This Is When You Should Turn Ads Off
The video explains when to turn off Meta ads based on economic KPIs, specifically when spend exceeds your break-even ROAS or CPA thresholds. The speaker emphasizes that KPIs are relative to each brand's own economics and offers a free calculator to help determine break-even points.
Summary
The speaker addresses a common question in Meta advertising: when should you turn off underperforming ads? The core answer is that ads should be turned off when they spend beyond your defined KPI thresholds, but the speaker stresses that these thresholds are highly relative to each brand's individual economics.
The speaker gives two contrasting examples to illustrate this relativity. Some scaling brands operate with a very low ROAS target of around 0.6, meaning they are willing to spend aggressively and accept minimal returns during growth phases. On the other end, some brands have a CPA threshold of $150 even when their AOV is only $90 — a scenario that would appear loss-making on the surface but may be acceptable depending on LTV or other factors.
For most advertisers, particularly those just starting out, the speaker recommends cutting ads when they fail to hit break-even ROAS during the initial spend period. This break-even point accounts for the first transaction's profitability before factoring in repeat purchases or lifetime value.
The speaker promotes a custom calculator they've built that accounts for COGS, payment processing fees, and other cost factors to help advertisers determine their precise break-even ROAS. This tool is available by DMing the word 'metrics' to the speaker on Instagram.
Key Insights
- The speaker argues that the decision to turn off Meta ads should be triggered when spend exceeds your defined KPI, but stresses that KPIs are 'extremely relative' and vary significantly by brand.
- The speaker claims that some aggressively scaling brands operate with a ROAS KPI as low as 0.6, meaning they cut ads only when performance drops below that minimal threshold.
- The speaker presents an example where a brand with a $90 AOV still sets a $150 CPA as their cutoff point, illustrating that surface-level loss-making metrics can still be acceptable depending on brand economics.
- The speaker recommends that most advertisers, especially those just starting out, should cut ads when they fail to achieve break-even ROAS within the initial spend period.
- The speaker has built a calculator that factors in COGS, payment processing fees, and other variables to help advertisers identify their precise break-even ROAS, available via Instagram DM.
Topics
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