This week's Pace Notes:
A friend of mine works for a large car service chain. Oil changes, tire rotations, that sort of thing. They were spending $250k a month on Google to make $350k back. A 1.4x ROAS.
All they were running were cheap static graphics.
Revenue came in under target, so what did they do? They pumped more spend into the same ads. The machine moved faster. The margin collapsed further. Bummer, right?
It doesn’t have to be this way!
Let's get into it →
What we’re breaking down:
Where your cost per conversion actually comes from, and why the answer changes how you split your marketing dollars.
Why treating the ad platforms like money vending machines is a mistake, and what to do instead.
The winning line:
Your cost per conversion is determined by your ads, not your ad spend.
The research on this is not subtle. Nielsen and NCSolutions studied nearly 450 campaigns to find what actually drives sales from advertising. Creative came in at 49% of the lift. Targeting was 11%. Reach was 14%.
Google's own number is higher. They say 70% of a campaign's success comes down to the creative.
So the thing most brands spend the least on controls half or more of the outcome. The thing they spend the most on controls a fraction.
Meta's research with Nepa found that simply following creative best practices drove up to a 7.4x increase in short-term sales on the same budget.
Why most people get it wrong
1. They read a revenue problem as a budget problem.
Remember our car service chain story? You cannot buy your way out of a creative problem. You’ll just lose money quicker.
2. They compare the wrong price tags.
A production budget for big creative ideas looks expensive next to a Canva template, but the calculations shouldn't end there
Canva templates at 1.4x ROAS? $100k in revenue costs about $71k in spend.
Good video ads with a 5x ROAS? That same $100k costs only $20k in spend.
3. They think the algorithm will save them.
Meta and Google have automated most of what media buyers used to do. Bids, placements, audiences. The machines handle it, and they handle it the same for you and your competitor.
Which means the only input the platform can't generate for you is the one you hand it. The ad. When everything else is automated, creative is the last lever you actually own.
The line to remember
Spend the money on the ads. Let the ads pay for your ad spend.
How to get it right
Audit the split. Pull your last 90 days. If creative production is under 30% of your total paid budget, you have it backwards.
Price creative against wasted spend. Creative costs both its upfront production as well as its performance opportunity cost.
Cap spend on unproven ads. No concept gets real budget until it earns its ROAS at test spend. Scaling a mediocre ad just scales the mediocrity.
Fix your ads before you feed the machine. If ROAS is flat, freeze the budget conversation entirely. Feed the system net-new creative, then test scale.
If you get the above right, then scaling a campaign to the moon becomes the easy part. Ads in → money out.
Cheers,
Sterling Voth
Founder, Voth Agency
P.S. - If you want to level up your ad creative, we build cinema-grade digital ads (Meta, Google, CTV, etc.) for 8+ figure automotive brands that are serious about making money. Check it out here.