(Part 2) Why ROAS Sucks: The New Marketing Metric Everyone Should Use…But Aren’t

Summary

Perpetual Traffic Podcast Summary

Episode: (Part 2) Why ROAS Sucks: The New Marketing Metric Everyone Should Use…But Aren’t
Release Date: March 21, 2025
Hosts: Ralph Burns & Lauren E. Petrullo
Guest: John Moran
Produced by: Tier 11

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Introduction

In the second installment of their two-part series titled "Why ROAS Sucks," hosts Ralph Burns and Lauren E. Petrullo delve deeper into the limitations of Return on Ad Spend (ROAS) as a primary marketing metric. Joined by John Moran, a seasoned marketing expert at Tier 11, the episode challenges conventional metrics and introduces a more effective alternative for measuring marketing success.

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The Shortcomings of ROAS

Lauren E. Petrullo [02:52]:

"This is a super important episode… ROAS is a no longer a leading metric. There are better ways to measure the growth and scale of business online."

The discussion begins by highlighting how ROAS has become an outdated metric that no longer provides a comprehensive view of a business's marketing effectiveness. Despite its widespread use, ROAS fails to account for the broader aspects of customer acquisition and long-term profitability.

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Introducing New Customer Acquisition Cost (NCAC)

John Moran [12:15]:

"ROAS is like an old metric. We should be focusing on Gross Profit or Net Operating Income instead."

John Moran introduces the concept of New Customer Acquisition Cost (NCAC) as a more insightful metric. Unlike ROAS, NCAC focuses on the cost associated with acquiring new customers, providing a clearer picture of marketing efficiency and business growth.

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Optimizing Ad Spend Across Platforms

Lauren E. Petrullo [05:22]:

"Meta was non-targeted spend and non-excluded spend that just kept growing."

The hosts discuss the importance of diversifying ad spend across platforms like Meta (Facebook) and Google. They emphasize moving away from rigid ROAS-based strategies to a more flexible approach that targets profitable customer segments.

John Moran [08:46]:

"It's not about getting the highest ROAS on each individual platform; it's about driving the most profitable traffic to your business."

By restructuring ad campaigns to focus on high-margin products and excluding non-performing segments, businesses can achieve better scaling and profitability.

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Case Studies and Real-World Examples

Lauren E. Petrullo [15:38]:

"Our blended CAC went from 91 down to 60. New customer ROAS went from an average of 1.2 to 1.35."

The episode presents a compelling case study where strategic changes in ad targeting led to significant improvements in Customer Acquisition Cost (CAC) and ROAS. By focusing on profitable products and excluding irrelevant audiences, the client saw a 40% decrease in CAC and an increase in new customer ROAS.

John Moran [20:13]:

"Our sales are up 353%, our profit is up 506%, and our blended CAC has decreased significantly."

Another example showcases how adjusting marketing strategies across channels can lead to exponential growth in sales and profitability while maintaining or even reducing acquisition costs.

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Implementing an Omnichannel Strategy

Lauren E. Petrullo [07:21]:

"Scaling is using omnichannel… amplify the customer journey instead of fighting yourself with siloed platforms."

The hosts advocate for an omnichannel approach, where different marketing platforms work in harmony rather than in isolation. By using Meta for prospecting and Google for conversions, businesses can create a cohesive customer journey that enhances overall marketing effectiveness.

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Measuring Business Health Over Channel Metrics

Lauren E. Petrullo [25:37]:

"Measure business health, never measure a report. If your business is failing, no report's going to tell you you're crazy."

A critical takeaway from the episode is the shift from channel-specific metrics to overarching business health indicators. Success should be measured by overall revenue growth, profitability, and customer lifetime value (LTV) rather than fragmented metrics from individual advertising platforms.

John Moran [29:12]:

"Channel reports don't matter. If your business is failing, who's going to pat themselves on the back?"

Emphasizing that the ultimate goal is business sustainability and growth, the hosts argue that internal metrics should align with long-term business objectives rather than short-term advertising performance.

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Conclusion and Takeaways

The episode concludes with actionable insights on transitioning from ROAS to NCAC, emphasizing the importance of strategic ad spend, focusing on profitable customer segments, and adopting an omnichannel approach. The hosts encourage listeners to rethink their metrics and adopt more holistic measures of marketing success.

John Moran [36:34]:

"Use NCAC to determine how to scale and grow your business, not ROAS."

Lauren E. Petrullo [35:39]:

"Leave us a rating and review to help change the perception on ROAS and adopt metrics that truly matter."

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Key Quotes

• Lauren E. Petrullo [02:52]:
  "ROAS is a no longer a leading metric. There are better ways to measure the growth and scale of business online."

• John Moran [12:15]:
  "ROAS is like an old metric. We should be focusing on Gross Profit or Net Operating Income instead."

