Optimize Your Ad Spend: How to Decide Which Ads to Keep or Cut

Maximizing your return on advertising spend (ROAS) is crucial for driving growth and efficiency in your marketing efforts. Our approach provides a straightforward, data-driven method to review and optimize ad performance every two weeks, ensuring you invest in the most effective campaigns.

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High-Level Approach

We recommend using a 2-week cycle to review ad performance. At the end of each cycle:

1. Review ads that ran in the past 2 weeks
2. Stop individual ads that are not performing well
3. Test new ads using an experimental budget for the next cycle

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Criteria for Keeping and Cutting Ads

We use two main criteria when determining what stays and what goes:

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1. Good Economics

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Evaluate the ROAS of all ads in aggregate. ROAS is different by business and vertical, but we typically recommend a $2-$4 ROAS benchmark as a starting point. B2B companies are typically on the lower end of that, whereas a B2C or high-volume B2B should be on the higher end.

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We use simple rules to evaluate ads—if they meet our criteria, we keep them, and if they don’t we cut them. Brutal.

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To help us understand performance, we look at conversions and qualified conversions. A qualified conversion is defined as a hand raiser (ex. demo request) with a good+ (>70/100) fit. We know that qualified conversions convert to 3x the revenue of a normal conversion, so we strongly recommend using qualified conversions as a goal.

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Ads with >$2 ROAS for qualified conversions, we keep.

Ads with <$2 ROAS for qualified conversions, we cut.

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2. Enough Clicks

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Ensure ads drive sufficient traffic so their effectiveness can be assessed. This depends on the scale of the business, but we typically set a threshold of >100 clicks in the last 2 weeks.

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Example

As an example, Ad 1 brings qualified conversions at $3,000 each. Each qualified conversion brings us about $6,000 in closed won revenue. This is a great sign. Ad 1 has also had 200 clicks in the past two weeks. Therefore, we’ll keep Ad 1.

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To operationalize qualified conversions, check out our documentation here.

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