Solved: High CPMs and CPCs on Facebook Ads Since February

Hi there,

Thanks for reaching out! I had a look at the situation you described with your Meta campaigns. It sounds incredibly frustrating, especially when things were going well before. A sudden jump in CPM and CPC like that can wreck your ROAS and make you feel like the whole platform has turned against you.

I've seen this exact pattern in a lot of accounts I've audited over the years. The good news is, it's rarely a case of "the platform is broken". More often than not, it's a sign that the strategy that got you here isn't the one that will get you to the next level. The problem isn't Meta; it's the reliance on a single, fragile approach. You're right to be concerned, but turning everything off and hoping for the best with new creatives is a bit like rearranging the deckchairs on the Titanic. The fundamental issue lies a bit deeper, in the structure of your campaigns and how you're telling the algorithm who to go after.

I'm happy to give you some of my initial thoughts and guidance on this. The solution isn't about finding a magic button, but about building a more robust, predictable system for acquiring customers. Let's get into it.

Let's talk about that "Broad" campaign problem...

Okay, first things first. Running BROAD campaigns. I know, I know. Every guru on YouTube talks about it like it's the holy grail. "Just go broad, trust the algorithm, let the pixel do the work!" And to be fair, sometimes it does work. For a while. You've seen that yourself. But it's a strategy built on a knife's edge, and it looks like you've just fallen off.

Here's the uncomfortable truth: BROAD targeting is only effective when your pixel is incredibly mature and fed a constant, high-volume stream of high-quality conversion data. It needs thousands, if not tens of thousands, of purchase events to properly understand who your ideal customer is. When it works, it's because you've already done the hard work of teaching it. When it stops working, like it has for you in February, it's usually for one of a few reasons:

• Algorithm Changes: Meta is always tinkering. A small, unannounced update to how the algorithm weighs signals can completely detrail a campaign that was reliant on it. Your pixel's past learnings might suddenly become less relevant.
• Audience Saturation: Even with broad, you've likely saturated the small pocket of users the algorithm found easy to convert. Now it's having to work harder, search wider, and show your ads to less relevant people to find new buyers. That makes your CPM and CPC shoot up.
• Creative Fatigue: The same ads shown to the same 'type' of people over and over again eventually leads to banner blindness. People stop responding, your CTR drops, and Meta charges you more to show an ad that people are clearly ignoring.
• Market Shift: February is a funny month. It's post-Christmas, post-New Year sales. Consumer spending habits change. The buying frenzy is over. The 'easy' customers you were getting in Q4 are no longer in the market, so the algorithm struggles.

Relying solely on BROAD is like flying a plane on autopilot without knowing how to land it manually. When the system fails, you're in freefall. You mentioned your retargeting campaigns have lower CPC and CPM. Of course they do! That's your first and most important clue. You're targeting people who have already shown interest. They are a qualified, warm audience. The BROAD campaign is failing because it's no longer effectively finding new qualified people at a reasonable cost. In fact, you're actively paying Meta to find the worst possible audience for your product. That's why your costs are 'outrageous'.

I'd say you need to build a proper account structure...

So, how do we fix this? We stop letting the algorithm guess, and we start telling it exactly what to do. We do this by building a proper, full-funnel account structure. This gives you control, stability, and a clear view of what's working and what isn't. It's more work upfront, but it's infinitely more resilient.

Forget the single BROAD campaign. I'd structure your activity into three distinct stages, or 'temperatures': Top of Funnel (ToFu - Cold), Middle of Funnel (MoFu - Warm), and Bottom of Funnel (BoFu - Hot). Each stage will have its own campaigns with specific audiences and goals.

This is how I would generally prioritise the audiences within this structure:

ToFu (Cold Traffic - Prospecting):
This is where you find new customers. Instead of BROAD, we get specific.

