Solved: Scale Facebook Ads in San Jose (Data Inside)

Hi there,

Thanks for reaching out! I'm happy to give you some initial thoughts and guidance on your scaling problem with Facebook ads. It's a really common issue, a lot of people hit a wall where just increasing the budget stops working and costs start to spiral. Tbh, the solution usually isn't about finding a magical 'broader audience', it's about fundamentally changing how you think about your numbers, your targeting, and your entire advertising system.

The scaling plateau is normal, but your approach is probably wrong

First off, hitting a spend plateau where you can't scale further without your CPA (Cost Per Acquisition) going through the roof is completely normal. It happens to almost every campaign. You've likely found a pocket of your audience that converts well, and now you've saturated it. The common mistake is to think the answer is to just broaden the targeting and hope for the best. That's a recipe for burning cash.

The truth is, as you scale, your costs *will* increase. You're forcing the algorithm to find people who are further and further away from the core, easy-to-convert group. The game isn't about avoiding this, it's about building a system so robust and a funnel so efficient that you can afford the higher costs and still be wildly profitable. You dont just need more leads; you need a predictable engine for generating profitable customers at scale.

This all goes to say: the problem isn't San Jose, CA, or Facebook's algorithm. The problem is likely in your strategy and your understanding of your own business maths. We need to fix that first before we even think about touching the ad account.

We'll need to look at your numbers, not your audience size

Here's the most important question in paid advertising, and it’s one most business owners can't answer: "How high a CPL can I afford to acquire a truly great customer?" If you dont know this number, you're flying blind. You're focused on keeping costs low instead of focusing on maximising profit. The answer to this question lies in your Customer Lifetime Value (LTV).

Let's break down how to calculate it. You need three pieces of information:

1. Average Revenue Per Account (ARPA): What do you make from a typical customer, per month or per year? Let's say for this example, it's $500 per month.

2. Gross Margin %: What's your profit margin on that revenue after accounting for the cost of goods sold (COGS) or the direct costs of servicing that client? For a service business, this is often high. Let's say it's 80%.

3. Monthly Churn Rate: What percentage of your customers do you lose each month? If you lose 1 out of every 25 customers a month, your churn rate is 4% (1/25).

The calculation is simple but powerful:

LTV = (ARPA * Gross Margin %) / Monthly Churn Rate

So using our example numbers:

LTV = ($500 * 0.80) / 0.04

LTV = $400 / 0.04 = $10,000

In this example, each customer you acquire is worth $10,000 in gross margin to your business over their lifetime. Now, play around with your own numbers using the calculator below. This is the single most important exercise you can do for your business.

Now you have the truth. A healthy business model aims for at least a 3:1 LTV to CAC (Customer Acquisition Cost) ratio. So with a $10,000 LTV, you can afford to spend up to $3,333 to acquire a single customer. Let that sink in. If your sales process converts 1 in 10 qualified leads from your ads into a paying customer, you can afford to pay up to $333 for a single lead.

Suddenly, that $50 or $100 lead from Facebook doesn't seem so expensive, does it? It looks like a bargain. This is the maths that unlocks aggressive, intelligent growth. It frees you from the tyranny of cheap leads and allows you to compete for the highest quality prospects.

I'd say you're paying Facebook to find the wrong people

Here is an uncomfortable truth about so-called "awareness" campaigns on Meta. When you set your campaign objective to "Reach" or "Brand Awareness," you are giving the algorithm a very specific command: "Find me the largest number of people for the lowest possible price." You're literally asking for cheap impressions.

The algorithm, being the ruthlessly efficient machine it is, does exactly what you asked. It seeks out the users inside your targeting who are least likely to click, least likely to engage, and absolutely, positively least likely to ever become a lead or customer. Why? Because those users are not in demand. Their attention is cheap. No one else is bidding for them. You are actively paying the world's most powerful advertising machine to find you the worst possible audience for your business.

The best form of brand awareness is a new customer. Awareness is a byproduct of great advertising that leads to a conversion, not a prerequisite for making a sale. That is why, to find people who will actually become leads, you MUST switch your campaign objective to optimise for conversions. In your case, that would be "Leads". You need to tell Facebook's AI what you actually want, and it will go find people who are most likely to perform that action based on billions of data points. Optimising for anything else when your goal is leads is like trying to drive to a new city without a map. You might get there eventually, but you'll waste a lot of fuel along the way.

You probably should redefine who your 'audience' even is

Forget the sterile, demographic-based profile your last marketing hire made. "Small business owners in San Jose, CA" tells you nothing of value and leads to generic ads that speak to no one. To stop burning cash, you must define your customer by their pain. By their nightmare.

You need to become an expert in their specific, urgent, expensive, career-threatening problem. Your ideal client isn't just a job title; they're a person staring at a problem they can't solve. Maybe your client is a Head of Sales terrified of missing quota for the second quarter in a row. Maybe they're a founder who's one bad month away from a payroll crisis while their competitors are confidently raising their next round. Your ICP isn't a person; it's a problem state.

Once you've isolated that nightmare, you can find them. Where do they go to solve their problems? What niche podcasts do they listen to on their commute? What industry newsletters do they actually open? What software tools do they already pay for, like HubSpot, Salesforce, or QuickBooks? Are they members of specific Facebook groups? Do they follow certain influencers on LinkedIn? This intelligence isn't just data; it's the blueprint for your entire targeting strategy. You have to do this work first, or you have no business spending another pound on ads.

