Abacus Weekly Experiment

On Value Optimization

At Abacus we see ourselves as mad scientists always experimenting to drive the best campaign results for our customers. This week we decided to conduct an experiment to help advertisers drive a more efficient return on ad spend and measure their advertising the same way they measure their business.
 
Recently, Facebook introduced a new optimization method called Value Optimization. New optimization method relies on deep learnings and an adaptive bidding algorithm which helps increase your Return on Ad Spend (ROAS) per user, not just the volume of purchases.
We decided to test the new optimization method in a series of split tests to determine if:

Hypothesis #1

Our first hypothesis was that the Value Optimization method could drive a higher value of purchases compared to Event Optimization (standard “Purchase” event), but could significantly impact the volume of purchases at the same time. To verify it, we would compare both the total count of purchases as well as total revenue generated.

Hypothesis #2

Our second hypothesis was that the Value Optimization could provide inconsistent results depending on the source of the targeted audience (Lookalike vs. Remarketing list based on pixel or CRM file).
 
Before we dig deeper, can you guess if our hypothesis was correct?

Split Test #1:

In our split test #1, we targeted the broadest audience possible, unrestricted by interests, behavior or additional layers of custom/lookalike audiences.
Here’s what our setup looked like:

Results:

After running this single ad split test for a full week, we were able to confirm that Value Optimization outperformed Purchase Event Optimization showing:

What’s even more surprising, the value optimized ad set delivered these impressive returns while reaching 40% less people. Talk about media spend efficiencies!

a laboratory

Split Test #2:

In phase two of the experiment, we launched a similar Value vs. Purchase Event split test, but this time we tweaked our targeting audience to include a couple of highly valuable re-targeting lists based on FB conversion pixel.
 
Here is what our setup looked like:


Results:

Once again, the Value Optimized ad sets produced stronger results and came as a winner by delivering:
an image of a facebook interface

Takeaways:

Our team understands that there is a lot of value in bidding for Value versus standard Purchase Event. For example, if we are working on a campaign for a large e-commerce store with hundreds (or maybe thousands) of weekly orders, then we can help to leverage Facebook’s new bidding option to drive high ROAS purchases.
 
Our practice is to focus your early stage acquisition strategy on driving the sheer volume (i.e.: bid for Purchase Events) to feed the Facebook algorithm with learnings about your typical buyers, including their average Order Values.
 
The Facebook algorithm needs to first understand who your buyers are before it can take those learnings and really produce the best results.
 
Once we start reaching a minimum threshold of 50+ purchases per week (think of it as a bare minimum), then we recommend switching to Value bidding to increase your ROAS. As our experiments showed, this could be achieved without hurting the sales volume while improving media spend efficiencies.
 
Have questions about our testing methodology? Reach out to Abacus via info @ abacus .agency

About Abacus

Founded in 2016 and based in Toronto, Canada, Abacus is a performance marketing company with a focus on Facebook and Instagram advertising. We’re decentralized, which means our clients are all around the world, we help everyone from startups to Fortune 500 companies.
 
Our team includes expert data scientists that build growth engines, not just campaigns. By utilizing the latest technology and unearthing patterns in data, we are able to help companies achieve their advertising goals while driving down costs.