Fix ad targeting and bid for return, not cheap leads

1. The right eyes on the ad

Targeting means making sure the right eyes land on the ad. Picture an ad made with an AI chatbot: 50 percent off bathing suits, shown in the middle of winter. However good the ad and the offer, in winter it will not convert. An advertiser based in Iowa whose ads end up shown in Florida will struggle in the same way.

A common saying. Marketers often rank the list above everything else, above even the offer. Take an extreme. With only the very best buyers in front of you, you could put up something very expensive and very exclusive that five of them can take, and there would be little selling to do, because the list is already that good. Putting the list together is the hard part. Take the identical offer to a vast crowd who do not know who you are, or for whom it is not relevant, and it will not work. So targeting matters.

2. Are the right people opting in?

This is one troubleshooting process for better targeting. Its first level is a question: is the kind of person you want the kind who is opting in?

Look them up. One practice here, especially if you are new to ads or trying a new targeting option, is a deep dive on the opt-ins: look at them, look up their Google account and the other accounts linked to it, and ask who these people are and whether they are the ones you want. Looking for chiropractors? Check that they are. If not, are they physical therapists, or doctors: are you getting close?

Then act on the answer.

What you find	What follows
No	Change the targeting
Sort of	A further process can help fix it (see section 11)
Yes	Leave the targeting alone and improve everything else in the funnel

Once the targeting is good, the work is to make the money model work and to improve the funnel: the friction in it, a better opt-in, a better offer, a clear headline, and things of that kind.

3. A new paid channel, month by month

Take a hypothetical. Would you spend $100,000 to have a second, fully separate paid channel start working and double the business? Of course. Here is what happens in reality most times.

Month	Spend	What is fixed	What happens
1	$10,000	Ads are run	Some clicks reach the page and some people opt in, but not necessarily the right ones
2	$10,000	The headline is clarified	The opt-ins are all chiropractors, they think, but none of them schedules
3	$10,000	The reason to book a call is clarified and tied to the lead magnet's benefit; the booking step fills in name, phone number and email, so scheduling takes one click	Bookings arrive, but nobody shows up
4	$10,000	More friction: before booking, a person watches a video and confirms that they fit and are eager to go ahead; a 60-second delay makes sure they have begun watching before they can schedule	Calls are booked and people start to show

What owners do instead. The way this will typically go: most owners can reason that spending $100,000 in a year to double would be superb. A second revenue line cuts risk, because there are now two ways to win customers; twice the revenue at less incremental cost would probably mean more than twice the profit; a banner year. What actually happens is that $10,000, $20,000 or $30,000 goes out, nothing comes back, and they say so. Of course they did: you make no money until the first dollar at last crosses the bridge.

How the money arrives. In the same units as the $10,000 a month, it runs: spend 10 and make nothing, three times over; spend 10 and make two; then in the fifth month spend 10 while the leads come in, opt in, watch and schedule, with the sales team prepared, and make 50. That wins back everything lost, but it takes time.

4. A question of efficiency, one constraint at a time

A way to think about it. The view here is that marketing works, and so does advertising; what varies is how efficiently. So instead of saying that a channel does not work for you, say that you have not yet worked out how to make it pay efficiently enough in your business. That turns it into something you can control. Each part of the funnel is tweaked until the throughput is what you want. That paid advertising is a matter of efficiency, not of whether it works, is also on SOP 35, section 1.

Solve the one in front of you. Concentrate on making progress, on the single constraint you face now, and solve them in turn rather than decide the whole thing fails. The questions run like this:

• Did the ad get clicks? Yes.
• Are they opting in? No: return to the ad, clarify the ask, and check the targeting is right.
• Are opt-ins coming? Yes. Next they need to book.
• They are not booking: go back and work through the journey from the click once more.

Experience here, across many acquisition channels on many types of platform, in many industries and media, is that the mystery goes away: you have to make it plain and obvious what the person needs to do. Why only one constraint limits growth at a time is on SOP 184, section 4; finding which funnel step to work on by arithmetic is on SOP 41, section 1.

5. A cheat sheet for targeting a new channel

Use this targeting cheat sheet when moving into a new channel.