You'll need a better system for testing and finding what works

Once you know your numbers and have a deep understanding of your true ICP, you can start building a machine to find them. Scaling isn't about one magic audience; it's about having a portfolio of audiences and creatives that you are constantly testing and optimising. The way to structure this is with a proper funnel approach: Top of Funnel (ToFu), Middle of Funnel (MoFu), and Bottom of Funnel (BoFu).

Here's a prioritised list of audiences I would usually test within this structure. The further down the funnel an audience is (or a lookalike of them), the better it will usually perform.

ToFu (Top of Funnel - Cold Audiences): This is where you find new people who've never heard of you.

• -> Detailed Targeting: This is your bread and butter. Combine interests, behaviours, and demographics based on your "Nightmare ICP" research. Don't target "small business owners". Target followers of a specific industry software, members of a niche professional group, and people with interests that strongly correlate with their job. I usually group these into themes.
• -> Lookalike Audiences: Once you have data, this is incredibly powerful. Create lookalikes of your *best* audiences first. A lookalike of your highest LTV customers is worth 10x more than a lookalike of all website visitors. You need at least 100 people in a source audience, but really you want a few thousand for it to work well. Prioritise them like this:
  1. Highest value previous customers
  2. All previous customers
  3. Leads submitted
  4. People who spent the most time on your site
  5. All website visitors
  6. Video viewers (e.g., 50%+)
• -> Broad Targeting: Only test this once your pixel has thousands of conversion events. It can work well, but you're trusting the algorithm completely, and it needs a lot of data to not waste your money.

MoFu (Middle of Funnel - Warm Audiences): People who have engaged but not converted.

• -> All website visitors (last 30-90 days), excluding converters.
• -> People who engaged with your Facebook or Instagram page.
• -> People who watched a significant portion of your video ads (e.g., 50% or more).

BoFu (Bottom of Funnel - Hot Audiences): People who were on the brink of converting.

• -> People who visited your contact/lead form page but didn't submit.
• -> People who started filling out a form but abandoned it.

You need seperate campaigns for each stage of this funnel. A ToFu campaign to find new people, and a retargeting campaign for MoFu/BoFu. Your ad messaging must be different for each. You don't talk to a stranger (ToFu) the same way you talk to someone who almost hired you (BoFu).

Then, within these campaigns, you systematically test. One variable at a time. Test different audiences against your best-performing ad. Then test different ad creatives (headlines, images, copy) against your best-performing audience. Turn off the losers quickly. A simple rule is to kill any ad set or ad that has spent 1.5-2x your target CPL without getting a lead. This methodical process is how you find pockets of scalability, not by just ticking a bigger location box.

I've detailed my main recommendations for you below:

To pull this all together, here is a summary of the strategic shifts you need to make. This isn't about small tweaks; it's a fundamental change in how you approach paid acquisition. We've seen these changes make a huge difference for our clients. For instance, I remember one B2B software client for whom we generated 4,622 registrations at just $2.38 each by implementing this kind of systematic approach.

Let's talk about your offer... it's probably not good enough

Now we arrive at the most common failure point in all of B2B and service-based advertising: the offer. The number one reason campaigns fail is an offer that doesn't provide enough value or isn't targeted at an audience with a clear, urgent need for that value.

I'd bet your website probably has a "Contact Us for a Quote" or "Request a Demo" button. Let's be brutally honest: these are perhaps the most arrogant Calls to Action ever conceived. They presume your prospect, a busy decision maker, has nothing better to do than book a meeting to be sold to. It is high-friction, low-value, and instantly positions you as a commoditised vendor, just like everyone else.

Your offer’s only job is to deliver a moment of undeniable value—an "aha!" moment that makes the prospect sell themselves on your solution. You must solve a small, real problem for free to earn the right to solve the whole thing.

What does this look like in practice?

• -> If you're a marketing agency, it's not "Book a Call". It's a free, automated website audit that shows them their top 3 keyword opportunities.
• -> If you're a financial consultant, it's not "Get a Quote". It's a free "Cash Flow Projection" template or a 5-minute calculator that shows them their financial runway.
• -> If you're a corporate training company, it's not "Learn More". It's a free 15-minute interactive video module on 'Handling Difficult Conversations' for new managers.
• -> For us, as a B2B advertising consultancy, it's a 20-minute strategy session where we audit failing ad campaigns completely free.

This isn't just about getting a lead; it's about getting a *qualified* lead who has already experienced your expertise. It transforms the sales conversation from a pitch into a consultation. This single change can have a bigger impact on your lead generation than any amount of audience targeting tweaks.

As you can see, scaling isn't just about pushing a few buttons in Ads Manager. It's about a deep, strategic understanding of your business, your customer, and how to build a predictable system that connects the two. It involves maths, psychology, and rigorous testing.

It's not just about setting up an ad and hoping for the best. It's about understanding your audience, optimising your targeting, creating compelling ads, and fine-tuning your entire funnel. That's where professional help can make a huge difference. With years of experience and a deep understanding of the advertising landscape, we can help you implement this entire process, ensuring every dollar you spend is working to grow your business effectively.

If you'd like to chat through your specific situation, we offer a free initial consultation where we can review your strategy and ad account together. It's often super helpful and gives you a taste of the expertise we could bring to your project.

Hope this helps!

Regards,

Team @ Lukas Holschuh