Value Optimization for Profit Margins

Meta’s testing Profit optimization…

In a recent announcement about new conversions tools, Meta shared a new option for Value optimization that is in testing.

The Feature

The feature is based on this scenario:

If an advertiser cares about ROAS based on profit margin [now testing]

Normally when you optimize for Value, Meta focuses on generating the highest Return On Ad Spend.

But that return is based on product value, not profit margins. You can use $50 of ad spend to sell a $100 product, but that doesn’t mean you made $50 in profit. There are other business costs involved.

Meta provided this example:

Certain products are more profitable to sell than others, and for some advertisers, selling a $20 product may be better for the bottom line than a similar $30 product.

How it Works

Advertisers in this test can send profit information using the Conversions API. They can then have Meta “focus on driving ROAS where the return is based on profit, instead of the size of a purchase.”

Again, this is only a test, but this could be a very useful option.

Are you a part of this test? Would you use it if given the option?