The Strategic Art of Losing Money on Advertising: Creating Growth With FB & IG Ads
I’m gonna say something that might sound a little crazy compared to what you typically hear in the online marketing world…
Sometimes, the path to profitability with advertising requires strategically "losing" money…
Sorta…
While at first glance it might sound “dumb” to lose money on advertising, it's actually a big picture approach and way of thinking that has lead to sustainable business growth for me and for our clients and students..
The Root Issue…
The problem is that many entrepreneurs and small business owners approach advertising with a simplistic "dollar in, dollar out" mentality.
They expect immediate returns on every ad dollar spent, and when that doesn't materialize, they abandon their advertising efforts completely.
But what if there's a more nuanced approach?
What about ads that are designed to generate new podcast listeners? Or blog readers? Or even just new followers?
None of those ads are MEANT to be dollar in for dollar out - and yet they have a KEY place in our ads strategy, which breaks down to three key pieces…
The 3 Keys to Our Ads Strategy
Before diving into the “how” of successfully losing money with ads, let me break down the three fundamental types of advertising that we us, and every online course business should consider adding to their strategy.
1. Long-Term Advertising: The Foundation
Long-term advertising encompasses all your ongoing efforts to grow and nurture your audience.
These campaigns include:
Email list building ads
Content promotion (blog posts, podcasts, videos)
Brand awareness campaigns
Engagement ads that keep your audience connected
The defining characteristic of long-term advertising is that it operates at what might appear to be a small loss when viewed in isolation. You're spending money consistently without necessarily generating an immediate equivalent return.
We focus instead on growing our list; and making a low ticket offer to all new subscribers on the thank you page; and via a short email sequence that happens post opt-in.
In most cases this won’t make a huge profit; but can create a 0.5x - 0.6x return on your investment.
For example, if you're spending $500 monthly on list-building ads that generate 200 new subscribers but only $300 in immediate low-ticket sales, traditional accounting would call this a $200 loss.
But this perspective misses the bigger picture.
You may generate $300 “up front” but you also now have 200 subscribers.
Let’s say that on your next launch you converted 3% of these (now warm) leads to a $197 offer you’re looking at $600 MORE in the long term.
Suddenly a $200 LOSS is a $400 GAIN…
2. Launch Advertising: The BIG Revenue Generator
Launch advertising refers to the concentrated advertising efforts around a specific, time-limited offer.
These might include:
Live webinar promotions
Limited-time course openings
Special promotions or sales events
Unlike long-term advertising, launch campaigns are designed to generate significant revenue spikes.
They convert the audience you've been building and nurturing into paying customers at scale.
When layered on top of long term lead generation - launches are ALSO going to convert higher; because you’ve got a warm audience pool to market to.
3. Funnel Advertising: The Cash Flow Play
Funnel advertising targets specific prospects with automated sales sequences designed to convert them quickly.
These include:
Automated webinar funnels
Video series funnels
Multi-step email sequences with sales offers
While many marketing gurus present these as "set it and forget it" systems, successful funnel advertising requires ongoing optimization and refinement.
So rather than looking at a funnel as the CORE of my business - I look at it as something that I run from time to time to the warm and launch audiences to create additional injections of cash!
Our Cyclical Growth Framework
Now that you’ve seen the three keys; I want to share with you how they work TOGETHER in a cyclical fashion to drive sustainable business growth.
Run long-term ads at a small "loss" - Consistently invest in growing your audience, even if those efforts don't immediately pay for themselves. This builds your marketing foundation.
Recover costs and generate profit through launches - Periodically (for us, quarterly) you can run launch campaigns to your warm audience. These convert your always growing audience into customers and fund your next growth cycle.
Supplement with strategic funnel activations - Between launches, activate your funnels to generate additional revenue spikes that can be reinvested into more long-term advertising.
Reinvest profits to expand long-term advertising - Use the profits from launches and funnels to increase your investment in long-term audience building.
This creates a really cool cycle: more audience building leads to more successful launches, which provide more capital for funnels and additional audience building.
Why This Works: The Economics of An Audience
The key insight that makes this approach work is understanding that when someone becomes a member of your email list - it has both immediate and long-term value:
Immediate value: The possibility of an immediate purchase (usually a lower-ticket item)
Short-term value: The likelihood of purchasing during your next launch
Long-term value: The lifetime customer value across all future offers
When you only measure the immediate return on advertising spend, you're ignoring the substantial short and long-term value components.
This limited view leads many businesses to underinvest in audience building, which ultimately limits their growth potential.
How You Can Implement the Cyclical Framework in Your Business
Let's look at how you might put this framework into practice:
Step 1: Start with Long-Term Advertising
Begin by establishing your consistent audience-building campaigns:
Create a compelling lead magnet that attracts your ideal audience
Set up a tripwire offer to offset some acquisition costs
Develop a nurturing sequence that builds the know-like-trust factor
Allocate a monthly budget you can sustainably maintain
The key here isn't maximizing immediate ROI but rather achieving the lowest possible cost per qualified lead while maintaining lead quality.
