Solved: Low London Ad ROI (Find Your Ideal Customer)

Hi there,

Thanks for reaching out about this. I've had a look at your problem and it's a really common one, especially in a city like London where it feels like you're shouting into a hurricane. It's easy to burn through cash and get very little back when the competition is so fierce.

I’m happy to give you some initial thoughts and a bit of guidance based on my experience. The good news is that the solution usually isn't about outspending your rivals. It's about being smarter and more strategic than them. The issue is rarely the market's competitiveness itself, but a mismatch between your offer, your audience, and your message. We need to fix that foundation first before we even think about scaling your ad spend.

The Real Problem: Your ICP is a Nightmare, Not a Demographic

Okay, let's be brutally honest. When you say you're targeting businesses in London, what does that actually mean? If your answer is something like "Financial services companies with 50-200 employees," you've already identified the core of your problem. That's not a target audience; it's a sterile, useless demographic that tells you nothing of value.

This kind of thinking leads to generic ads with generic messaging that gets ignored by everyone. To stop burning cash, you have to define your customer not by who they are, but by the specific, urgent, and expensive nightmare they are living through. Your Ideal Customer Profile (ICP) isn't a person; it's a problem state.

Think about it. The Head of Sales at a London tech startup isn't just a job title. She's a leader who is terrified of missing her quarterly target because her team is wasting hours on manual data entry instead of selling. The nightmare isn't 'needing a CRM'; it's 'my best reps are threatening to quit out of frustration, and I'm going to look like a fool in the next board meeting.' That's a pain you can sell a solution to.

For a legal tech company, the nightmare isn't 'inefficient document management'. It's 'a junior partner missing a critical filing deadline because they couldn't find the right document, exposing the entire firm to a multi-million-pound malpractice suit.' See the difference? One is a feature, the other is a career-threatening crisis.

Your first job, before you spend another pound on ads, is to get this right. Talk to your best existing customers. What was the exact moment they realised they needed a solution like yours? What was the specific pain that drove them to search for help? Once you've isolated that nightmare, you can build your entire advertising strategy around it. You'll know what to say in your ads, who to target, and what kind of offer will get their attention. This work is non-negotiable. If you skip this, you have no business running paid ads in a market as expensive as London.

You need to know your numbers... How to Calculate Your Customer Lifetime Value (LTV)

The next reason campaigns fail to deliver ROI is because most businesses don't even know what a good ROI should be for them. They're obsessed with lowering their Cost Per Lead (CPL) without knowing the one metric that actually matters: how much a customer is truly worth to them over time.

The question you should be asking isn't "How low can my CPL go?" but "How high a CPL can I afford to acquire a truly great customer?" The answer is found by calculating your Lifetime Value (LTV). This is the math that unlocks intelligent, aggressive growth and frees you from the tyranny of chasing cheap, low-quality leads.

Let's break it down. You need three pieces of information:

• Average Revenue Per Account (ARPA): How much does a typical customer pay you each month?
• Gross Margin %: What's your profit margin on that revenue after accounting for the cost of servicing that customer?
• Monthly Churn Rate %: What percentage of your customers do you lose each month, on average?

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

Let's take a hypothetical London-based SaaS company. They charge £1,000 per month (ARPA). Their gross margin is 85%, and they lose 3% of their customers each month (churn).

LTV = (£1,000 * 0.85) / 0.03
LTV = £850 / 0.03 = £28,333

Suddenly, the picture changes completely. Each customer is worth over £28,000 in gross margin to the business. A healthy LTV to Customer Acquisition Cost (CAC) ratio is generally considered to be 3:1. This means this business can afford to spend up to £9,444 (£28,333 / 3) to acquire a single new customer and still have a very healthy business model. If their sales process converts 1 in 10 qualified leads into a customer, they can afford to pay up to £944 for a single qualified lead. A £200 lead from a highly-targeted LinkedIn campaign doesn't look so expensive anymore, does it? It looks like an incredible bargain.

Use the calculator below to figure out your own LTV. This number is your north star. It dictates your ad budget, your bidding strategy, and your entire approach to growth.

I'd say you should delete your "Request a Demo" button...

Now we get to the most common failure point in all of B2B advertising, and probably the biggest lever you have to pull to improve your ROI: your offer. I am willing to bet your main call to action is something like "Contact Us," "Get a Quote," or the dreaded "Request a Demo."

The "Request a Demo" button is possibly the most arrogant call to action ever invented. It assumes that your prospect, a busy London decision-maker, has absolutely nothing better to do with their time than schedule a meeting to be sold to. It's incredibly high-friction and provides zero immediate value. It instantly positions you as just another commodity vendor clamouring for their attention, and it's a huge reason why your conversion rates are probably terrible.

