Solved: Need PPC Agency to Help with Unprofitable TikTok Ads

Hi there,

Thanks for reaching out to us. I've had a look at the details you sent over and I'm happy to give you some of my initial thoughts and a bit of guidance based on what you've said. It's a really common situation to be in, especially for businesses selling consumables, so don't feel like you're alone in this.

Spending a good chunk of money like £20k a month on a single platform like TikTok and not seeing profitability is a classic sign that the overall strategy needs a rethink, not just the ads themselves. It's rarely just one thing, but usually a combination of factors. What I'll do here is walk you through how I see the situation and what I'd be looking at if we were to tackle this. I'll be brutally honest, as that's the only way to get to the bottom of it.

We'll need to look at why you're not profitable first...

The first thing that jumps out is the reliance on TikTok. Now, TikTok can be an amazing platform for getting eyeballs on a product, especially a consumable one. It's brilliant for discovery and building initial brand awareness. However, its a tough place to build a profitable business from day one, particularly if its your only channel. The user intent on TikTok is very different from, say, someone searching on Google. People are there to be entertained, not necessarily to shop. They might make an impulse purchase, but turning that impulse into long-term loyalty is the real challenge.

With a £20k monthly spend, you're essentially buying traffic. The question is, what is that traffic doing once it arrives? You mentioned that you're not profitable. This tells me that your Customer Acquisition Cost (CAC) – the amount you spend to get one new customer – is higher than the profit you make from their first order. For a consumable, this is actually quite normal. Very few consumable brands are profitable on the first sale. The entire business model is built on repeat purchases, which drives up the Customer Lifetime Value (LTV).

The real issue, and you've hit the nail on the head yourself, is that you have a massive hole in your bucket. You're spending £20,000 every month to pour customers into the top of a funnel, but they're falling straight out the bottom because there's nothing to catch them. No email, no SMS. This is probably the single biggest reason for your lack of profitability. You are paying to aquire a customer once and then just hoping they remember you and come back on their own. In today's market, that's just not going to happen. They'll be distracted by the next shiny object on their TikTok feed within minutes.

So, before we even touch the ads, we have to talk about fixing that leak. Pouring more money into ads, or even just optimising the current ones, is a bit like rearranging the deckchairs on the Titanic if the fundamental business model for retention isn't there. We see this all the time, companies so focused on aquisition they forget that the real money is made from the customers you already have.

I'd say you need to fix your retention strategy immediately...

This is non-negotiable and it's the first thing any decent agency should tell you. Before you spend another penny trying to optimise your TikTok ads, you need to set up the basic foundations of email and SMS marketing. It doesn't have to be a super complex, multi-layered system from day one. You can start with the absolute essentials, which will probably have a massive impact almost immediatly.

Think about it like this. Your ad spend is an investment to buy a customer. Let's say your average order is £25 and your CAC from TikTok is £30. On paper, you're losing £5 for every customer you bring in. It's a disaster, right? But what if you could get 30% of those customers to buy again? And again? Suddenly that £30 investment to get the customer in the door looks very different.

Here's a very basic breakdown of the maths, just to illustrate the point:

This is a simplified example, of course. The numbers will be different for your business. But the principle is solid. The retention channels are where you make your money. The marketing cost for that second or third purchase is close to zero. It's pure profit machine. This is how brands like Dollar Shave Club, Huel, and all the big subscription box companies were built. They often lose money on the first order, but they know their numbers inside out and they make it all back (and then some) over the lifetime of the customer.

So, what are the absolute basics you need?

-> Abandoned Cart Flow: Someone adds your product to their basket but doesn't buy. You need to be emailing and texting them within an hour, then again 24 hours later. This is the lowest hanging fruit and can recover a huge amount of lost revenue.

-> Welcome Series: A new customer buys. You need to welcome them to the brand. Tell them your story. Give them tips on how to use the product. This builds a relationship beyond just a transaction.

-> Post-Purchase Flow: Depending on how long your consumable lasts, you need to be reminding them to re-order just before they run out. If your product lasts 30 days, you should be hitting their inbox around day 25 with a "Running low?" message and a direct link to buy again.

Getting this stuff sorted is job number one. An agency that only wants to talk about ad creative and targeting without addressing this is not the right partner for a consumable brand. They are just looking at one piece of a much larger puzzle.

We'll need to look at your entire advertising mix...

Okay, so once the leaky bucket is plugged, we can start looking at the ads themselves. Relying 100% on TikTok is a huge risk. What happens if your ad account gets banned for some reason? What if a new algorithm update kills your performance overnight? Your entire stream of new customers vanishes. You need to diversify your acquisition channels.

This doesn't mean you should stop using TikTok. If it's bringing people in, that's great. But we need to build out a more robust system around it. The obvious next step is Meta (Facebook and Instagram).

Why Meta Ads?

Meta's platforms are generally more mature for direct response advertising. The targeting is powerful, and the retargeting capabilities are exceptional for eCommerce. For a consumable brand, this is where you can really execute that LTV-focused strategy. I'd split the strategy into a classic funnel:

-> Top of Funnel (ToFu): This is your cold audience, similar to what you're doing on TikTok. You'd be targeting people based on interests related to your product, or creating Lookalike audiences based on your existing customers. The goal here isn't necessarily immediate profit, it's customer acquisition at an acceptable cost.

