TLDR;
- Your high CPC isn't a random glitch; it's likely a symptom of ad fatigue and an over-reliance on "open targeting" without enough data. Continuing this approach will just keep burning cash.
- The core problem isn't your ad setup, it's your customer definition. You need to stop targeting broad demographics and start defining your Ideal Customer Profile (ICP) by their specific, urgent pain points.
- You need to restructure your campaigns into a proper ToFu/MoFu/BoFu (Top, Middle, Bottom of Funnel) system, prioritising high-intent retargeting audiences before scaling to colder traffic.
- Stop obsessing over CPC and start calculating your Customer Lifetime Value (LTV). This is the only way to know what you can truly afford to pay for a customer, and it unlocks aggressive, intelligent scaling. This letter includes a functional LTV calculator to help you.
- The key to lowering costs is a combination of better creative that speaks directly to your ICP's problems and a more sophisticated, structured approach to audience testing.
Hi there,
Thanks for reaching out! I've had a good look at the issue you've described with your Facebook campaigns, and honestly, it's a situation I see all the time. A campaign works well for a while, and then suddenly the costs go through the roof for no obvious reason. It's incredibly frustrating, and it feels like you're fighting against a black-box algorithm that's changed the rules without telling you.
I'm happy to give you some initial thoughts and guidance. The good news is that the problem probably isn't as random as it seems. That 10x jump in CPC is a massive red flag, but it's not pointing to a simple technical fault. It's pointing to a deeper strategic issue with how the campaigns are structured and who they're trying to reach. We can definitely get to the bottom of this.
We'll need to look at why your CPCs have skyrocketed (and it's not what you think)...
When costs suddenly spike, the first instinct is to blame external factors: "competition has increased" or "the algorithm has changed". While these can play a small part, they're rarely the root cause of a 10x increase. If that were the case, everyone in your niche would be seeing the same thing. The real culprit is almost always something within your control.
Based on what you've said—running ads in the same niche for a while with the same setup—the most likely issue is a severe case of ad fatigue. Think about it from a user's perspective. They see the same ad from the same brand over and over again. At first, they might be interested. After the tenth time, they're blind to it. After the twentieth, it becomes annoying. The Facebook algorithm picks up on this. It sees that people are scrolling past your ad, that your click-through rate (CTR) is dropping, and it concludes that your ad is no longer relevant. To compensate and still hit its own revenue targets, it has to charge you more and more to show that same, tired ad to people. It's a downward spiral.
You mentioned you're using "open targeting". This compounds the problem. A few years ago, "going broad" became a popular piece of advice, but it comes with a huge caveat that most people miss. Open targeting only works effectively when your Meta Pixel has thousands, if not tens of thousands, of high-quality conversion events (like purchases or qualified leads). With that much data, the algorithm has a crystal-clear picture of who your ideal customer is and can find more of them on its own. Without that data, you're essentially giving Facebook your money and saying, "Here, please go and guess who might be interested in my stuff." It's an incredibly inefficient way to spend your budget, as you're paying the platform to find you the worst possible audience—the people who are cheapest to reach precisely because they don't engage or buy anything.
This is the classic cycle of a failing campaign: the creative gets stale, engagement drops, the algorithm punishes you with higher costs, and your budget gets wasted showing those stale ads to an un-interested, broad audience. It's a feedback loop that leads directly to the 10x CPC you're seeing now.
1. Launch
New creative, low CPC, high CTR
2. Saturation
Audience sees ad multiple times
3. Fatigue Sets In
Users ignore ad, CTR drops
4. Algorithm Reacts
Ad relevance score falls, CPC skyrockets
So, the immediate fix isn't about finding a magic button in Ads Manager. It's about fundamentally rethinking who you're talking to and what you're saying. Which brings us to the real root of the problem...
I'd say you have an ICP problem, not a CPC problem...
The number one mistake I see businesses make is defining their customers with sterile, useless demographics. "Women aged 25-45 who live in London and are interested in yoga" tells you almost nothing of value. "Companies in the tech sector with 50-100 employees" is just as bad. This kind of thinking leads to generic ads that speak to no one and get ignored, driving your costs up.
To stop burning cash, you have to define your customer not by who they *are*, but by what they're struggling with. You need to become an obsessive expert in their specific, urgent, and expensive nightmare. Your Ideal Customer Profile (ICP) isn't a demographic; it's a *problem state*. Your ads need to find people in that state of pain and present your product or service as the specific solution.
For example, let's say you sell a project management tool. A bad ICP definition would be "Marketing managers at SaaS companies". A powerful, pain-driven ICP would be: "A marketing manager who is terrified of her best team members quitting out of frustration with a chaotic workflow, constantly missed deadlines, and the feeling that they're always putting out fires instead of doing creative work."
