Here's Why You Need to Split out New & Existing Paid Ad Targets + How to Track Them

One of the main reasons I have seen brands with a high LTV that sell consumable products not be able to scale efficiently is because they get to a point in which Meta, Google & other platforms are spending 70%+ of the budget on existing customers.

Their blended efficiency (ROAS & CPAs) look good, but each time they push ad spend they don’t grow & those efficient ROASs & CPAs start to diminish...

The main two reasons this happens is from not doing the math to calculate new vs existing customer blended & channel level targets from the business’s overall targets & not having the correct tracking in place to force the platforms to spend on converting new customers.

I want to show you how to do the workings for calculating total blended, new & existing customer & channel level by customer type level targets all from your net profit after COGS & ad spend targets (start with your net profit targets and work back from there)

Why this is important (in my opinion)

A lot of brands doing $150k+ a month with a high returning customer rate (40%+) still view their targets as a blended number (new & existing) and also likely use the same targets for all channels (Meta & Google for example)

This doesn’t make sense to me…

As a business owner you should be wanting to pay much more for a net new customer and much less for an existing customer!

Brands, fail to set up the tracking to see how much of the channel spend is going to new vs existing customers. They will view their ROAS & CPA as a blended number.

An existing customer is way more likely to buy from you than a new customer, you should be willing to pay a lot more for a new customers as opposed to an existing customer.

Most of the time Google will be more efficient but less scalable and Meta will be less efficient but way more scalable. Conversely Google is typically less incremental and Meta is slightly more incremental.

Media buyers optimise & aim for the same target on both channels despite this.

If you don’t seperate your targets out and don’t have a view of where your ad spend is going, how can you know where the bottlenecks are & how to expect to scale spend?

I’ve set this up for a few brands in these exact scenarios and we end up seeing these ad platforms push way to much spend to existing customers and also spending more on channels that are bringing in less new customers and visa versa.

It has been literally the difference between scaling from $150k+ a month to $300k-$500k+ a month for some brands.

Down the bottom of this page is a free template you can download which has all the formulas & workings already done.

You just have to fill out your margin & profit targets.

I’ll explain more of how the logic works in the sheet works below.

How to reverse engineer your net profit targets to get new vs existing blended & channel CPA & ROAS targets.

You first have to get some data points from your backend, you will need your brands:

  1. Blended AOV
  2. New customer AOV
  3. Existing customer AOV
  4. Average gross margin %
  5. New & existing customer orders mix (of all orders each month what % are new vs existing)
  6. Meta conversion share (of all orders each month what % come from Meta)
  7. Google conversion share (of all orders each month what % come from Google)
  8. Meta & Google’s CPA ratios (Meta typically costs more, so you use Google’s CPA as baseline)

Most importantly you'll need your desired net profit target after COGS & ad spend for each customer type (your target NET CONTRIBUTION MARGIN)

I have written about net contribution margin here!

  1. New customer net profit target (if you have a high LTV you may be okay with 5%-10% or breakeven on first order)
  2. Existing customer net profit target (these are customers we have already payed for, you’d want to make 50%+ net profit on these customers)

Once we have these number we can then calculate your gross margin dollars ($) by customer type & your net profit $’s by customer type. As well as our weighted CPA ratio (this ratio makes sure channel level targets are weighted by their volume impact)

Now we have all the inputs, the sheet provided below will do the rest for you! If you want more of step by step breakdown keep reading.

Blended CPA & ROAS (reversed engineered from net profit & channel targets)

The formula here is simple:

(new customer cpa x new customer mix) + (existing customer cpa x existing customer mix)

For example:

Let’s assume your new customer CPA targets is $29, your your new customer share of orders is 40%, your existing customer CPA target is $21 and your existing customer share is 60%.

Blended CPA = ($29 x 40%) + ($21 x 60%) = $24.48

You can double check the math works out by working backwards from customer type CPAs or channel CPAs and weighting them back. The results should reproduce the blended CPA exactly.

Blended CPA check from Channel CPAs:

Formula: (Meta cpa x meta cnv share %) + (Google CPA x Google cnv share %)

Blended CPA check from Customer Type CPAs:

Formula: (new customer cpa x new customer share %) + (existing customer cpa x existing customer share %)

This will give your blended CPA overall to achieve your net profit target.

You can work out the blended ROAS or MER target by getting your blended AOV & dividing it by your blended CPA target we just calculated.

For example: AOV ($65) / $24.48 = 2.65X

New & Existing CPA & ROAS targets

We calculate the new customer CPA target using this formula:

nCPA = New customer gross margin dollars ($) x (1 - new customer net profit %)

For example:

New customer gross margin dollars ($) = New customer AOV x Average gross margin % ($33)

Your desired New customer net profit target % = 10%

nCPA = $33 x (1-10%) = $29.70

To get our ROAS, just take AOV divided by CPA target

AOV ($55) / $29.70 = 1.85X

We calculate the existing customer CPA target using this formula:

rCPA = Existing customer gross margin $ x (1 - existing customer net profit %)

For example:

Existing customer gross margin $ = Existing AOV x Average gross margin % ($42)

Your desired New customer net profit target % = 50%

rCPA = $42 x (1-50%) = $21

To get our ROAS, just take your AOV & divide by your CPA target

AOV ($70) / $21 = 3.33X

Blended Channel Targets

Let’s work out your blended channel targets by taking our blended CPA, channel CPA ratio and blended ratio.

