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How do you tell whether borrowed marketing money actually worked?
Subtract the revenue you would have had anyway, count contribution rather than sales, and include the cost of the money.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
How do I know if the marketing I borrowed for actually worked?
Measure against a trended baseline rather than against last month, convert incremental revenue to contribution, and subtract both the spend and the financing cost. In an illustrative case, three campaign months producing 76,160 of incremental revenue at a 41 per cent margin generate 31,226 of contribution against 50,400 of spend plus finance — a shortfall of 19,174 that requires about 46,800 of future revenue from those customers to close. Track cohorts rather than months, hold out a region or segment if you can, and never accept the advertising platform's own attribution as the measurement.
Most campaign reviews compare the campaign months to the months before them and count the difference as the result. That method credits the campaign with growth that was already happening, with seasonality, and with every other thing you did in the same period. It almost always says the campaign worked.
Build the counterfactual first
Expected revenue without the campaign: 149,628, 151,274, 152,938.
Actual revenue during the campaign: 171,000, 183,000, 176,000.
Incremental: 21,372, 31,726, 23,062 — 76,160 in total.
Note what has already happened: the naive comparison against the 148,000 baseline would have claimed 82,000 of uplift. Trending the baseline removed 6,000 of growth that was going to happen anyway. The adjustment gets larger the faster you are growing, which is why growing businesses systematically overestimate their marketing.
Convert to contribution, then subtract everything
Revenue is not the result. Contribution is.
At a 41 per cent contribution margin, 76,160 of incremental revenue produces 31,226.
Against that: 45,000 of spend and 5,400 of financing cost — 50,400.
Net: -19,174.
The campaign generated real incremental revenue and still lost money, which is the ordinary outcome for a first campaign and is not by itself a reason to stop. The question is whether the customers acquired will come back.
To break even, those cohorts need to produce another 19,174 of contribution, which at 41 per cent means about 46,767 of future revenue. If the campaign brought 300 new customers, that is 156 each. Whether that is plausible is a question about your repeat rate, and you can answer it from your own history.
Cohorts, not months
Month-based measurement breaks as soon as campaigns overlap, which they always do. Cohort measurement does not.
Tag every new customer with the month they first bought. Then track, for each cohort, cumulative contribution at 1, 3, 6 and 12 months. You get:
- Contribution per acquired customer over time, by cohort.
- A payback period measured in months — the point at which a cohort's cumulative contribution covers what it cost to acquire.
- A comparison between the campaign cohorts and your organic cohorts, which is often the most revealing number. Customers acquired by discount-led advertising frequently repeat less than customers who found you otherwise.
The rule that follows: the payback period has to be shorter than the term of the money. A cohort that repays its acquisition cost in four months can service a twelve-month facility. One that repays in fourteen cannot, and the repayments come from the rest of the business.
Get closer to causation
Trending a baseline is an estimate. Two methods do better.
Both are imperfect — seasonality and competitor activity interfere — but both beat a dashboard supplied by the party selling the advertising.
What to distrust in the reporting
- Platform-attributed conversions. Each platform claims sales that others also claim. The totals frequently exceed your actual sales.
- Last-click attribution, which gives all credit to the final touch, usually a branded search the customer was always going to make.
- View-through conversions, which count people who saw an advertisement and later bought.
- Revenue instead of contribution. A campaign driving discounted first orders can raise revenue and lower profit at the same time.
- Any measurement that cannot be reconciled to your own new-customer count from your own records.
Three measurements to keep permanently
What to do next
- Rebuild the analysis with a trended baseline and your own contribution margin. Include the financing cost as a campaign cost, because it is one.
- Tag cohorts from today, even if you cannot reconstruct history, and start the payback table.
- Compute the payback period in months and compare it to the term of the facility you used.
- Run a holdout on the next campaign, or a two-week on-off test on this one.
- Set the kill criterion in writing before the next spend: the cost per acquisition above which you stop, and how long you will tolerate it.
- If the campaign needs repeat purchases to break even, work out what drives repeat purchases and fund that before funding more acquisition.
And the test worth applying to the borrowing itself: could you have made the loan payments if the campaign had produced nothing at all? If the answer is no, the next campaign should be funded from cash, in a size you can lose, until you have a measured payback period to borrow against.
Where this applies
Related questions
How do I know if the marketing I borrowed for actually worked?
Measure against a trended baseline rather than against last month, convert incremental revenue to contribution, and subtract both the spend and the financing cost. In an illustrative case, three campaign months producing 76,160 of incremental revenue at a 41 per cent margin generate 31,226 of contribution against 50,400 of spend plus finance — a shortfall of 19,174 that requires about 46,800 of future revenue from those customers to close. Track cohorts rather than months, hold out a region or segment if you can, and never accept the advertising platform's own attribution as the measurement.
Which funding products does this apply to?
Working Capital, Business Line of Credit, Revenue-Based Financing, Business Credit Cards. Each has its own page listing the funders in this directory that offer it and what each one publishes about its terms.
Is this specific to retail?
It is written around how a retail business actually generates and collects cash, which is what makes its funding problem different. The mechanics transfer; the arithmetic may not.
Who writes this?
The Find Me Funders research desk. Some drafting is AI-assisted, and every page that is says so at the top, including whether a person has checked its claims yet.
How do I know a figure here is right?
Where a page carries the green notice, its claims were checked against the sources listed at the end and a reviewer is named. Where it carries the amber one, nobody has verified it yet and you should confirm anything you plan to act on.
Are the examples real deals?
No. Every worked example is labelled illustrative and exists to show the arithmetic. What any particular lender charges is on that lender's page, where it publishes it.
Why do you never say what a typical rate is?
Because we cannot source it. A market average assembled from lenders who do not publish prices is a guess with a decimal point on it. Where a lender publishes a figure, we show that figure and say where it came from.
Is this financial or legal advice?
No. It is general information about how these products work. Outcomes depend on your contract and your state, and a lawyer or accountant licensed where you are is the person to ask about your situation.
Can I reuse this content?
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