How to create profitable ads: A scientifically proven way

Running ads that cannot seem to get profitable? I know the feeling, and it truely sucks.

Whether you are a business owner running your own ads, part of an agency, a freelancer or are simply looking for ways to stop the bleeding from your adspend, you’re not alone.

In fact, this happens to most using PPC, whether it be Facebook, Google or other platforms.

Over the years, I’ve learned a way to scientifically engineer your ads to profitability and beyond so you can reach your wildest goals and dreams.

And In this article, I’ll go in detail on how to create profitable ads from scratch using a sure-fire method that will not leave you questioning your marketing abilities or even worse, your future.

Change my mind: There are only 2 types of ads

There are only 2 types of ads.

  • Profitable ads
  • Unprofitable ads

I bet you already knew that, but here’s why you need to know the difference.

Unless you have tens or hundreds of thousands of dollars to start with, running ads unprofitably may very well result in you going bankrupt. Straight talk.

I want to start by conveying the mindset that mediocre results are unacceptable. You cannot grow a business without either a) profit or b) outside investment. If you are not getting an investment, profit is your only option.

Did you get into business to grow or simply to be a glorified worker with all risk and no benefit?

My goal is to get you to easily create profitable ads at will. By having this as a goal, at worse, your ads will be breakeven, which is acceptable. But we can do better.

I want you to keep this in mind. Our goal is profitability. Not sales, add to carts, pages views or likes. These are vanity metrics that do have their uses, but they are not the end goal and should never be seen as such.

Fortunately, there are many ways to make profitable ads. And in the next section, I’ll show you what the 5 golden money levers are to make profitable ads.

And if you stick around till the end, I’ll even add a bonus money lever that will literally crush any tactic or strategy you could ever dream of.

(Don’t you dare scroll to the end just yet, I promise the others are worthwhile!)

The 5 golden money levers to making profitable ads

There are 5 of what I call “money levers” to make profitable ads. Essentially, a money lever is a step in the conversion process that you control.

You see, to be able to create profitable ads, we will need to be able to control the process that your target audience goes through. This will enable us to monitor and optimize each piece and step of this process, often called a sales funnel.

Here are the 5 money levers you can also leverage to optimize your ads and boost profitability:

  • Your target
  • Your offer
  • Your ad
  • Your conversion
  • Your backend
  • Bonus & most powerful: Your stickiness & value

These golden money levers will enable you to control and optimize your results through the roof using strategies from the best direct response marketers in the world.

Let’s go even deeper into each and understand what each does and how it will help you explode your ad profitability.

Golden lever #1: Your target

The first thing to keep in mind to get ad profitability and the one that is often completely forgotten is your who. It is crucial that this gets done first as the next money levers heavily rely on who you are targeting precisely.

You need to know what and how your target person is thinking right now. What this person is suffering from.

Also note that I’m talking about a person and not people. This does get personal, because if you can tailor your marketing to a single person, you will increase your results by a good margin.

Now, I know most of marketing material talks about a persona, and that is pretty much what this is. But the idea is not to only cater to a vague demographic type of person, but to zero in on your ideal target single person.

To start supercharging your ads, you need to know your target person’s:

  • Interests
  • Desires
  • Fears
  • Frustrations
  • Feelings
  • Thoughts
  • Experiences

This will leave you with important and extremely powerful insight into who this person is and what this person’s biggest fears and interests are.

By knowing these 7 points, you can literally sell anything to anyone.

With these, you can now talk their language, connect on a personal level, share relevant experiences, overcome objections before they have them, offer them hope to their biggest problems and reassure them that everything will be alright.

Example: Single male gamer in his 30s working as a programer.

