Solved: Low ROAS on New Meta Ads Campaign

Hi there,

Thanks for reaching out! It sounds like you've dived headfirst into Meta ads, which is great. It's completely normal to feel a bit lost at the start, especially when you're watching the spend go up but the ROAS isn't quite there yet. I'm happy to give you some initial thoughts and guidance based on my experience running these sorts of campaigns.

Honestly, what you're describing is a classic scenario for anyone with a new ad account and pixel. The key thing isn't to panic and switch everything off, but to understand what the platform is doing and how to diagnose the real issues. Forget what ChatGPT told you; early performance is rarely a perfect indicator of what's to come, especially with a fresh setup. Let's get into it.

We'll need to look at why early performance is a terrible guide...

Right, let's tackle that bit of advice you got from ChatGPT first, because it's a common misconception that can lead to you killing potentially winning ads far too early. The idea that "early ad performance is a good indicator of how the ad will continue to perform" is dangerously simplistic and, in your situation, completely wrong.

Your ad account and pixel are brand new. This is the most important factor. Think of the Meta pixel as a new employee you've just hired to find customers for you. On day one, it knows absolutely nothing about your business, your products, or the type of person who buys from you. It's starting from scratch. When you launch an ad, you're giving this new employee its first task: "Go find me some people who will buy this."

What does it do? It starts by showing your ad to a broad slice of the audience you've defined. It's essentially guessing. It shows it to Person A, they ignore it. It shows it to Person B, they scroll past. Then it shows it to Person C, and they click and buy. "Aha!" the pixel says. "Person C is interesting. What are their characteristics? What do they have in common with other people in this audience?"

This is what's known as the Learning Phase. During this period, the algorithm is actively spending your money to gather data and learn. It's looking for patterns among the people who convert. Every single conversion you get, even if it's expensive, is a critical piece of training data. You're literally paying for the pixel's education. This is why your CPC (Cost Per Click) and CPM (Cost Per Mille, or 1,000 impressions) are high right now. The system is inefficient because it's still learning. It has to show the ad to a lot of the 'wrong' people to find the 'right' ones.

Turning off an ad that's getting conversions, even if the ROAS is below 1, is like taking the textbook away from your new employee mid-lesson. You're starving the algorithm of the very data it needs to get better and more efficient. The system will generally exit the learning phase after it gets about 50 conversions in a 7-day window. Until then, performance will be unstable, and you should expect costs to be higher then they will be later on. The goal in this initial stage isn't immediate profitability; it's data acquisition.

So, to directly answer your questions: Yes, you absolutely must keep the ad that's converting running. It's your only source of good data right now. Yes, it will (or at least, it *should*) optimise as it gathers more data. And yes, having a new ad account and pixel is the primary reason for your current performance figures. It's not a bug, it's a feature of the system. Patience is the hardest part of paid advertising, but it's often the most important.

I'd say you need to diagnose the real problem...

Okay, so we've established that you need to be patient and let the pixel learn. But that doesn't mean you just sit on your hands and hope for the best. While a low ROAS is expected at the start, it's also a symptom. Your job now is to become a detective and figure out where the real bottlenecks are in your customer journey. An ad campaign doesn't fail just because of the ad; it fails because of a weakness somewhere in the funnel.

You need to look at your metrics forensically. Don't just look at ROAS. Break down the entire journey from the moment someone sees your ad to the moment they complete a purchase. This is how we diagnose problems for our clients.

Here’s a simple diagnostic framework:

1. Impression to Click (The Ad's Job): The first step is getting someone to stop scrolling and click on your ad. The key metric here is your Click-Through Rate (CTR). If your CTR is very low (e.g., under 0.5% for eCommerce), it tells you the ad itself isn't compelling enough. The image might be poor, the headline might not grab attention, or the copy doesn't resonate. This is an ad creative problem.


2. Click to Product Page View (The Scent Trail): Someone clicked! Great. But did they actually land on your product page and stick around? Look at the number of link clicks in Ads Manager versus the number of 'View Content' events your pixel has recorded. If there's a huge drop-off, it could mean your website is too slow to load (a common issue), or the message on your landing page doesn't match the promise of your ad. This is a website performance or messaging mismatch problem.


