MBA2607 Why Most Entrepreneurs Waste Money on Ads (And What to Do Instead)

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Most rookie entrepreneurs think they could just throw money at ads and suddenly customers will show up. The reality is is that that's the fastest way to burn through cash and get nothing in return. In fact, 80% of businesses that run paid ads lose money on them. That's according to Wordstream. So if you're running ads or thinking about running ads, you need to gobble up today's episode. I'm gonna show you why most entrepreneurs waste money on ads and more importantly, what to do instead to actually make your marketing work. Let's get it. Welcome Back to the $100 MBA Show. I'm your host Omar Zenholm, where I deliver practical business lessons three times a Monday, Wednesday and Friday to help you start, grow and scale your business. Most people lose money on ads because they don't understand how ads actually work. Here's what most struggling entrepreneurs do. They run ads with no clear strategy. They boost random posts hoping for a sale. They send people straight to the sales page. Most people don't buy the first time they see something. They don't track conversions properly. They have no idea what's working and what's not. The result? Wasted money, no roi, and a truckload of frustration. When I first started running ads over 15 years ago, I made all these mistakes. I was spending thousands on ads only to realize I was sending cold traffic directly to a thousand dollar offer. No trust, no relationship built. No sales. So here's what I did instead. Ads don't work in isolation. They need to be a part of a bigger strategy. Instead of spending money blindly, here's what actually works. Step one Capture leads. First, run ads to a free high value resource, not a sales page. Okay? You want to get your cost per acquisition as low as possible. So getting somebody's name and email address is a lot cheaper than trying to get them to buy. And by having a lead, you can then nurture them, educate them and then convert them into a customer. Think of the long term goal here. Don't try to get a sale immediately. So, so how to get the lead? Well, you use a lead magnet like I talked about. Like a PDF guide, like a video training, like some sort of tool or template. Why? Again, because people are more likely to give their email than to buy right away. They're going to get instant gratification by giving their name and email address to get your lead magnet and they're going to get satisfaction. They're going to get value immediately from you. Step two, Once you have their email, don't pitch right away. Don't make this mistake. Provide value. Build that relationship. Share useful content week after week on your newsletter. Build trust over time. When I started Webinar Ninja, a software company selling software, not content, right? We ran email capture ads first. Instead of selling the software up front, we actually gave away content as our lead magnet. We gave away a free masterclass on running webinars. The results? We built an email list of engaged leads who were far more likely to buy later. Step three is to retarget and close the sale. Now that people know you and trust you, this is where you run the conversion part of this equation. You start running conversion ads. This is where you retarget people who have downloaded your lead magnet. This is where you send them to a webinar where you can educate them further and then make an offer. This is when you can send them a limited time incentive to get started and buy. So maybe this is a bonus or some sort of discount or deal. For example, with our software webinar Ninja, we ran retargeting campaigns only to those who were on our webinars who watched our demo webinar. The result? We converted 10 to 15% of those leads into paying customers profitably. Now I get it. You might be asking Omar, what if I don't have the budget for ads? Don't worry I got your back. If you're not ready to run ads yet, here's what you can do instead. Organic content marketing. Post valuable content on YouTube, start a podcast, write some blog posts, write some posts on LinkedIn and X whatever you prefer. This is going to get people curious about what you do. Just remember that when you post this content to end on a call to action, asking them to download your lead magnet so they can get on your email list and start this cycle. Leverage other people's audience. Use partnerships, guest blogs, be a guest on a podcast. Use collaborations as much as possible so you can leverage other people's audiences. Lastly, leverage word of mouth. It still works. Ask your early customers for some referrals. Ask them to share their experience with their friends and family. Before I spent a single dollar on ads, I grew my podcast audience first. And through this podcast I was able to build my email list. And through my email list I'm able to sell my products and services. And by the time I got that point and I have some profit now, I can afford some ads. That first original organic traffic became my first thousand customers without spending a dime. But once you start making some serious profit, you can speed up your growth by leveraging ads. Like I mentioned, gas, snacks, tolls. This trip is draining my wallet.

Yeah, but we'll be with family.

You're in a good mood. What's your deal?

What's my deal? I saved at Metro with no activation fees and I got 1 line of 5G for just $25 per month. Get kept the phone I love and a five year price guarantee on my top tuxt and data detour to Metro. Get that more for your money feeling only at Metro by T Mobile. Just bring your number. $30 first month at $25 after with autopay not available. If with Metro or T Mobile in the past 180 days. Oh, could this vintage store be any cuter?

Right?

And the best part? They accept Discover. Accept Discover in a little place like this? I don't think so, Jennifer. Oh yeah, huh? Discover's accepted where I like to shop. Come on baby, get with the times. Right, so we shouldn't get the parachute pants. These are making a comeback, I think.

Discover is accepted at 99% of places that take credit cards nationwide based on the February 2025 Nielsen report. So I hope I've shown you that most entrepreneurs waste money on ads because they're using them the wrong way. They're blindly running ads, hoping for sales. Build a system first, capture leads, nurture them, then then sell right Retarget those warm leads. Sell to people who already trust you. Focus on organic marketing first. Ads should amplify what's already working. If you're not selling your products and services without ads, your product, Your offer is probably not strong enough yet, so you should be able to sell it without ads. If you can and you want to amplify it, that's where you go. The ads route. If you get this right, ads will scale your business instead of draining your bank account. If you take one thing away from today's episode, then let it be this. And I want to leave you with this. More money won't fix a broken system. Your goal isn't just to get more traffic. It's to create a system that turns that traffic into loyal customers. The right customers, the right way. Don't rush to burn cash on ads because you're impatient or that's what everybody else is doing. Focus on what actually moves the needle and when you get that system in place, ads will become the fuel to scale the not a money pit. You got this if you're serious about building your business, then join my Three Things newsletter. Every week I send you three things 1. Something to think about. Something to shift your mindset 2. Something to do, an actionable step to grow your business. 3. Something to learn. A valuable resource to keep you ahead. It's completely free and it's my way of coaching you from afar. Just go to100mba.net and sign up for any of our free guides and you'll automatically be added to the newsletter. If this episode helped you in any way, subscribe and share it with somebody you know needs to hear this. I'm Omar Zenholm and I'll see you in the next episode. Gas snacks, tolls this trip is draining my wallet.

Yeah, but we'll be with family.

You're in a good mood. What's your deal?

What's my deal? I saved at Metro with no activation fees and I got one line of 5G for just $25 per month. Kept the phone I love and a 5 year price guarantee on my top tuxt and data detour to Metro. Get that more for your money feeling only at Metro by T Mobile. Just bring your number $30 first month and $25 after with autopay not available. If with Metro or T Mobile in the past 180 days.