This is Audience Fragmentation

Fragmenting your audience into multiple ad sets makes optimization less effective. The algorithm is limited to finding results within each segmented group rather than across the whole potential audience, leading to fewer learning opportunities for the algorithm, issues with exiting the learning phase, and generally less optimized actions within your budget.

Meta suggests to consolidate your audience and your budget to avoid unnecessary fragmentation. If you need to analyze performance by demographic group, you can use breakdowns instead of creating separate ad sets. This approach helps in optimizing ad delivery and performance, especially when using features like Advantage+ Audience or setting performance goals.

Automated Rules can help manage Audience Fragmentation by setting up automated processes that monitor your ad sets. These rules can either combine ad sets automatically when fragmentation is detected or alert you so that you can make an informed decision on whether to combine them manually. This helps in maintaining an optimized advertising strategy.