3. Product Page View to Add to Cart (The Product's Job): They're on the product page, looking at what you're selling. If you get lots of product page views but very few 'Add to Cart' events, the problem lies on this page. Are your product photos high quality? Is the product description persuasive and clear? Is the price point right? Is there a clear call-to-action button? A drop-off here usually points to a product presentation or pricing issue.


4. Add to Cart to Purchase (The Checkout's Job): This is the final hurdle. If you're getting plenty of 'Add to Cart' events but few purchases, your checkout process is the culprit. The most common issues here are unexpected shipping costs being added at the last minute (the number one cause of cart abandonment), a clunky or confusing checkout flow, or a lack of trust signals (like reviews, security badges, clear return policies). This is a checkout process or trust problem.

For instance, I remember working on a campaign for a women's apparel brand. They had a great CTR, so we knew the ads were working, but very few people were adding products to their cart. We diagnosed the issue as poor product presentation on their website. Once they invested in better photography and clearer descriptions, their 'Add to Cart' rate doubled, which was a key factor in us eventually achieving a 691% return on their ad spend.

By analysing your campaign through this lens, you stop guessing. You're not just throwing new creatives into the fire; you're methodically identifying the biggest leak in your bucket and plugging it. This is far more effective then just randomly testing ads.

You probably should rethink your campaign structure...

The next thing to address is your campaign structure. While "1 campaign, 1 ad set, 3 ads" is a perfectly fine way to start and get your first bit of data, it's not a structure that's built for sustainable growth or effective optimisation. To really do this properly, you need to think in terms of funnels and audience temperature.

Not everyone you target is at the same stage of awareness. Some have never heard of you (cold), some have visited your site but not bought (warm), and some have added a product to their cart but got distracted (hot). You cannot speak to these three groups with the same ad and expect it to work well. A proper structure separates these audiences into different campaigns or ad sets so you can tailor your message and budget accordingly.

The classic framework we use, and which you should adopt, is ToFu/MoFu/BoFu: Top of Funnel, Middle of Funnel, and Bottom of Funnel.

1. ToFu (Top of Funnel) - Prospecting Campaign:

This is your campaign for reaching cold audiences—people who have never heard of you before. The goal here is introduction and discovery. You're trying to find new potential customers. Your current ad set is a ToFu ad set.

• Audiences: This is where you test your interest-based targeting (e.g., people interested in 'handcrafted jewelry', 'Etsy', 'fashion accessories') and Lookalike Audiences. Once you have enough purchase data (at least 100, but ideally 1,000+), you can create a Lookalike of your existing customers, which is often the most powerful prospecting audience you can build.
• Creative: The ads here need to be attention-grabbing and educational. Video works incredibly well. Showcasing the product in an engaging way, telling your brand story, or using user-generated content (UGC) are all great strategies. The goal isn't a hard sell; it's to get them interested enough to click and learn more.
• Budget: This is where most of your budget should go, typically 70-80%, because you constantly need to be filling the top of your funnel with new people.

2. MoFu (Middle of Funnel) - Retargeting Campaign:

This campaign targets warm audiences—people who have shown some interest but haven't made a purchase yet. They've visited your website, watched one of your videos, or engaged with your Instagram page.

• Audiences: You'd create custom audiences for 'All Website Visitors (Last 30 Days)', 'Viewed Product Page (Last 14 Days)', 'Instagram Engagers (Last 60 Days)', etc. Crucially, you must exclude people who have already purchased.
• Creative: The messaging here is different. They already know who you are, so you don't need to introduce yourself. Instead, you can overcome objections, showcase testimonials or reviews, highlight different product features, or present a soft offer like "free shipping."
• Budget: This campaign gets a smaller slice of the budget, maybe 10-15%.

3. BoFu (Bottom of Funnel) - Retargeting Campaign:

This campaign is for your hot audiences. These are people who are on the very verge of buying. They've put something in their cart or started the checkout process.

