How to identify a failed paid media campaign
As I discuss in my post on declining ROI in a PPC campaign, a well-run campaign should experience diminishing marginal returns.
But this post is not about squeezing every last drop out of a successful campaign. This post is about how to know when your campaign is a dud.
A rule of thumb for knowing when to quit
My rule of thumb is if the client has spent three times the Customer Lifetime Value (LTV) without a single qualified lead, that means further optimizations are unlikely to improve things enough to make the campaign profitable.
The logic behind using 3 x LTV is that by the time the client has spent that amount on clicks, the campaign’s poor performance is statistically unlikely to just be bad luck, and the amount it would have to improve in order to be profitable starts to look improbable.
This is true if the CPCs are high (fewer clicks, but you’d have to achieve a much higher conversion rate) and if the CPCs are low (more clicks, higher confidence that the campaign is failing despite ample data).
When this test might be wrong
The above test assumes that the campaign was set up reasonably well by yourself or another professional. If the campaign structure is terrible, then more dramatic improvements are possible.
Moreover if you see things moving in the right direction, by all means ask the client to give you more time to work your magic.
But if your client has spent a few multiples of the LTV and has seen nothing in return, don’t blame them for not wasting enough money. They will appreciate your candor when you tell them it has failed rather than waiting for them to figure that out on their own.
Sometimes PPC just doesn’t work
To some degree every marketing campaign is an experiment. There will be trial and error, and there is never a guarantee of success. Most business owners are not afraid to test the waters, but they count on you to look out for them and not string them along.
They won’t hold it against you if the campaign fails as long as you are upfront and honest with them, and in fact it may engender the kind of trust that will pay off when they refer other clients your way.
Oh, fyi, if you have the kind of integrity it takes to tell your clients when something isn’t working rather than stringing them along until they figure it out themselves, then you are the sort of person we want at Ethical Digital.
