Wednesday Oct 26, 2022

What actually happens when you scale your adspend? EP-043

Blake Beus  0:00  
scaling like everybody, every client there, they always get nervous. Yeah, anxiety when they when it comes to scaling, right? So you found something that works. You're spending maybe 100 bucks a day or something. And now you're telling them alright, let's do 200. Let's do 300. Let's, yes, let's do this. And then they have a ton of questions as they do do that. So what happens? Yeah,

Greg Marshall  0:22  
so, and it's normal to be nervous. I don't think that's abnormal at all right? Right. Because no one wants to like spend more money and risk losing. So typically, what happens? So number one, scaling, all that really means is do more, right, get more sales than you're currently getting, or more leads that you're currently getting. And typically, what happens? So here's usually the concern or the misconception of scaling. So let's say something is working really well, like $50 a day, right? Really, really low spent, and you're getting a good return. Let's say you're getting a four return on adspend. No, nice, right? So let's, let's just pretend that's happening now, if you haven't scaled before, or you're new to it, and I have made this mistake, okay. So I'm not like excluding myself, it is very easy to believe as well, if I spent 50, why don't I just spent $5,000, and I should get the exact same return of what I'm currently getting now of a Forex, right? Unfortunately, that is not how it works. And it pretty much I don't want to say it's impossible, but close to impossible to keeping maintaining that ratio that return as you spend more. And the reason for that, and Blake can probably attest to this is the audience, right? So the way these algorithms work, is when you're spending low spend, you're like forcing the algorithm to work harder to find that little pocket. That's a perfect match for your offer. But then what happens when you expand that audience?

Blake Beus  2:01  
You will you start, you start having to boil over into the the people that aren't perfect for the fit, and that's fine. Yep. There's more of those. And that's a good thing. Yep. Because there's, that's a much, much, much bigger audience. But instead of finding the people that are ready, right now, you're finding maybe people that are going to be ready, tomorrow, next week, or even a few or even in a few weeks, or maybe the offer is not exactly what they need. And they're comparing a couple of alternatives. And it takes them some time to make a decision. But all of that drives your costs up. Yep. And so people, in my experience, people start seeing the cost per acquisition go up, yep. Which means their row as return on adspend starts coming down, and they start panicking because they think this is a trend, that's eventually going to mean, I'm losing money. So I'm spending all this money and I'm losing money. But in reality is a good thing.

Greg Marshall  3:04  
Yep, in my eyes anyway. Well, and one of the things you have to keep in mind is, in my experience, okay, so I'm just speaking, in my experience, when you scale you actually, so people, I think incorrectly focus on the wrong part of the scale. And you should be thinking about the second sale, you're gonna give them the upsell, how many more orders they can make, and really focusing your energy on that. Not the the advertising part. Because it's inevitable that the cost per purchase, and the row ads is going to go down, the more you spend, but if you if you only focus on the advertising part, what's going to happen is you're going to get scared every single time it goes up, and you're going to retract or, you know, go back to what you were doing. And you're not ever going to be able to grow that and get more customers that you're looking for. And so that's the mistake that I see constantly is when they're trying to scale going, what worked out for x and 50. How do we make it work at $5,000 a day for x? Let's just keep looking at the ads over and over and over again, which is actually the wrong place to be work. You actually should be working on how do I increase the average order value or get them to buy sooner or get them to buy more often. That's how we

Blake Beus  4:23  
come up with more offers, like follow up offers, they bought this one thing, what's the next thing they should do? It was thing after that was the thing after that, if you have two or three layers of different offers, oftentimes they're going up in price. Exactly. Then you you actually have legitimate business there.

Greg Marshall  4:41  
Well, the advertising tends to work out right then you're not as concerned. But there is a transition where you have to almost practice going through this. Because every single time I've gotten I mean, I can't think of many phone calls and conversations of this sense of panic. Yeah, that scaling brings to the business owner, once again, not saying it's not warranted. It's just because you start seeing, Oh, man, I'm spending $1,000 A day 2000. And what makes it scary? Okay, this is a psychological game. What makes it scarier is when you keep seeing the receipts from Facebook or Google or any platform, hitting your account, reminding you how much is going out it almost couple times a day, yeah, when you're scaling, you're seeing your account being hit over and over and over and over again, one day, and that. So without looking at revenue, the client will just keep seeing these, because a lot of them have notifications set up when they get like a spend on their credit card or something like that. And so when you're, when you're spending $2,000 a day, which we've we've been,

