The Myth of Ad Success: How Much Can You Actually Spend on Ads to Get a New Member?

We’ve all heard the crazy success stories… a $50 ad spend that generates $15k in revenue, a $300 ad spend that brings in $40k in revenue…

These numbers are meant to impress you, but keep in mind that most of the success stories you hear about are actually using potential revenue based off the Lifetime Customer Value (LCV).  In other words, the $15k (or $40k) in revenue likely isn’t immediate… you have to wait several months (or more than a year) to receive all the member revenue.

But what does a successful Facebook Ad Campaign look like?

It’s better to look at success as whether or not your Cost per Acquisition (CPA) is less than your Average Customer Value (ACV).  This way, the revenue that is IMMEDIATELY generated is more than you sped on ads.

“Ad success is when your CPA is less than your ACV.”

Now, keep in mind that the higher your member retention is, the more you’ll be able to multiply that success.  This is where the Facebook Ad guru’s shine… they really get you to pay attention to lifetime revenue!

So the next time you run a Facebook Ad campaign, keep in mind that as long as your CPA is less than your ACV, then your campaign is a success.

If you want to learn more about retention and the cost of churn, I’d highly recommend Chris Cooper’s recent blog on TwoBrain Business – Churn: The Biggest Threat to Your Affiliate.