Account-level budget management with Autonomous Budget Optimizer

✨ Madgicx’s Autonomous Budget Optimizer allows you to manage budgets across your entire ad account. Read that again. This is a game changer for Facebook advertisers as it saves you countless hours of manual budget optimization. If you know, you know… 😵💫

This tool helps reduce human error and gives you more time to focus on other aspects of your business rather than the tedious and repetitive work on your ad account. 

All you need to do is provide our algorithm with your target metrics, and our machine-learning technology will continuously optimize your budgets based on your instructions. Soon, you can sit back and let Madgicx do the heavy lifting in your ad account.

Things you need to know before you start 🗒️

1. What is your breakeven ROAS?

You need to know your numbers. To calculate your breakeven ROAS, you need to take all your production costs into consideration: shipment, manufacturing, materials, etc. These are referred to as the costs of goods sold or COGS. 

Then, you need to calculate your profit margin:

Profit margin = Product selling price - COGS (cost of goods sold)

Finally, to calculate the breakeven ROAS, you can follow this formula:

Usually, you want your campaigns to have a higher ROAS than your breakeven point. 

2. Are you ready to maximize growth even if you don’t break even on acquisition?

This dictates your ROAS conditions for acquisition. Decide whether you want to break even, take a minimal loss, lose a lot while hoping you gain that back further down the funnel, etc. Whatever the answer is will dictate how you set up the Autonomous Budget Optimizer.

3. Will you have cash flow issues if you scale too aggressively?

If you’re afraid you might encounter cash flow or supply issues if you scale too aggressively, you can set your strategy to scale ad sets gradually.

See your ad account’s budget trajectory - the dashboard 📈

With a strategy in place, the ABO dashboard offers you a clear visualization of how your ad spend has changed over the last couple of days. You can see the upcoming budget changes and the ‘Create Strategy’ button at the top of the screen.

You can also see how much of our budget is managed autonomously - and by which strategy - and how much is managed manually. Furthermore, you can see the spendometer and the performance trend by each funnel stage, which allows for data-led budget projection.

For strategies that you have turned off or aren’t active, you can click "Simulate Impact" to see how the strategy will affect your account if you decide to turn it on. No more uncertainty. You can see how your budgets will change before actually pulling the trigger. 

But how much of your budget should be managed by the Autonomous Budget Optimizer? 

The Autonomous Budget Optimizer is primarily designed for scaling ads. This means that if you have campaigns for testing, it’s better to exclude them from your Autonomous Budget Optimizer strategy. You can do this by ensuring that you use the term ‘test’ in your naming convention for test ad sets and exclude them using the filter.

We exclude them because when you test new creatives and audiences, you want to let them spend more to give them a fair chance to gather results before looking at the data. 

Before we start - single or multiple strategies? 🤔

While it's recommended to have one strategy for your entire account, that’s not the case for testing campaigns and a few rare cases where you require specific strategies. You may want to measure different metrics for some of your campaigns, like downloads, installs, and leads. 

For example, Black Friday-Cyber Monday is a massive week for e-commerce businesses. During this week, e-commerce businesses want to scale their budgets big time for a short period. They also want to maximize their conversions in this short time, so they need to scale up the middle and bottom of the funnel while allowing for a high frequency that they usually wouldn't.

The old way to do this would be to go ad set by ad set, analyze its performance, and decide how much budget to give it. And then check every day how that increase affected the ad set's results.

This is long, tedious, and ineffective. 

By using the Autonomous Budget Optimizer, you can work at a macro level where you tell the algorithm how much you want to spend daily, and the tool will do all the grunt work.

Autonomous Budget Optimizer decides how to distribute the budgets based on the metrics that are most important to you and continues to monitor the performance daily while adjusting the budgets when needed. 

The "Strategy performance" graph at the bottom of your ABO dashboard allows you to visualize how your strategy has been performing over a timeframe of your choice.

You can also filter the performance by funnel stage or see the impact on specific ad sets. You can even compare performance between ad sets optimized by the ABO and those managed manually.

Optimize ad budgets autonomously - create a strategy 💪

To get started, simply click on the "Create Strategy" button.

The first thing you need to do is to give your strategy a name so that you can remember what it does, and everyone else who manages the account will be able to use it. 

The default name for our favorite strategy for e-commerce businesses is called "Yahav's ECOM Favorite Balanced Strategy" (named after our CEO, who created it). Feel free to change it to something more relevant to your business.

Asset selection

Now select which campaigns and ad sets to apply the strategy to. You can either filter by rules or do it manually.

For example, you can filter to only active ad sets or include campaigns whose name doesn't contain "testing". The advantage of selection by filter is that every new ad set and campaign you create can be added to the strategy if they fulfill the conditions 🤓

If you do it manually, you can only auto-select ad sets that will be created for a specific campaign. You can also save your filter selection to save time in any future strategies you intend to build. 

Funnel-stage level optimization

Click "Funnel-stage budget optimization" to define the budget allocation between the different funnel stages in your account.

This stage will define how much budget we allocate to Acquisition Prospecting, Acquisition Re-Engagement, Retargeting, and Retention. The target optimization metrics in each funnel stage are different. For example, you'll probably want to invest a higher budget and tolerate a lower ROAS in acquisition than in retargeting or retention. 

