Solved: Funnel Stages Fighting - Budget Allocation Issues

Hi there,

Thanks for reaching out!

I've had a look at the situation with your home furnishings client. It's a classic, and frustrating, problem. It sounds like you've got a decent grasp on the mechanics, but the funnel is acting like three separate, leaky buckets instead of a single, efficient pipeline. I'm happy to give you some initial thoughts and a bit of guidance on how I'd approach this. The issue likely isn't your budget allocation ratios, but something more fundamental about what you're asking the algorithm to do in the first place.

We'll need to look at why your TOFU is attracting the wrong crowd...

Here is the uncomfortable truth about awareness campaigns on platforms like Meta, and it's the absolute core of your problem. When you set your campaign objective to "Brand Awareness," "Reach," or even optimise for "Video Views," you are giving the algorithm a very specific, and very literal, command: "Find me the largest number of people, inside my targeting, who will perform this cheap action for the lowest possible price."

The algorithm, being an incredibly efficient machine, does exactly what you asked. It scours your audience and deliberately seeks out the users who are least likely to click, least likely to engage in a meaningful way, and absolutely, positively least likely to ever pull out a credit card. Why? Because those users aren't in demand by other advertisers who are optimising for sales. Their attention is cheap. You are, in effect, paying the world's most powerful advertising machine to build you an audience of non-customers.

You see low CPMs and high engagement, and you feel good about it. But that engagement is shallow. It's people who have a spare two minutes to watch a nice video of a sofa, not people who are actively considering re-furnishing their living room. You've built the top of your funnel with sand, and now you're wondering why the rest of your structure is sinking.

For a business like a home furnishings company, brand awareness is a byproduct of sales, not a prerequisite. The best form of awareness you can get is a happy customer showing off their new dining table on Instagram. That only happens if you focus relentlessly on the conversion. You need to stop paying Meta to find viewers and start paying it to find buyers, even at the cold stage.

I'd say you need to redefine your customer, not just your audience...

Before you even think about campaign structure, you have to get this right. Forget the sterile, demographic-based profile you might have. "Women aged 30-55, interested in interior design" tells you nothing of value and leads to the kind of generic ads that are currently getting you passive views but no sales.

To stop burning cash, you must define your customer by their pain. Their nightmare.

Your Ideal Customer Profile (ICP) isn't a demographic; it's a problem state. What is the real, urgent, and emotionally charged problem they are trying to solve?

• -> It's not 'needing a new coffee table'. It's 'being embarrassed to have friends over because the living room looks dated and cluttered'.
• -> It's not 'wanting a bigger bed'. It's 'endless sleepless nights and back pain because the old mattress is shot'.
• -> It's not 'looking for outdoor furniture'. It's 'dreading another summer of not being able to use the garden because there's nowhere comfortable to sit'.

Once you've isolated that nightmare, your creative and copy can speak directly to it. Your ad stops being "Look at our beautiful, handcrafted oak table" and becomes "Tired of family dinners squeezed around a table that's too small? Imagine effortlessly hosting everyone for Sunday lunch." See the difference? One shows a product; the other sells a solution to a real frustration. This is how you attract high-intent clicks from a cold audience. People who feel seen and understood are infinitely more likely to convert.

This understanding of the 'nightmare' also informs your targeting. Where do these people hang out online? They're not just 'interested in interior design'. They follow specific designers like Kelly Wearstler or publications like Architectural Digest. They might be using Pinterest to create boards for their "Dream Home". They might be searching for "small living room layout ideas". This is the intelligence that fuels effective targeting, not broad, generic interests.

You probably should restructure your entire funnel...

Right now, your funnel is fighting itself. Your TOFU campaign is judged on views, your MOFU on clicks, your BOFU on ROAS. They have conflicting goals. The solution is to give them all the same goal: Purchases.

This is how I would structure it. Forget TOFU, MOFU, BOFU as campaign objectives. Think of them as audience temperatures within a single, conversion-focused strategy.

1. Prospecting Campaign (Your new "TOFU"):

• Objective: Conversions (optimise for Purchase).
• Audience: Your best cold audiences. This means lookalikes of your past purchasers (the highest priority), lookalikes of your highest LTV customers, and interest/behaviour-based audiences built around the 'nightmare' we just defined. No more broad targeting optimised for views.
• Job: To use Meta's powerful algorithm to find new customers who are ready to buy now or are showing strong buying signals. You let the machine do the heavy lifting of finding buyers from a cold pool.

