Recently, I was advising a potential client about their online advertising strategy.

As I started listing the steps we take to build a profitable campaign, I realized it would be helpful to share our methodology with other  people, so I’ve decided to post it here on the blog.


Step 1. Identify Your Ideal Customer

The first step is to identify whom you want to target. Who are your ideal customers, and how can you reach them online?

Ask such questions as:

  • What keywords are they searching?
  • What websites are they visiting?
  • What are their demographics and psychographics (interests and beliefs)?
  • What are their hopes, desires, fears?

Based on these questions, create a customer persona (or “avatar”) representing your ideal customer. If you are targeting multiple customer segments, then create multiple personas.

Imagine that you’ll be advertising to 1 person.


Step 2. Research Your Competition

Next, research your competition to find shortcuts to success, while minimizing risk of failure.

Ask questions, such as:

  • What types of products are selling best, and at what price points?
  • What traffic sources are competitors using to acquire customers?
  • Are your competitors using paid advertising? And if so, what ad outlets?
  • What keywords are they advertising on?
  • What websites are they buying ads on?
  • What are your competitors’ selling points?
  • How are their marketing funnels structured?


Step 3. Know Your Numbers

Before you create your ad campaign, start with the end in mind. What’s your goal for the campaign? What metrics will you use to judge the success of your initial test?

Questions to ask include:

  • What’s your target cost per sale?
  • How much will traffic cost?
  • What are reasonable conversion rates to expect?

Based on these questions, you’ll prepare your ad campaign.


Step 4. Prepare Your Campaign

Before you create the actual ad campaign, you’ll want to take a close look at your offer.

For example, let’s say you’re planning to advertise a product, and you learned that traffic is going to be more expensive than you expected. In that case, you’ll probably want to test a higher price point. And that means you’ll probably want to bulk up your offer to substantiate the higher selling price.

Then, once you’ve finalized your offer, it’s time to develop your advertising campaign, including ads and landing page copy.

(I realize I’m skipping over the process of developing copy. Copy the most critical part of an ad campaign, but I don’t have time to provide an in-depth copywriting lesson without making this a never-ending post…)


Step 5. Initial Testing

The next step is to do an initial test campaign. During this step, you’re trying to figure out whether people will buy your product (or take whatever action you want them to take). Refer back to the metrics you laid out in Step 3.

Our favorite place to test offers is Google AdWords search advertising, assuming there’s search volume for your category of product. But if people aren’t searching for what you’re offering, that’s OK — you’ll test with display advertising, either on Google Display Network, Facebook, or other ad outlets.

I recommend you focus on testing 1 traffic source at a time.

How much money do you need to allocate to the test ad budget?  The answer varies, but as a rule of thumb we like to get a few hundred clicks from each keyword or placement before declaring it a loser.  But even that is a pretty small sample.

If your test bombs, go back to the drawing table and either re-work your offer, your sales copy, or test new traffic. If your test shows some signs of life, move on to Step 6.


Step 6. Optimization

Sometimes a campaign is profitable right out of the gate. But more often than not, you’ll need to do continual testing to get to profitability.

In order to reach profitability,  you’ll want to focus on 2 things:

1) Improving conversion rates by testing your pricing, offer, social proof, guarantee, headlines, adding email follow up, etc

2) Increasing your average customer value by testing adding upsells and  offering additional products and services to your new customers

Your overall goal during the optimization phase is to increase your most important metric, your Earnings Per Click (EPC).


Step 7. Scaling It Up

At this stage, your campaign is profitable. Congratulations!

Now it’s time to expand and scale it up.

One way to expand is to get as much traffic as you can from the original source. In addition, you’ll want to expand to other traffic sources, so you don’t become reliant on that 1 source.

By the way, you don’t really move from Step 6 to Step 7… instead, you’ll want to be continually focused on both Step 6 and Step 7.  That’s because the higher you can increase your EPC, the more traffic you’ll be able to buy. When you double your EPC,  you’re often able to buy much more than double the traffic.


This is the 7-step process we’ve used to create several profitable ad campaigns over the years.  Use it — it works!

P.S. We’re considering creating a report, webinar or course that goes into more detail about these concepts, and I’d love to get your feedback. If you have a question, post it below and I’ll reply as soon as I can.