If the budget is spent until it runs out, there is no target

Ask an owner what the target for the ad budget is and the most common answer isn’t a number. It’s a sentence: “More sales.” That is a wish, not a target. A target is the number that tells you when to stop the spend and when to add to it. Without it, the budget runs until it runs out, and the month-end question — did it go well? — gets answered by feel.

Where the leak is. Spending without a target doesn’t lose money in one campaign; it loses money wherever a decision should have happened and didn’t. Three things follow. The campaign that’s going badly isn’t switched off, because there is no measure of “badly”. The campaign that’s going well doesn’t get more budget, because there is no measure of “well”. And the agency or the in-house team picks whichever number looks best this month — clicks one month, impressions the next, “engagement” the month after. When the number changes every month nobody is lying, but nobody sees the truth either.

Three levels. At level one there is no target; the spend is the budget. At level three there is a written target — usually “so many leads a month” — but it isn’t tracked; it’s remembered at quarter end. At level five the target is defined per channel and per campaign, watched weekly, and the budget moves weekly: add to what delivers, take from what doesn’t. Level five isn’t a big-company thing. A ten-person firm can do it with one row in a spreadsheet.

Which number? Two candidates. ROAS is revenue per unit of ad spend; it works for e-commerce and direct sales. Customer acquisition cost (CAC) is the total spent to win one customer; it’s more honest where sales close by phone or appointment, because revenue arrives weeks after the ad. Which one you pick matters less than having written it down. An unwritten target is not a target.

A field example. A manufacturer’s agency report had said “above target” for three months. The target, it turned out, was three hundred forms a month. Three hundred forms arrived. Whether any of them became sales wasn’t discussed, because it wasn’t in the contract. We rewrote the target as “forms that reach a sales conversation”; the number fell from three hundred to ninety, and sales didn’t move. The agency had been doing the same work all along; it simply looked good against the wrong number.

The one-question check. Today, ask your agency or your marketing lead: “What’s the number at which we should pause the ads this month?” If the answer doesn’t come in ten seconds, there is no target. If the answer is “we’d have to look”, there is no target either. If the answer is a number, ask the second question: “Where were we against it last month?”

First action. This week, choose one number — ROAS or CAC — and write it as a sentence: “If acquisition cost goes above 150 this month, we pause and look.” Send the sentence to the agency and have it put as the first line of the monthly report. The number may be wrong; in the first month it probably is. What matters isn’t that it’s right but that it exists. A number that exists gets corrected in three months. A number that doesn’t exist isn’t corrected in three years.

In Growth 360 this measurement point is called “ROAS and budget management”, one of the heaviest points in the Attract column. The Quick Scan looks at it with one question; the Full Assessment reads all six points of the dimension together and puts the budget shift into the plan.