Blake Beus  5:51  
and I think Facebook the most you can have it set out and unless you have an account, like a big account with them or something is to charge you every $1,000. So you're gonna see $1,000 purchase twice a day. And most people were thinking, Ah, and I'll spend 1000s of dollars, you know, $1,000 Twice a day on anything. And you see that, but then you don't see the revenue numbers come in. Yep. And, and so it's easy to panic. Well, and I've been there, and

Greg Marshall  6:18  
I think it's totally normal. Yeah, we're not, we're not like downplaying, like, you should just let it happen and not be concerned or worried. We just want to prep you on, this is what will happen and make sure you This is like a psychological thing, to where you make sure you're not turning things off. Because I've had this happen before they are getting hit, we've got up to $3,000 a day, at at their threshold was $900. So that's three or maybe sometimes four transactions on Facebook a day. And what ends up happening is their return was working, everything is working, the numbers are working out. Nothing's really changed. But they shut it down, turn it off, turn it off. We're spending way too much. We gotta like reassess, yeah. And they lose that momentum that they're building. And they're constantly starting and stopping, not because of logistics, or looking at their numbers to see if it's working. But just because of the fear of seeing anxiety, the money come out over and over and over. And

Blake Beus  7:17  
that's, that's real. And it's normal. I think about it this way. So a few years ago, I got into my wife bought me smoker, and I got into smoking, you know, briskets. Yeah. And pork butts and things like that. And there's a saying for anybody that that that gets into this. If you're looking you're not cooking. Yeah. And I remember the first time I cooked something that was long, it was gonna take 16 hours. Yep. So I put it in the night before. I didn't sleep that night, I have thermometer in there I will. And I had the thresholds on the temperature set. so close that it was going off every half hour, and I'll go out and look at it and tweak things. But every time you lift the lid, the temperatures, drop, drop and change. And it turned out in there. But now, when I do that same cook, I get the get everything up to temperature, I throw the meat on I go to bed. Yep. And it is what it is in the morning. And it turns out great. But if you're looking, if I keep tweaking, you, you lose, you lose all the heat. Yep. Right. Yeah. And so you're constantly cooling things down and resetting the algorithm benefits and, and things along those lines. And so I'm not saying that doesn't mean, you can't turn things off. But as part of a proper scaling campaign, you shouldn't really have these surprises. Because you're not gonna go from 50 to 5000. Overnight. Yeah, you're gonna kind of you're gonna make some incremental changes. And then you'll pause, not necessarily campaigns, but you'll pause scaling for a minute, sometimes if something doesn't seem quite right, and you'll massage at that point, but you don't want to keep just flipping things on and off swapping out things all the time. Because you're you're gonna stop cooking at that point.

Greg Marshall  8:57  
Well, that's a recipe. That's a great analogy, because that is true, right? When you're smoking things. What we're really saying is, it's more about trust. Yeah, trusting the process. More so than trying to control too many things that ultimately because you're trying to control them makes it worse. Right? Not because of the intent that you have the right intent, I want to make sure everything works. But sometimes you have to let things run. And you know, they gotta cook, you gotta you gotta let them cook and you don't let it cook. You're gonna end up having not so good. Finished product and I think scaling is one of those. So here's, here's the base what you want to do number one, if you want to scale you should months before start mentally prepping and preparing what you will, how you, you will behave when these situations happen. I think it'd be very helpful because if you plan out mentally like okay, if I'm spending this much What are my by my logical cutoff points? And only measure of that and nothing else? You have to remove the emotion when it comes to so I recommend saying, what's the maximum amount of money that I will spend? And what does that ratio have to look before and a timeframe, how, you know, seven days or 14 days before I make this judgment call, so that when you go in, you're only you're doing it in a non emotional way. And you're just saying, if I spent $1,000, and I don't get at least $2,000 back and it's like, 1500, then I'll cut it off, right? Or if I spend $5,000, and I don't get 10,000. Back, I'll cut it off having specific numbers that you can just look at, and just say, Okay, I hit my threshold. And what typically helps I will have clients do this drill is to go if you were to spend, what X amount of dollars, you're not losing all the spend, right? That's the part that people like our minds trickers. So if you spent $1,000, and you get 1800 in sales, you didn't lose $1,000. Right, you may have just lost a couple 100. Yeah, based on whatever business model, and that's, that's the thing, like think about it that way. It's it's hard to say, Oh, we