Where you are	What to target on
No way of targeting yet	Interest groups, demographics and geographies: which parts of the country or world, what these people care about, whether they are of a certain age. This is the starting point here
A certain amount of opt-ins	Look-alikes built off the opt-ins, at 1, 2 and 3 percent
A certain amount of calls, better than an opt-in	Look-alikes of 1, 2 and 3 percent, built off the calls
Step four	A look-alike built off the sales
After that	A look-alike keyed to "the highest value", with nothing named after those words

Your own funnel's steps. Opt-ins and calls are only an example. Where your sales motion differs, the pair could be opt-ins and sign-ups for a webinar; the flow is identical. It is only a matter of thinking through the first, second and third steps of your funnel.

Why each rung is harder to reach. Getting there is hard because it takes a thousand fires, a thousand of the event recorded. A thousand opt-ins come more easily than a thousand calls, calls more easily than a thousand sales, and sales more easily than a thousand upsells. A thousand upsells, though, is a customer base of very high quality.

The data as an edge. Over time that data, the pixel, turns into something almost like an edge over competitors for the business. With the pixel already trained on your best customer, you can begin to open your targeting up overall.

A ladder that runs from platform to look-alike to filters, starting from interests alone when there is no list yet, is SOP 36 — Build the targeting ladder.

Flag: is interest targeting the start? The cheat sheet starts a new channel on interests. A second view, from a paid-ads team on one large platform as it works now: the ad itself tells the platform whom to find, so that team never targets by interest, still finds engaged audiences and look-alikes perform, and defaults to broad targeting. SOP 36, section 1, carries the same flag. This page does not settle which reading is right.

6. Rules of thumb: friction and return

A few rules of thumb follow from the hypothetical funnel above.

Friction and cost per action. Experience here: increasing friction and the cost per action almost always makes more money. Return on ad spend matters far more here than cost per lead.

An example.

	Cost per lead	Lifetime gross profit	Ratio
First choice	$100	$500	Five to one, not bad
Second choice	$500	$5,000	10 to 1

Almost everybody would pick 10 to 1. In practice you might behave otherwise: if someone raised your lead cost five times over, you might tell them to slow down and call it crazy. The fix is to think in orders of magnitude. Trying to turn $100 leads into million-dollar customers is a waste of time.

The air up market. The air up market is almost always thinner, or rather less populated. That is because so few people reason like this; it is a less constrained way to think. People habitually ask how to sell to the person in front of them, never whether to turn that person away. The view here is that paying five times as much for a customer you know is worth 10 times as much takes a discipline people lack, because they cannot turn money down.

What you leave running teaches the platform. A second practice, from an ads practitioner: switch off ads whose leads close at a lower rate, even when they bring plenty of calls, and never run again an ad with a high click rate and cheap leads who do not qualify; reframe it instead. The reason given is that the platform learns from every lead you keep accepting, so, put as a hypothetical, 100 highly qualified leads beat 1,000 mixed ones.

Adding friction even when each lead costs more is SOP 208, section 8. Its example of the same choice uses other figures: there the $500 lead is worth $10,000, against $5,000 here. A table of one customer base against a better avatar is SOP 197, section 2.3. Lifetime gross profit over acquisition cost, as a ratio, is SOP 55, section 6.

7. Cheaper clicks, and when to add a channel

After the other fixes. At this point the offer and the lead magnet have been fixed, systems are in place to bring more ads into the business, the creative is better, with more hooks that can reach new segments of the market, and the targeting has been improved. Only then come cheaper clicks, better called a higher return, since the hope is for as many owners as possible to drop that belief.

Cheaper is rarely it. A cheaper ad platform could, strictly speaking, exist for you; it is rarely what fixes things. More typically, you just want the platforms that give you the most back.

Add a channel once one works. Add channels only when the one you have is already doing very well, not as an escape from one you cannot get working. The view here is that jumping to a new channel for that reason is very rarely right. You almost always get your present channel performing, and performing strongly enough to take what works to others. One practice here is to expand to new channels only once one works.

Enough customers almost everywhere. Granted, business professionals are on LinkedIn and TikTok leans toward consumers: those are trends, and true. Fundamentally, though, most people are on most platforms, and people are all over the place. A new channel opens new crowds, but almost every platform holds customers enough. Picking the first paid platform, and researching it before you make anything, is SOP 35 — Choose the first paid platform.

