Solved: How Long to Wait Before Declaring Ad a Winner?

Hi there,

Thanks for reaching out! Happy to give you some initial thoughts on your question about when to mark an ad as a winner. It's a very common question, but I think people often focus on the wrong metric, which is time. It's less about how many days you wait and more about how much data you've gathered for the money you've spent.

Especially with a local lead gen campaign on a tight budget, you have to be really methodical. I'll walk you through the framework we use, which moves away from arbitrary timelines and towards a data-led approach based on your specific business numbers.

We'll need to look at... The Real Problem With Your Question

The core issue with asking "how long do I wait?" is that time is a poor measure of an ad's performance. An ad running for 7 days at £5/day has gathered the exact same amount of data as an ad running for 1 day at £35/day. They've both spent £35. The second one just got you the answer much faster.

The algorithm doesn't care about calendar days; it cares about impressions, clicks, and conversions. These are what it uses to learn and optimise. At £5 a day, you're feeding the machine tiny little scraps of data, so the "learning phase" can feel like it lasts forever, and you're left guessing.

This is why you feel stuck between killing ads too early and letting them burn cash for too long. You don't have enough data to make a confident call either way. So, the first shift in mindset is to stop thinking in terms of "days" and start thinking in terms of "budget spent".

Before we can even decide how much to spend, though, we need to know what a good result actually looks like for your business. A lead isn't just a lead. It's potential future revenue. How much revenue? That's the question we need to answer first. This brings us to the most foundational metric in all of paid advertising: Customer Lifetime Value (LTV).

I'd say you... Need to Understand Your Numbers First

You can't know what you can afford to pay for a lead (your Cost Per Lead, or CPL) until you know what a customer is actually worth to you over their entire relationship with your business. Otherwise, you're just picking a number out of thin air. A £40 CPL might seem terrifyingly high, but if that customer is worth £5,000 to you over their lifetime, it’s an absolute bargain.

So, how do you calculate it? Here's a simplified formula that works well for local service businesses.

1. Average Revenue Per Account (ARPA): What's the average amount a customer pays you per transaction or per month/year? Let's say you're an electrician. Maybe the average job is £300.

2. Gross Margin %: What's your profit margin on that revenue after accounting for costs directly related to delivering the service (materials, labour, etc.)? Let's say your gross margin is 60%.

3. Monthly Churn Rate: This is a bit trickier for a non-subscription business, but you can estimate it. What percentage of your customer base do you lose each year? Or, how often does an average customer use your service again? If a customer calls you once every 2 years, your "customer lifetime" is 24 months. The monthly churn rate is (1 / Lifetime in Months), so 1/24 = roughly 4%.

The formula is:

LTV = (ARPA * Gross Margin %) / Monthly Churn Rate

Using our electrician example:

LTV = (£300 * 0.60) / 0.04
LTV = £180 / 0.04 = £4,500

So, in this hypothetical case, each new customer is worth £4,500 in gross margin over their lifetime. Now we have a real number to work with.

A healthy business model often aims for a 3:1 LTV to Customer Acquisition Cost (CAC) ratio. This means you can afford to spend up to a third of your LTV to acquire a customer. In our example, that's £4,500 / 3 = £1,500. This is your maximum allowable CAC.

But that's the cost to get a *paying customer*, not just a lead. What's your lead-to-customer conversion rate? If you close 1 out of every 10 leads you get, your close rate is 10%. So, your maximum allowable CPL is 10% of your maximum CAC.

Max CPL = Max CAC * Lead Conversion Rate
Max CPL = £1,500 * 0.10 = £150

Suddenly, you have your answer. You can afford to pay up to £150 for a lead and still run a very profitable business. This number is your north star. It's the KPI that matters most. Now, let's make this real for your business with a calculator.

You probably should... Build a Simple Decision Framework

Right, now that you have a target CPL, you can build a simple, logical framework for making decisions. This removes the guesswork and emotion.

The rule of thumb I give to clients is what I call the "3x CPL Rule".

It's straightforward: If an ad (or ad set/audience) has spent three times your *target* CPL and has not generated a single lead, you kill it.

Why 3x? It provides a reasonable buffer. Sometimes you get unlucky. An ad might spend your target CPL of £150 and not get a lead, but then get two leads in the next £50 of spend. By waiting until 3x spend (£450 in our example), you've given it more than a fair shot. If it hasn't performed by then, it's highly unlikely to become a "winner". The probability is just too low, and you're better off reallocating that budget to a test of a different ad or audience.

