AEO vs. VO Ads on Facebook: How to Optimize for Better Conversions

User installation is a prerequisite for businesses that rely on in-app monetization. It’s crucial to attract the right users who are willing to pay for the product. This need for precise targeting has led to the development of strategies like Google’s UAC 2.5 event and Facebook’s AEO and VO models. In this article, we’re here to explain the details and differences between Facebook’s AEO (App Event Optimization) ads and VO (Value Optimization) ads.

Part One: What is Facebook AEO Ads?

AEO stands for App Event Optimization, a strategy where ads are optimized based on specific in-app events. These events aren’t limited to just “purchase events” but can include a variety of other actions depending on the campaign’s goals.

AEO is the most flexible ad optimization goal available. Unlike app installations, which primarily focus on acquiring users, and VO centered on value recovery and ROAS, AEO allows advertisers to meet a variety of campaign objectives through different events.

Currently, the most stable campaigns are those where the event-to-install ratio is between 20-30%. However, this does not mean that all products should follow this ratio. The choice of event should be driven by the ultimate goal of the product.

Part Two: What is Facebook VO Ads?

VO stands for Value Optimization, a type of ad optimization that focuses on maximizing the return from in-app purchases. Unlike AEO, which targets users based on the occurrence of specific events, VO ads concentrate solely on the monetary value generated by those events. The goal of VO is to target high-quality users with a strong likelihood of making significant purchases, thereby optimizing ad spend based on value recovery.

While AEO ads optimize for event triggers, considering the value as a secondary factor, VO ads prioritize the value itself. The primary objective of VO is to enhance Return on Ad Spend (ROAS) by focusing on users who contribute a lot.

In practice, VO is used to achieve a positive ROAS—often referred to as “breaking even”—when ROAS exceeds 1. This means the revenue generated from users covers the cost of the ads. Therefore, VO ads are geared towards optimizing ROAS to ensure profitability.

Part Three: Differences Between Facebook AEO and VO Ads

The primary goal of running Facebook AEO (App Event Optimization) and VO (Value Optimization) campaigns is to drive more user purchases or encourage further spending from high-value users. The key difference lies in the focus of each optimization strategy.

AEO targets users who are likely to complete specific in-app events, such as making a purchase. The emphasis is on the event itself, with no strict requirement on how much the user spends. As long as the user makes a purchase, the AEO objective is met. On the contrary, VO, on the other hand, focuses on attracting users who are likely to spend significant amounts of money. The goal is not just to capture paying users but to identify those who will generate the highest value. AEO aims at users Facebook’s algorithm predicts will complete certain events, while VO targets users the algorithm identifies as likely to spend within a specific range.

AEO (App Event Optimization) works by identifying people similar to those who have completed specific predefined events within your app. For example, if you’re running an AEO campaign on Facebook and have selected the “Complete Tutorial” event as your optimization point, Facebook will begin driving traffic to your campaign and monitor which users complete the tutorial.

Facebook will then analyze the common characteristics of the users who completed the event and adjust the campaign’s targeting to show your ads to more people with similar traits. With AEO, you can specify a target Cost Per Event (CPE), which is the average amount you’re willing to pay for a user to complete the event. Facebook uses this target to optimize ad delivery to more users likely to complete the event.

Regarding return on investment, it’s up to the advertiser to determine how the chosen optimization event correlates with revenue and ROAS. For instance, users who complete the tutorial may not necessarily be the ones most likely to spend money in the app.

VO (Value Optimization) campaigns are somewhat intricate because they heavily rely on Facebook’s proprietary user data, which is not as common across other major advertising platforms. The way Facebook explains it, VO campaigns primarily impact targeting: Facebook uses early monetization feedback from similar user groups to identify commonalities and find users who resemble high spenders. The targeting threshold is then set based on the ROAS goal specified by the advertiser during campaign creation. For instance, if you set a Day 1 ROAS goal of 10%, Facebook will target higher-spending users compared to a 5% ROAS goal.

Facebook has not disclosed whether it exclusively uses monetization data from an advertiser’s campaigns to target users, or if it leverages broader, user-level monetization potential across its platform to identify users likely to spend in any product. If Facebook does use user-level monetization potential—though it hasn’t explicitly confirmed this—it could significantly accelerate the learning process for campaigns by offering better prospects from the start. However, this would require product clustering to ensure the metric’s relevance.

Part Four: Final Thoughts

In summary, both AEO and VO campaigns on Facebook offer distinct approaches to optimizing user acquisition and monetization. The effectiveness of these strategies depends on how well they align with the advertiser’s goals and the unique characteristics of their user base. Understanding the nuances between these two optimization methods is crucial for advertisers looking to make informed decisions and maximize their campaign returns.

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