KPI Library
Ad Spend per New Deal
The average cost of advertising per new customer won.
The cost of advertising that takes the company to get a new customer.
This KPI calculates how much your company spends on ads until you get a new customer. It does not mean that’s the amount that you should be spending, but rather your current situation in this regard. It gives you a better understanding of whether your ad spends to get a customer is too high. If this happens, it may mean that you are allocating too many resources in a tool that is not giving you enough benefit. Therefore, this KPI basically compares your spending in a specific tool compared with the value of the customers you are getting from it. For instance, you might be spending 500dkk on Facebook Ads every day, and just getting a customer that’s worth 200dkk. With this KPI you will be able to have an overview of where your budget for advertising is going, and which are the tools that are performing best - and worst. If checked regularly, you will be able to adapt the strategy in order to get better results with the same budget.
KPI Example
What is Ad Spend per New Deal?
Ad Spend per New Deal describes the average cost of advertising per each new customer you obtain. Important! This KPI doesn’t indicate this is the amount you should be spending on advertising, but rather indicates what you’re currently spending.
With this marketing KPI, you’ll have an overview of how your advertising budget is doing, and which of your advertising tools are performing best – and worst. If checked regularly, you’ll be able to optimize your advertising strategy to obtain better results within the same budget.
Ad Spend per New Deal is a relevant metric for your marketing team to monitor.
Why marketing teams need to track Ad Spend per New Deal
Ad Spend per New Deal is important, because it gives you a better understanding of whether your ad expenditures to obtain customers is too high. If this is the case, it may mean you’re spending too much on platforms with too little payoff.
Essentially, this KPI compares your spending on a specific tool compared with the value of the customers you get from it. For example, you might spend $500 on Facebook Ads every day for a week, but win a customer who’s worth only $200. This certainly isn’t a good tradeoff, but having this knowledge allows you to reevaluate your advertising strategy as necessary.
How to calculate Ad Spend per New Deal
Best practices for improving your Ad Spend per New Deal
The best practice for Ad Spend per New Deal is to keep a close eye on the value of your deals, and where these deals are coming from. It’s up to you to determine an acceptable ratio of the amount spent on advertising to the number and value of customers obtained from this advertising.
If your advertising on one platform is delivering substandard results under this framework, it’s time to change strategy and advertise elsewhere. This is when knowing your ICP (ideal customer profile) comes into play – if you know this profile and where to find it, you can modify your advertising strategy accordingly.
Other KPIs similar to Ad Spend per New Deal include: