What is Facebook Value Optimization? If you've worked with Facebook advertising for any amount of time, you know that the changes are never ending. Meta is adding new tools and resources all the time.
Facebook Value Optimization is a technical piece of information but yet very powerful in the performance of Facebook (Meta) ads. What is it? is it important? Why should I be using it? All of these are great questions, let's start with what it is...
Value optimization is part of Meta’s (Facebook and Instagram) algorithm that helps improve Return on Ad Spend (ROAS) by using machine learning to predict your highest value customers. It’s a great tool to optimize for ROAS.
By adjusting bids in real-time based on the likelihood of a conversion, value optimization can help to increase the conversion rates for your ads. More leads, sales, or other desired actions can result on your website or app.
By maximizing the value of each conversion, value optimization can help you to achieve a better return on investment for your ad spend. This means that you can potentially reduce your overall advertising costs while still achieving the same or better results.
Value optimization takes into account various factors, such as the time of day, location, and behavior of users, to determine the likelihood of a conversion. This information can also help you to refine your target audience and improve your targeting strategy over time.
A study conducted by Facebook found that value optimization can increase return on investment by up to 35% compared to non-optimized campaigns. This is a significant increase that can have a big impact on the overall success of your advertising efforts.
Better tracking and measurement: Facebook provides detailed performance reporting and analytics for value-optimized campaigns, allowing you to easily track and measure the results of your advertising efforts. This information can help you to make informed decisions and improve your advertising strategies over time.
Let's walk through an example. You have 2 potential customers and one is likely to spend $60 on their total purchase and the other will spend $120 on their purchase. Pretend this is one shirt or 2 shirts.
Your margins are probably the same on the shirt and you likely get some economies of scale on the shipping. So, your margins and your ROAS will be greater on the $120 purchaser. If the sale costs you $35 in Facebook ad spend, your ROAS on the $60 customer is 1.71 and 3.43 on the $120 customer. Which one would you prefer? I know I will take the higher value customer in nearly every case.
In the good ole days (Pre-iOS14), we could see exact values. Meta creates “Value Sets” which are 4 distinct ranges of values of purchases. So, that’s why it takes up 4 of the 8 spots available in your Events Manager. You can use up to 8 value ranges but that would use up the maximum of 8. In that case, you wouldn’t be able to track add to cart, view content, initiate checkout, etc. We typically give it 4 spots and use the other 4 for things like view content, add to cart, initiate checkout and add payment info or something similar.
To be eligible, your account must send purchase data with values attached from your website. In addition, you must have 2 distinct values over the last 7 days. You will also need at least 30 attributed optimized click-through purchases in the last 7 days. So, if you’re new to Meta/Facebook ads, you may not have these yet or if your budget is too low.
For Apps, you must have at least 15 attributed optimized click-through purchases with values over the last 7 days. You also must have app events configured in Events Manager, with value optimization turned on for the events you want to optimize for value.
This is relatively easy to set up once you know where to go with Facebook Business Manager.
First, start by going to Events Manager in your Facebook Business Manager account.
Next, click on Aggregated Event Management.
Then click on Configure Web Events, then Manage Events.
Here is where you can set the Facebook ads value optimization. You have a total of 8 events you can track. If you want to optimize for value (and the best ROAS), toggle on the Value Optimization in Facebook. That will take 4 of the 8 slots available to you.
We typically will use other high value events like Initiate Checkout, Add to Cart and View Content (visited a product page typically.)
Once you enable Value Optimization, it may take a bit to start optimizing. We’ve seen lifts of greater than 40% in ROAS when enabled. It is one of the first things we check when we take on a new consumer brand on Shopify or BigCommerce that is running Facebook ads.
Will your ads still work? Yes, of course. If your pixel is working correctly and tracking the events, your ads will still work. They won’t be as efficient, however, if you care about Return on Ad Spend.
You can accomplish set up of value optimization in 5-10 minutes. This simple toggle switch can help the performance of your ads tremendously. So check today that value optimization is on.
If you want to know if you can be doing better and you are spending enough to get good data, typically $30,000/month or more, Contact Us to see if you qualify for a complimentary assessment if you’d like to work with a strategic partner and turn over your ads management and strategy to us. So you can focus on what YOU do best.
Typically, you need your pixel to be firing on your eCommerce site correctly. This is easy to do on Shopify, BigCommerce and WooCommerce pretty easily. If you care less about transactions then this optimization is less useful.
For example, if you are tracking leads only and you don’t track events like purchase, add to cart or view content, the value optimization is not likely to help you. If you want to optimize for those events, we suggest running lead ads to make it easier to integrate those leads into your CRM such as Hubspot or Salesforce.
Another reason you may not want to enable it is if you care more about customer acquisition cost (CAC.) If you’re goal is to have the lowest CAC, then you will likely pay more per customer acquired. If you want to get them into your brand and they have a massive Lifetime Value (LTV), Value Optimization may not be the best strategy. However, most brands we work with are very concerned about the initial profitability and don’t have massive pockets to grow unprofitably. In this case, we will turn on Value Optimization. If you have a high repurchase rate, you will likely want to leave it off and get the lowest CAC you can.
We’ve seen it improve results on Return on Ad Spend (ROAS) in every instance where we have enabled it. Return on Ad Spend is the focus for many consumer brands. Getting the most bang for your buck is important. Marketing Efficiency Ratio (MER) is another important metric. Total spend / total revenue (all revenue both paid and non-paid) will give you your MER. Many brands choose to focus on that because of attribution loss since iOS14. Focusing solely on ROAS typically also requires the click through data for value optimization whereas optimizing for conversions can use view and click through data. We tend to optimize for 7 day click and 1 day view in most cases. However, with value, the user needs to click through and that data needs to be passed back in accordance with privacy policies, to Meta to optimize for highest value customers.
One way this works well is for a brand that has a $0 eBook. When we optimized for conversions, it got us a bunch of customers at $0. Great for following up with email and other ways to bring them into the brand but not necessarily profitable in the short term. So, we switched to a value optimized campaign to drive conversions with actual revenue rather than low to no cost orders.
Try Facebook Value Optimization and see how it works for you. Would love your comments on your experience.
At ROI Swift, we understand that selling on Meta can be a thrilling as well as a frustrating and time-consuming venture. We love to partner with brands that are ready to scale their business to the next level and help set them up for success with their digital marketing. Facebook Ads Value Optimization is one of many tools in our toolbox. Want help? Book a call with us now!