Your Meta Ads Are Performing Better Than You Realize transcript

as long as I have been around meta ads there has been a sort of constant fear with almost every digital advertising provider that people have which is Big tech companies are overvaluing the revenue that they are driving in your ad account whichever tech company you're working with right meta Google Tik Tok doesn't matter and they're over reporting the value they're giving to your brand and to your business as a way to make more money from you so they're showing uh you oh you made 3 to one on your money when actually real the real true value to your business that produced was one or two to one or something like that right so the RASS they show you is actually uh much much better than the True Value you've gotten right that's that's the constant fear people have gotten and I've heard this comment made a million times this is why this is sort of used to justify third party attribution tools it's used generally to be conservative and and I think people also just hate the feeling of sort of like being had you know being tricked or fooled and so they're going like ah these big tech companies are about to get me I don't want to be fooled by them and therefore I'm going to not overspend ad dollars because I want to make sure that I'm not the one fooled it's just like a sort of a bad feeling it just feels like somebody stole something from you that basic uh calculation in people's head is really really common and that's again why people use all kinds of tools to test the true value of their spend today though on the EP on this show like what what I want to get into is that I think particularly with meta ads that calculation is actually wrong it may be true in all kinds of other areas right Google is famously problematic in this respect which is like you see a giant row ass number in your branded search or your pmax campaign and you know it's not really producing incremental value for your business and we'll talk more about theity of incrementality in a little bit uh though this episode is not mostly going to be about incrementality by the way there's this there's this awareness though that Google is sort of over reporting that value and I think that's that's true for Google and you have to be a lot more careful with it with that with meta though I actually think that calculation is exactly wrong uh that measured correctly in your meta ads dashboard meta is actually producing more value for your business than you realize and so what I want to walk through now is six ways that meta is actually generating more value six potential ways and you may be getting all of these in your business you may be getting only a couple of them but six places to look to see where meta is actually producing meta ads are producing more value value in your business than you're currently giving it credit for and probably is a justification for spending more money on meta so I'm going to walk through all six of them uh this is something I've been thinking about a lot I've been looking at different client spends in a few different ways we've been trying to assess the value of meta ads in these businesses and uh and so yeah let's let's sort of walk through each of them because there are different ways that I see people regularly undervalue their meta spend relative to the truth now one Baseline principle that I want to establish from the outset is that I do believe that click-based attribution in meta is something close to correct okay that essentially when if you if you hold your reporting dashboard on meta ads to click-based attribution you eliminate view conversions then it is potentially or probably the case that uh that uh you're basically right especially measured well this is part of the reason why Billy is a sponsor of mine that uh that if you get accurate tracking with really good server side tracking in your dashboard and you do that in a cost- effective way you're going to get even better even more accurate data in meta which is just like nice on its own even aside from the fact that it also may give meta more information to optimize against right so that's why I took part of why I took Billy on as a sponsor like it just is is sort of a bet on making sure that you have accur accurate data Billy is the best tool for server side tracking that I know of and so um and so uh so yeah so but that assumes click-based attribution is what matters okay so um so click-based attribution is is the Baseline assumption there so ass assuming click base attribution is what you're looking at then let's talk about six places where your meta spend is producing more money and where you should look in your business to see if it's producing additional value okay so number one Speaking of click-based attribution is 28 day click attribution so in your metad dashboard the default re re Revenue setting that you have is going to be either one day or 7day click attribution and maybe have view attribution in there as well typically on a one day window window um one day view attribution window so uh depending on what optimization settings you have selected when you've optimized your campaign whether one day click 7-Day click or or one day click with view or even engage view settings or 7-Day click with uh view or engage view settings that that click-based attribution is what it is but what many people fail to do is realize that if you open up the attribution settings um drop down menu uh in your column setup you can also add 28 day click attribution so you can see uh