When To Switch Off A Low Performing Ad Campaign

“When is the right time to kill my low performing ads?”

You can feel the end creeping up, lurking in the back, and the floor slowly falling out from underneath. It can be hard to talk about “the end” of a relationship, but it is better than letting something continue long after the feeling that it already ended. Sometimes it just takes courage to step up and say, “it’s not me, it’s you.”

Of course, I’m talking about low performing ad campaigns…

How do you know when to turn off low-performing ad campaigns? ❌

You might have done everything right in the beginning and scoured over all the “how-to’s” and old college textbooks. You defined the goals, set a budget, found the target audience, determined the media, and painstakingly crafted a surefire message. Really, it was more of a work of art than an ad campaign. 

Running successful ad campaigns means knowing the right time to switch off of a low performing ad campaign. Ultimately, this skill involves knowing how to evaluate your own ad campaigns.

The first thing to note, is this will look different for every business. The biggest factor you’ll want to be mindful of is what is a customer worth to you!

Let’s look at 2 examples:

Business A: Has an average customer lifetime value of £120,000

Business B: Has an average customer lifetime value of £97

Depending on their margins, Business A may be able to spend upwards of £50k in to profitably acquire a customer. Whereas Business B, can’t even afford to spend £100 to acquire a new customer as there simply isn’t enough value in it.

So what is a good cost per acquisition (CPA) to aim for? 📈

If this wasn’t already clear, every business will have a different target CPA.

Even 2 businesses in exactly the same industry, may have wildly different CPA’s. As one business may have an extremely high lifetime value due to high-value upsell or a high retention rate, whereas their direct competitor may be in the opposite position meaning, they might only be able to afford a fraction of the cost to acquire a new customer.

It’s essential you factor in your sales process and business model when determining when to switch off an ad campaign.

For example, if you run an ecom brand and people buy directly from your website, this is fairly easy to work out based on your average website conversion rate.

However, if you’re in B2B and generating leads which have an average buying cycle of 6 months, you’ll want to not only look at your website conversion rate (for generating leads) but also to analyse historic sales data to forecast things like average close rate, average deal size, etc…

It’s also worth bearing in mind that whenever you run a new advertising campaign on a new platform, the quality of the leads/visitors can vary massively depending on the quality of your content AND the targeting.

What factors should I look for in a winning or losing ad campaign? 🤔

It’s essential that you first factor in your sales process and business model when determining when to switch off an ad campaign.

For example, if you run an ecom brand and people buy directly from your website, this is fairly easy to work out based on your average website conversion rate.

However, if you’re in B2B and generating leads which have an average buying cycle of 6 months, you’ll want to not only look at your website conversion rate (for generating leads) but also to analyse historic sales data to forecast things like average close rate, average deal size, etc…

It’s also worth bearing in mind that whenever you run a new advertising campaign on a new platform, the quality of the leads/visitors can vary massively depending on the quality of your content AND the targeting.

How long do you need to test ads for? ⏱

We’ve seen multiple instances where it’s taken 6-12 months of testing and constant iteration to find a campaign that brings the right type of leads and drives quality, consistent results that generate profit.

In a nutshell, you have to see any new advertising campaign as an investment and also be prepared to lose money as there are no guarantees.

We obviously can’t tell you how much you should be willing to spend (or risk) but it should be in proportion to your lifetime customer value.

For example, if a customer is worth £50k to you, don’t just switch your ad campaigns off because you’ve spent £5k and not generated a sale yet!

Test, analyse and iterate!