• Lauren E. Petrullo [15:38]:
  "Our blended CAC went from 91 down to 60. New customer ROAS went from an average of 1.2 to 1.35."

• John Moran [20:13]:
  "Our sales are up 353%, our profit is up 506%, and our blended CAC has decreased significantly."

• Lauren E. Petrullo [25:37]:
  "Measure business health, never measure a report. If your business is failing, no report's going to tell you you're crazy."

• John Moran [36:34]:
  "Use NCAC to determine how to scale and grow your business, not ROAS."

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Final Thoughts

This episode of Perpetual Traffic provides a thought-provoking critique of traditional ROAS metrics and presents a compelling case for adopting New Customer Acquisition Cost (NCAC) as a superior measure of marketing effectiveness. Through real-world examples and strategic insights, listeners are equipped with the knowledge to enhance their marketing strategies and drive sustainable business growth.

For more insights and resources, visit perpetualtraffic.com, join their Telegram community, and explore additional content on their YouTube channel.

Transcript

[Ralph Burns]

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[Kassim Aslam]

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[Ralph Burns]

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[Kassim Aslam]

Brand that we recently worked with where.

[Ralph Burns]

They grew their revenue by 4.49.8% year over year and hit eight figures in top line revenue for the very first time in their history and they are now on track for 25 million in revenue in 2025. We are so excited to be working with this company and the reason why is they started using Tier 11 data suite about a year ago and re reduced their unattributed traffic by 90%. That's right. They're unattributed direct unknown traffic that probably frustrates the hell out of you. Over in GA4 or one of those other crappy attribution tools, we reduced that unattributed traffic by 90%, uncovered $850,000 in hidden revenue and scaled their ad spend by over 3x. These results are not magic. The results of clean, accurate data and a system designed for today's privacy world where everybody is trying to block your data. If you want to see these kinds of results for your business, reach out and let's make it happen [e-mail] apply and discover how tier 11 data suite can finally, allow you to scale your business, acquiring new customers at a cost you can afford. Head on over to tier11.com apply hello.

[Kassim Aslam]

And welcome to the Perpetual Traffic Podcast. This is your host Ralph Burns and the founder and CEO of Tier 11. And today' show is part two of our two part series on why Roaz sucks. And like I mentioned in the first show earlier this week, if you have not listened to that show from earlier this week, go back and listen to it. Why Roaz Sucks and the number one metric that we use here, which we have started to reveal here and we're.

[John Moran]

Going to get into more detail on.

[Kassim Aslam]

That specifically on today's show. This is a super important episode and like I mentioned in our first rebroadcast, this is one of the most downloaded shows that we've ever done here on Perpetual Traffic. And I think the reason is, is cause it's counterintuitive. It's very relevant to a lot of the marketers who are listening to this show. And you as a marketer, you as a CEO, you as a director of marketing or a VP of marketing, this is something that probably your team is getting caught up with and having been on multiple dozens of client calls the last couple of weeks, this is still a metric that rules the day, which is Roas. And Roas is a no longer a leading metric. There are better ways to measure the growth and scale of business online. Roas, especially in App sucks. And John and I get into exactly why and how to use this new metric in order to scale and grow your business. So we get into some other things here, which is how to use Meta for prospecting and Google for conversions. John gets deeper into that, sort of deeper into the funnel how we use the two platforms together. Once again, this is the first episode that we did with John as a member of Tier 11. Remember when he was over at Solutions 8, he was only a Google guy. Now he is a multichannel guy and has a lot more tools in the toolbox. So we talk about that here as well as how to choose the right product to sell if you're struggling with that on both Meta and Google and how to use them together because meta, Google, email, social, SEO, TikTok, Snapchat, they all work together to create conversions. They're not isolated in their own little silo. That's an old way of looking at things. If you looking at it first, click Roas on all the individual platforms, you're looking at it the wrong way. You're fighting yourself with the money that you're Spending and the time that you're spending on all your other marketing activities as well. So let's get right into it here. It's part two of myself and John. Take it away, boys.

[Ralph Burns]

You're listening to Perpetual Traffic.

