Solved: Ads Not Spending Budget & Performance Decreased

Hi there,

Thanks for reaching out!

From your enquiry, it sounds like you're running into a couple of really common but frustrating problems with your ads. When your campaigns don't spend their budget and performance suddenly drops, it's usually a sign of a deeper issue than just a few settings being wrong. It's often a symptom of a mismatch between your campaign's objective, your audience, and what you're actually offering them.

I'm happy to give you some initial thoughts and walk you through the framework I use to diagnose and fix these exact problems. We're not just going to tweak a few things; we're going to rebuild the foundation of your advertising strategy so that it's built to actually find customers, not just cheap clicks. Let's get this sorted.

We'll need to look at your campaign objective...

Right, let's tackle the biggest issue first, as it's probably the root cause of both your problems: your campaign objective. You mentioned learning the "difference between those two," and while I'm not sure exactly which two you meant, the most common and damaging point of confusion for new advertisers is the difference between a 'Brand Awareness' or 'Reach' objective and a 'Sales' or 'Leads' (Conversion) objective.

Here is the uncomfortable truth: when you select "Reach" as your objective on a platform like Meta, you are giving the algorithm a very specific, and very literal, command: "Find me the largest number of people for the lowest possible price."

The algorithm, being an incredibly efficient machine, does exactly what you asked. It scours your target audience and identifies the users who are the absolute cheapest to show an ad to. Who are these users? They are the ones who scroll passively, rarely click, almost never engage, and are statistically the least likely to ever pull out a credit card and buy something. Their attention is cheap because no other advertiser wants it. You are actively paying the world's most powerful advertising platform to find you the worst possible audience for your product.

This explains both of your problems perfectly:

1. Why performance has decreased: You were never reaching buyers in the first place. You were reaching passive scrollers. Any initial "performance" was likely just statistical noise. The algorithm isn't designed to find you customers with this objective, so it never will consistently.
2. Why it doesn't spend your budget: There's a limited number of these 'cheap' users in any given audience. Once the algorithm has shown your ad to most of them, it struggles to spend the rest of your budget without moving up to slightly more expensive (and still low-quality) users. It hits a ceiling of cheap inventory.

The solution is brutally simple: you must always optimise for the final action you want someone to take. If you want leads, you choose the 'Leads' objective. If you want sales, you choose the 'Sales' objective. This tells the algorithm, "I don't care about cheap impressions. Go find me the specific people within my audience who have a history of converting and are showing behaviour that suggests they will become a lead or customer for me, and I will pay a premium for that."

Yes, your CPMs (cost per 1,000 impressions) will be higher. But you will be paying to reach an audience of potential buyers, not an audience of ghosts. This single change is the most important one you can make. I remember one B2B software client who was struggling with this exact issue—getting tons of impressions but no signups. Once we switched their campaigns to a conversion objective, we generated 4,622 registrations for them at just $2.38 each. The objective is everything.

I'd say you need to redefine your Ideal Customer...

Okay, so you've switched to a conversion objective. Great. But that's only half the battle. Now we need to give the algorithm the right hunting ground. This is where your targeting comes in, and this is almost certainly the second reason your campaigns are failing.

Forget the sterile, demographic-based profile your last marketing hire made. "Companies in the finance sector with 50-200 employees" or "Women aged 25-40 who like yoga" tells you nothing of value. It leads to generic ads that speak to no one and forces the algorithm to guess who your real customer is. To stop burning cash, you must define your customer by their pain.

You need to become an expert in their specific, urgent, expensive, career-threatening nightmare. Your Ideal Customer Profile (ICP) isn't a person; it's a problem state. Let's make this real:

• Bad ICP: "We target marketing managers at SaaS companies."
• Good ICP: "Our customer is a Head of Marketing at a Series B SaaS company who is terrified of going into her next board meeting without hitting her MQL target. She's currently staring at a flat-lining leads chart, getting pressure from her CEO, and her current agency is just burning cash on fluffy 'awareness' campaigns. She's desperate for a predictable lead generation system that she can actually report on."

See the difference? The second one gives you everything you need for your advertising. You know her pain points (pressure, bad agency, unpredictable leads), her desires (predictable system, good reports), and even the language she uses. Your ad copy practically writes itself.

