We cut our Facebook budget from $20,000 to $0. Here’s what happened.

By Michael Carroll
Head of Growth @ Nutshell
I want to be upfront, this isn’t a hero’s tale.
It is not the usual story of hockey stick growth we are so often wooed by on Medium or GrowthHacker. This is what has to happen before that story can be told, or at least I certainly hope it is. In my first 90 days as the Head of Growth for Nutshell, I cut our Facebook spend from $20,000 a month to zero and the sky never fell.
Imagine that.
It’s vital to note, before we climb into this rabbit hole, that I was certainly not alone in this decision. Make no mistake it was mine to own, but in many ways my entry into the company created an opportunity to give them cover to explore a hypothesis that had long been brewing.
Here’s how we got there.
Data, Data, and More Data — Where Do You Really Begin?
Philosophically, I’m a big believer in two things. First, successful digital strategies depend on a blended, multi-channel approach to engaging, capturing, nurturing, and converting potential users to customers. And second, the most successful strategies focus more attention on generating traffic and leads organically. When it comes to organic traffic you’re rarely paying for the same real estate twice. When it comes to paid acquisition you pay for the same real estate everyday and every day it gets more expensive.
Focusing on organic traffic and conversion sounds simple, but the addiction of paid acquisition is a powerful one (click the link and save it…great article). Gains are usually immediate and in an optimized spend, big wins are immediately reflected in the bottom line of your business. As a result, it’s just easier to obtain institutional buy-in for focus on paid tactics as opposed to the “long con” of organic growth.
With this in mind, your first priority as a new leader joining an established team, should always be assessing and optimizing your paid spend. Bloated accounts and inefficiencies chew budgets, throwing your whole program out of balance. I knew I would have to trim some fat, but from where?
You have to start by answering this seemingly simple question.
Is Paid Acquisition Actually Driving Growth?
In fairness, I was more than adequately warned. My predecessors and the super talented team at Nutshell had been trying to crack this code for a while. It was becoming increasingly difficult, if not impossible, to find any correlation between overall digital ad spend and new MRR. Spend would increase and decrease, but overall sales (new MRR) remained unaffected.

Note: There is a 14-day lag to consider in this data set. On average our trial users become customers in 12 days, but as you can see, even without the trend lines, there’s almost no rhyme or reason to the overall effect of paid acquisition.
I don’t believe (and neither should you) there should be a one-to-one ratio between spend and raw wins (number of new sales) or new MRR (dollar value of new sales), but a basic correlation on some scale should be apparent, i.e. you spend more you make more. With no correlation between our overall spend and sales growth, the next logical question to answer was…is the correlation being disrupted by a particular channel? Spoiler alert: It was not.

The only way to solve a problem is to make it smaller
So now what? No correlation in overall spend, none in individual channels. In my previous position as the strategy director of a small digital agency I saw hundreds of different data-related problems, but to be honest, nothing quite like this.
Like any large problem, your only option is to make it smaller, break it down into its requisite parts, and assess through a process of elimination. As a result I began by analyzing the performance of our two primary paid channels from the bottom up.
Which Channels Are Driving Actual Sales?
We track lead source to sale using Nutshell and a little elbow grease from our engineering crew. (I may be a little biased, but I’ve used a lot of CRMs and Nutshell’s reporting capabilitiesare crazy powerful.)

As you can see the primary driver of new sales, according to our last-click attribution model is organic traffic. Specifically, branded organic traffic. However, because I’m a big believer in channel mix, last click is never the whole story…
