Why do ads stop working when you spend more?

Because the cheapest audience is spent first. The first budget reaches people most likely to buy; scaling reaches people progressively less likely, at the same or higher cost.

The reasoning

That is a property of the auction, not a mistake in the campaign. The way past it is a better offer or a wider product range rather than a bigger budget against the same one.

What most people get wrong

Attribution is harder than the dashboards suggest. A customer sees six things and the last one takes the credit.

The cheapest customer is the one you already have, and most budgets are spent as though that were untrue.

A channel that works at small spend often stops working at large spend, because the cheap audience runs out first.

How an app changes it

Push notifications sit on the owned side of that line, which is the whole commercial argument for an app.