ALL The Ways To Make Your Ads More Profitable (Annual Planning Pt 2)

This content was published in the No Best Practices newsletter on 12.11.2021.

One of the most important questions marketers and media buyers need to answer: what KPIs should I use to manage my media spend, and what targets should I assign to those KPIs?

Many organizations will look at a P&L delivered by finance, see that performance marketing is 20% of the budget, and then assign a blended last-click ROAS of 5 to all media spend. That approach is extremely limiting to growth (I covered this in depth in the last newsletter).

Other organizations, typically venture-backed, will set media targets based on cost of acquisition:customer lifetime value ratios. They’ll say something like “the average customer produces a lifetime value of $200, so we can afford to spend $100 to acquire a customer. The only problem with that? There is no standard definition of lifetime value, so this approach often results in unprofitable customer acquisition.

Surely, there must be a better way, right? Yes. Here it is:

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