Solved: Budget Not Spending & Poor Ad Performance

Hi there,

Thanks for reaching out. I'm happy to give you some initial thoughts on your questions about your ad campaigns. It sounds like you're running into a couple of really common but frustrating problems - the platform not spending your budget and seeing performance drop off. It's a good instinct to try and understand the fundamentals when this happens.

The issues you're describing almost always come down to a misalignment between what you're telling the ad platform to do, and what you actually want to achieve. Let's get into it.

We'll need to look at your campaign objective... because you're probably paying to find non-customers

You asked about "the difference between those two", and while you didn't specify which two, the most common (and most damaging) point of confusion is between campaign objectives. Specifically, running a "Brand Awareness" or "Reach" campaign versus a "Conversions" or "Sales" campaign.

Here is the uncomfortable truth that most people don't get: When you set your campaign objective to "Reach" or "Brand Awareness," you are giving the algorithm a very specific command: "Find me the largest number of people for the lowest possible price."

The algorithm, in its infinite wisdom, does exactly what you asked. It seeks out the users inside your targeting who are least likely to click, least likely to engage, and absolutely, positively least likely to ever pull out a credit card. Why? Because those users are not in demand. Their attention is cheap. You are actively paying the world's most powerful advertising machine to find you the absolute worst possible audience for your product. It feels like you're getting a lot of bang for your buck - look at all those impressions! - but it's a total vanity metric. It's like handing out flyers in a random tube station; sure, thousands of people see it, but did any of them actually need what you're selling?

To find customers that will actually buy from you, you must switch your campaign to optimise for a conversion objective, like sales, leads, or appointments. This tells the algorithm: "I don't care about showing my ad to a million people. Find me the small handful of people within my audience who are most likely to actually DO the thing I want them to do, and I will pay a premium for that." This is how you get results. Awareness is a byproduct of having a great product that solves a real problem and making sales, not a prerequisite for making one.

I remember one B2B software client we worked with came to us with this exact problem. They were spending thousands on awareness, getting loads of impressions but barely any signups. We switched their campaigns on Meta to a lead conversion objective. Their cost per impression went up, but their cost per registration dropped to just $2.38, and we generated 4,622 of them. That's the difference in action.

I'd say you need to fix your targeting... because that's why your budget isn't spending

This leads directly to your second problem: "why them never run my budget?". It's a common misconception that if a campaign isn't spending, you should just increase the budget. That's usually not the issue.

When you're running a conversion campaign, the algorithm has a much harder job. It's not just spraying your ad everywhere. It's trying to find specific people inside your target audience who it predicts are likely to convert. If it can't find enough of those people, it simply won't spend your money. It's the platform's way of telling you, "I've looked at the audience you gave me, and I can't find anyone here who looks like they're going to buy your thing."

So, what causes this? A few things:

1. Your Audience is Too Small or Too Niche: If you've layered on dozens of interests and behaviours and your potential reach is only a few thousand people, the algorithm might not have enough room to work. There just aren't enough potential converters in that tiny pool.

2. Your Audience is Wrong: This is the more common issue. You might be targeting people who seem right on paper, but in reality, have no interest in your offer. For instance, we see people selling high-end B2B software targeting interests like "small business". That's way too broad. It's full of hairdressers and cafe owners, not the CTOs they actually need to reach. I'll get into how to properly define your audience in a bit, but for now, understand that poor targeting is a primary cause of under-spending.

3. Your Ad Creative is Underperforming: The algorithm uses early signals to decide if an ad is a winner. If your ad gets shown to the first few hundred people and nobody clicks, or the click-through-rate (CTR) is terrible, the platform will assume the ad is no good. It will stop showing it to people to protect its users' experience, and your budget won't be spent. You have to earn the right to spend your budget by having an ad that people actually respond to.

4. You Have No "Social Proof": Ads with likes, comments, and shares tend to get prioritised by the algorithm and often see lower costs. A brand new ad with no engagement can sometimes struggle to get momentum initially.