[Lauren E. Petrulo]

So we looked at the last few years. We saw that Meta kept pushing a little bit harder and it hit a point, diminishing return and it became not profitable. So the client was upset. So I have had two calls with this client. One was to get the lay of the land and do the hours worth of research in order to figure out what happened. And then one hour to rebuild the campaigns instead of Google and now the person's kind of just off and onto their own. So I didn't have necessarily a chance to look inside of Meta too much. It was just on a screen share. But what was happening was Meta was going after. They didn't have exclusions. They didn't necessarily have. It was just a spend on whatever Meta wants to spend kind of thing. And then Google was like, all right, because it's performance max spend on whatever Google wants to spend. So it was just kind of two ships passing in the night, but also crashing into each other and not realizing it. So the Meta spend just kind of kept scaling and then didn't really push the bottom line. And then when they pull back 40% year over year from February to February, there wasn't a reduction in that overall revenue. That's where I looked at is Meta was it was non targeted spend and non excluded spend that just kept growing. And when it pulled back it was like, okay, it's probably going out on like sites or Advantage plus was just kind of like spending it to whoever they wanted to spend on. It wasn't actually going towards prospecting. So what we did is said, hold tight on Meta, don't do anything on Meta. We want to change Google first and see how that reacts. Because while you never want to think of Google versus Meta, you also want to know that when you're going from warm, irrelevant audiences to good, proper cold traffic with quality items, you do want to measure that change. And then next do the same thing on Meta and see how that doubles downs on that. And then talk about scaling is using omnichannel using the same amount of ad spend increases per platform regardless of what their levels are at. Which means if Meta's doing 70 grand and Google's doing 30 and you want to scale add 20% to both channels equally, you don't want to interrupt the lifecycle path of the customer journey. You just Want to amplify it.

[John Moran]

Right.

[Lauren E. Petrulo]

So that would be phase, like three. But this first phase was what channel do we go through first? And because this is a in demand type of product that does have a great amount of inbound search, it was just very easy to clean up Google first.

[John Moran]

Yeah. They kept meta in essence the same. You wanted to change the one variable and see how that would be impacted.

[Lauren E. Petrulo]

Yeah, yeah. If we go after cold traffic, detach Google from meta and turn Google into a prospecting network and not a regurgitation of semi poor meta traffic, what happens? It goes after new customers and it does grow and it does scale. That's fixed. Now we have to fix meta and then once those both are fixed, you can then start to scale both equally. But it's kind of two underperforming channels. Fix one, see how it works. If it's fixed, fix the other one, see if that's fixed as well, and then scale both.

[John Moran]

Another important part to this that I think, I don't want to lose this in the translation here is that the 80:20 of marketing, like the Pareto principle of put your best, most profitable products in front of those cold traffic audiences, especially the ones that you know are your best sellers. Like, it's just. I don't even know if that idea unto itself is something that a lot of businesses even think of. Like how many SKUs does this company have in total? Dozens? Or is it thousands? Or is it hundreds?

[Lauren E. Petrulo]

Yeah, I'm still in it. So this is actually 764.

[John Moran]

Okay. So out of those the 8020 is, let's say it's 100 products, maybe 50 something. Yep, 80 something. Okay. Somewhere in there. And that shift just on its own, taking that out of performance max, which I don't know, as if we've had you on. Well, we have actually had you on talking about performance max because you were all about performance max years ago and.

[Lauren E. Petrulo]

Oh yeah, you know, it is still fantastic for specific use cases.

[John Moran]

Yeah.

[Lauren E. Petrulo]

But if you fill it up with junk, meta traffic, you can't scale it.

[John Moran]

Yeah. Because it'll just retarget on brand, really.

[Lauren E. Petrulo]

Retarget junk traffic and only show up for brand. And then it learns off of that. So it's. So there's so many different moving parts and pieces. Do you want to see the irony of this? I made it my golden rule to never have a digital marketing gold rule.

[John Moran]

So it changes like.

[Lauren E. Petrulo]

Yeah, yeah. It's so unique, it's use. And people are, they always ask me, John, what's the best way to do this, John. What's the best way to do that? I'm like, I don't have an hour to go through every scenario specifically to your business.

[John Moran]

Right.

[Lauren E. Petrulo]

And that's what's interesting. There is no what is the best? What is the best is finding the best campaign hierarchy and structure on each channel for that businesses. It's like, is it over 300 or under $300? Is it impulse buy or is it not? What's the sales cycle? Do they return? How often do they return? Do you have influencers that are driving a whole bunch of traffic? That Performance Max and Advantage plus are.

[John Moran]

Going to remark so many different variables.

[Lauren E. Petrulo]

Like, exactly. There's a thousand variables I can think of. Where it's like, the best is for that use case. The best would be this. But it's vastly different for another business.

[John Moran]

Same type of customer, different industry with a different background. All of a sudden you might do something completely different than what we just shared on screen.

[Lauren E. Petrulo]

Right. I think this is. I want to go back a little bit to what you said is where it's like the driving the most amount of traffic to the proper product. I almost would say that most businesses do think that way. The good ones do. And a lot of people that are in positions of power will still sing that from the Mountaintops team. We need to get the traffic to these products. The problem is agencies may not necessarily do that if they seem good. Quote, unquote, roas.

[John Moran]

Yeah.

