Solved: Low UK Ad ROI (The Real Reason)

Hi there,

Thanks for reaching out!

I'm happy to give you some initial thoughts on why your paid ad campaigns in the UK might be struggling with ROI. It's a really common problem, but the solution isn't usually found where people think it is. Most people start by trying to slash their cost per click or tweak ad copy, but that's often just tinkering around the edges.

The real issue, more often than not, is that the entire strategic foundation is a bit shaky. You're probably chasing the wrong metrics, targeting the wrong people with the wrong message, or using an offer that just doesn't connect. Below, I've laid out my thoughts on how to rebuild that foundation so you can stop burning cash and start building a predictable system for growth. It’s not about finding a magic bullet, it’s about doing the hard work upfront that makes the ads work almost by default.

The real problem: You're measuring the wrong thing...

Let's be brutally honest. When you say you're struggling with ROI, what you probably mean is "my cost per lead/sale feels too high". You're looking at your ad spend, looking at the number of leads, and the maths isn't making you happy. That's understandable. But the question isn't "How low can my Cost Per Lead (CPL) go?". The real, grown-up business question is "How high a CPL can I afford to acquire a truly great customer?".

If you don't know the answer to that, you're flying blind. You're making decisions based on feelings, not numbers. The key to unlocking this is understanding your Customer Lifetime Value (LTV). This single metric tells you what a customer is actually worth to your business over their entire relationship with you. Once you know that, you can work backwards to figure out what you can profitably spend to get one.

It's not that complicated to get a rough idea. You just need three numbers:

• Average Revenue Per Account (ARPA): What's the average amount a customer pays you per month?
• Gross Margin %: What's your profit margin on that revenue? (Revenue - Cost of Goods Sold) / Revenue.
• Monthly Churn Rate: What percentage of customers do you lose each month?

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

Let's say you run a SaaS business. Your average customer pays you £200 a month (ARPA). Your gross margin is 85%. And you lose about 5% of your customers each month (churn). Your LTV would be (£200 * 0.85) / 0.05 = £3,400. This means, on average, each new customer you sign up is worth £3,400 in gross margin to your business.

Suddenly, things look a bit different, dont they? A healthy business can often spend up to a third of its LTV to acquire a customer. In this case, that's over £1,100. If your sales team converts 1 in 10 qualified leads, you can afford to pay up to £110 per lead. That £50 CPL from LinkedIn that felt painful a minute ago now looks like a bargain. This is the maths that separates businesses that scale from those that stagnate. Use the calculator below to get a feel for your own numbers.

I'd say your Ideal Customer Profile is a nightmare, not a demographic...

Right, now you know what you can afford to spend, who are you spending it on? Most businesses I see have an ICP that looks something like this: "Companies in the UK finance sector with 50-200 employees, job title Head of IT". Tbh, that's completely useless. It tells you nothing of value and leads to generic, boring ads that get ignored.

You need to stop defining your customer by what they *are* and start defining them by what they're *suffering from*. Your ICP isn't a demographic; it's a specific, urgent, expensive, career-threatening nightmare. Your job is to become the world's leading expert on that nightmare.

For a cybersecurity firm, the nightmare isn't 'needing better IT security'. It's the Head of IT waking up in a cold sweat because they know one clumsy employee clicking on a phishing email could lead to a ransomware attack that costs them their job and cripples the company. That's a pain point you can sell to.

For an e-commerce brand selling high-quality kitchen knives, the ICP isn't "men aged 30-50 who like cooking". The nightmare is a passionate home cook who just spent £50 on a beautiful cut of steak, only to mangle it with a dull, cheap knife, ruining the meal and feeling like a failure. You're not selling a knife; you're selling the feeling of being a competent, respected host.

Once you've isolated that nightmare, everything else falls into place. Where does this person go to find solutions? What podcasts do they listen to on their commute? What industry newsletters do they actually read? What influencers do they follow on Instagram or LinkedIn? This is your targeting. Your ad copy then speaks directly to that nightmare, showing you understand their world better than anyone else. This is how you stop being just another ad and start being a solution.

You'll need an offer they can't ignore...

Now we get to the most common point of failure in all of advertising: the offer. I've seen beautifully targeted campaigns with amazing ad copy completely fail because they lead to a landing page with a "Request a Demo" button. Let me be clear: "Request a Demo" is not an offer. It's an arrogant demand on your prospect's time. It screams "come and let my salesperson waste 45 minutes of your life". It is high-friction, low-value, and instantly positions you as a commodity.

Your offer's only job is to deliver an "aha!" moment. A moment of undeniable value that makes the prospect sell themselves on your full solution. You have to solve a small, real problem for free to earn the right to solve their whole problem for a price.