• Audiences: Custom audiences for 'Added to Cart (Last 7 Days)' and 'Initiated Checkout (Last 7 Days)'. Again, you must exclude purchasers. These audiences are smaller but have the highest purchase intent.
• Creative: The message here is direct and urgent. It's often called a 'cart recovery' or 'cart abandonment' ad. You can remind them what they left behind, perhaps with a dynamic product ad showing the exact item. You could also introduce a small incentive like a 10% discount code to nudge them over the line. Scarcity messaging ("Limited stock!") can also work well.
• Budget: This gets the remaining 5-10% of your budget. The cost per purchase here should be your lowest across all campaigns.

Here's how that might look in your Ads Manager:

I remember one client who sold cleaning products. They were in a similar situation, running simple campaigns with inconsistent results. Once we implemented a proper funnel structure like this, separating their prospecting from their retargeting, their results transformed. We were able to scale their campaigns and achieve a 633% return on their ad spend, dramatically increasing their overall revenue. It really shows how structure isn't just a 'nice to have'—it's the foundation for profitable scaling.

By structuring your account this way, you gain so much more control and clarity. You can see exactly which part of your funnel is working and which isn't, and you can allocate your budget much more intelligently. It stops being a guessing game and starts being a predictable system for acquiring customers.

We'll need to look at your numbers properly...

Finally, I want to reframe how you think about your costs and success metrics. Right now, you're focused on ROAS, which is understandable. But on day four of a new account, it's a vanity metric. A much more powerful way to think about your business is through the lens of Customer Lifetime Value (LTV) and Customer Acquisition Cost (CAC).

The real question isn't "Is my ROAS positive today?" but "How much can I afford to spend to acquire a customer and still be very profitable in the long run?" Once you know this number, you're free from the tyranny of short-term metrics. You can confidently spend money to acquire customers knowing that you'll make it back, and then some, over time.

Let's calculate a hypothetical LTV. You'll need three pieces of information:

1. Average Order Value (AOV): What is the average amount a customer spends in a single transaction?
2. Purchase Frequency (F): How many times does the average customer buy from you in a year?
3. Customer Lifetime (T): How many years does the average customer stick with you? (For a new business, you might have to estimate this, e.g., 1-2 years).

The basic LTV calculation is simply: LTV = AOV x F x T.

However, a better way for a growing business is to use your margin and your churn rate. This gives you a more accurate picture of the *profit* a customer generates.

• Average Revenue Per Account (ARPA): What's the average revenue per customer per month? (For eComm, this could be AOV * monthly purchase frequency).
• Gross Margin %: What's your profit margin on each sale?
• Monthly Churn Rate %: What percentage of customers do you lose each month? (This can be tricky to calculate early on, but it's the inverse of your retention rate).

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

Let’s imagine your average order is £50, your gross margin is 60%, and you find that only 5% of your customers don't come back for another purchase within a few months (a 5% monthly churn).

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

In this scenario, each customer you acquire is worth £600 in gross profit to your business over their lifetime. Now, a healthy business model often aims for a 3:1 LTV to CAC ratio. This means you can afford to spend up to £200 (£600 / 3) to acquire a single new customer.

Suddenly, that initial conversion that cost you a bit more than the product price doesn't seem so bad, does it? It looks like an incredibly smart investment. This is the maths that allows businesses to scale aggressively.

Use the calculator below to get a rough idea of your own numbers.

Knowing these numbers transforms your approach. It gives you the confidence to invest properly in the Learning Phase and to make strategic decisions based on long-term profitability, not short-term panic.

This is the main advice I have for you:

As you can probably tell, running paid ads effectively is a lot more involved than just launching a campaign and watching the sales roll in. It requires a strategic approach, a deep understanding of the platform's mechanics, and a methodical process for testing and optimisation. It can be quite a lot to handle, especially when you're also trying to run the rest of your business.

This is where getting some expert help can make a huge difference. An experienced eye can spot opportunities and problems you might miss, speed up the learning process significantly, and help you build a profitable advertising system much faster. We do this day in, day out for our clients, helping them navigate these exact challenges.

If you'd like to have a chat and go through your ad account together, we offer a completely free, no-obligation strategy session where we can give you some more tailored advice. It might be helpful to get a second opinion and a clear plan of action.

Hope this helps!

Regards,

Team @ Lukas Holschuh