What if you don't have a historical average CPL to work from? Use the Maximum Affordable CPL you just calculated as your initial target. As you gather data, you'll establish a real-world average, and you can adjust your target accordingly. For local services, CPL can vary wildly. I remember one campaign we ran for an HVAC company in a competitive city where they were seeing costs of around $60 per lead, while for a childcare service we worked with, we were getting signups for about $10. Your own numbers are the only ones that truly matter.

This process can be visualised as a simple flowchart:

This framework is your starting point. As you get more advanced, you can add nuance. For instance, an ad with a CPL slightly above your target but a very high Click-Through Rate (CTR) might be worth optimising rather than killing outright. Maybe the ad is great, but the landing page is weak. But for now, stick to the simple framework. It will prevent you from making the two biggest mistakes: cutting a potentially good ad too soon, or letting a bad one drain your bank account.

You'll need... To Address the Low Budget Constraint

Now we have to address the elephant in the room: your £5/day budget. I need to be brutally honest here. At this level of spend, you are playing on the highest difficulty setting. It is incredibly challenging to get results.

Let's use our £150 target CPL from the example earlier. To apply the 3x CPL rule, you need to be willing to spend £450 on a single ad test before deciding to kill it.

At £5 per day, how long will that take?

£450 / £5 per day = 90 days.

It would take you three months to confidently decide that *one single ad* is not a winner. In that time, a competitor with a larger budget could have tested dozens of ads, found several winners, and be actively scaling their campaigns, capturing market share while you're still waiting for data.

This is the real danger of a low budget. It's not just that growth is slow; it's that the feedback loop is so long you can't learn or adapt quickly. You end up making decisions based on tiny data sets, which is little better than flipping a coin.

So what can you do?

1. Consolidate Your Budget: Instead of running multiple ads at £5/day each, run only one ad or one ad set at a time with your entire budget (e.g., £15-20/day). This will accelerate the data collection for that one test, shortening your decision timeline from months to weeks.

2. Increase Budget (If Possible): This is the most obvious but often hardest solution. Even increasing to £20-£30/day dramatically shortens the time it takes to validate an ad.

3. Focus Maniacally on Your Offer: If you can't increase the budget, you must increase the efficiency of every pound spent. A powerful, irresistible offer can dramatically improve your conversion rate, which lowers your CPL and makes your small budget go much further.

Here’s a calculator to illustrate just how much your daily budget impacts your ability to make decisions.

Your offer needs to be built to solve an audience's pain

This leads to the final, and perhaps most important, piece of the puzzle. The number one reason ads fail isn't the targeting, the image, or the button colour. It's a weak offer. An offer that doesn't solve an urgent, expensive, or frustrating problem for a specific group of people is doomed from the start.

For a local service business, you aren't just selling "plumbing" or "landscaping". You're selling relief, peace of mind, and the restoration of order. Your ad copy needs to reflect this.

Don't use generic copy like: "Local Electrician Services. Certified and reliable. Call us for a free quote."

That speaks to no one. It's boring and forgettable. Instead, use the Problem-Agitate-Solve framework to hit a nerve.

1. Problem: State the specific, painful problem they are experiencing right now.
"Flickering lights driving you crazy? Worried that buzzing sound from the fuse box is a serious fire risk?"

2. Agitate: Twist the knife. Remind them of the consequences of inaction.
"Don't risk a DIY fix that could void your insurance or put your family in danger. An electrical fault isn't something to ignore."

3. Solve: Present your service as the fast, easy, and safe solution to their pain.
"Get a certified, local expert to your door today. We diagnose the problem fast, give you a fixed price upfront, and guarantee our work. Stop worrying and get it sorted. Tap to call now."

This approach transforms your ad from a boring business card into a compelling solution to a real problem. A stronger message leads to a higher CTR, more relevant clicks, and ultimately a better conversion rate on your website or landing page. This improvement in conversion rate is your secret weapon for making a small budget work. If you can turn 2% of clicks into leads instead of 1%, you've effectively doubled the power of your ad spend without spending a penny more.

This is the main advice I have for you:

I know this is a lot to take in, but implementing this framework will move you from feeling uncertain to being in control of your advertising. It turns advertising from a gamble into a predictable system for generating leads.

Navigating this, espeshally on a tight budget, can be tough. The process of calculating these numbers, structuring tests correctly, and writing compelling copy is where professional expertise can make a huge difference, saving you months of trial and error and wasted ad spend.

If you'd like to go through your specific setup and have us take a look at your account, we offer a free, no-obligation initial consultation. We can help you pinpoint your exact LTV, refine your offer, and set up a testing structure that will get you clear answers much faster.

Hope this helps!

Regards,

Team @ Lukas Holschuh