See the difference? The first is a label. The second is a story filled with emotion and urgency. When you understand the nightmare, you can write ad copy that feels like you're reading their mind. You can target them not just with "project management" as an interest, but by targeting the tools they already use (like Slack or HubSpot), the influencers they follow (like Seth Godin or Rand Fishkin), or the publications they read (like Marketing Week).
This work is the non-negotiable foundation. Without it, your targeting will always be a guess, and your ad spend will always be inefficient. You need to do this work first, or you have no business spending another pound on ads.
| Aspect | Weak ICP (The Money Pit) | Strong ICP (The Foundation for Growth) |
|---|---|---|
| Definition | Based on broad demographics (e.g., age, gender, location). | Based on a specific, urgent "nightmare" or pain point. |
| Example | "Small business owners in the UK." | "A founder of a 5-10 person service business who is losing sleep because they're buried in admin and can't focus on sales." |
| Ad Message | Generic features. "Our software helps you manage your business." | Speaks to the pain. "Stop drowning in invoices. Get paid faster and reclaim 10 hours a week to grow your business." |
| Targeting | Broad interests like "small business". | Niche interests: tools they use (Xero, QuickBooks), podcasts they listen to, business groups they're in. |
| Result | Low engagement, high CPC, poor quality leads. | High relevance, lower CPC, pre-qualified customers. |
You probably should restructure your entire account...
Your current structure—a warm adset and a cold adset with open targeting—is far too simplistic. It treats all "cold" traffic as equal and all "warm" traffic as equal, which is simply not true. Someone who visited your website five minutes ago is infinitely more valuable than someone who watched 3 seconds of your video two months ago. You need a structure that reflects this reality.
A proper Meta Ads account should be structured like a sales funnel: Top of Funnel (ToFu), Middle of Funnel (MoFu), and Bottom of Funnel (BoFu). Each stage has a different goal and targets a different level of user intent.
Here’s how I would prioritise your audiences, from most valuable to least. You should be spending your money working down this list, not just throwing it at a broad audience and hoping for the best.
BoFu (Bottom of Funnel) - The Hottest Audiences:
These are people who are on the verge of converting. The goal here is to get them over the line. These should be your highest priority for budget allocation because they offer the highest potential return.
-> Audiences: People who added to cart, initiated checkout, added payment info, but didn't purchase in the last 7-14 days.
MoFu (Middle of Funnel) - The Engaged & Interested:
These people know who you are but aren't yet ready to buy. The goal is to build trust and remind them of the value you offer.
-> Audiences: All website visitors (excluding purchasers), people who viewed a key product or service page, people who watched 50%+ of your video ads, people who engaged with your Instagram or Facebook page in the last 30-60 days.
ToFu (Top of Funnel) - Finding New People:
This is your cold traffic, but it should be *intelligent* cold traffic, not just "open targeting".
-> Audiences (in order of priority):
1. Lookalike Audiences: These are your secret weapon. You can create audiences of people who "look like" your best customers. Start with a Lookalike of your customer list, then purchasers, then people who initiated checkout. Only use 1% Lookalikes in your target countries to begin with; they are the most potent.
2. Detailed Targeting: This is where your pain-driven ICP research comes in. Target the niche interests, behaviours, and pages that your ideal customer follows. Layer them to create a highly specific audience profile.
Only after you have exhausted these, and are feeding the pixel with hundreds of conversions, should you even consider testing broad/open targeting. Your current setup has it backwards. You're starting with the most difficult, expensive audience instead of picking the low-hanging fruit first.
Top of Funnel (ToFu) - Prospecting
- → Priority 1: 1% Lookalikes of Purchasers
- → Priority 2: 1% Lookalikes of Add to Carts
- → Priority 3: Pain-Driven Detailed Targeting
Middle of Funnel (MoFu) - Nurturing
- → Website Visitors (30 days)
- → 50% Video Viewers (60 days)
- → Social Engagers (30 days)
Bottom of Funnel (BoFu) - Closing
- → Add to Cart (7 days, excl. Purchasers)
- → Initiated Checkout (14 days, excl. Purchasers)
You'll need to know your numbers to scale...
All of this brings us to the most important question in advertising, one that completely changes the game once you know the answer. The question isn't "How low can I get my CPC?" The real question is, "How high a Cost Per Acquisition (CPA) can I afford to acquire a truly great customer?"