Blake Beus  11:22  
lost money. If I spent $1,000. And I only sold $950 with the product. I lost 50 bucks, and it's not even a lost, you learned a lot and gained a bunch of customers. Yep. Right, you gained a bunch of people on your email list and everything. You can't keep doing that, because you're gonna run into some cash, cash crunch problems. But if you have a day like that, that's not the end of the world, because I've blown $50 In a day on stupid stuff before. And didn't get any customers out of it. Because it was 50 bucks on I don't know, I don't know, food or something. I mean, it's cool toy at best bought by or something and then didn't make me any money back. I didn't get any customers or anything. So think about it that way. You are going to have some fluctuations. You can't have consistent days where you're under Yeah, where you row as is under one. Yep. But if you have a single day like that, but all of your other days are good. That's not time to panic. That doesn't mean things are going south. That means I don't know, maybe there was a big news story that day. Or maybe something happened in the lives of a lot of your your audiences, like those things happen if you had I mean, if you had a massive news story, like a war started or something like that the day Russia invaded Ukraine, I guarantee you everybody's ad spent was way less effective that day. Oh, yeah. Then then or other days?

Greg Marshall  12:48  
Recession? Yeah, right, the talk of a recession. People cannot even I mean, everyone gets impacted by that. But some people may not even really have to worry about that. But just the fear that comes now we're going into recession will make people shrink. Right, right. You know, maybe I shouldn't buy that even though I can't afford it. Yeah, it's a natural, like knee jerk reaction, which, you know, I saw quite a bit with buyer behavior for like two weeks when it's just being pumped on the news every day, gas prices to all time high. The cost of meat is this and the cost of food design, and everything's gone up, you could see a shift in consumer behavior for a couple of weeks. But now, it seems like people are realizing oh, it's, it's hard to live, it's okay.

Blake Beus  13:35  
There's, there's all there's always fluctuations. And oftentimes, like with a little bit of creative thinking, without turning off your campaigns, you could use those new stories, or use those concepts in some new ad creative and see how that works, right? There's lots of ways you can kind of manage that, but you're not losing money, per se, if you spend $1,000, and you only made 950 back, you gained a bunch of people qualified people for your email list for your next product. And that's not really a bad thing. Obviously, we you want to be profitable all the time. But if you have one of those days,

Greg Marshall  14:07  
I'm glad you brought that up too, because the other almost unrealistic expectation is that every single day will have the exact same ratio of returns, which that's why I typically recommend look at seven days minimum, but more like 14 or maybe even a month to let it all kind of average out and go, What was our return? Right? Because if you do it day by day, what's going to happen is maybe one day at 5x And you're like, This is unbelievable. Then the next day dew point eight, you're like the sky is falling and you just turn it off. But if you just let it run and then another day three and others two and a half and others for you average that all out. It's actually a pretty solid campaign. But if you're looking at it like the stock market like your day trader and your cost is saying, Oh, we just lost money in the last hour. It's you're not going to get anywhere, because you're going to constantly starting and stopping. And that's not how it works,

Blake Beus  15:08  
right? And I would tell you if you're going to put effort into something like if you have this nervous energy, and this is like stressful for you, and you're going to, like put the effort into coming up with a next product. Yep, that once they've purchased this offer, yep. What's the next thing, and that next thing doesn't have to be a big step up in price it can be. But it could be just a little mini add on that you can follow up with a quick email campaign, that will make you more money than trying to watch your ad spend hour by hour, minute by minute, and keeping an eye on all of that stuff. So put your effort into that. I would also look at shifting gears just a little bit. I think a lot of people look at the wrong numbers, advertisers, media buyers, we talk a lot about cost per acquisition row as return on adspend CPMs. Those are important metrics. But as you scale the the way those metrics should be interpreted changes. And so what I think a lot of people should look at is instead of looking at those metrics, because those metrics will get worse as you scale. Because they have to get worse as you scale. But I would look at the total profit amount. Yeah, not margin, not percentage amount, but like total profit amount. So for example, let's just say I'm spending $10,000 a month, and I'm making $10,000 a month on that ad spend. And so that's my row, as is a 2x. And that's great. But next month, we spend $1,500. And I make, you know, 12,000 13,000, on profit, my row as is less Yep. But the actual profit in the bank is more, and your overhead didn't go up other than that ad spend, it's not like you had to hire new staff to deliver or whatever, you just have that ad spin. So your actual profit dollar amount is more. And I would like to make $12,000 in profit, more than I would like to make $10,000 in profit, that's a bigger number. And so you want to kind of look at that, as well. And if you're and then you also gotta realize that's just the first part of your marketing machine. And we've talked about this several times, but you have email follow ups you have next offers, you have all of these different things. Where as we focus on this one piece, because that's where everybody gets started. And that's fine. But when you want to start building out the full business, the marketing machine, you have these other products, these other offers, more bundles, more promotions, holiday promotions, all of those things. And putting effort into those things are what take your $12,000 a month on your 15k ad spend and turn that into $24,000 a month profit on the 15k ad spend is that extra stuff that you're you're adding on because the profit margins on those things is significantly higher, because you didn't have to acquire through paid ads, you've already acquired them, you've already spent the money to acquire the customer you have

