Ad Budgeting: Why Artists Quit Too Soon

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Let me start by saying this isn’t a sales pitch. I’m not trying to convince you to pay for an advertising service or to advertise at all. This is information I’m sharing because, for some strange reason, I wake up thinking about this stuff.

Artists often get caught up in the numbers game - quantity over quality. They want to see a lot happen. A lot of sales, a lot of listeners, a lot of fans. If that doesn’t immediately happen, they think ads don’t work. Here’s the thing.

It’s not about who says no, it’s about who says yes, how much they care, what they’re willing to spend, and how much it costs to reach them. Paying $100 to gain someone willing to pay $1,000 is well worth it.

Here’s where things break down

CLV - Customer Lifetime Value

CLV is a measurement of how long a customer remains loyal.

Let’s imagine someone is an active customer for 1 year, generating $83/Month, which would be great. But, they took 30 or 60 days to convert? What if that was the standard time it took for you to convert a customer?

If you spent $1,000 and got zero sales for 30-60 days, you’d stop advertising, likely before you paid $1,000. You might jump ship after you’ve spent $100 without a sale.

Top businesses earmark money for advertising. There’s an annual ad budget, and that money will be spent on ads no matter the outcome. They review performance at the end of the year to determine if the marks were met and tally the wins and losses.

The budgets are set at the start of the year and are based on:

• A percentage of projected revenue
• Last year’s ad spend
• For new companies, a.k.a new artists: Goals based on research

I use a collection of budget planners I built to predict modest outcomes.

One thing I wanted to avoid when I built them was unrealistic expectations for myself and clients, so they're built to give somewhat of a worst-case scenario.

$1,000 spent on a Facebook ad campaign targeting a Cold audience optimized for sales, promoting a $5 product.

Here’s What I Could Expect

I could expect to reach 48,828 Facebook users, resulting in 488 hits to my product page. But I wouldn’t get any sales.

Generating sales would require reaching a Warm Audience - people who have seen or heard my brand name or music before. With a Warm audience, I’d get 5 sales. A Hot audience - people who are likely fans or have high level interest - would bring me 24 sales. A little virality, where I get a few shares, would lead me to 73 sales.

The number changes depending on the ad platform, country, and other variables. I can work the calculators to find the right combination to get what I want. At the end of the day, it all comes down to planning and expectations. You can fool around with it and see what you can come up with: Your Free Budget Planner