How Much Do I Need To Spend On Ads?

Jay Topp, founder of Real Growth, answers on video. Transcript:

So how much do you need to spend on ads in order to run a book funnel? And so what we recommend is that you start with around $30 to $50 a day in spend. But the way that we think about spend with a book funnel is very different because it's what I call self-liquidating. So the way it works is I'll spend $50 today on ads, I will sell two or three books, and that will cover the cost of my ads, and so I'm essentially net positive on day one, so that any other dollar that I make from repeat buyers or people are sending into my backend offer is all profit.

And so it allows me to keep spending every day and to scale much faster because we don't have to wait for cash. It is speed of cash that allows a business to scale, and we're essentially bringing the speed up to day one. So I can start with $30 or $50 a day, get 30 or 50 back, and then in a few days, in a week's time, maybe I want to go to $100 a day and get $100 a day back.

And so we do it incrementally into ad accounts. We have those spending $10,000 a day. And as you scale, you may incur a small loss on the front end. Maybe you only cover 80% of your ad spend, but you're still covering 80% of your advertising when everybody else in your industry is losing 100% on their advertising upfront, hoping that they will make sales on the back end.

And so I like to start small, and the way that I think about it is I want to operate my business anywhere from a four to six ROAS at scale. Sometimes that goes down after when you're doing hundreds of thousands or a million dollars a month, that might compress to three. But the way that we look at it, up into 50K a month, okay, awesome. We want to operate four or five times ROAS or more.

So if I want to make $50,000 a month, I'm probably going to have to spend around $10,000 a month. That's $300 a day. But the beautiful thing is that we don't just jump to that. We do that slowly and incrementally, make sure that we're covering our ads every day and just taking it one step at a time, making our first backend sales, validating it, and then moving up incrementally, making small adjustments as we need along the way.