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  • ➗ Run profitable ads by understanding unit economics

➗ Run profitable ads by understanding unit economics

Important business metrics to guide your ad strategy.

Self-referential ads are great.

I love this McCann ad because:

  • Passionate copywriters likely seek out interesting ads. This ad uses the perfect medium to get to their target audience.

  • The message is crystal clear and only uses 8 words. Brilliant.

  • It uses a clever visual that supports the key message of “hungry” copywriters.

  • The use of whitespace draws attention.

Here’s another great recruitment ad:

🏷️ Create an offer that gets customers in the door

Sometimes media buyers are too cheeky or creative and forget about clarity.

If you have a great product, often times all you need is for customers to experience your business firsthand to win them over.

A clear and compelling offer will get more customers into your funnel, earning you long-term value over their lifetime.

Take a look at this simple and direct 1-800 Contacts ad:

Here’s some back-of-the-napkin math that might make ads like this work:

  • $30 per month subscription

  • 20% churn per year (average of 5 years per customer)

  • 40% gross margins

This works out to the following:

  • $360 average annual revenue per customer

  • $144 gross annual profit per customer

  • $720 lifetime value per customer ($144 / 20% churn)

  • $240 customer acquisition cost (CAC), based on 1:3 CAC:LTV ratio

This means these ads would be profitable as long as they acquire customers for $240 or less.

I’m making assumptions here but what’s important to understand are the unit economics.

An inexperienced marketing department might view a $240 CAC as unprofitable if their average revenue per month is just $30. However, the long-term profitability is what creates a strong business case for this type of direct response advertising.

🎲 Random ads I enjoyed this week

This billboard ad for Liberty Science Center:

This ad from Smirnoff:

🧠 Clever ad of the week

🏆 Placement of the week

🗣️ Quote of the week

“The more you tell, the more you sell.”

David Ogilvy