Solved: Overwhelmed by Ad Spend? Focus on the Offer (Data Inside)

Hi there,

Thanks for reaching out. It sounds like you're in a common spot – knowing your ads could be doing more but not having the specialised bandwidth to figure out exactly how. I'm happy to give you some initial thoughts and guidance based on my experience. When we talk about "ad spend optimisation," most people think it's about fiddling with bids and budgets. Tbh, that's the last 10% of the job. The real gains, the kind that transform your ROI, come from fixing the fundamentals that most people overlook.

I'll walk you through how I'd approach an analysis. It’s less about a quick audit and more about rebuilding the strategic foundation of your advertising from the ground up.

We'll need to look at your offer, not just your ads...

This is probably the most contrarian thing I'll say, but it's the most important. The number one reason paid campaigns fail isn't the targeting, the copy, or the creative. It's the offer. If your offer isn't compelling enough or doesn't solve a burning pain for a specific group of people, you can have the best ads in the world and they will still fail. You'll just be paying to send high-quality traffic to a brick wall. A lack of demand is a campaign killer, and you can't manufacture demand with a bigger ad budget.

I've seen so many founders and marketing teams chase what they think is a great idea, build out loads of features, spend ages developing the 'perfect' product, only to struggle massively to get any traction. It's almost always because they didn't nail the offer first. A successful offer, one that ads can actually scale, almost always does three things really well:

1. It focuses on a very specific audience. This makes the offer and the subsequent ads incredibly relevant. It’s the difference between shouting into a stadium and having a quiet, persuasive conversation with the one person who needs to hear you.

2. It identifies an urgent, expensive, or deeply frustrating problem that audience has. People don't buy products; they buy solutions to problems. They buy a better version of themselves or their business. For example, a video production company doesn't just sell a "brand film." They could sell a solution to a deep-seated frustration: being a really talented firm that struggles to build a customer base and looks smaller than they are. That emotional hook is what drives action, not a list of technical specs.

3. It packages the solution into a crystal-clear offer. The same video company could turn their service into a product like a "1-Day Filming Process." It gets a name, it has clear deliverables, and a defined timeline. This is huge. It takes a complex, scary, intangible service and makes it feel simple, tangible, and much less risky for a buyer to invest in. It moves them from "maybe one day" to "I need that now."

This brings me to what is possibly the most common failure point I see in B2B advertising: the Call to Action. I’d be willing to bet your website has a "Request a Demo" button somewhere prominent. It’s perhaps the most arrogant CTA ever conceived. It presumes your prospect, who is likely a busy decision-maker, has nothing better to do with their day than book a meeting to sit through a sales pitch. It's high-friction and offers zero immediate value. It instantly positions you as just another commodity vendor clamouring for their time.

Your offer’s only job is to deliver an "aha!" moment. A moment of undeniable value that makes the prospect sell *themselves* on your solution. You have to solve a small, real problem for them for free to earn the right to ask them to pay you to solve the whole thing. If you can do that, the sale becomes a formality.

What could this look like?
-> For SaaS founders: The gold standard is a free trial or a freemium plan. No credit card details. Let them use the actual product. Let them feel the transformation from their current painful state to the better future your software provides. When the product itself proves its value, you aren't generating marketing qualified leads (MQLs) for a sales team to chase; you are creating Product Qualified Leads (PQLs) who are already convinced and asking to buy. I remember one B2B SaaS client we worked with struggled for ages with a demo-first model. We helped them build a simple free trial funnel, and their signups shot up. We eventually drove 1,535 trials for them with Meta ads because the offer was finally frictionless.

-> For service businesses: You are not exempt. You have to bottle your expertise into something that provides instant value. For a markering agency, this could be a free, automated SEO audit that shows them their top 3 keyword opportunities. For a data analytics platform, a free 'Data Health Check'. For us, as a B2B advertising consultancy, it's a free 20-minute strategy session where we audit failing ad campaigns. We solve a small problem for free. It builds immense trust and demonstrates our expertise far better than any brochure ever could.

I'd say you need to define your customer by their nightmare...

This flows directly from getting the offer right. To solve a painful problem, you have to understand it intimately. Forget the sterile, demographic-based "Ideal Customer Profile" your last marketing hire probably put together in a spreadsheet. "Companies in the finance sector with 50-200 employees" tells you absolutely nothing of value. It leads to the kind of generic, bland ad copy that gets ignored by everyone.

To stop burning cash, you must define your customer by their specific, urgent, and expensive nightmare. Your ICP isn't a person; it's a problem state.

