Solved: Cheapest Paid Traffic Strategy (The LTV Secret)

Hi there,

Thanks for reaching out!

Happy to give you some of my initial thoughts on your question. Tbh, you've hit on a really common problem, but the way you're thinking about it—trying to find the "cheapest" traffic—is probably what's holding you back. It's a bit of a trap that a lot of people fall into. The real goal isn't to get the cheapest clicks, but to find the most profitable customers in the most cost-effective way. It's a subtle but massive difference.

Let's unpack that a bit. I'll walk you through how I'd approach this, from redefining the goal to setting up a proper targeting startagey that actually works.

Why 'Cheapest Traffic' is the Most Expensive Mistake You Can Make...

I see this all the time. Someone sets up a campaign on Facebook or Google, chooses an objective like "Reach" or "Traffic," and gets excited when they see a cost per click of like £0.15. The problem is, they've just paid the platform to find the absolute worst people for their business.

Think about it. When you tell an algorithm to find you the cheapest eyeballs, it does exactly that. It goes out and finds people within your targeting parameters who are known to browse but never click 'buy'. They're not in demand by other advertisers because they don't convert, so their attention is dirt cheap. You're effectively paying to fill your website with window shoppers who have no intention of ever pulling out their wallet. It's the digital equivalent of setting up a stall in a library – lots of foot traffic, zero sales.

The best brand awareness you can get is a sale. It's a customer who is so happy they tell their friends. That only happens when you stop chasing cheap clicks and start optimising for what actually matters: conversions. That means setting up your campaigns to track and optimise for leads, signups, appointments, or purchases. Yes, the cost per *result* will look higher, but you're paying for an action that has tangible value to your business, not just a meaningless visit.

So, what's a realistic price for a conversion?

This is the question you should be asking. And the honest answer is: it depends. It depends massively on who you're targeting, where they are, and what you're asking them to do. But based on the hundreds of campaigns we've run, you can get a pretty good idea of the ballpark figures.

Let's break it down. For a simple conversion like an email signup or a free trial, the numbers look something like this. Traffic costs (Cost Per Click or CPC) in developed countries (like the UK, US, Australia) are usually in the £0.50 - £1.50 range. From that traffic, you might see a landing page conversion rate of 10-30%. So, the math looks like this:

• Worst Case: £1.50 CPC / 10% Conversion Rate = £15 per signup.
• Best Case: £0.50 CPC / 30% Conversion Rate = £1.60 per signup.

In developing countries, the CPC is much lower, maybe £0.10 - £0.50. So the cost per signup can be as low as £0.33, but you have to be very careful about the quality. Often, you get what you pay for.

For something more high-commitment, like an eCommerce sale, the numbers change dramatically. A typical online store converts at maybe 2-5%. Using the same CPCs, your Cost Per Purchase could be anywhere from £10 (£0.50 / 5%) to £75 (£1.50 / 2%) in a developed country. It all comes down to the quality of your traffic and how persuasive your website is.

To make this more concrete, I've built a little calculator for you. Play around with the sliders to see how CPC and your website's conversion rate affect your final Cost Per Acquisition (CPA).

A smarter way to handle geography...

Okay, so now that we've established that cost varies by region, how should you approach it? My advice is to stop thinking about a single "worldwide" campaign. It's inefficient and you lose all control. Instead, you should structure your campaigns by country tiers.

First, if you have any existing customers, start there. The country where most of your customers are is your primary market. You know there's demand there, so double down on it first. Once you've got that working, you can expand.

We usually group countries into logical tiers and run seperate campaigns for each. For instance:

• Tier 1: Core English-Speaking Markets. United States, Canada, United Kingdom, Ireland, Australia, New Zealand. These are often high-value but also high-competition.
• Tier 2: Other Developed Countries. This would be places like Germany, France, Sweden, Japan, Singapore, etc. High purchasing power, but may require language localisation.
• Tier 3: Developing Countries. Here you'll find the lowest CPCs, but you must be ruthless about quality. We often exclude the 30-40 lowest-income countries entirely because they're rife with bots and click farms. A captcha or email verification on your landing page is a must if you target these regions.

By splitting your campaigns this way, you can allocate your budget much more intelligently. You can set different bids and CPA targets for each tier, ensuring you're not overpaying in cheaper markets or getting priced out of more valuable ones. You'll quickly see which regions are driving profitable growth and which are just draining your budget.

But the real secret isn't 'where', it's 'who'...

Here's the most important point in this whole letter. Geography is a useful lever, but it's not the main one. The single biggest factor that determines your success is how well you understand and target your Ideal Customer Profile (ICP). Most businesses get this completely wrong.

They define their customer with vague demographics like "companies in the finance sector with 50-200 employees." That tells you nothing. It leads to generic, boring ads that don't speak to anyone. You have to go deeper. You have to define your customer not by their stats, but by their nightmare.

