Blended ROI: The Ad Metric Pro’s Rely On But Rookies Don’t Even Know About

by Justin Brooke

DJ Khaled would call this a “Major Key”

First let me start off with the problem that “Blended ROI”solves for you.

Have you ever had an ad campaign that was good, but just not bringing in enough sales? Maybe it was just a few sales and the money was great, but it was just a handful of sales so didn’t really impact your life much?

This strategy will help you scale your campaigns while still keeping them affordable.

The problem is most people are shooting themselves in the foot.

I first learned of this while working for Agora (who spends millions per month on ads). It was the only way we were able to scale from a few sales per day to 500+ sales per day.

It’s called “Blended CPA” (CPA = cost per acquisition/sale/lead whatever)

Now, if you’re already a pro media buyer you might be rolling your eyes. To the pro’s this is elementary, but I find MANY people still don’t know what this is or why it’s so important.

Let’s work in real life examples…

Pretend you’ve got 3 campaigns running. One is horrible, one is just a little too expensive, and another is a huge winner.

We’ll call them…

1. Big Loser = 10 sales a day at -100% ROI (earning $1 for every $2 spent)
2. Little Loser = 10 sales a day at -30% ROI (earning $1 for every $1.30 spent)
3. Big Winner = 10 sales a day at 300% ROI (earning $3 for every $1 spent)

Now, what would you do for your client or maybe even your own campaigns? Most rookie media buyers would kill (pause) #1 and #2. It makes logical sense to only keep campaign #3 aka Big Winner.

WRONG!!!

Well not wrong, but the idea is “who cares about high ROI if it’s just 1 sale a day.” Most people chase ROI, but pro’s know that volume is what really matters. Rookies chase after 17,000% ROI and other gimmicks I see on sales pages these days.

Where as a pro media buyer would rather have lots of sales with a smaller ROI, than he would a few sales with really high ROI. Fact is… If your ROI is that friggin high, you’re leaving A LOT of money on the table.

Which brings me back to “Blended CPA.”

Blended CPA is when you blend the low ROI (or no ROI) campaign with the high ROIcampaign. The blending of the two campaigns ideally still gives you a net net positive ROI. Albeit, a smaller ROI, but still positive.

Let’s take another look at our 3 campaigns…

If you paused #1 and #2, but kept #3 you have 10 sales a day at 300% ROI. Not bad, some people that would be a big win. To each their own. But what if you also kept #2???

Now you have 20 sales a day at 270% ROI.

You just doubled your daily volume and you’re still profitable. What about the big loser though? What if you add that one into the blended CPA also???

Add all 3 campaigns together and you have 30 sales a day at 170% ROI.

 

TRIPLE THE VOLUME AND STILL PROFITABLE!

It doesn’t always work out that you can just keep every ad campaign and blended CPA will magically fix your errors. In this scenario is just happened to do that though.

The point is that high ROI is good, but it should not be the only factor in your decision making.

A pro media buyer uses blended CPA to balance both ROI and sales volume.

A pro media buyer uses blended CPA to balance both ROI and sales volume.

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They are like king and queen of media buying. You need both to succeed, ROI and volume.

Using the concept of “Blended CPA” you just might be able to get a lot more mileage out of your campaigns than you thought. Where you thought you were stuck at 10 sales per day, with blended CPA you all of a sudden have 30 sales per day.

By using a few high ROI campaigns you might be able to balance out the losers, and sometimes it’s the losers that actually help you scale.

Sounds illogical, I know, but this is what I live and breath every day.

I’m always asking, “well what is the blended CPA if we kept both or all the campaigns.” As long as the blended is still profitable or even breaking even, then GO GO GO!

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