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Why This Matters
Most small business owners don’t actually have a marketing problem — they have a measurement problem.
They boost a post, run a few Google ads, maybe even try Meta… and then stop because “it didn’t work.”
But what does “didn’t work” mean?
Too expensive? Too few clicks? No calls?
If you don’t know your numbers, you can’t improve your numbers.
This issue breaks down how to track, benchmark, and manage your ad spend — using the same process we use for clients, plus AI prompts to make it simple.
Before we get into the numbers, a quick note: Kojo is sponsoring this newsletter.
They’re paying me a small amount for each unique click — nothing wild, just a few bucks per click. But that’s exactly why this issue matters. The math you’ll learn below — how clicks, conversions, and ad performance are measured — is the same math Kojo and every other advertiser uses to decide what they’re willing to pay.
So as you read, keep that in mind. This isn’t theory; it’s literally how modern ad spend works in real life.
And if you want to support this newsletter, check out Kojo — they’re helping make it possible.
Step 1: Know What You’re Actually Paying For
These are the only numbers that matter for 99% of small businesses running ads:
Metric | What It Means | Why It Matters |
|---|---|---|
CPC (Cost Per Click) | How much you pay for each click. | High CPC = your targeting or creative may be off. |
CTR (Click-Through Rate) | % of people who see your ad and click. | Shows if your message is resonating. |
CPL (Cost Per Lead) | How much you pay per inquiry or form fill. | The key number for service-based businesses. |
CPA (Cost Per Acquisition) | Cost to actually close a sale or job. | Real ROI metric. |
ROAS (Return on Ad Spend) | Revenue ÷ Ad Spend. | The “is it worth it?” number. |
Frequency (Meta) | Avg # of times each person sees your ad. | Too high = ad fatigue. Too low = no recognition. |
Know these six, and you can manage ads with confidence.
Step 2: How to Set Real Targets (With Real Math)
Let’s use a real remodel example — because this is where most small-town service businesses get tripped up.
Example: Local Remodeling Company
Average project value: $15,000
Average gross profit: $7,000 (after materials and labor)
Target ad spend: 3–5% of gross profit per job
Close rate: 10% (1 job booked for every 10 qualified leads)
Here’s the math:
1️⃣ Budget per booked job:
3% = $210 • 5% = $350
2️⃣ Leads needed per job:
10 leads → 1 booked job
3️⃣ Target Cost Per Lead (CPL):
$210 ÷ 10 = $21/lead (3%)
$350 ÷ 10 = $35/lead (5%)
👉 Formula: Max CPL = Gross Profit × Ad % × Close Rate
Example: $7,000 × 0.05 × 0.10 = $35 CPL
If you close more often (say, 20%), your CPL target doubles.
If your jobs are more profitable, your budget can expand.
Step 3: Translate That to CPC (Cost Per Click)
Now connect it to your website’s conversion rate — how well it turns clicks into leads.
If your site converts 15% of visitors into leads:
CPC = CPL × Lead Conversion Rate
$35 × 0.15 = $5.25 CPC
So you can afford up to $5.25 per click.
If your CPC is higher—or your page converts worse than 10–15%—you’ll burn through your budget before landing good leads.
🔍 Step 4: Track Like a Pro
You don’t need fancy dashboards to manage ads effectively. Just a little discipline.
✅ UTM Links (Google & Meta)
Use this format for all campaigns:?utm_source=google&utm_medium=cpc&utm_campaign=kitchen_remodel&utm_content=ad1
✅ Weekly Review
CPC
CTR
Frequency (Meta)
CPL by campaign
✅ Monthly Review
Booked jobs per source
Close rate (leads → sales)
ROAS (Revenue ÷ Ad Spend)
✅ Simple Tracking Sheet
Date | Platform | Campaign | Spend | Clicks | Leads | CPC | CPL | Notes |
|---|
If your CPL creeps above your target or your close rate dips, you’ll know exactly where to look.
Step 5: Adjust Intelligently (Not Emotionally)
When results dip, don’t just panic and hit “pause.”
Ask yourself:
1️⃣ Are people clicking? (Check CTR)
2️⃣ Are those clicks converting? (Check CPL + landing page)
3️⃣ Are you getting enough reach? (Check Frequency)
4️⃣ Is your close rate holding steady?
Then adjust one variable at a time:
Bad CTR → Fix creative or offer.
Bad CPL → Improve page or form.
Bad close rate → Tune your follow-up.
Step 6: Let AI Handle the Heavy Lifting
You don’t have to spend hours in spreadsheets.
Use these ready-to-run AI prompts to automate your analysis.
Prompt 1: Calculate Your Max CPL and CPC
“Act as a marketing analyst.
My average job is worth $15,000, with a gross profit of $7,000.
I want to spend 3–5% of my profit on ads and close 10% of leads.
My website converts 15% of clicks into leads.
Calculate my target CPL and CPC at 3%, 4%, and 5% ad spend. Then summarize in a table.”
Prompt 2: Analyze Last Week’s Ads
“Here’s my ad report for the past week.
Summarize CPC, CTR, CPL, and ROAS by campaign.
Identify which are above my Max CPL and recommend what to pause, adjust, or scale.”
Prompt 3: Build a Simple Ad Tracking Sheet
“Create a Google Sheets template to track weekly ad performance (Google + Meta).
Include spend, clicks, leads, CPC, CPL, and notes.
Add conditional formatting to highlight any CPL over $35.”
Prompt 4: Improve My Ad Creative
“Here’s my ad copy and image description.
Suggest three alternate hooks and visuals that could improve CTR for homeowners in [your city].
Keep the tone friendly, local, and trustworthy.”
Find your next winning ad creative in seconds with AI
Most AI tools promise you thousands of ads at the click of a button. But do you really need more ads—or just better ones?
Kojo helps you cut through the noise. We analyze your paid social data to uncover the ideas with the highest chance of success. Then, our AI predicts which concepts will perform best, so you don’t waste budget testing what won’t work.
Instead of drowning in endless variations, Kojo sends your best idea straight to a real human creator who makes it engaging, authentic, and ready to win on social. The entire process takes less than 20 seconds, giving you certainty before you spend and better performance without the waste.
Why gamble on guesswork or settle for AI spam when you can launch ads proven to work, made by people, and backed by data?
Prompt 5: Predictive Budget Plan
“Using these results, project what monthly spend I’d need to hit [X leads or X jobs] while keeping CPL under $35.
Show three spend levels: conservative, realistic, and aggressive.”
Final Word
If you treat ad spend like a guessing game, you’ll always feel like you’re losing.
But when you track, benchmark, and adjust with intention — and let AI crunch the numbers — you’ll finally know what’s working and what’s not.
That’s how you stop wasting ad dollars and start building momentum.
Bonus Resource
Watch: “6 Ways AI Turned One Podcast Into a Content Machine”
We show exactly how we turn one piece of content into ads, emails, and social posts that actually work.
👉 Watch on YouTube