Are You Paying Too Much For Ad Spend?

by | Feb 15, 2021 | Marketing | 0 comments

Paying To Much For Ad Spend?

Unfortunately, this is a pretty prevalent practice within the aesthetic industry.⁠

It is easy to get wrapped up in marketing ads (Facebook, Instagram, Google, etc.) and believe you have to be running them. After leaping in and trying to DIY, most business owners decide to contract-out this portion of their marketing.⁠

Choosing the right marketing agency to run ads for you can be difficult. It is easy to invest hundreds or even thousands of dollars without receiving much of a return at all. ⁠

You want to savvy about this investment.⁠

When you are running marketing ads, consider tracking your Return on Ad Spend (ROAS). This metric essentially tells you how much money you are earning for every dollar spent on marketing. Understanding this metric within your business allows you to know how effective your ads are performing. The higher your ROAS score, the better for your revenue.⁠

Don’t be intimidated by this powerful metric. It is easy to track and understand! To factor, your ROAS divide the revenue from your ad (Conversion Value) by the cost of that ad (Cost).⁠

Conversion Value / Cost = Return On Ad Spend.⁠

Here is a quick example: Let’s say that you spend $20 on Facebook Ads marketing a $100 retail product. If you sold one retail product from that ad, your ROAS would be 5. ($100/ $20 = 5).⁠ Aim for ROAS >3, but the higher you go the better!⁠

When it comes to hiring out your ad campaigns to an agency, you should aim for a spending ratio of 30/ 70 on management spend versus ad spend. Only pay your marketing agency $3 for every $7 you spend on ads. Far too often, I find aesthetic business leaders spending as much for the service as they are for the ads, making a great ROAS nearly impossible to obtain.⁠

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