• Detailed Targeting: This is your new starting point. We're talking interests, behaviours, and demographics that align with your ideal customer. We'll dive into this more in a minute.
• Lookalike Audiences: Once you have enough data, you can create lookalikes. But they must be based on high-quality sources. A lookalike of 'all website visitors' is garbage. A lookalike of 'previous customers' or even 'highest value previous customers' is gold. You should test these in this order of quality:
  1. Lookalike of highest value previous customers
  2. Lookalike of previous customers (e.g., Purchased 180 days)
  3. Lookalike of people who initiated checkout
  4. Lookalike of people who added to cart
  5. Lookalike of website visitors (use with caution)

MoFu (Warm Traffic - Engagement/Consideration):
These people know you but haven't bought yet. The goal here is to nurture them and move them towards the purchase.

• All website visitors (excluding recent purchasers)
• Product page viewers (excluding recent purchasers)
• Social media engagers (people who liked a post, commented, etc.)
• Video viewers (e.g., viewed 50% of your ad)

BoFu (Hot Traffic - Retargeting):
These are your hottest leads. They are on the verge of buying. This is the retargeting you said is already working well. We just need to systemise it.

• Added to cart (in the last 7-14 days, excluding purchasers)
• Initiated checkout (in the last 7-14 days, excluding purchasers)
• Viewed cart (in the last 7-14 days, excluding purchasers)

By seperating your campaigns like this, you can allocate budget more intelligently. You can speak to each audience with a different message. You wouldn't talk to a stranger (ToFu) the same way you'd talk to someone who has their credit card out (BoFu), so why let your ads do it?

Here’s a simplified view of what that campaign structure might look like in your Ads Manager:

This structure prevents audience overlap, gives you clear data on which stage of your funnel is weakest, and lets you test methodically. When an ad set in your ToFu campaign stops working, you turn it off and test a new one, without destroying the performance of your entire account.

You probably should rethink your targeting from the ground up...

Right, so we've decided to use Detailed Targeting in our new ToFu campaign. How do we not mess this up? The biggest mistake I see is picking interests that are too broad or generic. It's a classic error. If you sell high-end coffee beans, targeting people with an 'interest' in "Coffee" is a waste of money. You'll reach millions of people who drink instant coffee from the supermarket. You need to go deeper.

The key is to stop thinking about demographics and start thinking about nightmares. Your ideal customer profile (ICP) isn't "women aged 25-45 who like fashion". That's useless. Your ICP is a problem state. It's a specific, urgent, and often expensive frustration.

Let's imagine you sell high-quality, minimalist womens apparel, like one of our past clients who achieved a 691% return once we got this right. The demographic is easy, but the nightmare is what matters. The nightmare isn't 'I have nothing to wear'. The nightmare is 'My wardrobe is overflowing with cheap, fast-fashion impulse buys that I feel guilty about, nothing matches, and and I still feel like I look a mess'. That's a specific pain.

Once you define that pain, you can find the signals. Who else caters to that pain?

• Brands: What other non-competing brands do they buy from? (e.g., specific sustainable skincare brands, minimalist homeware stores).
• Media: What magazines or blogs do they read? (e.g., The Gentlewoman, Kinfolk).
• Influencers: Who do they follow for inspiration? (e.g., specific minimalist fashion bloggers).
• Tools/Software: What apps do they use? (Maybe something like the Cladwell wardrobe app).

These become your interest targets. They are proxies for your ideal customer. Targeting people who like the 'Everlane' brand page is a thousand times more effective than targeting people who like "Fashion". You're aiming for audiences where your ICP is over-represented. This initial work is the most important part of building a successful cold traffic campaign. Do this right, and you're already halfway there.

You'll need a message they can't ignore...

Let's say you've perfected your new structure and targeting. Your ads are now being shown to a much more relevant group of people. But your CPC is still high and people aren't clicking. What gives?

This is where creative and copy come in. Your ad has one job: stop the scroll and get the click. A high CPC is often a symptom of a low Click-Through Rate (CTR). Meta's algorithm sees that people are ignoring your ad, so it charges you a premium to keep showing it. A compelling ad with a high CTR gets rewarded with cheaper traffic.

Your ad copy needs to speak directly to the 'nightmare' we just defined. Don't sell the product, sell the solution to the pain. One of the most effective frameworks for this is Problem-Agitate-Solve (PAS).

