How to Stop Your Facebook Ads from Wasting Thousands of Dollars

Have you invested tens of thousands of dollars into "Bad Ads" on Facebook and you just can't get it to stop spending on them.

Maybe you're constantly trying to change the ads and you're constantly trying to force Facebook to spend the money on the good one.

But time and again, you see all the money goes to the ads with the worst ROAS.

In this video I'm gonna talk about why this happens, what we should do about it, and why it might actually be a really good thing for your business.

Chapters:
00:00 How to Stop Your Facebook Ads from Wasting Thousands of Dollars
00:29 The Real Reason Your Facebook Ads Aren't Converting: Understanding the End User Experience
02:42 Maximizing Your ROI: The Importance of Blended CPA
05:55 Join Disruptor School and Take Your Business to the Next Level

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Facebook's focus on providing the best experience for end-users is critical because it drives their engagement with ads and ultimately leads to higher revenue for businesses. This means that businesses must create ads that are engaging and relevant to the audience they are targeting.

While ROAS is a very popular metric, it is not the determinant of a "bad ad". Instead, it is important to evaluate an ad's impact on the blended cost per acquisition (CPA) of the business as a whole, taking into account all marketing channels. ROAS on the other hand is built on attribution, or determining which ad gets credit for a sale, which is a false premise for an actionable metric because it is based the last touchpoint in a long customer journey.

When analyzing the effectiveness of ads, it is also important to consider the funnel. The funnel refers to the stages of the customer journey, from awareness to purchase, and "bad ads" may actually be more effective at filling the funnel and generating low-hanging fruit for the business.

It is also important to note that constantly making changes to ad campaigns can hinder the machine learning process, ultimately making success more difficult to achieve. Rather than constantly turning off ads or adjusting budgets, businesses should learn to appreciate the value of ads that may initially appear to be "bad". By evaluating ads based on their impact on blended CPA, businesses can optimize their ad campaigns for success.

Blended CPA is the most crucial metric in evaluating the efficiency of ad spend at acquiring revenue. It's important to monitor the spend and total conversion volume week over week to understand the impact of the spend against each ad on the business. By analyzing this metric, businesses can determine if spending more money on a certain ad actually affects the efficiency of revenue acquisition. It's important to remember that the acquisition of cash flow is what scales a business, and not the CAC (or new customer CPA).

While CPMs are generally considered inactionable datapoints, analyzing "bad ads" can reveal that their CPMs are often dramatically lower. This means that while these ads often do not get the chance to complete the sale, they do give "good ads" more opportunity to turn attention into revenue. While a lower CPM may seem like a good thing, it's important to note that it can also hurt the overall effectiveness of the advertising campaign, if that attention does not aid the unit economics of the marketing funnel.

Frequency is another important metric to consider. It's important to break down frequency by day, as outside of daily frequency, it doesn't matter much at all. "Bad ads" that have a low CPM and low daily frequency can often be good top of funnel efforts that amplify the rest of the business. It's important to remember that Facebook is using these "bad ads" as a prospecting effort, and businesses should learn to love them as long as the CPM stays lower than the rest of the ads, the frequency is also lower than the rest of the ads, and ultimately, the blended CPA doesn't spike (or even goes down) because Facebook decides to spend money on the ads that help their business model by providing the best user experience.

In conclusion, monitoring blended CPA, CPM, and frequency can help businesses evaluate the effectiveness of their advertising campaigns, and how each ad in the account is being used by Facebook, even at Broad. Blended CPA helps businesses understand the impact of ad spend on revenue acquisition, while analyzing CPM and frequency can help businesses optimize their campaigns for maximum effectiveness. By paying attention to these metrics, businesses can make informed decisions and scale their operations successfully.

[sangharshkhandelwal]

This is probably the best advice I've heard about Facebook ads recently! Thanks man!

[silvz]

Couple questions post-watching!

1. How many DCT tests do you recommend running at once? I have two currently running for two top sellers. Both 3x2x2 of course!

2. Do you continue leaving an ad running if all other metrics outside of conversions are showing very healthy?

[CHiKagOo]

Hey Charlie, your channel is the only one I have notifications on, I watch every video! It's amazing how you've scaled Underoutfit from last year to now. I understand that your teachings are geared toward e-Commerce but would you say that the process of running the ads is the same if you are doing lead generation for local businesses? 1 campaign, 1-2 ad sets, dynamic creative on, broad targeting?

[disagree]

Hey Man, thanks for sharing all of that stuff. I am an Engineer from Germany that quit his job last year to go for my own business, have spend 100k over the last 12 months on fb ads (which is a crazy number from my actual point of view:) ). I have tested around, tweaked and changed and sometimes really nearly lost my mind over it... created a huge amount of hypothesises and yet never was sure about a single one of them. You are absolutely the first one where i have these "aaah, fuck, yes, THAT makes sense and fits!"-feeling. So thank you for that! I think that will help me in the future! I am considering your MBA as well eventhough i usually am very sceptical about programs like that, let´s see:)

[karlamenzel]

I cant manage to get a lower frequency than 1, 10. What should I do?

[jameeno]

What do you mean you can’t control for the AOV?

[billymackie]

Hey Charlie,

Avid watcher!

I'd find it really valuable to know how you assess the impact of an ad on the wider omnichannel marketing strategy to warrant keeping it on IF on-platform metrics aren't favourable.

I know you mention to see how ad impacts blended CPA - any tips on how to do this?

[Suyaashchavann]

Amazing vid as always! just one question... how do you cycle in new creatives into the campaign (im following your 3:2:2, its working amazing but as soon as I increase the budget it fucks up). I want to test these new creatives so what do you suggest how should I test them?

[matejantoncic]

Great content as usual! One question: How often should you scale a profitable campaign, and what is the best way to do so?

[thesaxo]

I'm trying dynamic creative with broad targeting! Is there a cap limit of how big the audience adset should be? Ex. if you broad target all US it is like 250mln+ people within the adset, is it fine?

[mrpickle]

so you should never turn off ads in a CBO and only let FB determine what ad to show and when?