If you don't know the answer, you're flying blind. You're making decisions based on fear and gut feeling, turning off adsets that "feel" too expensive without knowing if they're actually profitable in the long run. The key to unlocking this is calculating your Customer Lifetime Value (LTV).
LTV tells you the total profit you can expect to make from an average customer over the entire course of their relationship with your business. Once you know this number, everything changes. Let's run through a quick example. We'll need three pieces of information:
1. Average Revenue Per Account (ARPA): What do you make per customer, per month/year?
2. Gross Margin %: What's your profit margin on that revenue?
3. Monthly Churn Rate: What percentage of customers do you lose each month?
The calculation is simple: LTV = (ARPA * Gross Margin %) / Churn Rate
Let's say your product costs £100 per month, your margin is 70%, and you lose 5% of your customers each month.
LTV = (£100 * 0.70) / 0.05 = £70 / 0.05 = £1,400.
In this example, each customer you acquire is worth £1,400 in gross margin. 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 £466 (£1,400 / 3) to acquire a single new customer and still have a very profitable business. Suddenly, a CPC of £5 or a CPA of £150 doesn't seem so scary, does it? It looks like a bargain.
This is the maths that separates amateurs from professional growth marketers. It allows you to advertise with confidence, to outbid competitors who don't know their numbers, and to scale aggressively and intelligently. Use the calculator below to get a rough idea of your own numbers.
This is the main advice I have for you:
Pulling all this together, your high CPC isn't an isolated problem. It's a symptom of a strategy that has run its course. To fix it, you need to stop tweaking the existing broken system and instead build a new, more robust one from the ground up. This involves a shift from tactical button-pushing to strategic marketing.
I've detailed my main recommendations for you below in a clear action plan. This is the exact process we would follow to diagnose and fix an account like yours, moving it from a cash-burning liability to a predictable engine for growth.
| Phase | Action Required | Why It's Important | Expected Outcome |
|---|---|---|---|
| Phase 1: Diagnosis & Strategy | Pause existing campaigns. Stop the bleeding immediately. Then, conduct deep customer research to define your ICP based on their "nightmare" pain points, not demographics. Calculate your LTV and target CPA. | You can't fix a problem you don't understand. This provides the strategic foundation for everything that follows and stops you from making decisions in the dark. | A crystal-clear definition of who to target, what to say to them, and what you can afford to pay to acquire them. |
| Phase 2: Creative Refresh | Based on the ICP's pain points, brainstorm 3-5 new ad angles. Develop new creative (images, videos, copy) that directly addresses these pains and presents your offer as the specific solution. Use a Problem-Agitate-Solve framework. | Ad fatigue is killing your performance. Fresh, relevant creative that speaks to a real problem will cut through the noise, lower your CPCs, and attract a higher quality of click. | A bank of new, high-potential ad creative ready for testing, moving beyond the stale ads that are currently failing. |
| Phase 3: Campaign Restructure | Build out seperate new campaigns for ToFu, MoFu, and BoFu stages. Start by funding the BoFu and MoFu retargeting campaigns first to capture the lowest-hanging fruit. | Your current structure is inefficient. A funnel-based approach ensures you're spending your budget in the most effective way, prioritising users who are most likely to convert. | A clean, logical, and scalable campaign structure that aligns ad spend with user intent and maximizes ROI. |
| Phase 4: Intelligent Testing & Scaling | Launch the new campaigns. For ToFu, start with your highest-value Lookalike audiences and tightly themed interest groups. Systematically test audiences and creative, cutting losers and reallocating budget to winners based on your target CPA. | You need a data-driven process for optimisation. This approach replaces guesswork with a structured testing methodology, ensuring consistent performance improvement over time. | Stabilized and then decreasing acquisition costs, and a clear path to scale the campaigns profitably by adding budget to proven winners. |
I know this might seem like a lot, and it's a significant departure from just running a couple of adsets. But this level of strategic rigour is what separates the campaigns that limp along from the ones that consistently drive profitable growth. It's about building a system, not just launching an ad.
Executing this properly requires a deep understanding of the platform, a disciplined approach to testing, and a knack for translating customer psychology into compelling creative. It's not just about technical skill; it's about marketing expertise. This is where working with a specialist can make a huge difference, saving you months of expensive trial-and-error and getting you to profitability much faster.
If you'd like to go over how this framework could be specifically applied to your business, I'd be happy to offer you a free, no-obligation strategy session. We can get on a call, I'll take a look at your ad account, and we can map out a precise plan of attack together. It would give you a taste of the expertise we bring to our clients and, at the very least, you'll walk away with a clear, actionable plan you can implement yourself.
Let me know if that's something you'd be interested in.
Regards,
Team @ Lukas Holschuh
