Your Magic Metric - Never Lose Money in Advertising | Scale Media
July 5, 2019

Your Magic Metric – Never Lose Money in Advertising

Every internet guru says you can make 10 thousand dollars per month. However, how many people actually are netting that amount? The number of leads isn’t meaningful data, nor does it mean a positive return of investment from a campaign.

Quality of leads > quantity, accounting for time invested to follow up.

Content, positioning and communication of value are much much much more important than the platform itself: SEO or paid marketing. The real metric is cash in the bank: sales, net profit and free cash flow.

The Real Metrics

One has to focus on real metrics. If you are spending 10 thousand dollars on advertising and expenses, exclusive of fixed costs: software, an employee pay or rental, and net 10k, you’re technically making a loss.

Hence, accounting for net cost per acquisition and documenting one’s cost per lead against your average order value will give you the ‘magic metric’ on how much you should spend to acquire one lead.

Numbers are half of the art of client acquisition.

Hence, a real metric, for any business is net cost per acquisition.

I am showing off here because the cost per acquisition is a concept I stole from Nicholas Kusmich, I improved it to net cost per acquisition because the return on advertising spend is merely part of the story.

Net cost per acquisition:

To get your net cost per client acquisition, apportion all expenses from software to rent, automate and document all expenses. Some marketing campaigns return positively on advertising spent but thin out on net margin due to fixing costs: rental, inventory, pantry snacks and etc.

One basic example:

You can make $9000 dollars in revenue, but pocket a net profit (free cash flow) of $1200.

I document and automate everything on Google Sheets. Google sheets is an awesome project management tool, shout out to Ryan Stewart here.

Closing Thoughts

I run my marketing campaigns with my own dollars, curate content with my own words and perform sales as a one-man outfit. This is the ultimate form of skin in the game. P.S. I’ve been net positive since day one. So that’s a good thing. 🙂

Marcus Neo

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