  • Interests: Technology, self employment, business, MMOs, mechanical keyboards, metal music, mountain biking, watching movies, helping others, travel
  • Desires: Become wealthy enough to retire early, wants to start his own company and own his time, wants to work with big clients, wants to play games, wants to hit level 99 in his favourite MMO, wants the new Moonlander mechanical keyboard, wants to play the guitar, would like to go mountain bike the famous A-Line trail in Whistler, wants to genuinely be helpful to others, wants to have a girlfriend, travel the world
  • Fears: Never making enough money, working his cubicle job until he dies, never finding the right time to start a company, financial risk, not having enough friends, never being able to find a significant other, never having the time to travel the world, quitting his job to get the life he wants
  • Frustrations: No easy option is available to start a business, not enough time to work on a side hustle, crappy and unreasonable management at his job, cannot play games as much ass he’d like, friends are always busy and cannot do anything, has no time to help others, cannot travel because he has to work to pay bills
  • Feelings: Stuck, behind in life, overwhelmed by the options and possibilities, discouraged, hopeless, excited at the future possibilities, hopeful for the future, FOMO
  • Thoughts: When should I jump into my next opportunity, which opportunity is the best for me, maybe I should try to be more productive, perhaps I could take courses on the subjects that interest me, maybe I should start saving more, how can I help others, how can I make a dent in this world, how can I make more money without risk, I should do a dopamine detox
  • Experiences: Familiarity with tech, has managed side hustles and businesses, has been technical manager for a marketing agency, is able to empower business owners to grow with tech, knows SEO, knows PPC, knows how to program tools from scratch, has good people’s skills, has back pain, is a casual gamer, has backpacked Southeast Asia for 3 months in his 20s, is good at mountain biking

It is important to be exclusive in your targeting rather than inclusive. The goal is to eliminate everyone that does not fit into your target person.

Golden lever #2: Your offer

Once you know how to talk to your target person, you need to craft an offer that will be so good that they will be missing out if they don’t get it now.

Offers are used to acquire customers or re-engage existing customers.

Whether this offer is paid or not (sale or lead gen) does not matter. No matter who you are, a no-brainer offer will suck in much more people with whom it connects than a vanilla offer that is simply “Buy now and save this amount” or “Get this product because of our awesome features”.

It is preferable to craft your offer based on a lack that this person is experiencing. A lack often creates pain and is way more powerful than gain and people are more afraid of loosing something (or missing out on something) than they are happy to gain something.

This offer needs to be so good that if they end up not taking you up on the offer, they regret it. Their current situation needs to be worse without your offer than with your offer.

Here are a couple of offer examples.

Lead gen examples:

  • To get agency leads: The 5 mistakes that prevent your agency from growing, and being a cashcow on autopilot.
  • To get residential real estate investor leads: Top 10 cities with cheap houses to invest in before the next boom and expected 300% returns within 5 years.
  • To get home owner, HVAC or renovation leads: 7 dangerous invisible mold issues 75% of houses suffer from. Discover if your family is at risk now for free.
  • To get landscaping leads: 7 secret hacks to make your grass greener than your neighbour’s in 1 weekend.
  • To get hair stylist leads: How to make the top 9 trendy hairstyles you see everywhere on TikTok with basic hair styling tools.

Sale offer examples:

  • To close agency leads: Stop working endless days banging your head on the wall trying to figure out how to get new clients with our 3-step plug and play proven formula. With already 133 agency clients having had an average of 10x ROI on their investment and doing an additional 200k$ per year, get access to our accelerator program today for only 4,995$. Results guaranteed within 6 months or your money back + 500$ for wasting your time.
  • To close residential real estate investor leads: Avoid losing deals. Supercharge your discovery of profitable houses to buy before everyone else with our notification platform for only 199$ / month. Register for your areas of interest today and find your next deal fast. If you do not find a worthy deal within the next 3 months, we will refund you and extend your subscription by 3 additional months on us, so you can get immense value before subscribing again.
  • To close home owner, HVAC or renovation leads: Schedule a free analysis (149$ value) to make sure your family is safe and your home is free of black mold. (opportunity for upsell on the spot) We will even install a FREE device that will notify you if it ever detects black mold in the future, protecting your family 24/7.
  • To close landscaping leads: Stop having to sweat it out in the burning Texas sun to cut your lawn on monday evening because you had no time on the weekend. For as little as 59$ per week, we will take care of your lawn for you. We will even do weed control so you’ve got the most pristine lawn in town, take care of edging to save your back and pick up any trimmings in your driveway, all worth an additional 49$ for FREE! Today only, schedule your first appointment now!
  • To close hair stylist leads: Prevent the mess up and treat yourself to the most desired hairstyle this weekend with our special TikTok offer. Glass of wine included. Bring your friend and get a 20% additional bonus on both your visits.

And these examples have not been optimized yet. Usually, you’ll want to create 10-20 variations of each headline/offer to make sure you get the most catchy, FOMO-y and effective copy.

You want to touch on the pain points and eliminate all objections. All of these could 100x be optimized. But that’ll do for now. I just wanted to list a quick few.

And the optimization of your offer will potentially be your biggest money lever. The more an offer is tailored and adds value to your target person, the more they are likely to buy.

