dropshipping store.

In the creation menu, you’ll see this screen:

facebook campaign creation

By default, the CBO option will be disabled. Simply, click the switch to turn on “Campaign budget optimisation“.

Next, enter in the daily budget you want it to spend. The daily budget is how much you want Facebook to spend every day on the campaign.

Campaign Budget Optimization

For the “Campaign bid strategy” we recommend using lowest cost.

Keep in mind, because you’re using campaign budget optimization, you won’t be setting the budget of any of your ad sets.

Depending on how many ad sets you have, the CBO will automatically allocate the daily budget to each of them.

Once you’ve set your campaign budget, create your Facebook ads as you normally would.

Our Ultimate CBO Facebook Ads Strategy

The Facebook ads strategy we created has 5 different phases:

Facebook Ads Strategy

We use this strategy on over 90% of our dropshipping stores. Furthermore, it’s how we consistently scale stores from a few hundred dollars in revenue to 7-figures.

Here are some of our results with stores scaled to Phase 5 of our campaign budget optimization ads strategy.

Daily Sales:

shopify sales

Monthly Sales:

shopify sales

As you can see, the results of this ad strategy are quite astronomical if executed properly. That’s why it’s important to be very thorough with your work each step of the way.

In Phase 1, we will perform interest testing using campaign budget optimization if our product is above $15.

Phase 1 – Interest Testing

Facebook ads interest testing

Let’s get started with creating our campaign.

Step 1) Campaign Creation

Go into your Facebook ads manager and create a brand new campaign.

Firstly, you’ll want to name your campaign “Interest Testing 1“. The purpose of this campaign is to test various interests related to your niche.

The second step of creating your CBO ad is to set your daily campaign budget. We recommend making the daily budget 1/10th of your total ad budget.

cbo budgets

For example, if your total advertising budget is $500, you should set the daily spend to $50.

This will give you at least 10 days to test your CBO ads. Additionally, you will probably make enough sales to continue testing after 10 days.

Next, you will be given the option to choose your bid strategy:

cbo bid stategy

We recommend always selecting “Lowest cost” because it’s given us the best results on our advertisements.

Step 2) Ad Set Setup

The next step is to setup your ad set.

Click to edit your ad set.

First, you’ll want to select “Purchase” as your conversion event. Selecting purchase will feed your Facebook Pixel the highest quality data.

We strongly recommend against choosing any other conversion event.

conversion event

For our other settings:

  • Dynamic Creative: Skip
  • Offer: Skip
  • Schedule: Midnight the next day
  • Spend Limits: No spend limits on ad sets
  • Custom Audience: None
  • Location: Your preference
  • Age/Gender: Auto (All)
  • Languages: English (All)
  • Detailed Targeting: Find your own related to your niche

The most important part in this step is choosing good interests. We recommend picking audiences that make sense for your niche. For example, if you have a store selling dog related products, type “dog” into the search bar and see what comes up.

Remember to only select one interest.

detailed targeting

Furthermore, the audience size is extremely important when choosing your interests.

audience definition

We recommend choosing a few audiences with a broad reach (10 million+) and a few audiences with lower reach (1-10 million).

Just choose one audience for now, we will duplicate you ad sets later on and select more audiences.

Next, you can choose where to place your ads.

facebook ads placement

We recommend using “Automatic Placements” because it gives your CBO the best chance to fully optimize.

Lastly, you’ll want to name your ad set with the name of the audience you’re targeting.

ad set name

For example, if you selected the interest “Home Improvement”, name your ad set accordingly.

Step 3) Upload Photo/Video for Ad

The next step is to upload the creative of your advertisement.

Click to edit your ad.

First of all, make sure the correct Facebook and Instagram pages are selected:

ad set creative

Next, upload your photo/video:

ad set creative

After uploading your creative, here are the other options you need to set along with our examples:

  • Primary Text: Controls the main text for the ad
  • Headline: The text next to the CTA (call to action) button
ad text
  • Description: Smaller text underneath the headline
ad text
  • Website URL: Link to product page
  • Display Link: Base domain URL
  • Call to Action: Shop Now
ad url

Lastly, take one last look at the preview and make sure everything looks correct.

Step 4) Ad and Ad Set Duplication

Ad Duplication

If your ad creative looks good to go, the next step is to duplicate the ad.

ad duplication

The purpose of this step is to upload a different creative. We recommend testing more than 1 creative and seeing which one brings better results.