What is the specific, urgent, expensive problem that keeps them awake at night? Your Head of Sales client isn't just a job title; she's terrified of missing her quarterly target and having to explain it to the board. Your Head of Engineering is worried his best developers are about to quit because their workflow is a mess. Your ad needs to speak directly to that pain. Your ICP isn't a person; it's a problem state.

Once you know their nightmare, you can figure out where they hang out online. What niche podcasts do they listen to? What industry newsletters do they actually read? What software tools do they already use? This is how you find them on platforms like Meta or LinkedIn. You don't target "Business Owners"; you target people who are members of the "SaaS Growth Hacks" Facebook group, follow Jason Lemkin, and have an interest in "Shopify" and "WooCommerce". That's how you pre-qualify your audience and ensure your message is hyper-relevant.

I'd structure your audience targeting like this...

When you have a new ad account, you dont have any data. So the way forward is to start with cold audiences, gather data on your website visitors and conversions, and then use that data to build much higher-quality audiences.

Here’s a simplified flow of how I'd prioritise things:

For Meta ads (Facebook/Instagram), this translates into a classic funnel structure. You'd have seperate, long-term campaigns for each stage:

• Top of Funnel (ToFu): This is your cold traffic. Here you're testing detailed targeting (interests based on their 'nightmare'), and later, lookalike audiences of your best customers.
• Middle of Funnel (MoFu): This is for retargeting people who've shown some interest but haven't taken a key action. Think website visitors, video viewers, etc. You're warming them up.
• Bottom of Funnel (BoFu): This is your highest-intent audience. People who added a product to their cart, initiated checkout, or added payment info but didn't buy. You hit them with direct offers to get them over the line.

You have to test constantly. Group your interests into themes, run them against each other, and turn off the losers after they've spent enough to prove they don't work (a good rule of thumb is 2-3x your target CPA). Once you have enough conversion data (at least 100 events, but more is better), start building lookalikes from your most valuable actions—purchasers, high-value purchasers, etc. These are often your best-performing cold audiences.

The business maths that actually matter...

This brings me to the final peice of the puzzle. How do you know if a £15 CPA is good or bad? You can't possibly know without understanding your Customer Lifetime Value (LTV). This is the single most important metric you can track, and almost nobody does it properly.

The LTV tells you the total profit you can expect to make from an average customer over the entire time they stay with you. Once you know this, you know exactly how much you can afford to spend to acquire them (your Customer Acquisition Cost, or CAC).

The calculation is simple. You need three numbers:

1. Average Revenue Per Account (ARPA): How much do you make per customer, per month?
2. Gross Margin %: What's your profit margin on that revenue?
3. Monthly Churn Rate %: What percentage of customers do you lose each month?

The formula is: LTV = (ARPA * Gross Margin %) / Monthly Churn Rate

For example, let's say your service is £500/month (ARPA), your margin is 80%, and you lose 4% of your customers each month. Your LTV would be (£500 * 0.80) / 0.04 = £10,000. Each customer is worth £10k in gross margin to you. A healthy business model aims for an LTV to CAC ratio of at least 3:1. This means for a £10,000 LTV customer, you can afford to spend up to £3,333 to acquire them! Suddenly that £50 lead from LinkedIn doesn't seem so expensive, does it? It looks like an absolute bargain. This is the maths that lets you scale aggressively and intelligently.

I've built another calculator for you below to figure this out for your own business.

And finally, the one thing that makes or breaks any campaign...

You can have the best targeting in the world and a perfectly calculated budget, but if your offer is weak, you'll fail. This is definitely the #1 reason campaigns dont work. The "Request a Demo" button is the most arrogant, high-friction call to action ever invented. It assumes your prospect has nothing better to do than schedule a meeting to be sold to.

Your offer's only job is to deliver a moment of undeniable value. You must solve a small, real problem for them for free to earn the right to solve the whole thing. For a SaaS company, this is a free trial with no credit card required. Let them use the product and see the value for themselves. For a service business, this could be a free, automated audit tool, a valuable checklist, or a short, insightful video course. For us, it's a free 20-minute strategy session where we audit failing ad campaigns. Give value first, and the sale becomes a formality.

This is the main advice I have for you:

I know this is a lot to take in, so I've summarised the main strategic shifts into a table for you.

Putting all of this into practice—from the strategic thinking to the technical campaign setup and ongoing optimisation—is obviously a lot of work. It's what we do day-in, day-out for our clients, helping them move from burning cash on cheap traffic to building a predictable, scalable engine for customer aquisition.

If you'd like to chat through how this could apply to your specific business, I'd be happy to offer you a free, no-obligation strategy session where we can have a look at what you're doing now and map out a proper plan.

Hope this helps!

Regards,

Team @ Lukas Holschuh