the purchase Behavior Beyond one or seven days and that is a really big deal because it is real right like I just want you to consider what what a one or s-day attribution window is telling you what it's telling you is that in the last one or seven days when somebody has clicked on your ad and then purchased uh they there may be a gap between the time of click and the time of purchase even on a one day window somebody might click uh and then 10 hours later change from their phone to their computer and go make a purchase that would show up in a one-day attribution window uh on a one day click attribution window okay a 7-Day attribution window would of course capture if somebody clicks today or clicked uh let's say clicked three days ago and then because meta reports the purchase on the day that the purchase happened not on the day that the click happened which is different than how it used to be a long time ago but um but it's how it does it now uh if they clicked three days ago and bought today that would happen and what we all know uh is is that that happens all the time that people don't always make their purchase decision on day one and so a one or sday click window tells you something about that uh and many people in the dashboard are are re are uh measuring their row ass based on that now the first thing you should do is take view attribution out of there okay so that you are only seeing click attribution as I mentioned a second ago but but there's a second thing you should do which is that you should look at your the the behavior the revenue that you're out there driving on a 28 day click basis because because plenty of people take longer than seven days to make a purchase and so you could you can and should report in your meta ads dashboard on 28 day click Revenue not on 7day or one day click Revenue because that revenue is real it is predictable to some degree there is usually a consistent lift from one or seven days to 28 days that you just go look at old campaigns and you can measure it and see what percentage increase in revenue is there from day one or day seven to day 28 and if you if you uh go measure that in your historical campaigns you can usually predict it reliably going forward so um you know it used to be the case and and I I think this is changed a little bit now but it used to be the case that uh that I would regularly see a 40% lift from day one to day 28 which is to say if I get a dollar on within day one of a click I get another 40 cents on average uh on by day 28 and that's a really big deal that's a lot more money that you got over that time period and uh and so you ought to measure that in your reporting that's real Revenue that came from your click whether it's a delayed purchase or actually Meta Even reports a second purchase in there if that happens over that time and so that in that case it would be a returning customer Revenue purchase um you can actually see the difference between first purchase conversions and all conversions over that time period like there's there's a bunch of different ways to slice this but the point is that revenue is real and there's certain times where this really really matters and I'm thinking especially of the upcoming moment of Black Friday everybody knows you and I and everybody else is going to do the same thing it is going to be November 10th or November 7th and you are going to go oh that's an interesting product I had never heard of that before I might want to buy that this year and then you will think to yourself Black Friday is like in two or three weeks or whatever whatever date you you are looking at it is okay two or three weeks and you're going to think I'm gonna wait for Black Friday and wait until the sale comes and when that sale comes then I'm going to make my purchase because it will be 40% off or whatever and you'll purchase then and that behavior will happen you will make a list you will make list of things that you want to buy over that time and that behavior will happen and so you should assume it will happen in fact in the Black Friday leadup you should assume will happen more often than usual spend into it and calculate the value that you're driving based off of that and so 28 day click Revenue I'm amazed how many people just don't pull up that column set my column Set uh for meta ads has that as a um as a like all the time on thing like I I report all revenue to clients on a 28 day click basis because I think it's a much truer um consideration of the value that my ads are driving than just one or seven days and and many brands are UND spending because they just don't realize there's more value there than is Cas so set your attribution settings to click only and then measure 28 day click and even predict uh the 28 day click behavior in fact if you go to my website and sign up for my email list one of the things you'll see is that I have a unit economics calculator where uh where it actually builds into your target a a lift from day one or day seven to to day 28 so you can actually calculate if you're running cost controls your bid caps your cost caps your target Ros targets uh based off of those predicted lifts I call it the delayed purchase multiplier because the idea is that some people are going to delay their purchase for all kinds of reasons maybe they're going to research your product maybe they're's waiting for their paycheck to hit like whatever uh and so uh and so that happens all the time I already mentioned them in this episode but this is brought to you by my friends at Billy b.