Always remember this: If you start with an industry average conversion rate of 2% on your offer, simply making a better guarantee and decreasing their risk could increase your conversion rate by 2%. Congrats, you just doubled your results and halved your CPA.

Golden lever #3: Your ad

Your ad has one single job: Get the right click.

How do you do this? Build immense intrigue and curiosity to the right person.

Your ad is what’s getting your leads or sales in the door. It needs to be specific and exclusive.

In other words, based on your target person, you want to create a message that compels them to click. And to make sure that the people that click are the most likely to convert on your offer, you need to eliminate any click that is less likely to convert from the start.

To do this, you paint specific pain points to a very specific person. Anyone that does not feel compelled will not click since the intrigue of the ad will be tailored to your audience.

Here are a couple examples:

Becker Facebook ad since 18 months
Alex Becker’s Hyros Facebook ad active for 11 months straight
Clickfunnels Facebook ad
Clickfunnels’ Facebook ad
Content Maverick Facebook ad
Content Mavericks Facebook ad
King Kong Facebook ad
King Kong’s Facebook ad

Here is a quick checklist to get winning ads:

  • Attract your target person’s attention
  • Call them out
  • Touch on their pain points
  • Have an intrigue that they will really miss out on if they go past your ad and never see it again
  • Have a strong call to action

Testing multiple variations will then help you get the most bang for your marketing buck.

Always remember this: If you start with a CTR of 2%, simply increasing your CTR rate by 2% to 4% essentially doubles your potential results or leads for the same budget.

Golden lever #4: Your conversion

The conversion is where the action (sale or optin) takes place. In our case, we are talking about the landing page.

Since you should already have a solid offer by now, the landing’s page job is to convey pursuasively each and every detail of said offer with the sole goal of them either opting in or buying.

You will drill on their pain points and paint the picture of a better future that is only attainable through you. This is called a before-after-bridge.

Here, the copy used to sell your desired action (optin or sale) will most likely have the biggest impact on your conversion rate.

And often, simple wins.

Here are the basics to have an effective landing page:

  • Have a bold and clear title (make sure this follows the promise and intention from the previous ad)
  • Deliver on the promise of your ad and tie it to your offer
  • Have a strong and clear call to action

And that’s it.

Now, you may be wondering about additional sections, images, bullet points, videos, testimonials, etc. that you see on every single landing page you land on.

And the truth is that a landing page is crafted and has no pre-determined optimal structure for every single business. This will depend on your audience, offer, etc.

All the additional sections however will be added to the second bullet of the list above. This second bullet is usually the main meat of the page that drills on pain points and decreases the risk to buy, which will usually bring the best results.

Testing and optimizing will be key on your landing page.

I will go into the optimal landing page in another article.

Always remember this: If you start with an industry average conversion rate of 2%, simply increasing your conversion rate by 2% doubles your results to 4%.

Golden lever #5: Your backend

The backend is where you get to really stretch your AOV (average order value) and LTV (lifetime value). This is where most businesses and startups make their profit even if they lose money on the acquisition.

And this is also your opportunity to play on your AOV and LTV and eventually be able to make any ad profitable in the long run.

The backend is anything that happens after the initial action.

This includes:

  • Email marketing
  • Upsells
  • Cross-sells
  • Downsells
  • Order bumps
  • OTO (one time offers)
  • Retargeting
  • Re-engagement
  • And more

This is where you have what was once a lead or prospect and you now have someone that trusts you enough to give you their money or some piece of personal info.

In other words, you’ve earned some trust. If they bought, they are now a customer.

Now, you want to nurture this trust and further grow your relationship with this person.

This will then increase your LTV to a point where if you were not sustainable until now, you can become wildly profitable knowing the return on your initial investment will come.

Here is an example of how the backend can save your business.

Warning, if you hate math, skip the next section.

Making ads profitable example

Here’s a simple example for a pool cleaning business. I will assume that this business has a 30% profit margin on it’s initial offer and 50% on upsells and cross-sells. Please note that this example may not apply to every geographic area. This is based on prices publicly shown by a local company called JFPiscines in the Greater-Montreal area in Canada in 2021.