Your offer has one job and one job only: to deliver a moment of undeniable value—an "aha!" moment that makes the prospect sell themselves on your solution. It must solve a small, real problem for them for free, right now, to earn you the right to solve their bigger problem for money later.

If you're a SaaS founder, this is your secret weapon. The gold standard is a completely free trial or a freemium plan, with no credit card details required. Let them actually use the product. Let them experience the transformation firsthand. When the product itself proves its value, the sale becomes a simple formality. You stop generating Marketing Qualified Leads (MQLs) for a sales team to chase and start creating Product Qualified Leads (PQLs) who are already convinced.

If you're not a SaaS company, you're not off the hook. You must bottle your expertise into a tool, some content, or an asset that gives them an instant win.

• For a marketing agency, this could be a free, automated website audit that shows them their top 3 SEO opportunities.
• For a data analytics platform, a free 'Data Health Check' that instantly flags the biggest issues in their database.
• For a corporate training company, a free 15-minute interactive video module on 'How to Handle Difficult Conversations' for new managers.
• For us, as a B2B advertising consultancy, it's a 20-minute strategy session where we audit failing ad campaigns completely free of charge.

Your offer must shift from asking for their time to giving them value. This single change can have a bigger impact on your ROI than any amount of campaign tweaking or budget increases. It's about changing the dynamic from "please listen to my pitch" to "here's something that will genuinely help you." In a skeptical market like London, that difference is everything.

You'll need to get your targeting right...

Once you know who you're talking to (their nightmare) and what you're offering them (a high-value freebie), you need to actually find them. This is where so many people get it wrong. They either go too broad and waste money on irrelevant people, or they get so obsessed with hyper-targeting that their audience is too small to be effective. The key is a prioritised approach, especially on platforms like Meta (Facebook/Instagram).

The flowchart above shows the general order of operations I'd recomend. You start at the top of the funnel (ToFu) to build data, then you move down to retargeting and scaling.

#1 Start with Detailed Targeting: For a new account, this is your starting point. You need to feed the algorithm data. But don't just pick broad interests. Think back to your ICP's nightmare. Where do they hang out online? What tools do they use? What industry publications do they read? For a tech company in London, you wouldn't target "Technology." You'd target people who have an interest in 'SaaStr', 'TechCrunch', or who are page admins of business pages related to software like 'HubSpot' or 'Salesforce'. The goal is to find interests that are far more likely to be held by your ideal customer than by the general population.

#2 Move to Retargeting (MoFu & BoFu): As soon as you have enough traffic (you need at least 100 people in a custom audience, but more is much better), this is where the money is made. These are people who have already shown some interest in you. They've visited your website, watched your video, or engaged with your page. These are your warmest leads. You should have seperate campaigns or ad sets specifically targeting these people with messages designed to overcome their final objections and get them to take your high-value offer. For B2B, sales cycles are longer, so your retargeting window should be longer too, maybe 90 or even 180 days.

#3 Scale with Lookalikes: Once you have a good number of conversions (leads, trial sign-ups, purchases), you can ask Meta to find more people just like them. This is one of the most powerful tools available. Start by creating a Lookalike audience of your highest-value converters. If you're an e-commerce store, that's your purchasers. If you're a SaaS, that's people who completed a trial sign-up. Start with a 1% Lookalike in your target country (e.g., UK), as this will be the most similar to your source audience. As you scale, you can test broader percentages (2%, 3-5%).

This systematic testing is how you find pockets of profitability. You let the data tell you what's working. If an audience has spent 2-3 times your target CPA without a conversion, it's probably not a winner. Turn it off and move the budget to the audiences that are performing. In London, precision is everything. This structure forces you to be precise.

You probably should have a message they can't ignore

Now that you know who you're targeting and what you're offering, you need to craft an ad message that cuts through the noise. Generic, feature-focused copy just won't work, especially in a sophisticated market like London. Your ad needs to speak directly to the 'nightmare' you identified earlier.

There are a few simple but powerful frameworks we use that consistently outperform generic "we do this" copy.

For a high-touch service business (e.g., consultancy, agency): Use Problem-Agitate-Solve (PAS). You don't sell "fractional CFO services"; you sell a good night's sleep to a stressed-out founder.

• Problem: "Are your cash flow projections just a shot in the dark?"
• Agitate: "Are you secretly one bad month away from a payroll crisis while your competitors are confidently raising their next round?"
• Solve: "Get expert financial strategy for a fraction of a full-time hire. We build the dashboards that turn uncertainty into predictable growth."