Step 2: Plan Your Launch Calendar
Map out your launch schedule for the year:
For most businesses, quarterly launches provide the a great balance of revenue generation without audience fatigue
Ensure your launches target different segments of your audience or feature different offers
Build anticipation for launches through your nurturing content
Establish clear financial goals for each launch based on your audience size
Your launches should not only generate profit but also cover the "losses" from your long-term advertising between launches.
Step 3: Develop and Refine Your Funnels
Create automated sales funnels that can generate revenue between launches:
Start with a single funnel focused on your core offer
Test and optimize each element: opt-in page, content delivery, offer presentation, and follow-up
Activate these funnels strategically, especially after launches when audience engagement is high
Use funnel revenue to supplement your long-term advertising budget
Remember that funnels aren't "set it and forget it" systems. They require ongoing refinement based on performance data.
Step 4: Analyze the Complete Cycle
Rather than evaluating each advertising channel in isolation, assess performance across complete cycles:
Measure the total revenue generated during a complete cycle (we look quarterly and yearly)
Calculate your overall return on advertising spend (ROAS)
Identify opportunities to optimize each component
This holistic view prevents the common mistake of cutting advertising that appears unprofitable in isolation but contributes significantly to your overall results.
But you might be thinking…
"I can't afford to lose money on advertising"
I want to offer a different way to analyze this…
You're not losing money in the traditional sense; you're investing in asset building (your audience).
This is no different from investing in software, team, or other business assets that don't immediately generate revenue but create capacity for future growth.
"I need faster results"
While the cyclical approach prioritizes sustainable growth over immediate returns, it doesn't mean you'll wait forever to see results.
Even your long-term advertising should generate some immediate revenue through tripwire offers and initial purchases.
The key difference is that you're not expecting those immediate returns to fully cover your acquisition costs.
"My funnel should be profitable from day one"
This expectation has been created by marketing hype, not business reality.
Even the most successful funnels require testing and optimization.
The "money while you sleep" promise of automation is only realized after you've put in the work to optimize each element of your funnel.
Let’s Talk Numbers: An Example
Consider a course creator who implements this approach:
She spends $1,500 over 3 months on list-building ads, generating 400 new subscribers
She’s generates 500 leads at $3 each
Her tripwire converts at 1.5% generated 6 sales at $65 each
Her tripwire offers convert 1.5% of new subscribers, bringing in $390 monthly
Viewed in isolation, her long-term advertising operates at a $1110 "loss"
At the end of the 3 months she decides to run a five-day challenge that converts 4% of participants to her $297 online course
She spent another $1500 on ads for the launches
The launch generates 20 customers (4%) and $5,940 in revenue
She’s now generated $7,050 from ads, and has spent $2500.
30 days after the launch she activates her funnel for a $500 offer.
She spends $2,500 on the funnel with a 2.5x return
This brings another $6500
How it Shakes Out…
Total advertising investment: $5,500
Total revenue generated: $13,550
Overall ROAS: 2.46x
And here’s the thing - this accounts for NO ORGANIC SALES. But if we looked at JUST the listbuilding ads - we would have only seen a $1k loss - but when we zoom out - we actually see that this coach generated over $8,000 in profit by sticking with ads.
The Power of Consistent Advertising
Perhaps the most important element of this framework is consistency.
Too many businesses treat advertising like a faucet they turn on and off based on immediate needs. This approach is fundamentally flawed because it ignores the compounding value of consistent audience building.
Think of your advertising not as a faucet but as a stream that should always be flowing. The volume might vary based on your business cycle, but maintaining continuous flow is what creates the momentum for sustainable growth.
It’s All About Embracing the Bigger Picture
The most successful course businesses understand that marketing effectiveness can't be measured solely by immediate returns.
By embracing the cyclical nature of strategic advertising, know that small "losses" on long-term audience building to fuel substantial gains through launches and funnels, you create a sustainable engine for business growth.
This approach requires patience, strategic thinking, and a willingness to look beyond immediate gratification. But for those who embrace it, the rewards are substantial: consistent growth, predictable revenue cycles, and a business that builds value over time rather than chasing sporadic wins.
As you evaluate your own marketing strategy, consider whether you're taking this holistic view or still trapped in the "dollar in, dollar out" mindset.
The difference could be transformative for your business growth.
Ready to Start Your Long-Term Listbuilding Ads?
If you're convinced that long-term advertising should be the foundation of your marketing strategy but aren't sure how to begin, we can help.
Join our Facebook and Instagram Ads for Listbuilding Bootcamp, where we'll take you through every step of creating effective list-building ads that consistently grow your audience.
In this live 5-day bootcamp, you'll learn how to set up, optimize, and scale your list-building campaigns—even if you're starting from scratch. By the end of the bootcamp, you'll have new leads joining your email list as a direct result of your Facebook ads.