[Lauren E. Petrulo]

So it's like, well, we're getting a 5x. Do we really want to do what that guy says? Well, yeah, that's the owner of the company. He built it and now he's here or she's here because of what they know what to do. But your Roas is going to stop that. And if you make these changes and you see the roas dips down 40% or whatever it just dipped on me, you're going to panic and switch back and then you're going to tell the boss, hey, sorry, you know, sir, ma'am, like, what you want is wrong. So that's what's interesting is it's just measurement. But a lot of times, yeah, if you actually put the Aspen towards the products that have built the company and measured differently and do it. Omnichannel. Wow. What a novel idea. Like, let's drive traffic to a good product that sells.

[John Moran]

Right, right. When a lot of clients come to us, they can think of multiple examples here. They say, all right, well, here's our strategy. This is what we're doing. And then When I was doing this day in and day out, I'd be like, all right, well, if you want to market your company, give me a list of your bestselling products and your most profitable ones. So your best sellers, the most popular, ideally least competition plus highest net operating income, gross profitability, contribution margin, you know, name your metric. Like those are the ones that matter the most. Because I can get an 800% ROAS on a $7 product that you make a buck on.

[Lauren E. Petrulo]

Right.

[John Moran]

And look like a hero, but that doesn't move your business forward. So I think that just unto itself, these are a little bit more involved concepts that have nothing to do with traffic, but it's just decision making and understanding the business. And my sense is that with this customer, it's probably one of the first things that you asked is let's say 80, 20 this.

[Lauren E. Petrulo]

Yeah. Oh yeah. The shocking thing, if you're running Google Ads right now or if you're even your own business, hop into your Google Ads account as an example. Before you click on a campaign, just click product. Click your product list. It'll show you all the products that are all marketed in all campaigns. Sort descending by cost, not conversions, not conversion, rate, not row at sort descending by cost.

[John Moran]

Look at the five products there and say cost of ad spend. Okay. Ad spend, got it. That's.

[Lauren E. Petrulo]

Yeah, yeah. So when you sort descended by cost, that'll tell you what the ad spend is being spent on. So when you start descending by cost, ask yourself, are these the five products that I should be spending the majority of my ad spend on right there? I would guess half of everybody here that would try this would probably look at this and say, oh, you know what crap.

[John Moran]

Hmm.

[Lauren E. Petrulo]

I shouldn't be spending majority of my ad spend on these five products right there. You know that you have a structure problem for your business, period. That's it. I don't care what the ROAS is. I don't care. I don't care. Anything that is a structural issue in your business, especially if it's performance max, you have very little control over. So it's quite interesting.

[John Moran]

Yeah, it is. Do you factor in that question about best selling plus most profitable Ultimately, at the end of the day, like we want to be able to scale and grow businesses and you don't do that necessarily just by top line growth, but you really are looking at. And every business has this differently. We've had customers set it up inside Meta, for example. Like, I don't even care about what this, what the retail price is. I just Want to know what the contribution margin is? We alter our conversion value or net profitability, like net operating income. Like, I want to know exactly what I net on everything. Are those the types of conversations that agencies should be having with. With businesses? Just to begin with? Because for me, when I'm talking to my team, it's like, care about gross profitability. I care about net operating income. I care about customer centricity, which feeds all of that. But those are the types of conversations that I don't think a whole lot of agencies really have in this day and age.

[Lauren E. Petrulo]

No, no, not at all. And that's the part that just is shocking to me. Here's a great example. This is one that we don't even necessarily need to blur. This is a company that I'm a small equity owner in another screen.

[John Moran]

Share fun with John Moran here. Yeah, baby.

[Lauren E. Petrulo]

So I'll do this here. And this is the part where it gets real fun. And I'll actually share two examples on this part. Just do this period here. If we look at this time period here, which is just February 1st, 21st, you'll see something here that we have net quantity sorting descending.

[John Moran]

We are in Shopify now. We are in the back end of Shopify, which is one of the things that John typically looks at first, because that's what kind of matters. It's where the money's collected.

[Lauren E. Petrulo]

This is what you should be doing necessarily before you even start marketing.

[John Moran]

Yeah.

[Lauren E. Petrulo]

Really? I mean, if you have any sort of sales.

[John Moran]

Yeah, I know. Yeah.

[Lauren E. Petrulo]

If you're not doing this, you skipped a step. Yeah.

[John Moran]

Want to watch this? Yeah.

[Lauren E. Petrulo]

Yeah. And so we're looking at like, what products have what sort of profit margin. And I think we started this on the 25th. So this is the kind of after it's 54% profit margin where I think it would just take two weeks before that was at 52. So it's funny is when we look at the. This beef cheek roll here had a 62% profit margin, had 27 sales. And I think here, for example, this beef cheek roll now has 46 sales. So went from 27 to 46. We just changed the meta ads and we drove our gross margin for 52% up to 54% in two weeks. We're like, excellent. What changed? We just changed the meta ad of what we're marketing to a more profitable product. Whoa. Like, groundbreaking novel idea. Like, holy crap.

