business-simon_squib/_share/Paid ads checklist.md

About this Resource:
This resource is about understanding the basic principles of paid advertising and getting a better understanding of how your business can leverage paid advertising to its fullest potential. You will also learn about common mistakes that we have seen after working with 200+ businesses over the last four years and spending $42+ million on paid ads in the last 12 months.

Who am I?
Hi! My name is Jack and I’m the owner of Mongoose Social. I started my marketing company when I was 19 and in university. Since then Mongoose Social is now a 7 figure agency that works with world-renowned brands to help scale their revenue and profitability to new heights.

Feel free to connect with me on LinkedIn or follow the Instagram page to keep up to date with new ways to scale your business through paid advertising!

Paid advertising FAQ:

What is paid advertising and why will this help my business?
Paid advertising is all about leveraging ads across various search and social platforms to drive more traffic and customers to your business.

Paid advertising is an effective way to reach more people across various platforms. With the correct strategy, this can be a significant lever to scale your business at an accelerated rate.

What does a paid ad look like?
Paid ads will vary depending on the platform. However, there are generally three main components to a paid ad: 1) Ad copy. 2) Creative. 3) Call to action.

For example, below is an example of what a Facebook ad looks like.

What platforms should I use for paid advertising?
The platforms for paid advertising are endless and can sometimes be overwhelming. The platform you use for paid advertising will depend on various factors, such as the target demographic, advertising objectives, and your business's industry.

If you are new to paid advertising, the safest option would be to start with Facebook and Instagram ads. Facebook’s advertising platform is one of the most cost-effective methods to see results for your business.

Note: Other paid advertising platforms can certainly generate results if you are new to paid advertising. However, establishing a foundation with Facebook and Instagram ads is usually the best way to start and then branch out onto other platforms such as TikTok.

How much should I spend on paid advertising?
Budgeting is one of the most important aspects of running a successful marketing strategy and ensuring that your ad spend is generating a positive ROI. To understand how much you should be spending on paid advertising, you need to calculate various KPIs such as Average Order Value (AOV), Lifetime Value (LTV), Customer Acquisition Cost (CAC), profit margin, and operating costs.

Example - Jeremy and his T-shirts.
For example, Jeremy has a clothing brand selling T-shirts. The T-shirts cost him $10 to manufacture and he sells the T-shirts for $20, which leaves him with a gross margin of 50%. He knows that on average, a customer will buy two T-shirts on their first order (2 x $20 = $40) and will buy another two T-shirts three months later after the initial purchase.

This means that the Average Order Value is $40 per customer (2 x $20 = $40), AND the average Lifetime Value is $80 (initial purchase = $40, AND the purchase in three months equals another $40).

Jeremy now needs to understand his breakeven point - the Return On Ad Spend (ROAS) he needs to generate to cover ad spend AND manufacturing costs. To do this, Jeremy calculates his profit margin from the price he sells the T-shirt for ($20) vs the manufacturing costs ($10), which equals a 50% profit margin on every T-shirt he sells. Using this 50% profit margin, he can then calculate his breakeven point using this equation:
1 / {profit margin} = {answer}
{answer} x100 = {breakeven ROAS}

For Jeremy, this looks like this:
1 / 50 = 0.02
0.02 x 100 = 2
Jeremy needs a breakeven ROAS of 2x to cover his ad spend + manufacturing costs.

Here’s the breakdown of Jeremy’s KPIs:
AOV = $40
LTV = $80
Manufacturing cost = $10
Price Jeremy sells the T-shirts to paying customers: $20
Profit margin per T-shirt: 50%
Breakeven ROAS: 2x

Jeremy’s target is to generate 100 new customers over the next 30 days.

Now… time to crunch the numbers on how much Jeremy can spend on paid advertising.

To remain profitable, Jeremy has to spend less than $20 to acquire a customer (otherwise he will lose money on each customer). As a result, Jeremy sets his target cost per purchase to a maximum of $15 to ensure he is profitable on each customer generated. He uses this calculation to figure out how much he needs to spend over the next 30 days to reach his target:
Cost per purchase x target number of sales = marketing budget

In Jeremy’s scenario:
$15 cost per purchase x 100 customers = $1,500

Therefore to generate 100 new customers, Jeremy needs to spend $1,500 over the next 30 days to reach his target.

Where should I direct my ad traffic?
The destination of where you should drive ad traffic will depend on your objectives and industry. For example, a clothing brand will send ad traffic to its website to drive online sales, whereas a building company will likely send people to a lead form/enquiry section.

Use the following as a guideline:
If you sell a product online: direct people to your online website so that people can purchase the product. This can be done by directing ad traffic to your Shopify site. If you are

advertising a specific product in your paid advertising, you can also direct the ad traffic to that specific product page.

Example:

The ad:

The landing page:

If you are a service-based business: use lead-generation forms to get people enquiring about your services and generate new leads for your pipeline. You can use software such as Typeform to ask specific questions about your prospects and gather information about their pain points or what they are looking for.

See the example below:

How do I target the right people?
Needless to say, targeting the right people is one of the key fundamentals to build a successful paid advertising strategy.

Before you launch any paid advertising campaign you need to understand your Ideal Customer Profile (ICP). This is the type of people you want to attract to your business and align with the products/services that your business offers. Here are a few questions you can answer to figure out who your ideal customer is.

1. Where are my customers located? Are they international, national, or local?

2. What gender are my customers? Male, female, or both?

3. Why do customers need my product/service? What benefits does your product/service offer?

4. How old are my customers?

5. What interests do my customers have? What are their hobbies? What music do they listen to? What do they eat? What clothes do they wear? Do they like sports?

6. What’s their annual income? What do they do for a living? What’s their spending power? Will they consider my product/service expensive?

7. What is their relationship status? Are they married? Are they single? Do they have children?

8. Is your customer price-conscious? Are they constantly looking for the best discount? Is the price the biggest factor when deciding on buying a product/service?

What common mistakes should I avoid?

1. Not targeting the right audiences
   A lot of businesses don’t utilise paid advertising effectively simply due to targeting the wrong people. For example, some businesses won’t create an Ideal Customer Profile (ICP) and fail to understand who specifically they need to target in their paid ad campaigns.

2. Lack of testing
   Success in paid advertising comes through testing. No matter how big or small a business is, testing is essential. Testing within paid advertising is endless, and you need to develop systems and processes to test new variables continuously. Such variables that need to be tested include ad copy, creative, call to action, audiences, discount vs no discount, and product-specific promotions.

3. Not understanding KPIs and business-specific benchmarks
   Every business is different. As a result, so are the KPIs needed to run successful campaigns. For example, Business A operates on a 80% profit margin, whereas Business B has a 30% profit margin. Therefore, the KPIs that Business A has to meet will be entirely different to Business B.

   Using the example above in the Example - Jeremy and his T-shirts section, you can find all the relevant information on what factors you need to consider to establish paid advertising benchmarks.

4. Poor advertising creatives
   This is one of the biggest areas that is typically overlooked in paid advertising. To have a successful advertising campaign, you need high-converting ad creatives. Look at what images/videos your competitors are using in their advertising strategy, and identify any relevant trends that you could use in video ads for engaging content. Put simply, engaging ad creatives = more money for your business.

5. Not monitoring website/landing page conversion rates
   Whilst paid advertising can help you grow your business, it can only get you so far if the destination you’re sending ad traffic to is not optimised for conversions. A low-converting website or landing page will lead to fewer customers, and more people leaving the website without taking any sort of action. You can have the best ad strategy in the world, but it won’t matter if your website is not converting!

   Note: You should aim for a minimum of 1-2% conversion rate depending on your industry.