If you are doing any kind of advertising, and it seemed to be doing well, you naturally want to scale by increasing your budget right? Chances are you’ve done this, only to discover that each and every-time you do this your ROI goes to shit.
Well, there’s a reason to this and this is why it happens. Let’s say you are spending $20/day on an adset and you are getting 200% ROI. You decide, whoa this is killin’ it, let’s milk this biyatch!! So you increase your budget by doubling it to $40/day, then you double that to $100 day, and then to $200 a day, and long behold your ROI starts going down, and soon enough by day 3 it’s like nonexistent.
WHY? WHY do I deserve this, why can’t I just scale and make money you think to yourself, bashing your head in the wall. Well there’s nerdy science to it all, and it has to do with how the ad auction works, and how CPMs, and all that correlate with each other.
When you increase your budget fast, it means Facebook will want to spend that budget, so if you are doing auto bidding, then it will increase your CPM bid to get more impressions, thus win more auctions on their platform. This will increase your CPC costs, and that will in turn decrease your ROI.
Over a period of 2 weeks, I’ve measured and noted the effects of increasing the budget slowly vs fast and the Conversion Ratio % always stayed pretty much level at 2.5% when I fast-increased, or slow-increased. The only thing that changed was CPM costs shot up, and with that the CPC’s did as well, so i was paying more for a conversion since the conversion % stayed the same, and the CTR’s on my ads as well.