Billy is the best serers side tracking tool that I know of for meta ads and in fact it goes Way Beyond that Billy can be a One-Stop shop replacement for your Google tag manager for all of the places that you are tracking ads on the internet like oneclick installs basically for meta ad tracking pixel tracking Google ads ga4 in one click amazing uh because ga4 is a huge pain to set up uh all this stuff in like two minutes or less Tik Tok xad Snapchat it's all there at billy. and the main reason I started using it with my clients is to track my meta ads with the best tracking that I know of uh that exists out there I've seen a lot of other third- party tracking tools I've run Billy and head-to-head AB tests against them uh just like take the same ads the same campaign setup auto bid uh for just this test to figure out exactly like what happens if I run the Billy pixel versus other pixel installations from third parties or from the Native Shopify integration and over and over and over again what I see is that the Billy pixel tracks Revenue better uh and and even sees better roas performance again uh some mix there of probably just better tracking so you get more accurate data and also powering better spend in meta by giving meta the most accurate purchase data from your website and even more objective than that is the fact that I go check the event match quality score in the meta ads event manager and over and over and over Billy has the best event match quality that I have seen uh and so that is the most objective way I can say 100% service side tracking with um with Billy is awesome it also in increases your page load time things like that by being 100% server side it really is great billy. a b y. a go get it right now okay so that's first 28 day click second correlated to that what about Beyond 28 days like meta gives you 28 days of uh of reporting data and then it stops tracking people after that and if somebody buys on day 29 your meta dashboard is not going to show up but of course 28 days while it does capture the majority of your value that you're producing 28 days is an arbitrary cut off it's like it's a totally arbitrary cutoff so like why not think about what happens beyond that there are multiple versions of this uh but part of it is just like being aware that some people are going to take longer and and actually if I zoom out even broader than sort of direct Performance Marketing one of the things I'm really getting at here is that um purchase intent starts with awareness and that over time one of the ways to grow your businesses is just to spend money this is something that I think some people really have right um my friend Nate Legos talks about this um I've heard Shireen Au another friend of mine talk about this just the idea that like deploying the dollars is a value in itself because people are going to hear about your brand and then maybe they'll buy you know 40 days later from now and and that like brand awareness thing is not something you should probably like really count on in the truest sense of like predicting some value but it's part of the reason your brand does grow over time people click three times throughout the year and then buy a holiday right or or whatever it is um or wait for the moment to be right in their life aside from holiday or anything like that or maybe they get introduced to a category you could imagine a supplement you know um where where it's like oh maybe I don't care about this now I've never heard of people you know supplementing uh colostrum before or something but then I see an ad here from this colostrum brand and then I see another one and then I click on this one and suddenly I start thinking like wait maybe I need to supplement colostrum actually maybe it's an incredible superfood that's really good for me and so so you could imagine sort of how that plays out and it takes five clicks over time but that is value that's produced by that first click people get under your funnel they become aware and now the retargeting click is cheaper Etc and and so in that respect there is sort of just Baseline and this is really the point here it's not that you should measure this really specifically and build a a predictive number into it I think it probably just gets to be too far most brands are bootstrapped it gets to be too long of a cash um conversion cycle uh essentially for this to be really worth doing um but for you to just be aware that there is a reasonable instinct to spend money because spending money gets you Impressions and reach and clicks and video views and all these things that have value beyond the 28 day click purchase um that get people into your funnel so uh that's that's the second thing okay um if you're trying to grow your business spending money really helps it really helps it really gets people there and deploying those dollars has real value in the business and if you if you are able to uh it's it's a really good use of your money all right third um third incrementality so let's talk about this a little bit uh this is another thing that people often don't realize uh is the case right there is this idea that um incrementality is right the concept of just thinking through um what would people have done if they had not seen my ad or if they had not clicked on my ad or whatever right um and the idea is would they have bought or would they have not bought and incrementality just seeks to measure uh which of those would happen well it turns out that meta ads over and over and over again in incrementality testing and I leaning not so much on