That’s a great way to look at it, however perhaps not the best way.
While I do agree that you should look a the numbers, I would suggest that you take an even deeper dive into those numbers.
In your example, you used opt-in leads, which presumable means that you can continue to
market to those leads, at least until they each individually opt-out. So, if you are using the average lifetime value of those leads, i.e. 1% conversion rate per month multiplied by an average retention span of say 4.5 months, that same exact campaign is no longer a net loser, but a profitable campaign that should generate at least a 100% ROI.
Please note, I did not change any of your numbers, I just used Profit-driven marketing principles, measuring the full value of a lead, to get a more accurate assessment of the exact same campaign data.
I simply used your example as a way to point out how most advertisers leave profits behind when using “cost center” based marketing methods. While learning to master “cost center” based marketing is a good first step for new advertisers, cost center-based marketing will typically ensure profitability, however, it rarely yields maximum profitability. For that to occur you need to embrace profit-driven marketing.