Business data
Pool season opening service value: 300$
Pool season opening service profit: 300$ X 30% = 90$

Ads data
Ad spend: 1,000$ / month
Cost per click: 1.00$
Number of clicks: 1,000

Conversion data
Conversion rate: 2%
Sales: 1,000 clicks X 2% = 20 sales = 6,000$ | 20 sales X 90$ profit = 1,800$ in profit

ROAS: 6,000$ in sales, 1,800$ in profit
Profit on ad spend: 1,800$ profit – 1,000$ ad spend = 800$ net profit

This is currently profitable. This business would currently be profiting 800$ / month per 1,000$ / month ad investment.

Now, we all know that these results may not be sustainable if the CPC goes up or if their conversion rate tanks. Let’s fix this next with a couple of examples.

Optimizations

  • Increasing initial conversion rate by 1% (now at 3% conversion rate): That’s a whopping 10 additional sales totaling 3,000$ in sales and 900$ in profit / month for a new total of 9,000$ in sales and 2,700$ in profit (net profit from 800$ to 1,700$, a 213% increase!!!)
  • Upselling a luxury pool season opening treatment (+150$ sale or +75$ profit), converts at 10%: 3 additional sales, adds 450$ in sales / month, 225$ profit / month
  • Cross-selling a summer maintenance (+200$ sale or +100$ profit / month), converts at 10%: 3 additional sales, adds 600$ in sales / month, 300$ profit / month
  • Cross-selling a pool season closing (+150$ sale or 75$ profit), converts at 10%: 3 additional sales, adds 450$ in sales / month, 225$ profit / month

So, here is our new potential if we sell everything to a customer.

  • Starting ad spend: 1,000$ / month
  • Starting sales: 6,000$ / month
  • Starting profit at 30% of sales: 1,800$ / month
  • Starting net profit without ads: 800$ / month
  • With 1% conversion rate increase (3% CR total): Sales of 9,000$, net profit of 1,700$ / month (213% profit increase from 800$)
  • With luxury pool season opening treatment upsell: Sales of 9,450$, net profit of 1,925$ / month (241% profit increase)
  • With summer maintenance cross-sell: Sales of 10,050$, net profit of 2,225$ / month (278% profit increase)
  • With pool season closing cross-sell: Sales of 10,500$, net profit of 2,450$ / month (306% profit increase)

Our new sales potential is 10,500$ / month while the new profit potential is 2,450$ / month using this strategy, potential increases of 175% and 306% respectively.

If we keep up with the numbers, at first, a customer was worth 300$ with a 30% margin for 90$ profit and cost 50$ to acquire. That was 40$ in profit per new customer.

Now, a customer is worth 350$ for 131.67$ profit and costs 50$ to acquire. That is 81.67$ in profit per new customer.

This means that by offering a simple upsell and cross-sell system, we have more than doubled our average profit per customer.

And you now know that you could spend up to 81.64$ for a new customer knowing that you would break even.

And this has not even been further optimized to get better upsell conversion rates…The potential is HUGE.

BONUS Golden lever: Make em stick

And as a bonus, here is probably the most powerful golden lever: Make your customers stick around and buy again and again and again.

This is the ultimate way to create lasting ROI and have a solid financial base that can be used to be even more aggressive towards acquisition and growth.

If you thought the #5 golden lever was huge, this one will go ahead and compound it for every buying cycle (every month for pool services).

Picture this: If you knew that every single customer you were onboarding would continue paying you forever. How would that affect your profitability?

Forget about going to the moon.

The truth is that your profitability would skyrocket to the freakin stars and you could use this extra cash to have and offer better pay, scale your acquisition and even most powerful of all: pamper your customers so they buy even more, again.

You can literally 10x, 50x and even 100x or more your profit if you make sure to get customers to stick long term.

And how do you achieve this? Offer so much value with the service or product that you offer that they just cannot stop buying. They DO NOT want to stop receiving your product or service, because the value is that good and it makes their life better.

Think things like Netflix, Coca-Cola, internet providers, Apple products, smartphones, microwaves, electricity providers, petrol and gas providers, etc. What do these all have in common? They offer INCREDIBLE value for the money and those that partake in buying these will simply not stop.

All of these could double in price and people would still buy them.

And when the offer is from a particular recognizable business (Netflix, Coca-Cola, Apple), that business will become a pioneer and just rake in wads of cash and profit.

So the next time you are having issues getting your ads to be profitable, instead of trying to micro-manage your ads and try to only optimize your creative to lower your CPM and ad score, try some of these money levers out and see how it can explode your profitability within weeks or even days.

The takeaway is that the money is not in the ad itself, it’s in the monetization system.

Have a powerful monetization system and most ads will just crush it, even if you suck at it.