incrementality tests that I've done but on stuff from Taylor holiday we talked about this um in the episode that I did with him most recently go check that out it's a really good episode we spent some time on incrementality um and but what he has seen over and over again from his Brands is that meta is actually more incremental than even the roas reports right so if the roas is reporting a 2 to one the actual incremental value of the spend is very often higher than that the meta's internal like Rass in the dashboard is simply missing some conversions it's Under reporting not over reporting and and uh and the vast majority of those conversions are in fact incremental they would which is to say they would not have happened without the ad spend that includes retargeting by the way um many people have this idea that the only way for a for a purchase to be truly incremental um or for Value to be truly incremental is if it happens at the top of the funnel or whatever and that's just not true like uh lower funnel some lower funnel retargeting type clicks definitely produce incremental uh value and and incrementality tests bear this out over and over again that meta is just a really really incremental Channel and so the IR Rass the incremental Rass of your ads is very often higher um what Taylor has said and I'm just leaning on his uh deeper look than I've had time to do here but I think it's a really compelling point is that in fact um meta ads very often is producing an incremental row that is something like the 28 day click plus one day view row ass number in your meta as account so in some ways It's actually an argument for putting that view conversion data back in there now I I think that's unhelpful for some other reasons because it muddies up things like bid caps and cost caps Etc but the point is if you're measuring the value of your spend against the actual Revenue that you are having come into your ad account um which is the ultimate source of Truth right like uh the actual Revenue that's coming into your bank account excuse me not your ad account the the actual Revenue that's coming into your bank account never lies to you right the bank never lies and and that money is real or it's not and so you can measure you can see the relationship between your new customer Revenue your am even your returning customer revenue and your ad spend uh and and see like what is 28 day click R Us say versus what is the actual new customer Revenue okay so that is a really big deal and um and if you are not thinking about that um incrementality thing just just know that Baseline consideration test after test after Test shows you should probably be spending more on meta the real implication for many people in this case is actually just they should be moving budget like so many wasted dollars happen on Google and Tik Tok and Twitter and influencer Partnerships all kinds of things there's so much wasted money because people hate the idea of being overleveraged on one channel but you know what the mo the best place to spend your money next the next best place to spend your money is the place where it gets the highest return and being leveraged on one channel is not really a problem many people should be more focused there should stop trying to spend and all these other channels all it's going to do is drain Focus From the place that is actually producing the most money for you while also putting money into a place that is going to give you a lower if not a negative return and there is no justification for doing that really um it you know again uh you may have other channels that are producing value for you I'm not saying never spend another Channel I'm just saying that meta ads very often and almost always for like for a long time in businesses is the best channel to be spending your next Dollar on for much longer than people realize and that if you actually play the incrementality game out uh man it is just way better than so much of what's out there uh so don't uh don't uh diversify your channel mix too soon instead Focus there put your money to the place that's most incremental and grow your business especially there all these especially if the all the if there are all of these places that are uh that there's actually additional value to meta than what you're even thinking about which gets us to number four retention uh for a long time I uh lived under the assumption that you ought to not spend any meta ad dollars on returning customers and the logic was that's just going to cannibalize the spend that I could be uh or it's just going to cannibalize the revenue that I was already going to get from returning customers via email SMS Etc but the fact is that there are for most brands you are simply not going to get every returning customer dollar that you could get by sending email and SMS and doing product drops and things like that there you need to pay to reach your past customers and what I generally do is simply hold those returning customers to a higher Rass Target than I would for a new customer and it's because um I assume that yes there's going to be some amount of that money that was going to come in either way via email SMS Etc um but that also there's going to be some Inc mental value on returning customers this is especially true uh if you are in a category that is regularly releasing new products um if you're releasing new products like some of your customers are just going to miss your email about it okay they're just going to miss your SMS even if you uh use the best practice of sending like a lot of email and SMS about