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Why Scaling Back On Your Ad Spend Can Actually Help You Scale

DimNiko - burning Money

If you’re spending $1K or $2K a day on paid traffic and it’s unprofitable you are pretty much burning your money.

And what a lot of Brands don’t want to hear is you might actually need to pull back your ad spend, and as you can imagine most see this as a negative.

It doesn’t matter how good you think your ads are, your creatives are or your website is… if it’s not profitable you are doing something wrong and need help.

One of my calls last week was in this exact situation. They were telling me how good their creatives were, how they have this incredible in house creative team and the product is amazing blah blah blah but I calmly pointed out to them…

BUT your results are unprofitable, just over a 1x ROAS so it doesn’t matter how good you think you are, your market disagrees.

They were spending $2K a day on ads and I made it super clear to them they should actually pull back their ad spend and fix the foundations of their ad account first to ensure long term success.

This is why it can actually help.

Be Profitable Before Scaling

Firstly you need to understand to scale aggressively you need to be profitable with your ads or you are losing money for every dollar you put into ads.

You need to pull back your ad spend to really focus on the things that are working and double down on those areas to ensure that consistent growth over time.

If something isn’t working at your current ad spend, there is no way it is going to work at a higher level of ad spend. You will just lose more cash.

To give you a real life example, we had a client come on with us that was spending $3K a day with a $110 CPA and monthly revenue was $153K.

We took over and we knew the CPA was far too high so we told them we were going to scale down the spend, optimise what is working so we could take 1 step back and then take 2 steps forward to actually scale.

By dropping the ad spend and working on heavy optimisation of what was working we were able to squeeze a lot more out of the current campaigns and set some solid foundations for growth.

Month 1 together we dropped spend from $93K to $72K, so we dropped the spend by $20K and this actually dropped the CPA to $83, remember it was $110. 

Which meant we actually increased their monthly revenue while dropping spend by $20K for the month, which is pretty insane, imagine spending $20K less on Ads for more revenue.

During that first month together we were able to get clear on what was working and communicate this to the client to get us more creative, more assets for the ads so we could scale profitably.

So we had taken that necessary step back, then Month 2 together we started scaling

Increased spend upto $96K for the month and the CPA dropped even further to now being $72 and monthly revenue was $213K

So we are 2 months in working together, we are sitting at the same level of spend when we took over but monthly revenue has gone from $153K to $213K, $110 CPA to $72 CPA.

So What Should You Do If You’re Unprofitable At a High Level of Ad Spend.

Analyse your account, look at what is actually working, pull back on spending on unprofitable campaigns, double down on the winning campaigns or creatives.

Trust me, once your ad account foundations are set correctly at a lower ad spend you will be able to scale far beyond where you were before.

If you actually want help analysing your ad account results to take your brand to the next level let’s have a chat.

Book a call here: https://dimniko.com/msp-apply

Chat soon,

Dan

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