So, the fix isn't about budget settings. It's about giving the algorithm better ingredients to work with: a larger, more relevant audience, and compelling ad creative that gets a good initial response. If you get those right, you'll find your budget gets spent without a problem.

You probably should run a diagnostic... because something is broken in your funnel

When performance has "decreased", it means something that was working before has stopped, or something new is failing. You need to work out where the leak is in your funnel. People often blame the ads themselves, but the problem could be your targeting, your ad copy, your landing page, or your offer. You have to diagnose it methodically.

Think of it as a series of questions. You start at the top of the funnel (the ad) and work your way down to the bottom (the conversion).

Question 1: Are people seeing the ad? (Impressions) If your impressions are low or zero, you have a budget/bidding/audience size problem as we just discussed.

Question 2: Are people clicking the ad? (Click-Through Rate - CTR) If you have lots of impressions but a really low CTR, your ad isn't resonating. The image or video isn't stopping the scroll, or the headline and copy aren't grabbing their attention. Your message is wrong for your audience, or your audience is wrong for your message. Time to test new creative and copy. A low CTR also leads to a high Cost Per Click (CPC), so you're paying more for less traffic.

Question 3: Are people who click actually landing on your page? (Landing Page Views vs. Clicks) Sometimes there's a technical issue. Your site might be too slow to load, especially on mobile, so people click and then bounce before the page even appears. Check your page speed. If you're paying for 100 clicks but only getting 60 landing page views, you're wasting 40% of your ad spend on thin air.

Question 4: Are people who land on the page taking the next step? (Conversion Rate) This is the big one. If you're getting plenty of cheap traffic to your site but no one is buying or filling out your form, then the problem is not your ads. The problem is your landing page or your offer. Does the page look trustworthy? Is the copy persuasive? Does it clearly explain the value? Is the call-to-action button obvious? Is your price right? I remember one eCommerce client had loads of product page views but no 'add to carts'. We looked at their store; the product photos were poor, there were no descriptions, and it just didn't look trustworthy. We advised them to fix that before spending another penny on ads.

Here's a simple flowchart to visualise that diagnostic process:

You'll need to define your ICP by their nightmare, not their demographics...

I mentioned that a "wrong" audience is a huge reason for failure. So how do you find the *right* one? You need to stop thinking in terms of sterile, demographic-based profiles. "Companies in the finance sector with 50-200 employees" tells you nothing of value. It leads to generic ads that speak to no one.

To stop burning cash, you must define your ideal customer profile (ICP) by their pain. Their specific, urgent, expensive, career-threatening nightmare. Your customer isn't a job title; they're a person with a problem.

Let me give you an example. Let's say you sell a legal tech SaaS product. Your old ICP might be "Law firms, 20-50 solicitors". Your ads would be boring: "Efficient Document Management for Law Firms." No one cares.

Your new ICP is defined by the nightmare: "A partner at a mid-sized firm who lies awake at 3 am terrified that a junior associate will miss a critical filing deadline, exposing the firm to a multi-million-pound malpractice suit and reputational ruin."

See the difference? Now you're not selling software. You're selling peace of mind. You're selling security. You're selling reputation protection. Your ad copy writes itself: "Worried a missed deadline could cripple your firm? Our platform flags every critical date, so you can sleep at night." That ad speaks directly to the fear. It's an ad that a person with that specific nightmare can't ignore.

Once you've isolated that nightmare, your targeting becomes much clearer. Where does this person hang out online? They're not searching for "document management". They're probably members of specific LinkedIn groups for law firm management, they might follow legal industry publications, or listen to niche podcasts about legal practice technology. You target those specific watering holes, not the broad "lawyer" demographic. You've got to do this work first, or you have no business spending a single pound on ads. It's the foundation of everything. This is a subtle but profound shift that most advertisers never make, and it's why they fail.

I'd say you should build a proper campaign structure...

