Digital Marketing

When To Start Implementing Paid Advertising and Key Metrics To Track in Your Marketing

By Hugo Fernandez
When To Start Implementing Paid Advertising and Key Metrics To Track in Your Marketing

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According to the Small Business Administration, as of 2014 there were around 28.2 million small businesses in the US. Of these, over 80{3a2c4a0805d1010346945af56d6c7f7373ea77d542a39d135c91600d098c4502} don’t have employees and struggle to make a mere $44,000 a year in gross revenue. Naturally at that level, it’s tough to spend $10 on advertising.

You can certainly thrive relying solely on organic traffic generating methods. Companies like Tesla, Costco, Sriracha, and Zara all do well without spending a dime on paid advertising. If you have the proper positioning and create raving fans through your products, you won’t have to spend any money on advertising.

However, if you find that the organic strategies do not give you the results you’re looking for, you want immediate jump in growth, or you want to grow consistently, paid advertising will be that much needed fuel.

Think of paid online advertising as a faucet. You can turn it on or up when you want more water, you can turn it off or down when you want less water.

I personally recommend a mix of both paid advertising and organic growth strategies. With the right combination, your revenue can skyrocket and you’ll get be able to scale faster. Achieving your growth goals is simply a matter of dialing things in and turning them up.


So, when should you start advertising your business?

  1. Make money first When a new business comes to me and says they need help with their marketing but their revenue falls below $100,000, I usually advise them on organic growth strategies. Chances are they’re still trying to figure out their your customers are and getting their operations in order.If you’re under $100,000 and this is your first business, go knock on doors, cold call, network, and attend events to meet potential clients or promotional partners. If you’re one of the 80{3a2c4a0805d1010346945af56d6c7f7373ea77d542a39d135c91600d098c4502} of businesses just getting started, get something up, then go out there and hustle, talk to people, and learn about your clients. You can go online to Vistaprint and get brochures, postcards, and business cards. Go on Squarespace and get a website for a few dollars. Just start and focus on growing your revenue.In my new book, the Client Acquisition Blueprint, I give you a 10 step process for starting your marketing process. Step #10 is paid advertising. Implement the first nine chapters of the Client Acquisition Blueprint to at least get to around $100,000 in sales before investing in advertising.
  2. Put your business systems in place You have to really dial in your business before implementing paid advertising. You need to have a product or service people want, have an easy way for people to give you money, and have your systems for delivery dialed in.How are you answering your phone or emails when someone submits an inquiry? Are your conversations smooth or are you winging it every time because ‘it’s all in your head’? Write it down, put it on a checklist, and make it easy for someone else to follow the same process.Make sure you have some basic automation and tracking in place to handle the new influx of business. Otherwise you’ll get the calls, inquiries, and opportunities, but they’ll fall off your desk without you even realizing it.Even when business owners think they have it all together, I’ve seen them shut off their successful ad campaigns because they’re ‘too busy’ and can’t handle the work. It’s a good problem to have but it’s almost as bad as the feast and famine, cashflow rollercoaster most businesses find themselves in. I’ve seen business owners not put the proper tracking in place or write contact information on sticky notes, then toss them out with their lunch leftovers.
  3. It takes courage Have you ever heard the expression, “It takes money to make money”? I disagree with that statement 90{3a2c4a0805d1010346945af56d6c7f7373ea77d542a39d135c91600d098c4502} of the time because you can find ways to make money without having to spend money. But in advertising, that’s definitely true.More importantly, making money takes courage. The courage to go out there, learn a new skill, learn how things work, and then just take an informed leap of faith. You never really know if a campaign will work, but you can’t get gun shy and start prematurely tweaking campaigns before they get a chance to optimize or produce enough data.If all that sounds too scary, and it most likely does – nobody wants to spend money without any guarantees or assurances – don’t worry. Below, we’ll go through the basic metrics to track on your paid advertising campaigns so you know what to focus on. In the Client Acquisition Blueprint, we cover how to maximize your advertising efforts and create winning campaigns. Get a free pre-launch copy of the book here.


The Profit Path is simply a series of key metrics to track when running any marketing campaign. Here’s how to structure your own Profit Path so you can build profitable advertising campaigns:

  1. Determine Your Average Client Value: Look at your last 12 months of transactions and determine what your average client is worth to you. This will help you determine the maximum you’re willing to spend to acquire.
    1. On a single transaction: How much do they spend with you their first time around? Caution: this is where most business owners stop and they leave money on the table for their competitors to snatch up. Only looking at what you make on the first transaction is a huge mistake that prevents you from going all in on your marketing.
    2. Client Lifetime Value: How long does each client stay with you and continue to buy your products or services? I usually start by simply figuring out my clients’ 12 month value. How much do they spend with us during the first 12 months?
  2. Set your Advertising Budget: In the Client Acquisition Blueprint, I talk about how to set your overall marketing budget. A good place to start would be to budget 10{3a2c4a0805d1010346945af56d6c7f7373ea77d542a39d135c91600d098c4502} – 20 {3a2c4a0805d1010346945af56d6c7f7373ea77d542a39d135c91600d098c4502} of top line revenue for marketing. This number can adjust as you grow. Also, the more creative you are and the more organic marketing methods you deploy, the less you’ll have to budget out of pocket for marketing.
    1. If you’re a $500,000 business (or want to have a $500,000 business) then you’re looking at spending $50,000 to $100,000 in marketing.
    2. A simple way to divide your budget in this scenario is:
      1. 50{3a2c4a0805d1010346945af56d6c7f7373ea77d542a39d135c91600d098c4502} to pay for your team (time): either your internal marketing team or agency partner. $50,000 might get you an entry level or mid level marketer depending on your market and location.
      2. 50{3a2c4a0805d1010346945af56d6c7f7373ea77d542a39d135c91600d098c4502} of that can be allocated to pay directly for advertising.
  3. Website Metrics:
    1. Traffic: How many visits do you need to your website?
    2. Conversion Rate: What percentage of your visitors take action and become a lead? That’s your Lead Conversion Rate.
  4. Sales Metrics: How many people do you need to talk to in order to get a sale? That’s your Sales Conversion Rate.
  5. Costs and Returns: Is this campaign profitable?
    1. Cost Per Lead (CPL): How much did it cost you to acquire a lead? Divide the ad spend by the number of leads generated from your campaign to find your CPL.
    2. Cost Per Acquisition (CPA): How much did it cost you to acquire a client? Divide the ad spend by the number of clients you got from your campaign to find your CPA.
    3. Return on Investment: Revenue earned divided by ad spend.

It’s important to know these numbers during the life of your advertising campaign, but you should also structure your Profit Path from the beginning so you’re clear on what to track. Set baseline targets, even if in the beginning you’re just taking educated guesses.

Advertising can be pretty simple. It’s a pay-to-play game that with some planning and strategic actions can have a very strong and positive impact on your growth.

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  • Paid and Organic Traffic Mastery: The Fail-Proof Facebook Ads, Google Adwords, and Organic Authority campaigns that nobody is talking about yet.

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