-> Middle of Funnel (MoFu): This is where you retarget people who have shown some interest but haven't bought. They might have watched your videos, visited your website, or engaged with your Instagram page. Here you show them different ads - maybe testimonials, reviews, or highlighting a specific benefit they might have missed.

-> Bottom of Funnel (BoFu): This is the money-maker. Retargeting people who have added to cart or initiated checkout. This is your most valuable audience. You can hit them with ads that have a small discount or a "free shipping" offer to get them over the line.

I would propose taking a portion of that £20k budget, maybe £5k-£8k to start, and testing Meta. You'd run ToFu, MoFu, and BoFu campaigns simultaneously. This creates a full-funnel system where you are constantly acquiring new customers and converting the ones who are already interested.

What about Google Ads?

This is another channel to consider. Are people actively searching for your type of product, or a solution to a problem your product solves? If they are, you absolutly should be there. Google Search ads capture intent like no other platform. If someone types "buy [your product type] online", they are ready to purchase. It's often more expensive per click, but the conversion rate can be much higher.

Performance Max (PMax) campaigns can also work wonders for eCommerce. They combine Search, Shopping, Display, and YouTube into one campaign, and Google's AI optimises it to find you customers wherever they are. For a physical product, having it show up in the Google Shopping tab is incredibly powerful.

You probably should rethink your creative and offers...

This applies across all platforms, but especially on social media like TikTok and Meta. The creative is your shop window. If it's not compelling, people will just scroll on by. For consumable products, User-Generated Content (UGC) is king. It's more authentic, more trustworthy, and it performs better than slick, corporate-looking ads.

You need a constant stream of new creative to test. You can't just run the same 3 videos for six months and expect performance to stay high. Ad fatigue is a real thing. An agency's role is not just to manage the campaigns, but to drive the creative strategy. They should be giving you briefs for new UGC videos every single month.

Here's a few angles that almost always work for consumables:

Alongside the creative, you need to test your offers. "10% off your first order" is standard, but is it the best you can do? What about "Buy 2, Get 1 Free"? Or "Free Shipping on all orders"? Or even better for a consumable, a "Subscribe & Save" model? Getting customers onto a subscription is the holy grail for a consumable brand. It locks in that LTV and makes your business far more predictable and valuable.

You'll need an agency that gets this...

So, back to your original question about finding an agency. When you're talking to potential partners, you need to listen for whether they are talking about this bigger picture. If they jump straight into promising a lower cost per click on TikTok without asking about your LTV, your repeat purchase rate, or your retention strategy, they are the wrong agency for you.

Here’s what you should be looking for:

-> Relevant Case Studies: Have they worked with other eCommerce brands, ideally consumables or subscription models? Ask to see the results. It's not just about a high ROAS figure, but understanding how they got there. For example, I remember one eCommerce client selling cleaning products where we achieved a 633% return on Meta Ads by implementing a full funnel strategy, which involved retargeting and high-quality creatives.

-> A Strategic Approach: They should be talking about funnels, LTV:CAC ratios, and multi-channel diversification. They should see themselves as a growth partner, not just "the people who run the ads". They should be challenging you on your offers and your retention.

-> Transparency and Honesty: Paid advertising is not magic. No one can promise you specific results. It's a process of rigorous testing and optimisation. An agency that promises to double your sales in 30 days is probably lying. Look for an agency that sets realistic expectations and is honest about the challenges.

-> A Collaborative Feel: Do they offer a free initial consultation or an account review? This is a great way to get a feel for how they think. We always do this because it allows us to show our expertise and make sure we're a good fit before anyone signs a contract. It should feel like they are on your team. It signals they are confident in the value they can provide.

Your £20k/month budget is a significant investment. You need to entrust it to someone who understands the entire ecosystem of a direct-to-consumer brand, not just one advertising platform.

I know this is a lot to take in, but I wanted to be thorough. Your problem isn't just "unprofitable TikTok ads," it's a fundamental strategic issue with customer retention and channel dependency. I've put my main recommendations into a table for you below to give you a clear, actionable overview.

This is the main advice I have for you:

Fixing this is a complex task that involves a lot more than just tweaking some ad settings. It requires a deep understanding of eCommerce strategy, data analysis, and creative direction. While you could try to piece this all together yourself, the reality is that an experienced agency can implement this kind of holistic strategy far more quickly and effectively, helping you avoid months of costly trial and error.

The value you get from a good agency isn't just the time saved on managing campaigns; it's the strategic oversight and the experience gained from working across dozens of similar accounts. They know what works, what doesn't, and how to build a profitable growth engine for a brand like yours.

If you'd like to have a more detailed chat about this and have us take a proper look under the bonnet of your ad accounts, we offer a free, no-obligation consultation. We can walk through your current setup together and map out a much more specific plan of attack tailored to your exact product and numbers. Just let me know if that's something you'd be interested in.

Hope this helps give you some clarity.

Regards,
Team @ Lukas Holschuh