Once you've isolated that nightmare, you can find them. Where do they hang out online to solve their problems?
-> Do they listen to niche podcasts like 'Acquired' or 'SaaS Open Mic'?
-> Do they read industry newsletters they actually open, like 'Stratechery' or 'Lenny's Newsletter'?
-> What SaaS tools do they already pay for? HubSpot? Salesforce? Gong? These are all targetable interests.
-> Are they members of the 'SaaS Growth Hacks' Facebook group? Do they follow people like Jason Lemkin or Dave Gerhardt on Twitter/X?

This intelligence isn't just data; it's the blueprint for your entire targeting strategy. On Meta, you can now build audiences based on interests like "HubSpot" or people who follow specific influencers. This is infinitely more powerful than targeting a broad demographic. You're no longer shouting into the void; you're whispering directly into the ear of someone with a problem you can solve. Do this work first, or you have no business spending another pound on ads.

You probably should fix your offer...

This next part is the one most business owners don't want to hear. The number one reason campaigns fail, even with the right objective and perfect targeting, is the offer. Your offer is what you ask the user to do when they click your ad. And most offers are terrible.

The "Request a Demo" button is perhaps the most arrogant Call to Action ever conceived. It presumes your prospect, who is a busy and important person, has nothing better to do than book a 30-minute slot in their calendar to be sold to. It's high-friction and low-value. "Buy Now" for a product they've never heard of is almost as bad. It's like asking someone to marry you on the first date.

Your offer’s only job is to deliver a moment of undeniable value—an "aha!" moment that makes the prospect sell themselves on your solution. It has to solve a small part of their nightmare, for free, right now.

Here’s what a good offer looks like for different businesses:

• For a SaaS product: The gold standard is a free trial (no credit card required) or a freemium plan. Let them use the actual product. Let them feel the transformation. When the product itself proves its value, the sale becomes a formality. I recall one of our most successful campaigns for a software client, where we generated 5,082 trials on Meta. A key reason for its success was the irresistible free trial offer.
• For a marketing agency: Don't say "Book a consultation." Instead, offer a free, automated SEO audit that shows them their top 3 keyword opportunities. Give them a tangible piece of value they can use immediately.
• For a high-touch service (like a fractional CFO): Don't sell "CFO services." Offer a "Free Cash Flow Projection Template" or a "5-Point Financial Health Check." Give them a tool that solves a small, immediate pain. For our agency, we offer a free 20-minute strategy session where we audit failing ad campaigns. We solve a real problem for free to earn the right to solve the whole thing.
• For an eCommerce store: Don't just say "10% off." That's boring. Offer something more compelling. A free gift with the first purchase, a free guide on "How to Style Your Handcrafted Jewellery," or entry into an exclusive club. We helped a women's apparel brand achieve a 691% return not just with good ads, but with an offer that felt exclusive and valuable.

Your offer has to be a no-brainer. It must be so obviously valuable that the user feels stupid for not taking it. A weak offer is like trying to push a boulder uphill. A great offer is like letting it roll down. Fix your offer, and you will be amazed at how much easier advertising becomes. You might find that your budget spends properly because the algorithm can finally find people who are actually interested in what you're putting in front of them.

You'll need to understand your numbers...

So, we've fixed your objective, your targeting, and your offer. Now we need to talk about money. Most advertisers are obsessed with the wrong question: "How low can my Cost Per Lead (CPL) go?" This leads to a race to the bottom, chasing cheap, low-quality leads that never convert. The real question you should be asking is, "How high a CPL can I afford to acquire a truly great customer?"

The answer lies in its counterpart: Lifetime Value (LTV). LTV tells you what a customer is actually worth to your business over the entire time they remain a customer. Once you know this number, you can advertise with confidence, knowing exactly how much you can afford to get one.

Let's break down the calculation. You need three pieces of information:

1. Average Revenue Per Account (ARPA): What do you make per customer, per month (or year)?
2. Gross Margin %: What's your profit margin on that revenue? (Revenue - Cost of Goods Sold) / Revenue.
3. Monthly Churn Rate: What percentage of customers do you lose each month?

The calculation is simple:
LTV = (ARPA * Gross Margin %) / Monthly Churn Rate

For example, let's say you run a subscription box service:
ARPA = £50 per month
Gross Margin = 70% (0.70)
Monthly Churn = 5% (0.05)

LTV = (£50 * 0.70) / 0.05 = £35 / 0.05 = £700.

