Hi there,
Thanks for reaching out! Happy to give you some initial thoughts on your situation. It sounds like a stressful spot to be in, and I can see why you're tempted to just crank up the budget to push through the learning phase.
But honestly, I think that would be a massive mistake. Your problem isn't the learning phase; it's that your current setup is fundamentally unprofitable. Scaling it will just make you lose money faster. We need to fix the engine before we put more fuel in the tank. Let's break down what's likely going wrong and how to fix it properly.
TLDR;
- Stop focusing on the "learning phase." It's a distraction from the real issue: your ads are currently unprofitable at a $170 cost per purchase.
- Increasing your budget to $1200/day will almost certainly lead to significant financial loss without fixing the underlying problems.
- Before spending another penny, you need to calculate your breakeven Customer Acquisition Cost (CAC) and Lifetime Value (LTV). This letter includes an interactive calculator to help you do that.
- Your high CPA is a symptom of a leak somewhere in your sales funnel – it could be your ad creative, your targeting, your website, your offer, or your pricing.
- The most important advice is to pause your current campaigns, diagnose where customers are dropping off, rebuild with a proper funnel structure (cold, warm, hot audiences), and test systematically with a much smaller budget. Only scale what's proven to be profitable.
We'll need to look at the real problem: Your funnel is broken, not your budget
Let's be brutally honest. The "learning phase" has become this boogeyman that advertisers blame for poor performance. The advice to "just spend more to exit learning" is dangerous and usually peddled by people who don't understand the mechanics. The algorithm needs 50 conversions to learn who your ideal customer is, yes. But if it's costing you $170 to get a single purchase, and you're only making about $66 in revenue for every $100 you spend, what do you think the algorithm is learning? It's learning to find you more unprofitable customers.
You're essentialy telling Facebook to "find me people who will cost me $170 to acquire," and it's doing exactly what you asked. When you optimise for conversions with an unprofitable setup, you're just paying the world's most powerful advertising machine to find you the worst possible customers for your business – people who are incredibly expensive to convert. Pouring $1200 a day into that is like trying to put out a fire with petrol. It'll make a bigger flame, sure, but it's not the outcome you want.
The goal isn't to exit the learning phase. The goal is to build a predictable, profitable system for acquiring customers. The learning phase is just a milestone on that journey, not the destination itself. Forget about it for now. We have bigger fish to fry.
I'd say you calculate what you can actually afford to pay
Before we go any further, we need to answer the most important question: what is a customer *actually* worth to you? Without this number, you're flying blind. A $170 Cost Per Purchase (what you're calling CPA, but we'll call it Customer Acquisition Cost, or CAC) could be a bargain if you're selling custom furniture for £5,000. It's a catastrophe if you're selling t-shirts for £25.
This is where Lifetime Value (LTV) comes in. It tells you how much profit a customer will generate for you over their entire relationship with your business. Once you know your LTV, you can determine a target CAC that keeps you profitable.
The calculation is pretty simple:
LTV = (Average Revenue Per Account * Gross Margin %) / Monthly Churn Rate
A healthy business model aims for an LTV to CAC ratio of at least 3:1. This means for every £1 you spend to acquire a customer, they should generate at least £3 in profit for you over their lifetime. So, if your LTV is £900, you can afford to spend up to £300 to acquire that customer. Suddenly, that changes the entire conversation, doesn't it?
Let's make this practical. Use the calculator below to figure out your numbers.
Once you've done this, you'll have your target CAC. Now you can look at your $170 CPA and know for certain if it's a disaster or just a bit high. My guess is it's a disaster. And that tells us we need to fix the fundementals, not the budget.
You'll need to diagnose the leak in your funnel
A $170 CPA doesn't just happen. It's a symptom of a larger problem, or multiple problems, in your customer's journey from seeing your ad to making a purchase. You're losing people at one or more steps along the way, and each person you lose costs you money. We need to become detectives and figure out where the leak is.
Think of the journey like this:
Impression -> Click (CTR) -> Website Visit -> Add to Cart (ATC Rate) -> Initiate Checkout (IC Rate) -> Purchase (Conversion Rate)
Your job is to look at the metrics for each step. Where is the biggest drop-off?
Here are the common culprits at each stage:
-> Low Click-Through Rate (CTR) and high Cost Per Click (CPC)? This means people are seeing your ad but not clicking. The problem is your creative or your targeting. Your images might be poor quality, your ad copy might be boring, or you're showing the ad to the wrong people who have no interest in your product. We've seen SaaS clients get great results with UGC-style videos, which could be something to test for eCommerce too.
-> Lots of clicks but few Add to Carts? You're getting people to the site, but they're not taking the next step. This points to a problem on your product page. Are your product photos high quality? Is your product description persuasive and clear? Is your pricing competitive, or does it seem unreasonable? Is the page slow to load? You might be getting the wrong traffic (a targeting issue) or the product page itself isn't convincing.
-> Lots of Add to Carts but few purchases? People want your product, but something is stopping them from completing the purchase. This is a classic checkout problem. Are you surprising them with high shipping costs at the last minute? Is your checkout process long and complicated? Do you require them to create an account? Does your site look untrustworthy? Adding trust signals like customer reviews, clear return policies, and secure payment badges can make a huge differance here.