The type of offer depends on your business:

• For B2B SaaS: The gold standard is a free trial or a freemium plan. No credit card. Let them use the actual product and feel the transformation. We've worked with numerous SaaS clients, and those that reduce friction to get people into the product, like one campaign where we generated 5082 software trials at just $7 each, always win. The product does the selling, not a salesperson.
• For Service Businesses: You need to bottle your expertise. Don't offer a "free consultation". Offer something specific and valuable. An IT company could offer a "Free 10-Point Security Vulnerability Scan". A marketing agency could offer a "Free Google Ads Wasted Spend Audit". For our own consultancy, we offer a free 20-minute strategy session where we audit failing ad campaigns. It provides immediate value and demonstrates our expertise.
• For eCommerce: The offer isn't just a discount. It can be a free guide ("The 5 Essential Tools for the Perfect Home Barista"), a quiz ("Find Your Perfect Skincare Routine"), or a valuable sample. For one subscription box client, a compelling introductory offer helped us achieve a 1000% Return On Ad Spend. It's about giving value beyond the transaction.

If your offer isn't compelling, it doesn't matter how good your ads are. You're trying to push water uphill. Fix the offer first.

We'll need to look at what you're asking the ad platforms to do...

Here's another uncomfortable truth. If you're running "Brand Awareness" or "Reach" campaigns on platforms like Meta or LinkedIn, you are actively paying the algorithm to find you the worst possible audience. You've given it a simple command: "Find me the most eyeballs for the least amount of money".

The algorithm, being very good at its job, goes out and finds all the people in your target audience who are serial scrollers, never click on anything, and certainly never buy anything. Why? Because their attention is cheap. Nobody else is bidding for it. You are literally optimising for non-customers. I've seen so much money wasted on this it's not even funny. For a small or growing business, awareness is a *byproduct* of making sales, not a prerequisite for it.

You must tell the platform what you actually want. If you want leads, you set your campaign objective to "Leads". If you want sales, you set it to "Sales". This is called conversion optimisation. You're now telling the algorithm: "Go into my target audience and find the specific people who have a history of doing the thing I want them to do". This is a completely different instruction and will get you a completely different, and much better, audience. Yes, your cost per impression will be higher. But you're paying for quality, not just quantity.

The choice of platform also matters massively. You need to fish where the fish are biting.

I'd say you need to be more strategic with your audience targeting...

Once you've chosen your platform and objective, you can't just throw a load of interests into one ad set and hope for the best. Good campaign structure separates your audiences based on their temperature—how well they know you. This is often called Top of Funnel (ToFu), Middle of Funnel (MoFu), and Bottom of Funnel (BoFu).

For a platform like Meta (Facebook/Instagram), it should be prioritised something like this:

1. BoFu (Hottest Audience): These people are close to converting. They've visited your checkout page, added a product to their cart, or added their payment info. Your ads to them should be direct, maybe with a small incentive to get them over the line. These should be your highest performing audiences.
2. MoFu (Warm Audience): These people have shown interest. They've visited your website, watched 50% of your video ad, or engaged with your Instagram page. They know who you are, but they're not ready to buy yet. Your ads here should be about building trust, showing case studies, or explaining your value proposition in more detail.
3. ToFu (Cold Audience): These people have never heard of you. This is where you use your interest, demographic, and lookalike audiences based on your "nightmare state" ICP. The goal here is to stop their scroll and make them aware of the problem you solve.

You should have separate campaigns for each stage of this funnel. By splitting them out, you can allocate budget to what's working and tailor your message to the audience's level of awareness. I remember one campaign for a medical job matching SaaS where we took their CPA from £100 down to just £7. A big part of achieving that was moving away from a one-size-fits-all approach and tailoring the messaging to different audience segments.

I've detailed my main recommendations for you below:

To pull all of this together, here’s a more structured summary of the steps I would take to diagnose and fix your ROI problem. This isn't a quick fix, it's a fundamental shift in how you approach paid advertising. It moves you from a gambler hoping for a lucky campaign to an investor building a predictable system.

As you can probably see, getting this right is a lot more involved than just boosting a few posts. It requires a deep understanding of business metrics, customer psychology, and the technical nuances of each advertising platform. It's a full-time job, and for many businesses, it's just not feasible to develop this level of expertise in-house while also trying to run the actual company.

This is where working with a specialist can make a massive difference. We've seen these patterns play out across hundreds of accounts and can typically diagnose the core issues in a fraction of the time it would take you to learn through expensive trial and error.

If you'd like to have a chat and walk through your specific campaigns together, we offer a completely free, no-obligation 20-minute strategy session where we can do just that. At worst, you'll walk away with a clear, actionable plan to improve your ROI. At best, you might find a partner to help you build the growth engine your business needs.

Hope this helps!

Regards,

Team @ Lukas Holschuh