With custom conversions, you can track conversions more granularly than just the Facebook standard events (View Content, Add To Cart etc), as well as optimize your bids towards those conversions.
In practice, this means creating new, trackable conversions by combining standard pixel events such as ViewContent, AddToCart or Purchase, and other arbitrary parameters such as price or product category. You can for example separately track conversions for different product categories. In this case, you could set up "Purchases, shoes" by creating a custom conversion, where the pixel event is "Purchase" and only count in events where the site URL contained the word "shoe". Another example could be "Big purchase", combining "Purchase" event with a rule "value-parameter (configured in the pixel event in your website) is greater than 100".
To use custom conversions you first have to set them up in Facebook Ads Manager. After they're configured in Ads Manager, they will be automatically synced to Smartly.io.
Go to Facebook Ads Manager → Tools → Custom conversions
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The value that you get from custom conversions is that you can create your own custom and more exact conversions to optimize against. For example for us in Smartly.io it’s valuable to be able to optimize against getting clicks to our careers page as we have heavy focus on recruiting at this moment. Simply put custom conversions enables you to get more exact data as you’ll get to define the conversions points yourself.
Limitations
The maximum number of Custom Conversions per ad account is 100. Custom Conversions can be shared across accounts in Business Manager Settings.
To use custom conversions in Smartly.io you first have to set them up in Ads Manager. Once they're set in Ads Manager, return to Smartly.io, go to campaign creation/editing, set objective to Website conversions and then choose the desired conversion from the conversions list under bidding. Custom Conversions are also not possible to use in bidding with the Catalog Sales objective when promoting a product set. However, you can collect the audience with custom pixel events in DPA.
Custom events
Custom events—not to be confused with custom conversions discussed above—are pixel events whose name is not among the 9 standard pixel event names. Custom events are created automatically when you send a non-standard event name in your Pixel base code. Existing custom events are listed in Account Settings > Pixels under Facebook Pixel Events.
Custom events cannot be used directly in optimization and reporting. However, you can create a custom conversion based on the custom event. The custom conversion can then be used normally.
See also Facebook's instructions for custom events.