Instead of minimizing Cost per Action, like the regular conversion optimized bidding (formerly oCPM), Value Optimization aims to maximize your Return on Ad Spend (ROAS or ROI). It measures revenue reported with Purchase events by your Pixel or app.
You can enable it in the Optimization Goal drop-down menu:
The feature is whitelisted by an automated process by Facebook, and there are quite strict limitations: (these limitations are expected to change when Facebook is able to improve their algorithms)
- Campaign Facebook Objective needs to be one of
- Conversions for website
- App Installs
- Product Catalog Sales (= Dynamic Ads campaign)
- Choose Optimization Goal: Value
- Conversion Event must be: Purchase with Value Optimization toggled on
- Conversion window can be 1 or 7 days click-through
- Facebook has strict requirements for accounts to be (automatically) whitelisted:
- Your Pixel/SDK must be getting more than 100 Purchase events monthly, from Purchase-conversion optimized ad sets, with a 7-day click-through conversion window
- Your Purchase events must send the 'value' parameter consistently, with non-fixed values; i.e. a distribution of revenue values
- You ad account is automatically whitelisted if it fulfils these requirements
- There are separate whitelists for campaign objectives: Conversions, App Installs and Product Catalog Sales
- This means that you must have, for example, 100 Purchase conversions attributed to Ad Sets that are optimized towards Purchases inside App Installs campaigns, in order to be able to create Value Optimization Ad Sets in an App Installs campaign.
- Even if all of the above requirements are met, Facebook reserves the right to not allow a certain account to use Value Optimization for non-public reasons
- The Bidding strategies type available are Lowest Cost without Bid Cap and Minimum ROAS Bidding
To clarify the requirement clause, here's an image underlining that the Facebook white-listings are dependent on the results for each different Facebook campaign objective:
Minimum ROAS Bidding
The bidding strategy, Lowest Cost with Minimum ROAS, lets you set a minimum ROAS level that Facebook will try to achieve.
ROAS = revenue / spend
This means that if you set a minimum ROAS of 200%, Facebook will spend as much as possible, as long as they can get at least twice as much (200%) revenue than they spend. 100% means that you get as much revenue as you spend. The allowed input is from 1% to 100,000%.
Limitations of Minimum ROAS Bidding
This is a relatively new feature, so there are still certain limitations, which we are working on improving:
- You can't make relative changes (e.g. "-50%") to the "Minimum ROAS Target"
- The Trigger action "Change bid" does not affect the "Minimum ROAS Target" as technically, it is not a "bid"
Value Optimization FAQ
Question: What happens if your account/ad sets are eligible, but the amount of conversions drops at some point? Facebook currently recommends to have 50 purchase conversions a week. If you're below that at some point, what happens: Will the optimization change or will it just slow down the delivery?
Facebook answer: "We don't fall back to conversion optimization, so you'll still be optimizing for value, but the efficacy of the model will decline when there's less historical data/volume to go by. It won't slow down delivery if you're using highest value with no min ROAS."