Why did increasing budget of Facebook ad set lead to increase in Cost Per Purchase?

Question

I'm advertising on Facebook and I have an ad set where after I increased the budget significantly, I've seen cost per purchase triple in comparison to the month before. Digging into the data I saw there was a clear decrease in the CTR trend from the day in which I increased the ad set's budget and also in the conversion rate from click to app install. Install to registration and registration to purchase conversion rates didn't show the same distinct trend of decline.

I'm having a hard time putting my finger as to the cause of this sharp increase in the cost per purchase of my ad set. I'd really like to learn and improve my knowledge because these cases are likely to happen to me again in the future.

So - Why in some cases does increasing the daily budget on ad set/campaign lead to increase in cost per purchase?

Answer 1

This is a good question. I'm assuming these ad sets are running with no bid control (eg. minimum cost)?

I believe the reason this happens is that Facebook expands its targeting for the ad set in order to spend the higher daily budget, and as a result, it exposes the ad to people for whom it is less relevant. This happens right away in an exploratory phase, but it can also result in a new baseline being established if the ad set isn't subsequently changed.

I'd recommend setting a cost control; more information on that here: Understanding bid strategies and cost control in Facebook advertising

Answer 2

Digging into the data I saw there was a clear decrease in the CTR trend from the day in which I increased the ad set's budget and also in the conversion rate from click to app install.

Your finding above makes me believe that you may have increased the budget too aggressively, leading to the ad sets entering into learning phase and negatively impacting performance. You also may have reached the outer limits of your optimal audience, which would mean targeting needs to be adjusted.