This will help you structure your ad creatives in the future because you’ll know what type of image/video works.

Once the ad is duplicated, change the name to “Creative 2

ad name

Next, change the image/video to the second creative you have ready.

edit ad creative

Afterwards, you have the option of changing the text in the advertisement. We recommend keeping the text the same for your first campaign because we want to see which creative is better.

Next, we will duplicate our ad sets.

Ad Set Duplication

Go back to the ad set level by clicking on the ad set tab:

ad set

Next, you should duplicate your ad sets to test your 2 ad creatives on different audiences.

ad set duplication

Here’s our rule of thumb for how many times you should duplicate your ad set:

  • Take your daily budget and divide it by 5
  • For example, if your daily CBO budget is $50, you should have 10 total ad sets (duplicate 9 times)
  • Only have a maximum of 10 ad sets in your campaign (Even if your daily budget is $200, use 10 ad sets)
  • If you want to increase testing, test more creatives rather than audiences
ad set duplication

Afterwards, click to edit just one of the copies.

Next, use the “Suggestions” option under detailed targeting to find additional audiences.

ad set audiences

Be sure to only select one audience per ad set. Furthermore, remember to change the name of each ad set to the name of the audience.

In total, you will have 10 different ad sets each with a unique audience.

Furthermore, each ad set will have 2 ads (creatives).

ad set setup

With your campaign fully setup, click on “Review and Publish“.

review and publish

Next, confirm that you have the correct number of ad sets and ads.

If everything checks out, you can finally click “Publish“.

publish facebook ads

How to Measure Your CBO Ad Results: Customize Columns

With your Facebook ads ready to launch at midnight the next day, you’ll want to configure your columns to help best analyze your ads.

First, click on “Columns” and select “Customize Columns“.

ad columns setup

Delete the following columns:

  • Bid Strategy
  • Last Significant Edit
  • Reach
  • Impressions
  • Ends
  • Schedule

Add the following columns:

  • CPM
  • Outbound Clicks
  • Outbound CTR
  • CPOC
  • ATC Total
  • ATC Cost
  • Checkouts Total
  • Checkouts Cost
  • Video Average Play Time

Next, rearrange your columns by dragging and dropping them into the right places:

  1. Delivery
  2. Ad set name
  3. Budget
  4. Amount Spent
  5. CTM
  6. Video Average Play Time
  7. Outbound CTR
  8. Cost per Outbound Click
  9. Cost Per Checkout Initiated
  10. Cost Per Result
  11. Outbound Clicks
  12. Adds to Cart
  13. Checkouts Initiated
  14. Results

Lastly, hit “Apply” and save the column preset with the name “Dropshipping

column preset name

Here’s our reasoning for how we setup the columns:

why we set up our columns

As you can see, each section shows a more specific amount of data. This will help you measure your ad performance in a chronological matter.

How To Analyze Your CBO Ad Performance After 2 Days

With your ads running and your columns setup, the next step is analyzing the performance of your ads.

The main task is to find out if your creatives are performing well. Since you uploaded two different videos/photos, we want to find out if we need to turn any of them off.

At this stage, our goal is to only move forward with a profitable creatives.

Measuring Creative (ad) Performance

So, hover the account overview on the left-hand side, click “Show” more tools, and then select “Creatives“.

creative performance

Next, make sure that the date range of the data is set to “Lifetime“.

Now select your “Dropshipping” columns you setup earlier, so that you’re viewing the correct metrics.

Usually, we’d simply look at the “Cost per Result” to determine which creative is performing better.

cost per purchase

However, since your budgets are not extremely big (ex. $1000+/day), cost per result actually isn’t the most reliable metric. At low budgets, getting actual sales could be due to luck.

For this reason, we want to look at the other metrics in the columns. Start by comparing the second section of the columns from CPM to Cost per Result.

Your goal is to see if the purchases were due to a good creative, or pure luck.

Let’s take a look at this example:


You always want to analyze all the metrics along with Cost per Result to see if the purchases were flukes or not.

However, measuring your data will depend on your own product pricing, ad budget, and so forth. For this reason, use your best intuition to see if the creatives are profitable or not.

You always want to look for consistent performance across every metric in the funnel.

Check out our YouTube video titled “Why You’re Not Making Any Sales” if you want to learn more about analyzing the metrics of your Facebook ads.

This video will teach you about what to look for when turning off your ads and ad sets.