Channel target = Blended CPA x (meta cpa ratio / weighted avg ratio)

Meta example:

$24.48 x (2.5 / 2.05) = $29.85

Google example:

$24.48 x (1 / 2.05) = $11.94

You can see that Google ads is approximately 2.5x more efficient than Meta given it’s share of total conversions it contributes.

This here is the power of weighting channel level targets.

Most brands just get average targets and aim to achieve the same CPA/ROAS on both channels despite their conversion share.

Channel & Customer Type Targets

The above was blending new & existing customers together, if we want to get more accurate we should calculate our targets by customer type for each channel.

This assumes you have the proper tracking & optimisation events set up, so you can optimise for new customer purchases as opposed to total purchases on each platform.

The formula:

Meta nCPA = New customer CPA x (Meta ratio / avg weighted cpa ratio)

For example: $29.70 x (2.5 / 2.05) = $36.21

Google nCPA = New customer CPA x (Google ratio / avg weighted cpa ratio)

For example: $29.70 x (1 / 2.05) = $14.48

You use the same formula for existing customers, replacing the new customer CPA with the existing customer CPA.

What's better to track channel level targets or customer level targets?

The short answer is: By customer type is significantly more impactful than by channel.

Your gross margin, net profit target, and LTV all live at the customer level, not the channel level.
A new customer acquired through Meta and a new customer acquired through Google are worth exactly the same to your business (in most cases. Yes you could argue that the type of customer may be more price sensitive) The channel is just the pipe, the customer type is what determines profitability.
When you optimise by channel blended (mixing new and existing together), you are essentially flying blind on the most important variable.
A channel can hit its blended CPA target perfectly while quietly shifting its mix toward cheaper-to-acquire existing customers, making the number look good while your new customer acquisition quietly deteriorates....

The risk of channel-blended targets:

You hit your Meta CPA of $30.66, but 80% of those conversions are existing customers. Your actual new customer CPA is $60+ and you would never know from the blended number alone.

The Hierarchy of Target Importance

Priority
Target
Why It Matters
1st
New Customer CPA / ROAS
Drives future LTV and business growth. The hardest and most expensive to hit.
2nd
Existing Customer CPA / ROAS
Protects margin on repeat revenue. Should be easy to hit — if it is not, there is a retention problem.
3rd
Blended CPA / ROAS
Your overall health check. Use this for board-level reporting and to sense-check the above two.
4th
Channel-level targets
Useful for budget allocation decisions, not for profit target management.

 

The Recommended Simplified Framework

Rather than tracking all 18 targets, I would recommend collapsing to three primary targets and using everything else as diagnostic context:
Target 1: New Customer CPA (your growth engine) This is the most important number in your business. If this is on track, you are acquiring customers at a profitable rate relative to their LTV. Everything else follows from this.
Target 2: Blended CPA (your overall health check) This is what your platforms report. It is the weighted result of your new and existing customer performance. If this is on track but Target 1 is off, you have a customer mix problem, not a media efficiency problem.

Target 3: New Customer Mix % (the leading indicator) This is not a CPA or ROAS number, but it is arguably the most important input to monitor. If your new customer mix drops from 40% to 25%, your blended CPA will look artificially good even as your growth stalls. Tracking this monthly is what keeps the other two targets honest.

When Channel-Level Targets Become Important

Channel-level targets are most useful for budget allocation decisions, not profit management. Specifically:
  • If Meta's new customer CPA is trending above target while Google's is below, that is a signal to shift budget toward Google, not a signal that your overall profit targets are at risk.

 

  • If one channel's conversion share mix shifts significantly (e.g., Meta drops from 70% to 50%), your blended CPA target needs to be recalculated because the weighted average ratio changes.
The channel targets in the sheet are therefore best used as monthly recalibration inputs rather than as primary KPIs to optimise against day-to-day.

The Practical Recommendation

For day-to-day optimisation, give your media buyers two numbers:
  1. New Customer CPA target, this is what they optimise toward.
  2. Blended CPA guardrail, this is the floor they must not breach.
For monthly reporting, review three numbers:
  1. Blended CPA (actual vs target)
  2. New Customer CPA (actual vs target)
  3. New Customer Mix % (actual vs target)
Everything else in the sheet, channel breakdowns, existing customer targets, guardrail ranges, is diagnostic context for when one of those three numbers is off. That is the simplest, most impact-focused way to use the framework you have built.

Here is the full automated template:

https://docs.google.com/spreadsheets/d/1wIvzXlw9IwM4cCNYOK8oJI9f0WDZRTFV3whDlDdzaks/edit?gid=1956970643#gid=1956970643

In Summary

There was a lot of math, sorry. However when you break it down it is pretty simple math all based of your net profit targets and your channel weightings.

Setting up your business and marketing like this can be a game changer for growth & efficiency, you will be investing ad spend more accurately into each channel and spending more on new customers instead of existing customers, which Meta & Google secretly do without you being able to see it, unless you set up the proper tracking and targets.

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