In this example, each customer is worth £700 in gross margin to your business over their lifetime. A healthy LTV to Customer Acquisition Cost (CAC) ratio is typically 3:1. This means you can afford to spend up to £700 / 3 = ~£233 to acquire a single customer.

This is the math that unlocks aggressive, intelligent growth. Suddenly, a £20 CPL doesn't seem expensive; it looks like an incredible bargain. It frees you from the tyranny of cheap leads and allows you to focus on acquiring high-value customers. Use the calculator below to get a feel for your own numbers.

Let's structure your account properly...

Right, now for the final peice of the puzzle: putting it all into a campaign structure that actually works. A lot of people just create one campaign, throw a few audiences in, and hope for the best. This is a recipe for disaster. You need to structure your campaigns to match the customer's journey.

We use a simple but powerful framework: ToFu, MoFu, and BoFu.

• ToFu (Top of Funnel): This is for reaching cold audiences—people who have never heard of you before. The goal here is to introduce them to the problem you solve and your solution.
• MoFu (Middle of Funnel): This is for retargeting warm audiences—people who have shown some interest. They've visited your website, watched your videos, or engaged with your page. The goal is to build trust and consideration.
• BoFu (Bottom of Funnel): This is for retargeting hot audiences—people who are on the verge of converting. They've added a product to their cart, initiated checkout, or visited your pricing page. The goal is to close the deal.

Here’s how I would prioritise the audiences you test within this structure, starting with what's most likely to work:

ToFu Campaign (Objective: Sales/Leads)

1. Detailed Targeting: This is where you start. Use the research from your "Nightmare ICP" to build audiences. Target interests like competitor brands, software they use, influencers they follow, and publications they read. Group related interests into themed ad sets and test them against each other. For a new account, this is your primary tool for finding customers.
2. Lookalike Audiences: Once you have enough data (at least 100 conversions, but ideally more), you can create Lookalike audiences. These are Meta's secret weapon. You give Meta a list of your best customers, and it goes and finds millions of other people who look just like them. The priority for testing Lookalikes is:
   • Lookalike of highest value previous customers
   • Lookalike of all previous customers
   • Lookalike of people who initiated checkout
   • Lookalike of people who added to cart
   • Lookalike of all website visitors
3. Broad Targeting: Only once your pixel has thousands of conversion events and is really 'smart' should you even consider testing broad targeting (e.g., just age and location). It can work, but you need a lot of data for the algorithm to know who to look for.

MoFu/BoFu Retargeting Campaign (Objective: Sales/Leads)

I usually combine these into one campaign for simplicity, with different ad sets for different levels of intent. Your hottest audiences get the most aggressive offers.

1. BoFu - Hot Audience: Target people who added to cart or initiated checkout in the last 7-14 days but didn't buy. Hit them with ads that overcome common objections, offer a small incentive (like free shipping), and create urgency.
2. MoFu - Warm Audience: Target people who visited your website or specific product pages in the last 30 days (excluding the BoFu audience). Show them testimonials, case studies, or different angles of your product.
3. MoFu - Engagers: Target people who watched 50% of your video ads or engaged with your Facebook/Instagram page in the last 30-90 days. Keep your brand top of mind.

By structuring your account this way, you ensure you're sending the right message to the right person at the right time. You stop treating all traffic the same and start guiding them through a proper funnel. This methodical approach is how you get consistent, scalable results instead of the rollercoaster of performance you're seeing now.

This is the main advice I have for you...

I know this is a lot to take in, but these are the foundational pillars that separate campaigns that burn cash from campaigns that build businesses. It's not about finding a secret "hack"; it's about doing the strategic work upfront. I've detailed my main recommendations for you below in a clear action plan.

Executing this strategy correctly takes time, expertise, and a lot of testing. The difference between a campaign that works and one that doesn't often comes down to small nuances in targeting, creative, and optimization that are hard to see when you're close to the business. That's where working with a specialist can make a huge difference.

We do this all day, every day. We've seen what works and what doesn't across dozens of industries, from reducing a client's cost per acquisition from £100 down to £7, to generating over $115k in revenue in just six weeks for a course creator.

If you'd like to have a chat and get a second pair of expert eyes on your ad account, we offer a completely free, no-obligation 20-minute strategy session. We can screen-share, look at your specific campaigns, and give you some tailored advice on where your biggest opportunities are.

Hope this helps either way!

Regards,

Team @ Lukas Holschuh