Greg Marshall  18:13  
now. So that's the secret that a lot of the people out there that are scaling and scale big. That's what they're actually focusing most of their effort on. Because I've heard this before from clients like yeah, I talked to this one guy. And he you know, he he spent X amount of dollars and got a gigantic return right sounds like some outsize return. Did you go to find out? Well, he sent emails, and he's hitting a huge list of people that he already acquired. So that's why he's able to get such a outsized return, because he tells me already bought those cars. Yes. And so the numbers are gonna be skewed on that. And so you have to think that's how they're doing it. They're not, there's no secret way that you can unlock, you know, like a video game, or like a cheat code where you can go, Alright, there's a secret audience out there that if I just tap into it, I'll be able to get 1500 row as some that I'm doing unlimited. And if I can just find the pot of gold, that at my life will be saved. just doesn't work that way, no

Blake Beus  19:22  
matter how many no matter how many, just this one quick tip or this secret or how many, you know, whatever secrets books, you buy it, those are hooks to get you to buy. But But yeah, just there's no magic code to that. And the people that are saying they have this massive row as they're using that as a hook to kind of get you in. Fine. But oftentimes, I was watching one where the person said, Oh, the row as was, I don't know. 10,000 Yeah. And when I dug into the story a little bit, they will Were running some ads to a small geographic area to get people to come to a seminar to buy condos in a new condo complex. Yeah. And so they needed, you know, they had 100 people in the room, they, they they ran ads, maybe they only ran $1,500 in ADS. Yeah. And they sell to condos. And they're low as $1,500 to a million because they're $500,000 condos. My row as was crazy. Here's the secret, but they

Greg Marshall  20:28  
don't like, yeah, most people aren't selling condos.

Blake Beus  20:31  
And that's not a pure row as because there's all this overhead and selling condos. Like, there's all of these construction costs and real real trophies, it's just not accurate.

Greg Marshall  20:42  
So we recommend, build a business. Don't listen, anyone who says you're gonna get some outsized returns, it's not going to happen. You can get very solid returns from the business fundamentals, which is, of course, what most people do not want to hear. Just like exercise and eating healthy. There's no secret, there's no nothing. It's just basic fundamentals, you just got to do the same thing when you're building your business. So we really apologize to laying down that there isn't some secret trick or hack to get everyone. But if you just stick with the process, you can have a very successful business, trust me. Amazon is not hacking the system with some secret ad campaign. They've got a very strong business model. That's a well thought out from the acquisition all the way to fulfillment to return customers. If they do it, you probably should do

Blake Beus  21:37  
well, and they didn't do that overnight, exact, right? Like it's gonna take you some time to get there. They built out they're still building out big sections of their fulfillment arm of the business. Right? And so you build those parts and you optimize those parts as you go. That's why it's called building a business. But anyway, let's wrap this up. Greg, how can people get in touch with you,

Greg Marshall  21:56  
Greg marshall.co, and you can book a free strategy session. What about

Blake Beus  22:00  
Blake beus.com/sm? Three is the best way to get in touch with me.

Greg Marshall  22:04  
All right. Until next time, I'll talk to you later. Okay, bye.

Unknown Speaker  22:06  
Bye.

 

Comments (0)

To leave or reply to comments, please download free Podbean or

No Comments

Copyright 2021 All rights reserved.

Podcast Powered By Podbean

Version: 20221013