[John Moran]

And for our listeners that may not know the difference between gross contribution and net, in your case here, gross margin is what specifically for this customer.

[Lauren E. Petrulo]

Yeah. So this is just our net sales of the products minus the cogs, what it costs for us to manufacture and ship the product out.

[John Moran]

Right. So that is gross profit. Just for those of you who are not familiar with some of these accounting terms, which are kind of important terms, if you're an agency, you don't know this shit. You should get an accounting book or read something on it. Anyway, I digress. You were rolling there. So going up from 52 to 54. Pretty nice increase. Yeah. And about 12 days.

[Lauren E. Petrulo]

Yeah. What's interesting is actually I'll do this here. I'm going to pull up that Meta account. And you want to know what's funny is this is a fairly small account. I mean, we're just doing stuff. And this is all fake. That's actually what they call tofu mofu. So for listeners that can't see my screen, I'm just taking a campaign that was already running and just simply just changing around what happened internally. But all we did here is, you see, everything else was shut off here and we just started marketing those beef cheeks. And it's literally just one ad inside the beef cheek. And the beef cheek, what we did is say, hey, are you a person who is a website visitor? Well, you're excluded. Has bought anything ever. You're excluded as well. So if you ever heard about us or been to our website, you're not allowed to see my ads anymore. And when we did that, now a.

[John Moran]

Beef cheek, it's not perfect by any stretch, but at least you're doing that right there. If you're not, it's the biggest mistake we see on all Meta accounts. John.

[Lauren E. Petrulo]

Yeah, well, reason why this one was so bad and the reason why we took this such a harsh approach is because Meta was spending about. It had about 60% of its attributed sales to existing customers. And when we just, we said, hey, before we start to build out everything, like people who have interacted with the ads and all those downstream things that after the first prospecting, we're spending 100% of our money on prospecting. Right now we have zero remarketing, which again is a failure. But it's to reset the account because once I start filling it up with people who have started to interact with my ads for the first time now I can kind of move into also who are the people I've interacted with the ads or have been to the websites and build up my remarketing, that kind of stuff. So I had to reset the account. But in doing so, I just did most profitable products. And what's nice about this is here's a good example of when you're thinking about Omnichannel, the right audience is spending the right amount of money on the right products. The before and after change of this, this is probably the best thing that I can share to everybody that's not necessarily in this day to day in the weeds. This is the first four days before and after of this test. So the first four days of shutting off the advantage plus shutting off the non excluded audiences, basically turning this from a kind of warm to an all cold. What you'll see here is the blended CAC went from a 91 down to a 60. The new customer ROAS went from an average of 1.2 to 1.35. My new customers went from an average of 3.5 a day or 14 up to 18. My new customer sales went from 876 up to 1370. And my profit per new customer went from negative 257 to negative 117. Because we're heading in the right direction, our LTV is fantastic. We have a 60% return customer rate per month on a cohort. So I can afford. But now it's spending a lot less. The only area is after changing this Meta, which is the only actual channel that we're marketing right now. The only thing that actually happened that was bad repeat customer sales 4, 500 down to 29.92. This was off of just an email campaign that happened the day before. That's the only reason why this thing kind of went down is because we had a really good email sale that blasted through a bunch of return customers that didn't come next week.

[John Moran]

Great.

[Lauren E. Petrulo]

But the new customers where we're actually attributing them just by excluding everybody and going pure cold. Just having our CAC go from 91 down to 60 in first four days. What was it like a 40% decrease in our CAC just by structurally changing the audiences that we were going after. And this is happening on every channel like for all clients. It's amazing.

[John Moran]

And you know you're going to get them again because this is 60. What did you say? It's a 60% return rate.

[Lauren E. Petrulo]

Yeah. That's what's nice is we've been taking this mantra for a little while and we've kind of changed this company around a little bit. We did a whole bunch of changes in Meta but if we look at like the last 30 days as an example, out of 393 orders, it's 62.3% return customer rate. This company, we acquired it and it was an SEO only company for years. So not big push for new customers. So it just grew organically for years. And so that's why if I spend a dollar on these people I will have them return all the time. That's why we can afford to kind of lose on that CAC a bit. Our actual purchase. If we can get to a zero CAC where it's break even now it's just how many free customers do you want? That's that scale and that's what we're moving towards.

[John Moran]

Right, right. And the lifetime value of something like that is like.

[Lauren E. Petrulo]

Oh yeah.

[John Moran]

If you've been able to measure that and serve a longer term timeline.

