Ad Spend per New Deal

What is Ad Spend per New Deal?

The Ad Spend per New Deal describes the average cost of advertising per each new customer you obtain. Important! This KPI doesn’t indicate this is the amount you should be spending on advertising, but rather indicates what you’re currently spending.

With this marketing KPI, you’ll have an overview of how your advertising budget is doing, and which of your advertising tools are performing best – and worst. If checked regularly, you’ll be able to optimize your advertising strategy to obtain better results within the same budget.

Ad Spend per New Deal is a relevant metric for your marketing team to monitor.

Why marketing teams need to track Ad Spend per New Deal

Ad Spend per New Deal is important, because it gives you a better understanding of whether your ad expenditures to obtain customers is too high. If this is the case, it may mean you’re spending too much on platforms with too little payoff.

Essentially, this KPI compares your spending on a specific tool compared with the value of the customers you get from it. For example, you might spend $500 on Facebook Ads every day for a week, but win a customer who’s worth only $200. This certainly isn’t a good tradeoff, but having this knowledge allows you to reevaluate your advertising strategy as necessary.

How to calculate Ad Spend per New Deal

Here's the formula needed to calculate your Ad Spend per New Deal:

Ad Spend per New Deal = Total Ad spend / Number of New Deals

Best practices for improving your Ad Spend per New Deal

The best practice for Ad Spend per New Deal is to keep a close eye on the value of your deals, and where these deals are coming from. It’s up to you to determine an acceptable ratio of the amount spent on advertising to the number and value of customers obtained from this advertising.

If your advertising on one platform is delivering substandard results under this framework, it’s time to change strategy and advertise elsewhere. This is when knowing your ICP (ideal customer profile) comes into play – if you know this profile and where to find it, you can modify your advertising strategy accordingly.

Other KPIs similar to Ad Spend per New Deal include:

• Ad Spend per New Order
• Ad Spend per Won Deal
• Ad Spend per New Lead