How To Make Higher Profits With Lower ROI

Common question with no good answer:

“What’s the typical ROI of a ‘good’ display campaign?”

ROI varies depending on so many things. Your offer, your sales funnel, your industry, your traffic sources, etc.

However, what it depends on MOST… is scaleability — The ability for you to increase spending and still remain profitable.

Believe it or not, the highest scale opportunities (mass markets like weight loss, finance, relationships, etc.) often have the lowest ROI. This is because competition is fierce for the inventory because the stakes and rewards are both higher.

However, a lower ROI isn’t necessarily bad for business.

In many cases… a lower ROI is going to make you more money and you should actually accept and be happy with a lower ROI.

Why Should I Aim For a Lower ROI?

If you’re consistently and intelligently optimizing your campaigns you’ll eventually find that “sweet spot” — that perfect margin between spend and revenue. It’s where you’ve maxed out your current ROI.

It might seem that things can’t get even better, but don’t be tricked.

You still have room to scale.

Why 25% ROI is Better Than 200%

Take a look at this example:

Campaign #1: $25K/month with $50K profit (200% ROI)
Campaign #2: $200K/month with $50K profit (25% ROI)

Which campaign would you prefer?

With Campaign #1 you have an amazing ROI.

Campaign #2? Not so much.

Yet, if I’m in your shoes, I’m going for campaign #2.

Why?

Because even though you’re spending more, you’re still seeing the same level of profits, just at a much lower margin. The upside to this is that since you’ve spent 8x more, you likely have a bigger list of prospects, buyers, and more traffic for testing.

In the long run you’ll make more money by increasing bids, spending more and going broader with targeting. Although, you’ll push your margins down, you’ll get more traffic, which will allow you to test much faster.

These higher traffic levels will turn into larger profits once you further optimize your funnel based on your testing.

But what if I’m just starting out?

If you haven’t even found that ‘magic spot’ yet, here’s my suggestion:

Shoot for break even.

You should aim for not losing money before you even start thinking about making $1 in profit.

Once you’ve broken even you can start to look at all steps in your funnel, the front end and the back end. You will begin to see improvements as you optimize and as your campaign matures. Your break even campaign WILL become profitable. I promise 🙂

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