Solved: Scale Facebook Ads and Reduce Cost Per Purchase

Hi there,

Thanks for reaching out!

Getting 19 sales in your first week is a decent start, so well done on that. But you're right to be worried about the cost per purchase eating into your margins. That's the exact problem you need to solve before you even think about scaling. I'm happy to give you some of my initial thoughts and guidance on this, as it's a common stumbling block for new advertisers.

Let's get into it.

The real question isn't "How to Scale?", it's "Can I Afford to Scale?"

Everyone wants to scale. But scaling an unprofitable campaign just means you lose money faster. The first thing we need to do is forget about scaling and focus on the real issue: your profitabilty. Your question, "how can I reduce my cost per purchase?" is the right one, but it's only half of the equation.

The other half is knowing what you can actually afford to pay for a customer. Without this number, you're flying blind. You might think your current cost per purchase is too high, but what if I told you it was actually a bargain? Or what if it's even worse than you think? The only way to know is to calculate your Customer Lifetime Value (LTV).

This sounds complicated, but it's not. It's the total profit you can expect to make from a single customer over the entire time they buy from you. Once you know this, you can determine your target Customer Acquisition Cost (CAC), which is the most you should be willing to spend to get a new customer. A healthy business usually aims for an LTV:CAC ratio of at least 3:1.

Here’s the basic maths:

LTV = (Average Revenue Per Customer * Gross Margin %) / Monthly Churn Rate

I've built a little calculator for you below. Play around with the sliders. This isn't just a nice-to-have; this is the fundamental maths of your business. Until you know these numbers, any ad spend is just a gamble.

You probably should restructure your campaigns...

You mentioned you're running an A/B test with two ads. That's a start, but it's probably not the most effective way to test or structure your account for the long run. The built-in A/B test feature on Facebook can be quite restrictive. A better approach is to build a proper campaign structure that mirrors your customer's journey.

This is often broken down into a funnel: Top of Funnel (ToFu), Middle of Funnel (MoFu), and Bottom of Funnel (BoFu).

• ToFu (Top of Funnel): This is where you find new customers. These are people who have never heard of you before. Your broad and specific interest audiences fall into this category. The goal here is to get them to your website.
• MoFu (Middle of Funnel): These are people who have shown some interest. They've visited your website, watched a video, or engaged with an ad, but they haven't bought anything. The goal here is to bring them back and get them to look at products.
• BoFu (Bottom of Funnel): These are your hottest prospects. They've added a product to their cart or started the checkout process. The goal here is to get them over the finish line and make a purchase.

You should have separate campaigns for each stage of this funnel. Why? Because you need to talk to these people differently. The message for a complete stranger (ToFu) should not be the same as the message for someone who has a product sitting in their shopping cart (BoFu). By splitting them up, you can tailor your message, your offer, and your budget to each group, which is a massive lever for reducing your cost per purchase.

We'll need to look at your audience targeting...

You've found that one audience is performing better than the other. That's the whole point of testing. Now, you need to build on that. The mistake many people make is turning off the 'loser' and just putting all their money on the 'winner'. That's not scaling; that's just consolidation.

To really reduce your cost per purchase, you need a systematic approach to finding more winning audiences. For a new e-commerce store, here’s the priority I would usually follow for testing ToFu audiences:

1. Detailed Targeting (Interests/Behaviours): This is where you start. You have a hypothesis about who your customer is. Test it. Be specific. If you sell high-end coffee beans, don't just target "Coffee". That's too broad. Target interests like "Specialty Coffee Association", followers of specific roaster pages, or people interested in "Chemex" or "Aeropress". You need to find interests that contain a high concentration of your ideal buyer. One campaign we worked on for a subscription box saw a 1000% return on ad spend simply by getting this part right.
2. Lookalike Audiences: Once you have enough data (at least 100 purchases, but ideally more like 1,000), you can create Lookalike audiences. These are people Facebook finds who are similar to your existing customers. Start with a Lookalike of your purchasers, then maybe people who added to cart. These often perform incredibly well because you're using your own data to find new people.
3. Broad Targeting: This is where you target a country with minimal restrictions (maybe just age and gender). You only want to test this once your pixel is very 'seasoned' and has thousands of purchase events. At that point, you can trust Facebook to find buyers for you. Doing this too early, like you might have done, can be an expensive way to gather data.