Let's stick with our minimalist clothing brand example:

• Problem: "Staring into a closet full of clothes, but feeling like you have nothing to wear?" (States the exact pain point).
• Agitate: "That guilty pile of fast-fashion impulse buys isn't helping. It's a cycle of waste and wardrobe frustration." (Twists the knife, makes the pain more acute).
• Solve: "Our collection is different. Five timeless pieces, ethically made, that create 25 stunning outfits. Look effortlessly chic and build a wardrobe you'll love for years. Discover the collection." (Presents your product as the clear, simple solution).

This is a world away from "Shop our new collection! 20% off!". It connects on an emotional level. You need to test different angles, different images, and definitely different videos. Video is huge. Even simple user-generated content (UGC) style videos can outperform slick, professional shoots because they feel more authentic. I remember one B2B SaaS client where we reduced their Cost Per Acquisition from £100 down to just £7, and a huge part of that was ditching the corporate videos and testing raw, honest UGC-style testimonials.

You need a ruthless testing programme. In each ad set, test at least 3-5 different creatives with different hooks or visuals. Let them run for a few days, see which one gets the best CTR and lowest CPC, turn off the losers, and iterate on the winners. Creative testing is not a one-time task; it's a continuous process.

We'll need to look at what you can actually afford to spend...

The final piece of the puzzle is to stop obsessing over CPM and CPC. Yes, they are indicators of ad performance, but they are not business metrics. Who cares if your CPC is €0.20 if none of those clicks ever convert? I'd rather have a €2.00 CPC if I know every 10th click results in a €150 sale.

The only metrics that truly matter are your Cost Per Acquisition (CPA) and your Customer Lifetime Value (LTV). You need to know what a customer is actually worth to you, so you can figure out what you can afford to pay to get one. This is the maths that separates amateur advertisers from professional growth marketers.

Here's how you can calculate a basic LTV:

• Average Order Value (AOV): What's the average amount a customer spends in one transaction? Let's say it's €80.
• Gross Margin %: After the cost of the goods, what's your profit margin? Let's say it's 60%.
• Monthly Churn Rate: What percentage of customers do you lose each month (i.e., they don't come back to buy again)? This is trickier for eCom, but you can estimate it. Let's say you find that 10% of your customers don't return each month.

The calculation is: LTV = (AOV * Gross Margin %) / Monthly Churn Rate

In our example: LTV = (€80 * 0.60) / 0.10
LTV = €48 / 0.10 = €480

This means, over their entire 'lifetime' with your brand, the average customer is worth €480 in gross profit. Now you have your North Star. A common rule of thumb is to aim for a 3:1 LTV:CPA ratio. This means you can afford to spend up to €160 (€480 / 3) to acquire a single new customer and still have a very healthy, profitable business.

Suddenly, that scary €1.50 CPC doesn't seem so bad, does it? If your website converts at 2%, that means you need 50 clicks to get a sale. At €1.50 per click, your CPA is €75. With an LTV of €480, a CPA of €75 is fantastic! You're making €405 in long-term profit on every new customer you acquire through ads.

This calculation changes everything. It frees you from the tyranny of cheap clicks and allows you to invest in acquiring high-quality customers, confidently.

I've detailed my main recommendations for you below:

This is a lot to take in, I know. It's a complete shift from what you were doing before. To make it clearer, here is the step-by-step plan I would implement if I were in your shoes, starting today.

This process transforms you from a passive victim of the algorithm into an active driver of your own growth. It's about building a machine, not just pulling a lever and hoping for the best.

I understand this is a significant undertaking, and getting the details right—from the LTV calculation to the audience research and creative testing—is a lot to manage, especially when you're also runnin' a business. It takes time and experience to get it right, and mistakes can be costly.

Many business owners find it valuable to get an expert eye on things to speed up the process and avoid common pitfalls. We often start with a free, no-obligation strategy session where we can dive into your specific ad account, look at your data together, and map out a more detailed, customised action plan. It's a way for you to get immense value and clarity, with no strings attached.

If that sounds like it could be helpful, just let me know.

Either way, I hope this detailed breakdown gives you a much clearer path forward. You can definitely turn this situation around.

Regards,

Team @ Lukas Holschuh