You can see in the image above that the acquisition re-engagement strategy has not been set because no ad sets in this funnel stage were selected. You should define a strategy for your ads that target your recent brand interactions specifically for this funnel stage. This ensures all stages are included in the account strategy. If you click on ‘Set up anyway’ our default Madgicx settings will appear, which you can edit easily.

Remember that re-engagement ad techniques can yield a high ROAS, so this ad account is missing out on potential revenue without a budget optimization strategy in place. 

Ad-set level optimization

Select your primary optimization metric that will determine how much budget you spend on each funnel stage. For most e-commerce accounts, this will probably be ROAS, but Madgicx allows you to set dynamic values, so you can customize it as you see fit. 

Now you need to select what timeframe you’re looking at. ROAS over the last 7 days and ROAS over the last 14 days can paint a very different picture. 

You can also choose whether you want to have the default setting of different prioritization rules for each funnel stage or if you want one rule for all funnel stages. Simply uncheck the box to change it.

As a rule, the more aggressive you want to be, the shorter the time frame you should select so you can zoom in on good performance.

If you had an amazing day yesterday and reached a ROAS of 10 in a very short time frame - for example, over the last 3 days - this will have a massive impact. If, however, you are looking at a longer time frame, let's say 28 days, one fantastic day will have a much smaller impact.

The same logic applies if you had one really bad day, of course. 

The next decision to make is how much you are willing to spend based on the performance. Meaning if you selected your most important metric to be ROAS and the time frame to be the last 7 days, you'll now need to decide what budget you are willing to spend based on your ROAS in the last 7 days.

Madgicx will recommend smart default values based on your historical account data ✨

If you change those optimization metrics, make sure to click "Recalculate smart defaults" in the popup that'll show up on your screen. If you want to change those values, you can do so simply by clicking the edit icon. 

This will open up a window allowing you to edit the different ranges and budget levels as you see fit. You can also remove or add more steps. 

Once you've finished editing, click "Save changes". 

Next, you must decide how often you want the algorithm to optimize your budget. If you choose once a day, the Autonomous Budget Optimizer will monitor your performance every day just after midnight and make the necessary budget changes.

Lastly, choose a frequency limit for each funnel stage. 

This is especially important in the retargeting and retention stages since these are audiences that are significantly smaller and might suffer from ad fatigue. Since no one likes companies that bombard their audiences with ads all the time, you better set a maximum frequency limit to avoid this happening.

Preview strategy and launch 🚀

On the preview page, there are a few things you want to check before going live. 

The first thing is the changes in your overall budget and the new budget after those changes. You can see both of these on the top of your screen. Make sure you are happy with these.

The next thing you need to do is to decide when to apply those changes.

You can choose between immediately launching your Autonomous Budget Optimizer strategy or according to an optimized schedule.

An optimization schedule means five minutes after midnight, which allows you to make sure you don't harm campaign performance throughout the day. As a rule of thumb, if it's the start of the day before 1:00 PM local time, you can apply the changes immediately.

If it's already later in the day, Madgicx expert media buyers recommend using the optimization schedule option. 

At the bottom of the screen, you can see how the strategy will affect every funnel stage and ad set in your ad account. Meaning, what changes it's going to make, and where you currently stand with the metric targets you've previously defined.

The summary starts with an overview of how many assets are going to be optimized at the account level and where each funnel stage is on the scaling spendometer based on how you defined your metric targets 🎯

Next is a breakdown of each funnel stage, which lets you see the changes being made to each ad set.

In addition, you can see the grade of each ad set. The grade is calculated based on everything you previously defined: optimization metrics, priorities, time frames, and so on. 

The grading is the complex score based on the metrics you select in the strategy settings. Each metric has its own weight depending on the position (higher = more). The better the results of the ad set according to the strategy configuration, the better the grading. 

It also takes into account funnel stage data in the calculation. Once all this is done for all the ad sets, we normalize the grading score and get 0-100.

There are two more values you might see under the Grading column. "OF" stands for "over frequency". This is based on the frequency limit you set on stage two (remember ad fatigue).

"IM" means "information missing". This means the algorithm doesn't have enough data to optimize just yet but rest assured: it'll get optimized once Madgicx collects more data. Once you have looked it over and made sure everything looks correct, click "Create" on the top right-hand side of the screen, and that's it.

Monitor and edit your strategy 🧑‍⚕️

You have just launched a full-funnel ABO strategy into your account 🚀 Well done! This will take you back to the ABO dashboard where you started. Using this dashboard, you can continue to monitor your strategy's performance over time. 

When you first set up a strategy, Madgicx’s paid media experts recommend coming in once a day for two to three days to make sure everything looks good for you.

When you are sure everything is working correctly, there is no need to come here daily. You’ll still want to check every once in a while to ensure you’re on track, but no need to babysit it all the time. You can carry on elsewhere knowing your budget strategies are in place and on autopilot 🧑‍✈️

If you want to make changes to an existing strategy, just click on the three dots on the right side and select "Edit Strategy".

You can also turn it on and off at will and have the option to duplicate strategies. This allows you to make minor adjustments to the strategies and test different variations. It also lets you create new strategies much faster, as long as they aren't too different.