2. Retargeting Campaign (Your new "MOFU/BOFU" combined):

• Objective: Conversions (optimise for Purchase).
• Audience: This is where you segment by intent. You'll have different ad sets for different levels of warmth:
  • -> Warm (MOFU): Website visitors, social media engagers, video viewers (of conversion-focused ads!) from the last 30-60 days. Exclude people who have added to cart or purchased.
  • -> Hot (BOFU): People who have Added to Cart or Initiated Checkout in the last 7-14 days. This is your highest-intent audience. Exclude purchasers.
• Job: To bring back people who have already shown interest and get them over the line. The creative here can be more direct – maybe showing testimonials, mentioning a limited-time offer, or using Dynamic Product Ads to show them the exact items they looked at.

This structure works because it's aligned. Every part of the machine has one job: generate sales. The prospecting campaign feeds the retargeting campaign with genuinely interested people, not just passive viewers. Your retargeting audience becomes much higher quality, which means your MOFU stage will start converting and your BOFU stage will actually have a qualified audience to scale into.

Here's a flowchart to visualise the difference between the broken model and the one I'm proposing.

You'll need to know your numbers before you can scale...

The question that underpins all of this is: "How much can I actually afford to pay for a customer?" Without knowing this, you're flying blind. You can't tell if your £50 cost-per-purchase is a disaster or a bargain. This is where calculating your Customer Lifetime Value (LTV) becomes non-negotiable.

For an eCommerce business like home furnishings, it's slightly different from a SaaS model. We need to factor in repeat purchases.

Here are the key metrics you'll need:

• Average Order Value (AOV): What's the average amount a customer spends in a single transaction?
• Purchase Frequency (F): How many times does the average customer buy from you in a year?
• Gross Margin %: What's your profit margin on each sale after accounting for the cost of goods sold?
• Customer Lifetime (T): How many years, on average, does a customer keep buying from you? This can be tricky, but you can estimate it based on past data.

The calculation is then: LTV = AOV * F * Gross Margin % * T

Let's say your AOV is £300, customers buy 1.2 times a year, your margin is 60%, and they stick around for 3 years.

LTV = £300 * 1.2 * 0.60 * 3 = £648

This means, on average, each customer you acquire is worth £648 in gross margin to the business. A healthy rule of thumb is a 3:1 LTV to Customer Acquisition Cost (CAC) ratio. This means you can afford to spend up to £216 to acquire that customer and still have a very profitable model. Suddenly, that £100 CPA you might see from a cold prospecting campaign doesn't look so scary. It looks like a profitable investment.

I've built a simple calculator for you below so you can plug in your client's numbers and see for yourself.

This is the main advice I have for you:

To pull this all together, here is a summary of my recomendations. This isn't about tweaking percentages; it's a fundamental shift in strategy away from a broken, multi-objective funnel to a unified, conversion-driven machine. Your budget question is answered not by a fixed ratio, but by performance. You should allocate the majority of your budget (perhaps 70-80%) to the cold prospecting campaign, because that's your engine for growth. The remaining 20-30% goes to retargeting to capture the value you've created.

The MOFU stage becomes stable when it's being fed a consistent stream of qualified prospects from your TOFU efforts. By switching your prospecting to a purchase objective, you ensure that the people who click and land on the site are already pre-qualified by Meta's algorithm as being more likely to buy. This fixes the 'high clicks, no conversion' problem at its source.

This is a big shift, I know. It requires trusting the algorithm and focusing on the end goal rather than vanity metrics at the top of the funnel. But from my experience running many eCommerce campaigns, this is the structure that not only works, but scales effectively. I remember one women's apparel client where we saw a 691% return by focusing purely on conversion objectives and letting the data guide our creative tests. The principles are the same, whether its fashion or furniture.

This kind of strategic overhaul can be a lot to implement. It’s not just about pushing different buttons in Ads Manager; it’s about rethinking the entire approach to customer acquisition. Getting an experienced eye on the account to manage the transition, analyse the initial data, and make the right optimisations can be the difference between success and another frustrating quarter.

If you feel it would be helpful, we offer a free, no-obligation initial consultation where we can look through the account together and map out a more concrete plan of action. Sometimes a 20-minute screen share can clear up months of confusion.

Hope that helps!

Regards,

Team @ Lukas Holschuh