For a B2B SaaS product: Use Before-After-Bridge (BAB). You don't sell a "FinOps platform"; you sell the feeling of total relief when the cloud bill arrives.

• Before: "Your AWS bill just arrived. It’s 30% higher than last month, and your engineers have no idea why. Another fire to put out. Your weekend is cancelled."
• After: "Imagine opening your cloud bill and actually smiling. You see exactly where every pound is going, and waste has been automatically eliminated before it ever becomes a problem."
• Bridge: "Our platform is the bridge that gets you from chaos to control. Start a free trial and find your first £1,000 in savings today."

Notice how none of this talks about features. It talks about feelings, problems, and transformations. That's what people buy. They don't buy the drill; they buy the hole in the wall. You're not selling software; you're selling the feeling of being a competent, successful professional who has everything under control. That's a message that will resonate far more deeply than a list of your product's capabilities, and it will give you a much better chance of standing out in a crowded ad feed.

We'll need to look at costs, platforms and campaign objectives...

Finally, let's talk about the practical side of things: platforms, budgets, and what you should actually be optimising for. The chart above gives you a realistic idea of what you might expect to pay per conversion in a market like London. It’s not cheap, which is why having a solid strategy is so important. Wasting money on the wrong platform or the wrong objective will kill your ROI before you even start.

First, a myth I need to bust. Stop running "Brand Awareness" or "Reach" campaigns. When you tell a platform like Meta you want awareness, you are giving it a very specific command: "Find me the largest number of people for the lowest possible price." The algorithm does exactly what you asked. It finds the users inside your targeting who are least likely to click, least likely to engage, and absolutly least likely to ever buy anything. Why? Because their attention is cheap. You are actively paying to reach the worst possible audience for your product. Awareness is a byproduct of making sales and solving problems, not a prerequisite. Always, always, always optimise your campaigns for the action closest to the money: leads, trials, purchases, or appointments. Let the algorithm find you people who actually do things.

Next, choosing the right platform depends on whether your audience is actively searching for a solution or not.

If they ARE actively searching (high-intent): Your best bet is Google Search ads. These people have a problem right now and they're looking for a fix. You can target keywords that show clear commercial intent. For an accounting software, you wouldn't target "what is accounting," you'd target "best accounting software for small business UK." You're catching them at the exact moment of need. This traffic is more expensive, but it's often the highest quality. For one medical job matching software client, for instance, we reduced their cost per user from over £100 down to just £7 by focusing on high-intent search terms on Google Ads and optimising their Meta Ads.

If they are NOT actively searching (you need to create demand): Social media is your best option. This is for disrupting their day with a compelling message about a problem they might not even know they could solve.

• For B2B: LinkedIn is the obvious choice. The targeting is unmatched for job titles, company sizes, and industries. You can target the exact decision-makers you need to reach. I remember one campaign we ran on LinkedIn for a B2B software client where we were able to get qualified leads from decision-makers for around $22 each, which was incredible value when you consider their high customer lifetime value.
• For B2C or some B2B (e.g., selling to small business owners): Meta (Facebook/Instagram) can be incredibly effective. The targeting is less about job titles and more about behaviours and interests. You can target "small business owners" or people who like specific software or industry leaders. It's often cheaper than LinkedIn, and for some niches, it can perform even better. One B2B software campaign we ran on Meta generated over 4,600 registrations at just $2.38 per registration.

Your budget should be informed by your LTV and target CPA. I usually recommend at least £1k-£2k per month to start with on any platform to get enough data to make decisions. But the real answer is: (Number of leads you need per month) x (Your target Cost Per Lead). That's your ad spend. And with the right strategy in place, it should be an investment, not an expense.

I've detailed my main recommendations for you below:

I know this is a lot to take in, but trying to improve ROI without fixing these fundamentals is like trying to patch a leaking boat with tape. It might work for a bit, but you'll eventually sink. The competition in London is fierce, but most of them are making these exact same mistakes. By focusing on a sharp strategy built on real customer pain, a valuable offer, and a clear understanding of your numbers, you can cut through the noise and build a profitable advertising machine.

Getting this right takes expertise and experience, especially when you're busy running your actual business. It’s not just about setting up an ad; it's about deep research, continuous testing, and understanding the nuances of each platform. This is where professional help can make a huge differance.

If you’d like to go through your specific situation in more detail, we offer a free, no-obligation initial consultation where we can review your strategy and ad accounts together. It’s often incredibly helpful for potential clients and gives you a clear sense of the expertise we could bring to your project.

Hope this helps!

Regards,

Team @ Lukas Holschuh