Your Head of Engineering client isn't just a job title; she's a leader who lies awake at night terrified that her best developers are about to quit out of sheer frustration with a broken, inefficient workflow. Your target at a law firm isn't 'someone who needs document management'; it's the partner who just had a near-miss on a critical filing deadline and is petrified of exposing the firm to a malpractice suit. That is the level of specificity required. What keeps them up at night? What threatens their job or their company's survival? What is the one thing they'd pay almost anything to make go away?

Once you've truly isolated that nightmare, your entire advertising strategy becomes clear. You stop guessing and start executing with precision. The next step is to find out where this person goes to talk about or solve that nightmare. This intelligence is the blueprint for your targeting.
-> What niche podcasts do they listen to on their commute, like 'Acquired' or 'My First Million'?
-> What industry newsletters do they actually open and read, like 'Stratechery' or 'The Hustle'?
-> What SaaS tools do they already pay for every month, like HubSpot, Salesforce, or Xero?
-> Are they members of specific Facebook groups like 'SaaS Growth Hacks'? Do they follow specific influencers on Twitter/X like Jason Lemkin or Shaan Puri?

This is the real work of audience research. When you know the nightmare and you know where they live online, you can craft a message that feels like it’s reading their mind and place it directly in their path. That's when ads start to work spectacularly well. Without this work, you have no business spending a single pound on ads.

You'll need a clear view on what a customer is actually worth...

Now we get to the "data-driven" part of your request. Most businesses are obsessed with the wrong metric. They ask, "How low can I get my Cost Per Lead (CPL)?" This is the tyranny of cheap leads. It forces you into a race to the bottom, optimising for garbage leads that never convert, and it strangles your ability to scale. The real question you should be asking is, "How high a CPL can I *afford* to acquire a truly great customer?"

The answer lies in its counterpart: Customer Lifetime Value (LTV). This is the single most important number in your business, and if you don't know it, you are flying blind. Here's a simple, back-of-the-napkin way to calculate it. You need three numbers:

1. Average Revenue Per Account (ARPA): What's the average a customer pays you per month?
2. Gross Margin %: What's your profit margin on that revenue after costs of service?
3. Monthly Churn Rate: What percentage of customers do you lose each month?

The calculation is straightforward:

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

Let's run a quick example. Say your ARPA is £500, your gross margin is a healthy 80%, and your monthly churn is 4%.

LTV = (£500 * 0.80) / 0.04
LTV = £400 / 0.04
LTV = £10,000

This one number changes everything. In this example, each customer you acquire is worth £10,000 in gross margin to your business over their lifetime. A healthy and scalable business model often aims for a 3:1 LTV to Customer Acquisition Cost (CAC) ratio. This means you can afford to spend up to £3,333 to acquire a single £10,000 customer.

Now let's take it a step further. If your sales process historically converts 1 in 10 qualified leads into a paying customer, you can afford to pay up to £333 per qualified lead (£3,333 / 10).

Suddenly, that £250 lead from a perfectly targeted ad on LinkedIn that reaches a CTO experiencing the exact nightmare your product solves doesn't seem expensive, does it? It looks like an absolute bargain. This is the math that unlocks aggressive, intelligent growth. It frees you from the short-sighted panic of cost-per-lead and allows you to focus on acquiring high-value customers, even if they cost more upfront. Without knowing your LTV, any attempt at "spend optimisation" is just guesswork.

You probably should rethink what 'awareness' actually means...

Here is another uncomfortable truth, this time about awareness campaigns on platforms like Meta (Facebook & Instagram). When you set your campaign objective to "Reach" or "Brand Awareness," you are giving the algorithm a very specific, literal command: "Find me the largest number of people inside my target audience for the lowest possible price."

The algorithm, being a ruthlessly efficient machine, does exactly what you asked. It scours your audience and seeks out the users who are least likely to click, least likely to engage, and absolutely, positively least likely to ever pull out a credit card and buy something. Why? Because those users are not in demand by other advertisers. Their attention is cheap. You are, in effect, actively paying the world's most powerful advertising machine to find you the worst possible audience for your product.

This is a huge area of wasted spend for so many companies. They think they need to "build the brand" before they can sell. For a startup or an SME, this is backwards. The best form of brand awareness you can possibly have is a competitor's customer switching to your product and raving about it online. That only happens through a conversion. True, lasting awareness is a *byproduct* of having a great product that solves a real problem and generates happy customers, not a prerequisite for making a sale. You don't have the budget of Coca-Cola, so don't advertise like them.

