Matt VaadiCEO at guHRoo | We help small businesses build HR growth infrastructure (People + Tech + Benefits)

How to Know Exactly What You Can Spend on Ads

Name: How to Know Exactly What You Can Spend on Ads
Uploaded: 2025-06-30T15:01:22+00:00
Duration: 57 s
Channel: Matt Vaadi
Description: In this segment, the speaker challenges the common belief that LinkedIn ads are prohibitively expensive by showing that perceived cost depends on a…

30 Jun 2025 · 1 min

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In this segment, the speaker challenges the common belief that LinkedIn ads are prohibitively expensive by showing that perceived cost depends on a business’s specific economics. He walks through a step‑by‑step calculation: first determine the average customer lifetime value (e.g., a client stays 7 years and spends $20,000 per year, yielding $140,000 LTV). Then estimate the conversion rate from meetings to closed deals (e.g., 1 deal per 5 meetings). Using these numbers, the cost to acquire a new customer can be as low as $1,000, which is justified by the $140,000 lifetime revenue. The example illustrates how to translate raw ad costs into a rational customer acquisition budget, turning “expensive” into a data‑driven decision.

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One thing I want to touch on there with ads, though, because people will often get hung up on how expensive ads are. The LinkedIn ads are kind of known for being expensive, but until you've sat down and done the math, what you can afford to pay to acquire a new customer, you really don't know what expensive means yet. So for example, if you told me— if I came to your office right now and said, hey, I'll sell you appointments, you make appointments for $200 apiece, you'd probably look at me and be like, dude, I'm not going to pay you $200 to set an appointment for me. That's so much money. Whereas if you said, sat down and did the math and said, all right, what's the average lifetime value of my customer? So, you know, they're with us 7 years, they spend $20,000 a year with us, it's $140,000. How many meetings do I have to have to close a new deal? Well, for every 5 meetings I have, I close a new deal. So for every $1,000, I close a new deal. So I can spend $1,000 and get $140,000 in lifetime value. That's an astronomical, off the charts, low cost of customer acquisition.