Once you know who you're targeting and what their pain is, you need to structure your campaigns properly. Don't just lump everyone into one ad set. You need to talk to people differently depending on how familiar they are with you. I usually structure this in three stages, often called Top of Funnel (ToFu), Middle of Funnel (MoFu), and Bottom of Funnel (BoFu).

1. Top of Funnel (ToFu) - The Strangers: These people have never heard of you. Your goal here isn't to make a hard sale, it's to introduce yourself by solving a small piece of their problem. You're targeting those 'nightmare-aware' audiences we just talked about (detailed interests, lookalikes of your existing customers). Your ads here should be valuable and educational, perhaps pointing to a helpful blog post, a free guide, or a short video explaining a concept. You are auditioning for their attention.

2. Middle of Funnel (MoFu) - The Visitors: These people have shown some interest. They've visited your website, watched one of your videos, or engaged with a post. They know who you are, but they're not ready to buy. Your goal here is to build trust and demonstrate your expertise. You'll retarget these people with case studies, testimonials, or an invitation to a webinar. You're showing them *how* you solve their problem.

3. Bottom of Funnel (BoFu) - The Almost-Customers: These are the hottest leads. They've added a product to their cart but not checked out, or they visited your pricing page. They are on the verge of converting. Your goal is to give them a final nudge. Retarget them with a direct offer: a discount code, a reminder about their abandoned cart, or a strong call to action to "buy now" or "book a call". This is where you make the sale.

By splitting your audiences and messaging like this, you guide people through a journey instead of just shouting "buy my stuff!" at everyone. It's more work to set up, but it's far more effective. For most eCommerce clients we work with, the BoFu retargeting campaigns are where the highest Return On Ad Spend (ROAS) comes from. One women's apparel client of ours saw a 691% return by implementing this kind of structured retargeting.

You'll need to understand the math... because your Cost Per Lead might actually be cheap

So many people get obsessed with the wrong numbers. They panic about a high Cost Per Click (CPC) or a high Cost Per Lead (CPL). The real question isn't "How low can my CPL go?" but "How high a CPL can I afford to acquire a truly great customer?" The only way to know that is to calculate your Customer Lifetime Value (LTV).

LTV is the total profit you expect to make from a single customer over the entire time they do business with you. Once you know this number, everything else falls into place. Here's how you can get a rough idea:

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

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

Let's run a quick example. Say you run a subscription box service. ARPA is £50/month, Gross Margin is 60%, and you lose 5% of your customers each month (churn).

LTV = (£50 * 0.60) / 0.05 = £30 / 0.05 = £600.

Each customer is worth £600 in gross margin to your business. Now you know the truth. A healthy business model often aims for a 3:1 LTV to Customer Acquisition Cost (CAC) ratio. This means you can afford to spend up to £200 to acquire a single customer and still have a very profitable business. Suddenly, that £20 CPL you were worried about doesn't seem so bad if 1 in 10 leads becomes a customer, right? This is the maths that unlocks aggressive, intelligent growth. It frees you from the tyranny of chasing cheap, low-quality leads and allows you to confidently pay for high-quality ones.

I've put a simple calculator below so you can plug in your own numbers and see for yourself.

I've detailed my main recommendations for you below:

To pull this all together, the path forward involves a systematic approach to fixing the foundations of your advertising. It's not about finding one magic trick; it's about getting all the peices of the puzzle right. Based on the common issues you've described, here's the action plan I would suggest.

Working through this process takes some effort, but it's what separates the advertisers who consistently get results from those who are just gambling with their money. You have to be a detective, figuring out what's broken, and then a scientist, testing hypotheses to fix it.

I hope this detailed breakdown has been helpful and gives you a much clearer path forward. It can feel like a lot to take in, and implementing all of this correctly requires experience. This is often where businesses decide to bring in an expert who has been through this process hundreds of times.

If you'd like to have a chat and get a second pair of eyes on your ad accounts, we offer a free, no-obligation strategy session where we can look at your specific setup and give you some more tailored advice. It might be a good next step to turn things around.

Regards,

Team @ Lukas Holschuh