However, if you’ve come to the conclusion that both creatives are profitable, you can continue onto Phase 2 with both creatives.

On the other hand, if only one creative is profitable, continue onto Phase 2 with the single creative.

Lastly, if both creatives are unprofitable, you’ll need to stop the current CBO and create a new one with new creatives. You can duplicate your campaign and add new creatives.

Measuring Ad Set Performance

Once you’ve found your winning creative(s), the next step is to find your winning audiences.

Simply analyze your ad sets the same way you did with your creatives.

Turn off the unprofitable ad sets and only leave the profitable ones.

If none of your ad sets are profitable, create a new CBO with different audiences.

Now, if you have at least 1 profitable ad set and 1 profitable audience, it’s time to move onto Phase 2.

Phase 2 – Scaling Your Interest Targeting Ads

The next phase of our Facebook ads strategy is to scale the winning creative and audience. This means increasing the overall budget of the campaign, while maintaining its performance.

scaling interests

Furthermore, we only recommend using CBOs from this point on. Based on our experience, CBOs have a much higher chance of working with a proven audience and creative.

Firstly, create a new campaign and name it “Interest Scaling 1“.

Then, turn on “Campaign budget optimisation” and set the daily budget to $100.

Now, duplicate the winning ad sets from Phase 1 into the new campaign.

scaling interests

If you only had 1 winning ad set from Phase 1, duplicate it 5 times. Furthermore, if you had 2 winning ad sets, duplicate them 4 times each for 8 total ad sets in the new campaign.

Lastly, if you had 3 or more winning ad sets, choose the best 3 and duplicate them each 3 times for a total of 9 ad sets.

We recommend only have a maximum of 10 ad sets in the new campaign because the budget is only $100.

Using the Winning Creative On All Your Ads

The next step is to only use the winning creative(s) on all the ads in your new campaign. To do this, go to the “Business Tools menu“.

scaling interests

Next, click “Page Posts“.

scaling interests

Your screen should show all of the posts you’ve made so far on that account:

scaling interests

Now, copy the post ID of your winning creative.

scaling interests

Afterwards, go back to your ads manager and select all the ads in your new campaign:


Then, click to edit them.

scaling interests

Next, click “Use Existing Post“.

existing posts

Now, click “Enter Post ID” and paste in the ID you copied.

enter post id

In total, you will have a $100 CBO campaign, 5-10 duplicated ad sets, and 2 duplicated ads per ad set.

cbo ads

What if I have 2 winning creatives?

If you have more than 1 winning creative, there are two options to choose from, depending on your budget.

  • Low-budget – Use the 2 different creatives per ad set (copy and past the other post ID on half of the ads)
  • High-budget – Duplicate the new campaign and put the second creative on all the ads in the duplicated campaign

Measuring the Results of Phase 2

Once your campaign is fully setup and running, you’ll want to closely measure its results.

Let the campaign run for 2 days before making any decisions.

If after 2 days the campaign is unprofitable, start over with Phase 1.

Furthermore, if the campaign is indeed profitable, you can try scaling the campaign.

*Scaling Rule*

If a CBO performs well for 2 days and the winning audience exceed 20 million people, duplicate the winning audience and creative into a new CBO with twice the original budget.

Then, if the duplicated CBO performs well after 2 days, you can duplicate the CBO and double the budget again.

Lastly, if a campaign spends 5x your breakeven cost per purchase, turn off the campaign.

Before moving onto Phase 3

If your interest scaling in Phase 2 is bringing in profitable results, you can look to move onto Phase 3 of our Facebook ads CBO strategy.

But before moving to Phase 3, here’s what you need:

  • at least $500 spend total for the ad account
  • or 2000 75% Video Viewers (if you’re using video creatives)

The reason for this is that we will be using lookalike audiences for Phase 3, which require enough data to work effectively.

Phase 3 – LLA & Retargeting

The goal of Phase 3 is to test lookalike audiences and setup a retargeting campaign.

We will be testing our creatives on lookalike audiences instead of interest groups. Furthermore, we will setup a retargeting campaign to bring potential customers back to our store.

More importantly, you will first need to make custom audiences for both lookalike audiences and retargeting campaigns.

How to Make Custom Audiences

First, go to your ad accounts manager and click “Audiences” on the left-hand side.

custom audiences

Then, select “Create a Custom Audience“.

custom audiences

Here are the audiences you should make for retargeting ads:

  • Pageview
  • AddToCart
  • InitiateCheckout
  • Top 25%
  • Engagement
  • 75% VV

Furthermore, use data from only the past 7 days for your retargeting ads.