You need to go into your ad manager and your website analytics and find the answers to these questions. Without that data, you're just guessing. I remember one eCommerce client selling cleaning products who had a similar problem. By analysing their entire funnel, we found the key drop-off points. After implementing our changes, their revenue increased by 190%, delivering a 633% return on ad spend. That's the kind of thing you need to be looking for.
You probably should rebuild your campaigns from scratch
Right now, it sounds like you have one campaign where you're throwing all your budget. This is inefficient. A much better approach is to structure your campaigns based on the customer's awareness level, often called a ToFu/MoFu/BoFu funnel (Top of Funnel, Middle of Funnel, Bottom of Funnel).
1. Top of Funnel (ToFu) - Cold Audiences:
This is for people who have never heard of you. Your goal here is to introduce your brand and products. You'd test various detailed targeting audiences based on interests, behaviours, and demographics. Think about who your ideal customer is. What magazines do they read? What competing brands do they follow? What influencers do they listen to? Group these into themed ad sets and test them with a small budget. The goal isn't immediate sales (though they're a bonus), it's to find which audiences respond best and to feed your retargeting pools.
2. Middle of Funnel (MoFu) - Warm Audiences:
This is for people who have shown some interest but haven't bought yet. These are your retargeting audiences. You'd create separate ad sets for:
- All website visitors (in the last 30-90 days)
- People who engaged with your Facebook or Instagram page
- People who watched a certain percentage (e.g., 50%) of your video ads
3. Bottom of Funnel (BoFu) - Hot Audiences:
These are people on the verge of buying. They've shown strong intent. This is your most valuable audience, and where you should see the highest Return On Ad Spend (ROAS). You'd target:
- People who added a product to their cart but didn't buy (in the last 7-14 days)
- People who initiated checkout but didn't complete it
By structuring your account this way, you can allocate your budget more intelligently and tailor your message to the right person at the right time. It's much more effective than a "one-size-fits-all" approach.
This is the main advice I have for you:
So, instead of just cranking the budget and hoping for the best, here is a much safer, more methodical plan. It requires more work up front, but it's how you build a sustainable advertising machine instead of a cash bonfire.
I've put my main recommendations for you in the table below. This is the exact process we'd follow. It's about being systematic, letting the data guide you, and only spending significant money once you have proof that something works.
| Step | Actionable Recommendation | Why This Is Important |
|---|---|---|
| Step 1: STOP | Immediately pause your current high-spend campaign. | You are actively losing money. The first rule of being in a hole is to stop digging. Every dollar spent now is amplifying a broken system. |
| Step 2: CALCULATE | Use the LTV calculator in this letter to determine your breakeven and target CAC. | You cannot optimise what you don't measure. This number becomes your north star for all future advertising decisions. You'll finally know if a CPA is "good" or "bad" for your business. |
| Step 3: DIAGNOSE | Analyse your ad metrics (CTR, CPC) and website analytics (bounce rate, ATC rate, checkout abandonment) to find the biggest drop-off point. | Instead of guessing, you'll use data to pinpoint the exact "leak" in your funnel. This allows you to focus your effort on the one thing that will have the biggest impact. |
| Step 4: FIX | Based on your diagnosis, fix the weakest link. This might mean shooting new product photos, rewriting your product descriptions, or simplifying your checkout process. | Small improvements to your website conversion rate can have a massive impact on your CPA. A 1% increase in conversion rate can cut your CPA in half. |
| Step 5: REBUILD | Create new campaigns with a ToFu/MoFu/BoFu structure. Start with a small budget (e.g., $50-$100/day TOTAL, not per campaign). | This structured approach allows you to test audiences and creatives methodically and find profitable pockets without risking a large budget. You're building a foundation for scale. |
| Step 6: TEST & VALIDATE | Run your new campaigns for a few days. Turn off ad sets that are clearly not performing and shift budget to the ones that are getting cheaper conversions. | This is the proper way to let the algorithm "learn". You're feeding it good data from validated audiences, not asking it to find a needle in a haystack with a huge, unfocused budget. |
| Step 7: SCALE | Only once you have a campaign that is consistently hitting your target CPA, begin to scale the budget slowly (e.g., 20% every few days). | This is the final step. Scaling a proven, profitable campaign is how you grow. Scaling a broken one, as you were planning, is how you go out of business. |
This all probably feels like a lot of work, and it is. Getting paid advertising right isn't about finding a magic button or a "hack." It's about rigorous testing, understanding your numbers, and having a deep appreciation for the customer journey. It's a skill, and like any skill, it takes experience to master.
That psychological blow you're worried about from losing $800 in a day? It's a very real concern. And it's exactly what will happen if you follow your initial plan. The methodical approach I've outlined minimises that risk and puts you back in control of your advertising and your business's finances.
If you're feeling overwhelmed by this, that's completely normal. This is complex stuff. Many business owners find that their time is better spent working on their product and their operations, while leaving the complexities of digital advertising to an expert. If you'd like to have a chat and go through your specific account and website together, we offer a free, no-obligation strategy session where we can map out a precise plan for you.
Hope this helps!
Regards,
Team @ Lukas Holschuh