[Lauren E. Petrulo]

Yeah we have $240 of 12 month LTV. So $240 lifetime value for each one of these customers. So if we're buying, we went from buying them at 240 now down to 112. That's the CAC change of this last kind of four days. But if we look at our top line metrics because that's just attributed CAC from only spend that happened on Meta. But if we look at our lifetime Lee, as an example, this is where that change took place. We started the beef cheek campaign here. This was on the day before the 25th. That's when we started here. So we look at the 25th again, it's not going to be probably the best and perfect. Now our profit's up 2100%. So yeah, we basically our sales are up 353. Our marketing costs are up 4 and 11. At least that profit at 506 because this is again really high. Cogs, you can see The COGS are up 336. They're really low AOV, really low margin product. But if I could have a net profit of 506 and our blended CAC be 45, 34 bad day here. But 50, 57, 58, 80, our return customer sales every day is like 600 to a thousand dollars a day. Now we're a little bit sometimes over a thousand bucks.

[John Moran]

Good. That should just be growing over time.

[Lauren E. Petrulo]

That will continually grow. If I can wake up and have $2,000 a day, that's over $700,000 in basically sales a year that I don't have to get out of bed for now.

[John Moran]

Yeah, because you've done your job on the front end because you figured out the math. And we're also looking at lifetimely which is another great. I wouldn't even Say it's an app, per se, but it's like a dashboard, literally, that shows all this.

[Lauren E. Petrulo]

It's amazing.

[John Moran]

Yeah.

[Lauren E. Petrulo]

Check this out here. This is where businesses need to measure and stop measuring. In app roas. My net profit on the 29th was 240 bucks because I had a 1.4 new customer ROAS. Which people are like, oh, no, I need 300 roas. Yeah, okay, that's the wrong thing. I had a 1.4 new customer ROAS. I had 5 new customers. I lost $24 on every one of those new customers that day, but then made $1300 in repeat sales, which I don't have to try for anymore. And then my contribution margin that day was 240 bucks. Excellent. So measuring, what can I afford? How many of them can I afford? How many can I scale? We're still losing a couple bucks per new customer on top line, which is. Okay, that's what we're moving towards, is putting all of our Aspen towards new customers and then refining that. But there comes a day where it's like a dollar net profit per new customer. We hit 100k and spend. We're just cranking this thing up because that is just going to grow and grow and grow.

[John Moran]

And I love this case study because this isn't like, oh my God, it's thousand percent increase in two days. It's like, this is a gradual process. And I think it's important for businesses to look at this and say, the ad platforms are not an atm. You don't put the card in and just say, hey, how much money do I want that day? It's an investment into the future. And I think that's a hard thing for people to wrap their head around, especially if you've got new entrepreneurs with new businesses that have never done this before. They realize that marketing is an investment and it's something that you have to. I guess I have to quote Kassim here because this is the analogy that I'm getting at. Like, everyone stops planting corn. All they want is the popcorn in the bag at the grocery store, eat the smart food because it's delicious, but nobody wants to plant the corn. Like, this is what you need to do. You need to plant the corn along the way in order to get the corn, and then pop the corn and turn it into popcorn. The point is, like, that's what you're doing. And a lot of businesses have a challenge with this when you're working with a client, and they don't quite see it that way. We're talking, this is one that they see it, they get it. Reputation alone. Maybe it's because you're John Moran and like, you know, I'll just do whatever this guy says because I know he's fricking smart. But to the listener that's out there that's maybe struggling with this, what kind of recommendations would you have to get a client or, you know, if you are in business, you have to convince your partners of this. Like, maybe you're the director of marketing. You have to convince your CEO this, like, what do you do to take them down that path?

[Lauren E. Petrulo]

First thing I would say is this is going to be some pretty, pretty crazy talk. But it's true. If you're a business owner or a client, task all of the people that are working with you inside of your business or as a vendor, when we're talking about marketing, for example, only measure business health, never measure a report. If I was a business owner and I had a vendor saying, here's my report on my paid channel, I would throw it away. I would. It's useless because what I would say is if the agencies that are involved, if they're separate or an agency that is holistic, if they are not being measured by your business performance, your business health, nothing else matters. The company that bully Stick Central company, this is a company that was acquired last year. And you can see I'm screen sharing right now, the back end of the shopify. And in the last 365 days was, I think was actually purchased in March. So give or take here a few weeks off. But we have a 44 business growth. A total orders up 34%. The average order value went up 9% and our return customer rate is still at 41. It's only down 6. That means that we actually have more new customers. Perfect. But they are not wavering. So this is really good business health. If this trend continues with a 44% business growth and a 158% increase in subscriptions, great. You win. Keep going. Good job. Yippee skippy. Did we lose any money? No, we're actually slightly more profitable during this 44% year over year scale. All right, I'll see you next year. That's how this should work. Or in a large client. This is a client that is scaled massively.

