Lower your ad spend and make more money

If you want to make more money, you should probably just lower your ad spend.

It sounds counter-intuitive, but it's by far the biggest mistake I see Kleio merchants making: burning money on customer acquisition.

Sometimes because they allow a too high CPA relative to their AOV at a small scale, but most often they simply just spend way too much money on ads relative to what they can push through, profitably.

I can only speculate why. But I think it's because they see big brands on X/LI spending a lot of money, so they think that's normal, expected, and the way to do it.

But it's not. You can't expect to be able spend the same amounts on ads as Ridge. And you definitely don't get rich through unprofitable ad spend. You're just pulling money out of your bank account at a crazy rate.*

Just look at this screenshot from a Kleio user. Before our call, they were doing fine - sometimes. Unfortunately, they were stuck in a cycle of making money on acquisition, increasing ad spend, burning all the money they made and more, lowering ad spend, making some money again, increasing ad spend, repeat.

And in the end, they didn't see their bank account increasing. Which is typically a great sign that something is wrong.

So, we had a great talk about how unprofitable ad spend is not worth it - how it kills your cash flow and how you're making a lot less on repeat customers than you think - bid caps, and a lot more. And now the brand consistently makes money on acquisition, and, for the first time in a long time, see their bank account increasing ❤️

*No, unprofitable ad spend is not balanced out by LTV. Only in a very, very few cases. The average user loses so much on the first order that it takes years to recoup the loss — if it ever does. And even when it's faster, it's not worth the risk.