Digital Lab

3 Ways To Make More With Ads

Advertising is the most common form of marketing… yet many businesses struggle to scale it properly.

Here are a few tricks you can use to improve your Return-on-Ad-Spend (ROAS) quickly.

1. Reduce Your Cost-Per-Lead (CPL)

The easiest (and most obvious) way to improve your ROAS is to reduce your CPL.

Your CPL directly determines how much your campaign has the potential to make.

If you’re closing 25% of your leads, then you can close 25/100.

If your CPL gets cut in half, then you could now close 50/200. Without changing anything else about the campaign.

The best ways to reduce CPL are:

• Test different offers (promotions, products, services)
• Test different copy (messaging, CTAs, captions)
• Test different creative (video, image, text)

Often, when testing just one of these you’ll find a way to reduce your CPL. But you should be testing them all regularly.

2. Increase Your Customer Life-Time-Value (LTV)

Maybe you already have an incredibly low CPL, so you don’t believe there’s much more you can do there.

The next easiest way to increase your ROAS is to increase your LTV.

LTV is simply a measurement of the average amount of money a new customer will contribute to your business over the rest of their lifetime.

A quick way to calculate this is to take your estimated monthly value & multiply it by the average customer retention length.

LTV = Monthly Revenue x Number of Months

So if you sell something for $500/month and customers usually pay for 10 months, then your LTV is $5000.

Once you know your LTV, you can understand what is a reasonable amount of money to spend per customer.

So if you have a $500 CPL on a $5000 LTV, you’re doing pretty good.

But what if you were able to get your LTV to $10,000?

Suddenly your $500 CPL is incredible.

The easiest way to increase your LTV is:

• Increase the price of your products/services
• Increase the number of times a customer pays
• Increase the length of time a customer pays

The first is straightforward.

The second is a question of upsells or downsells.

Ie. what other things could you sell your customers for $50/month or $2500/month?

If you can increase the frequency of payment, you’ll dramatically improve your ROAS.

The last is mostly a question of how good your product/service is and how good your customer service is.

If your customers are happy and your product/service is useful, they’ll stick around longer.

3. Find New Markets

If you have truly exhausted the two options above…

The next best thing is to explore new markets.

And by market I mean, a group of people whom you have the potential to sell something.

It could be a new physical location, it could be a new age group, or it could be B2B or B2C.

There are a lot of ways to split into new markets:

• Adjacent markets (other products/services to the same crowd)
• Upstream markets (higher value customers, enterprise)
• Downstream markets (lower value customers, mass)
• Partner markets (partners that can sell on your behalf, wholesale)
• New markets (new product/service, new customer)

The last one is the most risky, as you have no proven success in that space.

Most companies intuitively go for upstream markets because the LTV’s are more exciting. But this isn’t great for every team.

Going upstream means you have to sell completely differently, and the scale at which you need to deliver the product/service brings its own challenges.

The easiest markets to tackle are downstream and partner markets. You’re often selling the same thing or a bite-sized version of it.

This means you can use all the same sales tactics you already have and apply them to the new market.

Think carefully before moving into a new market & consult a marketing professional who can help you run experiments on the market before going all in.

Are you making the most of your Ad $$$’s?

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