THE ONLY 4 WAYS TO GET LEADS

Paid Ads Part II: The Money Aspect

Now, let's delve into the financial side of paid advertising. This chapter answers key questions about returns on investment:

 How Much to Spend: The Three Phases

 1. Track Money:

 Before spending, set up precise tracking to measure returns accurately. Track everything from the start to avoid financial pitfalls.

2. Lose Money (Half-Joking):

 Understand that initial losses are part of the process. You’ll inevitably "lose" money in the beginning; this is what we call the Testing phase. The more money & time you spend testing, the more you’ll have an idea of what works and what doesn’t, in order to build more successful ad campaigns.  

So, budget wisely, with an eye on recovering losses from successful ads.

3. Print Money:

 Once your ads break even or better (end of the testing phase), scale the budget by aligning it with lead-getting goals. Reverse your budget from sales goals for efficient scaling.

Pro Tip: Smart Budgeting

Budget two times the cash collected from a customer in thirty days when testing new ads. Smart budgeting ensures controlled spending during the initial phases.

For example, if I know I make $100 in profit from a customer in the first thirty days, I’ll let an ad go up to $200 in spend before shutting it off (as long as I’m getting leads). If I’m not getting any leads from an ad at all, before I spend 1x thirty-day cash I shut it off ($100 in the example). It costs money to build an advertising machine.

How Well Am I Doing: Cost & Returns 

Evaluate paid ad efficiency by comparing lifetime gross profit (LTGP) with the cost to acquire a customer (CAC). Aim for an LTGP-to-CAC ratio above 3 to 1 for profitable advertising.

Pro Tip: Focus on Business Model

If CAC is below 3x the industry average, focus on improving the business model (LTGP).

If CAC is above 3x the average, refine advertising strategies.

My Ads Aren't Profitable: Client Financed Acquisition

 For businesses where LTGP surpasses CAC but not immediately, adopt client financed acquisition. Ensure that customers spend more than the cost to acquire and fulfil them within the first 30 days. 

To do this:

- Create upsells or additional offerings to boost initial gross profit.

- Encourage repeat purchases within the first month to cover acquisition costs.

Personal Lessons from Paid Ads

 1. Don't Confuse Sales and Advertising Problems:

 If you’re getting engaged leads who have the problem you solve and the funds to spend, but they’re not buying -> you have a SALES problem -> focus on refining your sales process.

2. Leverage Free Content for Paid Ads:

 Your best free content can make the best ads. Utilize user-generated content, such as customer testimonials, for effective ads without additional effort.

3. Mind Your Self-Talk:

 Negative self-perception can impact performance. Avoid undermining your abilities through self-deprecating language.

Final thoughts on Paid ads:

Being successful with paid ads isn’t about being the most creative or having the best copy. It’s about knowing the numbers. So, follow the steps outlined.

I recommend doing paid ads last for two reasons. First, skills from the other three methods transfer to this one. And second, paid ads cost money. Money you will have if you start with the other three methods first.

And once we have all that, we scale it. We expect to lose more times than we win. And once we win, we scale the hell out of it. And that’s how we do it.