8. Optimizing a campaign for return rather than leads

A common setup is a campaign optimized for cost per lead against one optimized for return on ad spend. The second is typically only open to businesses that take some kind of transaction; if there is a way for you to take one, it is highly encouraged here. Without one, a paid-ads team's practice is to optimize for the deepest step it can measure, such as a booked meeting rather than an opt-in; that team calls it probably one of its biggest levers, and it changed the quality of its leads a great deal.

One launch. The campaigns driven by leads brought leads in far more cheaply, several times the leads for each dollar. The campaigns driven by return paid several times as much for each lead, yet each of those leads was worth many times more: the gap in what a lead was worth ran far wider than the gap in what it cost.

The earlier example, a $100 lead against a $500 lead, put the gap at twice as much (10 to 1 against five to one). The launch is offered as real math, with the gap coming simply from targeting.

In the ads manager. These are the sales optimization and the lead optimization.

Campaigns split the same way are on SOP 197, section 2.2.

9. Price for the customer you want

The right customer probably costs more at first. Parts of the market can absolutely afford what you are after, and you can give them a better service since they are the right fit. They probably cost more on some of the first actions, and they are still worth far more.

Do not build for the middle. Instead of saying you have a couple of customers you love and that most of the others are a disappointment, do not build a business priced between what buyers short of money can barely afford and what wealthy buyers wildly undervalue, thinking you are cheap. The right customers would gladly pay you five times more.

The avatar first, then the price. Leads, sales and pricing are hard to split, because so much of it works together. Settle the right avatar first, and set the price to suit it. Many of you get stuck in between: priced as if selling to buyers short of money while wanting to sell to wealthy ones, who do not believe you because of that price. It has to be congruent from end to end, which means being willing to say no. Going up market as one of the directions a business can take is SOP 93 — Choose a market direction.

10. Platforms to pick first

Offered as quick and dirty, the picks here if you had to choose the platforms to focus on:

Selling to	The picks
Consumers only	Meta, YouTube and TikTok, kind of the 80/20 here
Other businesses	Meta and YouTube, then LinkedIn and X

These are the picks if you had to choose just three. Obviously, the preference here is that you run every one of them; for those with more constrained resources, the short lists are the way to think about it.

11. What this page does not decide for you

• How many opt-ins or calls before the next look-alike. Each rung says a certain amount; whether that is the thousand fires is not said. Not established on this page.
• What the last look-alike is made from. Only "the highest value" is given, and what it qualifies is not named. Not established on this page.
• Which process a partly right answer leads to. A further process is said to help; which one is not named. Not established on this page.
• Every platform, or one at a time. The preference here is all of them, and the practice here is to add a channel only once one works; how the two fit together is not said. Not established on this page.

12. The checklist

Step	What to do
1	Check that the right types of people are opting in by looking them up, especially if you are new to ads or to a targeting option
2	If they are not, change the targeting; if they are, leave it and improve the rest of the funnel
3	On a new channel, expect months of spend before it pays, which is what happens most times
4	Treat a channel that fails as one you cannot yet make efficient enough, and fix the one constraint in front of you
5	Start a new channel on interests, demographics and geographies; move to look-alikes of opt-ins, calls and then sales as the data builds
6	Weigh return on ad spend above cost per lead, as a rule of thumb
7	Keep working your current channel until it works before adding another; switching is very rarely right, in the view here
8	If you can take a transaction, run a campaign optimized for return, which is highly encouraged here; if not, one team optimizes for the deepest step it can measure
9	Switch off ads whose leads close at a lower rate, a second practice
10	Choose the avatar, price to match, stay congruent throughout, and be willing to say no
11	With constrained resources, focus on the picks in section 10 for consumers or for businesses

13. Where this sits

• Making more ads, and finding ones you already have: SOP 210 — Set ad volume and harvest the ads you already have.
• Better creative for the ads this page targets: SOP 212 — Make better ad creative with hooks, permutations and assembly.
• The offer and lead magnet, fixed ahead of the rest in this order: SOP 209.

14. What this page does not cover

Enriching your lists with customer data is SOP 219 — Find the right customers, screen for them and capture data. Building a brand through content is SOP 216 — Make content for the customers you want and build a brand.