Paid advertising: definition, costs and when to start

Paid advertising buys immediate visibility. It amplifies what already works and accelerates the ruin of what does not.
3 min read
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Advertising is the only channel that produces results the same day. That is its enormous advantage, and also why it attracts people who cannot yet afford to use it.

Because it does not create demand: it amplifies. If your offer converts, it makes you grow. If it does not, it makes you lose money faster.


Definition

Paid advertising means buying visibility with a targeted audience, billed per impression, per click or per conversion, on search engines, social networks or third-party sites.


Three conditions to meet before spending

A funnel that already converts

You need to know your Conversion rate on unpaid traffic. Without that benchmark you will not know whether a poor result comes from the advertising or from the page it feeds.

A known LTV

LTV (customer lifetime value) sets the acceptable CAC (customer acquisition cost) ceiling. Without it you cannot tell whether thirty euros per customer is excellent or ruinous.

Cash to cover the delay

You pay for advertising today, the customer repays you over several months if they are on subscription. That lag is the real risk, and it is measured by the payback period in the LTV/CAC ratio.

Warning

Advertising towards a product with poor Retention is the fastest way to empty a bank account. You pay full price for every customer only to watch them leave before repaying their acquisition.


What each channel family buys

TypeWhat you buySuits
SearchAn expressed intentAn already-formed need
SocialInterrupted attentionA need to be revealed
RetargetingA second chanceA long funnel
Partnership, newsletterA recommendationAn identified Niche market

The last row is badly under-used by independents. A slot in a newsletter read by your niche often costs less than a campaign, and it brings the author's trust along with it.


Frequently asked questions

Question

What budget should I start with?

Enough to get a signal, not enough to hurt. In practice, an amount that lets you reach about thirty conversions: below that you are interpreting chance. If that amount worries you, it is too early.


Question

How do I know if a campaign works?

Not by click-through rate, which says nothing. Look at cost per customer actually acquired, against your CAC ceiling. A campaign with few clicks but profitable customers beats a heavily clicked one with no sales.


Question

Should I stop advertising once profitable?

No, but watch it. Advertising costs rise with time and competition: a campaign profitable six months ago may not be today, with no alarm going off.


Question

Advertising or content?

Both, at different moments. Advertising pays for the present, Organic traffic builds the future. Doing only advertising means renting your audience indefinitely.

Related terms

Discover our online business glossary

Every online business term explained in plain language: acquisition, recurring revenue, conversion, pricing, payments. Clear definitions and real numbers for founders and solopreneurs.

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