I get asked this question ALL. THE. TIME. when speaking with prospective clients.
“How long will it take for me to be profitable when I start running ads?”
And the answer is…it depends!
(Shocker, I know.) But what you need to know…
It all comes down to the numbers, my friends.
If you’ve never run ads before, here are a few questions to ask to help answer this.
- What are you going to run ads to? A free lead magnet? A low-ticket offer? A live webinar? A course or membership?
- What’s the percentage of people who purchase after taking the action you want them to take with the ads?
- How long does it take for them to purchase?
- What is the price-point of your paid offer on the back-end?
- Have you successfully sold that offer in the past?
- If so, what was the purchase conversion rate? (Calculate: Of those who became a lead or registered for your webinar, what percentage of them purchased your larger paid offer?)
- How much do you plan to spend on ads?
Take all of these factors into consideration and do the math using different scenarios.
Let’s pretend, shall we?
Here are two clients who run $2,000 in ads – both are promoting a free webinar where they sell a coaching program at the end.
To give you a range of realistic expectations, the average range I’m seeing right now for webinar registrations is anywhere from $3 to $35 (depending on your industry).
Meet Client #1:
She wants to run ads to her webinar where sells a high-ticket coaching program at the end for $3,997. When she did this webinar organically before, the purchase conversion rate was 4%.
After $2,000 in ad spend, she got leads for $35 each. (On the high-end of our range.)
That means 57 people signed up for the webinar. If 4% purchase (like before), that’s 2 people who purchase.
Seems like not very much, right? But that would equal $7,997 in revenue!
$7,997 minus $2,000 in ad spend = $5,997 in profit. That’s a 3x Return on Ad Spend (ROAS).
That means for every $1 she puts in, she gets $3 back.
That’s a GREAT return!
Meet Client #2:
He wants to run ads to his webinar where he sells a mid-ticket coaching program at the end for $500. When he did it before, his conversion rate was 10%.
After $2,000 in ad spend, he got leads for $3 each. (On the low-end of our range.)
That means 666 people signed up for the webinar. If 10% purchase (like before), that’s 66 people who purchase.
And that comes out to $33,000 in revenue!
$33,000 minus $2,000 in ad spend = $31,000 in profit. That’s a 15.5x Return on Ad Spend (ROAS).
That means for every $1 he puts in, he gets $15.50 back.
Who WOULDN’T do either of these scenarios?!
Every. Single. Day.
It’s ALWAYS a good idea to know the best-case scenarios (and worst-case, too!) before running new ad campaigns.
Because, we all know there are sooooo many variables that can affect the outcome of any launch.
Like . . .
What if the cost per registration changes?
What if the purchase conversion rate goes down once we start targeting a cold audience (which is common, BTW).
What if we improve our webinar experience and increase the conversion rate?
How much difference would these scenarios make?
Well, I have an easy way to find out!
Download my FREE Ads Profitability Calculator to quickly AND EASILY determine what your Return on Ads Spend could be.
This calculator will let you plug in your conversion rates to determine a variety of scenarios.
It’s helpful to know the range of possibilities going into any new ad campaign.
Otherwise, you could go in with unrealistic expectations.
(I know you don’t want that.)
And neither should your ads manager.