[John Moran]

We're looking at north beam here if you're not on the YouTube channel. Yeah, okay. Just. Just trying to navigate.

[Lauren E. Petrulo]

Yep. This is a company that scaled massively from March 1, 2023 to March 1, 2024. And inside of Nor Beam, which is we're using as a total metric tool. Just looking at all cash in, all cash out, top line business health. What I only measure. And I'll share this sort of people that are not seeing the screen. The only thing that I measure is total spend across all channels all year and total top line growth regardless of channel all year. What this means is that if I spend $142,000 in paid media over this 142%. Sorry. If I spend 142% more in paid media in one year, I should see something close to that in my total revenue. And it's up 129.3%. So that means we actually put about $20 million in ad spend last year and made about 80 million more in revenue because that number is 43 million spend which is up 142% and 153 million which is up 130%. Good. So you're scaling well. And then what is my media efficiency ratio? My company's roas if you want to use it that. But it's my company's cash in, cash out. For that scale of 20 million or actually probably 25 million. The media efficiency ratio only went down 5.4%. So what is 5.4% of a 3.5?

[John Moran]

What is it?

[Lauren E. Petrulo]

I don't know. But basically, yeah, it was like went from 3.6 down to 3.54.

[John Moran]

Yeah.

[Lauren E. Petrulo]

So my business health stayed the same.

[John Moran]

You are pretty good. That was pretty good. That was quick math right there. Okay.

[Lauren E. Petrulo]

I'm kind of winging it so I get pretty close.

[John Moran]

No calculator needed.

[Lauren E. Petrulo]

Yeah.

[John Moran]

Right.

[Lauren E. Petrulo]

And my costs per acquired first time customer only went up 9% of $6.91. So it's about $0.60 good. What individual channels measure and grew and doesn't matter.

[Kassim Aslam]

Doesn't matter.

[Lauren E. Petrulo]

Completely. Doesn't matter. Doesn't matter. Does not matter.

[John Moran]

Doesn't matter.

[Lauren E. Petrulo]

Doesn't matter.

[John Moran]

That's a case in point right there of this whole thing coming together at a massive scale.

[Lauren E. Petrulo]

Yeah.

[John Moran]

And it's just a shift in mindset.

[Lauren E. Petrulo]

Exactly. Because if Google is just going after brand, they couldn't scale. That's pretty much it.

[John Moran]

There were all kinds of levers that you had to press in that big X that we just showed in the screen share.

[Lauren E. Petrulo]

Yeah. That's a year's worth of daily work and grinding and really doing it. But as an agency or as an owner, you should only be measuring your business. That's it. Because if your business is failing, no report's going to tell you you're crazy.

[John Moran]

Yeah. Channel reports, toss them in the trash, right?

[Lauren E. Petrulo]

I mean, think about it, really. Channel reports don't matter. If your business is failing, who's going to pat themselves on the back?

[John Moran]

Well, the agency might. We see that all the time. Or your internal team. Let's not just bash agencies here. I mean, there are internal teams where. Oh yeah, yeah. And you know, this. So like you work with internal teams that maybe like, you know, are doing the Facebook side of the equation and you're doing the Google side and we deal with this all the time is like, you have to be able to navigate through it. It's more challenging that way because they're also trying to keep their jobs. They're trying to maintain favoritism with the boss, that I'm doing my work and I'm doing my job and I'm substantiating my existence. But even if the business is going down, the boss is the one that's catching hell from the CEO. All shit rolls downhill anyway.

[Lauren E. Petrulo]

So everyone just needs to get on the same, same boat, really. That's the thing is it forces internal team members, it forces one agency, it forces all of the agencies. Everyone has to communicate and work together. The bad agencies would be like, well, we did our job. It was meta that failed or meta agencies like, well, we did our job. But then Google took all the credit then those are not people that could work together. If you have two agencies that are in their own boxing corners getting ready for the fight, about ready to kind of come out swinging at each other, the company loses. Yeah, that's it.

[John Moran]

It's true. Well, this has been amazing and I know we've talked our way through probably two episodes here, so this will be a two parter. But, you know, obviously we'll have you on many, many, many more times here on Perpetual Traffic because it is such a trip. And this is the reason, like this conversation is the conversation I've been wanting to have on this show for probably five years. So. And in large part because now we are together and working with you has been a fucking dream. And my team is so excited. They're like beyond excited. And it's because of this. It's not just because, oh, it's like John Moran's finally on our team. It's like this type of thing that talked about here is next level. This is where our space is going. This is where we see collectively, you and I as well as, you know, everyone on the leadership team, which you'll have the chance to meet out in Denver like in a week or so, which is going to be a lot of fun, is like, this is our mission to do this. Like this feels good when you can actually sit and grow a business and help them achieve their goals. And especially if it's a purpose driven business where they're really doing good stuff, there's nothing better. When we first met about this whole idea, we just want to grow businesses. I'm like, that's all we want to do. I don't know why that's what we want to do, but that's what we want to do and it's the most fun thing in the world. So this has been a trip having you on here today and obviously pretty excited to have you alongside tier 11. So John will be back. It's not just because Kassum's away down in Argentina. I think he's just catching. He's just going down there to catch a tan. He's not like working or anything.