Next, make these audiences for your lookalike audiences:

  • Pageview
  • Facebook Engagement
  • 75% Video Views

Use data from the past 180 days for your lookalike audiences.

Create Lookalike Audiences

Next, go back to “Audiences” and select “Create Lookalike Audience“.

Create these lookalike audiences:

  • 5 Pageview, 5 Facebook Engagement, 5 75% Video Views
  • 0-1%, 1-2%, 2-3%, 3-4%, 4-5%

In the end, you should have 15 lookalike audiences total.

lookalike audiences

If you aren’t using video creatives, you will only have 10 lookalike audiences.

Next, with your custom audiences and lookalike audiences created, you’ll want to create your retargeting campaign first.

How to Create Your Retargeting Campaign

Go back to your ad creation manager and create a new campaign.

Name the campaign “Retargeting 7 Days“.

retargeting campaign

Set the CBO daily budget to $50, create 7 ad sets (1 for each custom audience), and make a new ad creative that’s suitable for warm traffic.

As you scale your campaigns, you want your retargeting campaign to be around 5-10% of your total budget.

retargeting campaign

For example, if your total daily budget is $2000, you should set your retargeting campaign budget to $100-200.

How to Create Your Lookalike Audiences

After you’ve setup your retargeting campaign, it’s time to create your lookalike audiences.

First, create a new campaign and name it “LAA Testing 1“.

Furthermore, set the CBO daily budget to $100, and create 5 ad sets using the Pageview lookalike audiences.

lookalike audiences

Lastly, add your winning creative twice for each ad set.

Test your 5 Pageview audiences first.

Once you’ve tested Pageview, you can test Page Engagement and Video Views next.

If your lookalike audience campaign is profitable after 2 days, you can move onto Phase 4.

Furthermore, if your lookalike audience isn’t profitable, try testing another lookalike audience.

Lastly, if none of your lookalike audiences are profitable, go back to Phase 2 and wait a few days to collect more data before trying again.

Phase 4 – Lookalike Scaling

The goal of Phase 4 is to scale our lookalike audience campaigns following the scale rule we mentioned earlier.

This involves duplicating the working CBOs and setting higher budgets.

lookalike audiences

If the new scaled CBOs are profitable, we will continue duplicating and setting higher budgets.

Furthermore, if your scaling is going well, your Facebook Pixel should have collected a lot of data.

For this reason, you should make additional lookalike audiences for AddtoCart, InitiateCheckout, and Purchase. Then, test the new lookalike audiences like you did for Phase 3.

At this point, this is where you will start making 5 figures/day.

However, before moving onto Phase 5 you’ll have to wait until you’ve spent $5000 or more total on your ad account.

Phase 5 – End Game

The goal of Phase 5 is elevating and scaling your ads even more. We call this phase “End Game” because you can run your Facebook ads semi-automatically.

We let Facebook decide the best audience for our product with broad targeting.

facebook ad scaling

Broad targeting is when Facebook decides everything expect for the budget, location, and creative. With the amount of data your store has collected, Facebook can effectively optimize your ads for you.

We don’t give Facebook any audiences whatsoever. Everything is left blank expect for the location, budget, and creative.

broad targeting

Phase 5 Campaign Setup

  • $500 campaign budget optimization
  • 3 Broad Ad Sets – (USA, Canada + UK + Australia + New Zealand, Worldwide)
  • Winning Creative

For our 3 broad ad sets, set the location accordingly:

  1. USA
  2. Canada + UK + Australia + New Zealand
  3. Worldwide

After you’ve set up the ads, go ahead and publish them.

Once again, wait 2 days to analyze the campaign results. If the campaign is unprofitable, turn it off and go back to Phase 4 to gather more data.

Closing Thoughts on Campaign Budget Optimization

There it is. Our ultimate high profit Facebook ads strategy that uses campaign budget optimization. CBO ads have been extremely powerful to help scale our dropshipping stores.

If you have any questions about this ad strategy, feel free to leave a comment below or ask us on our Facebook group.

Ecommerce as an career path and industry is continuing to evolve and grow. For this reason, it’s mandatory to be well-versed in Facebook marketing to be successful.

Taking the time to fully learn the Facebook ads platform will benefit you greatly in the long run.

We hope this guide was helpful and allows you to achieve your advertising goals.