You have to earn the right to go broad. Start specific, gather data, create Lookalikes, and only then test broad. This methodical approach will consistently uncover new, profitable audiences and help you acheive a lower cost per purchase.

I'd say you need a message they can't ignore...

You said both ads use the "same content". This is almost definately a mistake and a big reason your costs are high. An audience of people who've never heard of you needs a very different message than an audience of people who are already familiar with your niche. Your ad creative (the image/video and the text) is your single biggest lever for performance.

You don't need to be a world-class copywriter, but you do need to stop selling features and start selling outcomes. Nobody buys a drill because they want a drill; they buy a drill because they want a hole in the wall. What is the 'hole in the wall' your product provides?

A simple but powerful framework is Before-After-Bridge.

• Before: Describe their current world. What's the pain or problem they're experiencing? "Tired of bland, bitter supermarket coffee?"
• After: Paint a picture of the world after they use your product. What's the dream state? "Imagine waking up to the perfect, richest cup of coffee every single morning, brewed just the way you like it."
• Bridge: Your product is the bridge that gets them from the Before state to the After state. "Our single-origin beans, roasted fresh to order, are the bridge to your perfect morning coffee."

This structure works because it connects emotionally with the customer's problem before you even mention your product. We used a similar angle for an elearning client and generated $115k in revenue in just over a month because the message resonated so strongly. You need to test different angles, different images, and different videos constantly. A great audience with a bad ad will fail every time. But a great ad can make an average audience work wonders.

You'll need to understand your perfomance metrics...

To figure out *why* your cost per purchase is high, you need to look at the whole funnel, not just the final sale. The data tells a story. Look at these key metrics in your Ads Manager:

• Click-Through Rate (CTR): The percentage of people who see your ad and click on it. A low CTR (e.g., under 1%) usually means your ad creative isn't grabbing attention. The image is boring, the headline is weak. This is an ad problem.
• Cost Per Click (CPC): How much you pay for each click. High CPCs are often a result of low CTRs. Fix the ad, and the CPC will often come down.
• Add to Carts (ATC): How many people who land on your product page add the item to their cart. If you have a good number of clicks but very few ATCs, the problem is likely on your product page. Are the photos good? Is the description persuasive? Is the price clear? Maybe your targeting is off and you're bringing the wrong people to the site.
• Purchases: If you're getting lots of Add to Carts but very few purchases, the problem is often in your checkout process. Are shipping costs a surprise? Do you require people to create an account? Does your site look untrustworthy? For a cleaning products company we worked with, a deep analysis of their funnel metrics was a key part of the strategy that ultimately helped them achieve a 633% return. Identifying and addressing these friction points, for instance with a highly targeted cart abandonment campaign, can make a huge difference to your conversion rate.

By analysing where people drop off, you can diagnose the problem and focus your energy on the part of the funnel that's actually broken. It's often not the ad itself, but something further down the line.

I've detailed my main recommendations for you below:

This is the main advice I have for you. It's a lot to take in, but focusing on these steps in order is how you build a profitable and scalable advertising machine instead of just burning cash.

As you can probably tell, it's not just about setting up an ad and hoping for the best. It's about understanding your audience, having a solid strategy, optimising your targeting, creating compelling ads, and fine-tuning your entire sales funnel. It's a complex process with a lot of moving parts.

That's where professional help can make a huge difference. With years of experience and a deep understanding of the advertising landscape, an expert can help you navigate these steps much faster and avoid the costly mistakes that most new advertisers make. We can provide insights you might not have thought of and take over the implementation of the entire process for you, ensuring that every pound you spend is working to grow your business profitably.

If you'd like to have a chat and get a more detailed review of your ad account and strategy, we offer a free, no-obligation initial consultation. It could be really valuable to get a second pair of expert eyes on it.

Hope this helps!

Regards,

Team @ Lukas Holschuh