[Lauren E. Petrulo]

Yeah, well, he's got a year round tan so I don't know what he's doing down there.

[John Moran]

So he's getting darker. Yeah, he's going to cut his hair. That's what he's going to do. He's going to come back.

[Lauren E. Petrulo]

He's going to try even more taller, darker and handsomer, I guess.

[John Moran]

Is that possible? Oh my God. Well, excellent. This has been great. And if you have not gone over to our Telegram channel, we're going to try and coerce John to join it. But perpetualtraffic.com forward/telegram. I'm looking at Telegram right now. There's all kinds of stuff going on here, which is really cool. And so our way of keeping in touch with you, the Perpetual Traffic listener, and getting real time feedback. Creating a community. We often talk about creating a community as a way to build a business and all right, we're eating our own dog food here to a certain degree. But it's also, it's great to have the listeners like yourself in there talking about and commenting on things that we discuss here on the show and getting sort of the behind the scenes stuff on top of that. So definitely check out our telegram and make sure that you do. If you were not, and maybe you were in the car or listening, go back and watch this episode, probably two episodes together. We're going to do a two parter here on our YouTube channel, which is perpetual traffic.com forward slash YouTube. And of course all the resources and show notes for the entire show are going to be over@petpetual traffic.com make sure that you follow me over on LinkedIn and Qasem on his socials. We'll give him a shout out at Qasem Aslam on socials. I haven't even asked you every once in a while, like you comment on LinkedIn. There's like 10,000 comments. Where are you doing a social thing right now? We haven't talked about this much.

[Lauren E. Petrulo]

I usually am on LinkedIn. My posts, I really try to make them extremely purpose driven and impactful and actionable. So a lot of times it'll take a few weeks worth of development of something and then I'll share it on LinkedIn. I don't like the thing where it's like comment like if you hate Google Ads on Monday. I just try to deliver strategic actual items for people to consume. I'm not very social on social media. I only have a LinkedIn. That's it. I don't even own a personal meta account. But yeah, LinkedIn is.

[John Moran]

I love that about you.

[Lauren E. Petrulo]

Yeah, I like it. It's easier. I'm kind of all business, all the time.

[John Moran]

I love LinkedIn. Yeah, I think LinkedIn's.

[Lauren E. Petrulo]

LinkedIn's great.

[John Moran]

Yeah, I think it's totally underutilized and it's also from a business perspective. Chances are it's probably where our ideal customer hangs out. So we try and narrow our focus there. We've talked about that many, many times here on the show. So definitely check out John when and if we'll try and get him to post more. John does what John Does. So, like I said, super psyched to have you on the show here today. Go over to perpetualtraffic.com, we're going to leave a lot of resources there, as we do for every show we do here and join that Telegram channel. Love to learn a little bit more about you and give some feedback on maybe future shows.

[Kassim Aslam]

So I hope you enjoyed this week's episode. Make sure that you do watch this over on our YouTube channel, perpetualtraffic.com YouTube if you're listening to it.

[John Moran]

And he said, you know, they're trying.

[Kassim Aslam]

To explain it here, but I didn't really get it all the way. The YouTube channel will show you exactly, through screen shares, exactly what John and I are discussing. But even if you did listen to it, hopefully you enjoyed it and you're now thinking differently about these metrics and these are metrics that really do matter in today's marketing landscape. And this is a theme that we're going to continue to come back to in 2025 with examples of how we're doing it inside Tier 11 obviously using the Tier 11 data suite which was just sort of on the leading edge at the time of this original recording. Now it's incorporated into everything that we do here at tier 11 and something that you should look at as far as NCAC determining how to scale and grow your business not using roas but using new customer acquisition cost as your North Star moving forward. So if you like this week's episode, make sure you leave us a rating and review.

[Ralph Burns]

We want to get this out to.

[Kassim Aslam]

As many marketers as possible just like yourself. Leaving a rating and a review will certainly help us do that and change the perception on roas and how we're really leading the charge here on new metrics that really do matter that scale and grow businesses in 2025 and beyond. So on behalf of my awesome and amazing co host Lauren E. Petrulo until next show, see ya.

[Ralph Burns]

You've been listening to Perpetual Traffic.