For any business that needs to see an ROI on ad spend, every single campaign should be optimised for a conversion objective. That could be leads, trials, appointments, or direct sales. The algorithm is smart. If you tell it to find you people who will sign up for a trial, it will analyse the millions of data points it has on users and find people who exhibit behaviours similar to others who have signed up for trials in the past. You are aligning your goal with teh algorithm's power, not fighting against it. This single change – switching from awareness to conversion objectives – can have a massive impact on your results.

We'll need to look at your targeting structure...

Once the foundations of Offer, ICP, and LTV are solid, we can finally get into the platform mechanics. A common mistake is a messy, disorganised ad account with dozens of ad sets testing random audiences with no clear strategy. A structured approach based on the sales funnel is always better.

When I audit Meta accounts, I often see people testing audiences that have no real connection to their goals. The further down the funnel an audience is (or a lookalike of that audience), the better it will almost always perform. Here’s a prioritised structure I use as a starting point, which you can adapt. It seperates campaigns into different stages of the funnel.

Top of Funnel (ToFu) - Prospecting for New Audiences:
This is where you find new people who've never heard of you. The priority here is quality, not just volume.
-> 1. Detailed Targeting (Interests, Behaviours): This is where your ICP nightmare research pays off. For new accounts, this is the place to start. Don't target "Business". Target the specific software they use, the influencers they follow, the magazines they read. For instance, if you're targeting e-commerce store owners, don't target "Amazon". That's way too broad. Target interests like "Shopify", "WooCommerce", or followers of e-commerce podcasts. You want interests that are much more likely to be held by your ICP than the general population.
-> 2. Lookalike Audiences: Once you have data, this is where the magic happens. You give Meta a source audience, and it finds millions of new people who share characteristics with them. The key is the quality of your source. Don't use a lookalike of "all website visitors." Use a lookalike of your *best customers*. The priority should be:

• Lookalike of highest value customers (from a list you upload)
• Lookalike of all previous customers
• Lookalike of people who Purchased
• Lookalike of people who Initiated Checkout
• Lookalike of people who Added to Cart

Middle of Funnel (MoFu) & Bottom of Funnel (BoFu) - Retargeting:
These are people who have already interacted with you but haven't converted yet. This is often your most profitable audience. You should group them into a dedicated retargeting campaign.
-> BoFu (High Intent): People who were on the cusp of converting. Target them with ads that overcome objections, offer social proof (testimonials), or a gentle reminder.

• Added Payment Info but didn't buy
• Initiated Checkout
• Viewed Cart / Added to Cart

• Visited a key landing page or product page
• Watched 50% of a video ad
• Engaged with your Facebook or Instagram page

On Google Ads, the principle is the same but applied to keywords. You need to target keywords that show commercial intent, not just informational queries. Someone searching for "how to improve team workflow" is doing research. Someone searching for "best project management software for remote teams" is looking to buy. Your ad spend should be focused on the second user. We had a client in the recruitment space and by shifting their budget from broad keywords to highly specific, long-tail keywords that matched what a hiring manager would type when they urgently needed to fill a role, we reduced their Cost Per Acquisition from over £100 down to just £7. That's the power of intent.

Testing these audiences needs to be systematic. Run seperate ad sets for each of your top priority audiences. Give them enough budget to get meaningful data, and be ruthless about turning off the ones that don't perform after they've spent enough (e.g., 2-3x your target CPA). This structured testing is how you find pockets of scalable growth.

I've detailed my main recommendations for you below:

To wrap this all up, "spend optimisation" is a result, not an action. You don't acheive a better ROI by logging into your ads manager and lowering bids. You acheive it by building a robust, customer-centric system. When you have an irresistible offer that solves a painful nightmare for a well-defined customer, and you measure success by what that customer is truly worth, your ad spend naturally becomes more efficient because every pound is working towards a clear, valuable goal.

This is obviously a lot to take in, and implementing it correctly requires expertise and constant attention. It's not a one-time fix; it's an ongoing process of testing, learning, and refining. This is where having a specialist consultant can make a huge difference. We live and breathe this stuff every day, so we can implement these systems far more quickly and effectively, avoiding the costly mistakes that come with trial and error.

If this approach resonates with you and you'd like to discuss how we could apply it specifically to your business, I'd be happy to schedule a free, no-obligation 20-minute strategy session. We can take a quick look at your current campaigns and give you a few more actionable insights you can use right away.

Regards,

Team @ Lukas Holschuh