it people will still miss it they will unsubscribe they whatever they just or it'll get caught in their spam folder whatever promotions folder um and like if you're in a Peril where you're dropping new products all the time like returning customer revenue for sure has some incremental value for for sure 100% for sure I know this because I've run apparel brands at accounts where returning customer revenue is X dollar per day you turn on your returning customer Revenue ad campaign and you know even just putting a couple hundred dollars a day towards it depending on how big your business is you know a very small percentage of your total spend and suddenly your returning customer Revenue goes up 20% 40% 50% something like that it it just very clearly shows up in the actual Revenue itself and in that respect it's producing more value than you it can produce more value than you think um and again there is this idea in people's heads that's not incremental at all but it is it is incremental that that that returning customer you know people lose sight of your brand you need to maintain their attention to some degree and uh spending on ad dollars can do it further and similarly on the retention aside from retention specific spending it there is going to be leakage in your ad account where even if you exclude all of your past customers from your ads targeting new customers like my campaign setup is like broad targeting exclude with using a clavio list um you know a CIO clavio segment really not a list or or send Lane segment or whatever right my my ESP using a segment from them plus a pixel-based segment I'm excluding past customers from all of my new customer ads spend right I have broad targeting where where I'm only trying to Target new customers and yet no matter how much I do that guess what some returning some customers get in there uh returning customers get in there like they just you just can't exclude everybody perfectly it simply is impossible and so it and so there will be return of customer but again that is actually value that if you're only looking at your new customer revenue and comparing that to your ad dollars you probably are not properly calculating uh the true value of your spend and that's a really big deal like that that means there is additional value being created if you're only looking at new customer Revenue that you are not counting and that additional Revenue again to some degree probably is incremental and so um so there is value there and it's worth noting that you'll actually see this really clearly if you ever have a winning ad suddenly spike your spend right let's say your spend doubles right because you launch a new ad it hits and it crushes and that's great right your new customer Revenue goes up really really obviously but what you will see is that returning customer Revenue goes up with it goes up with it really fast um and it doesn't go up necessarily at the same rate but it goes up some and that's because your ad is going to be reaching returning customers no matter how much you exclude them just is going to be reaching them and of course what that tells you is that those returning customers we not going to buy without that ad right so um so if the returning customer Revenue actually goes up then again it's an indication that the ad is working uh it's actually producing incremental Revenue including with returning customers so retention is a place where there's value that you probably not or maybe not thinking about in your business all right number five related to that uh on a broader timeline is LTV okay so LTV is something that again many brands are not thinking carefully enough about but you need to forecast the LTV in your business and be thinking about it um there's a couple ways people miss this the first is they have this idea that LTV future LTV is really risky and not very Bank they they say oh you know in the past a customer is worth 50% more in a year than they than uh than they were from first purchase right so if they spent a dollar $100 in their first purchase on average in the past they're worth $50 more over the course of the next year and and people have this idea yeah but that's really risky what happens if my co-ords are worse or you know those customers came from Word of Mouth what happens about my maybe my Facebook customers won't be as good or whatever and over and over and over and over again what I see is actually that that revenue is not very risky at all at least in the early and middle stages of business like maybe this changes if you're $200 million year business I'm not sure but um but you know for every eight and lower figure business that I've seen the future cohorts are pretty similar to the Past cohorts and as long as the first product they buy is the same they actually do come back and buy at a pretty high rate and you end up doing fine and so the returning customer Revenue that you get from that from that LTV really is bankable and really matters and you should be factoring that into your ad spend um and factoring that into your strategy if you have extremely high LTV it may be worth spending at a loss uh to acquire those customers if you're acquiring subscribers who buy six times in a year on average right then yes you the then the return on invested capital on that money is extremely high and if you are sort of so worried about the cash risk or what I mean mortgage your house and go buy those customers right don't don't go don't go do that right this is not Financial advice I should make sure and say that clearly not not investment advice um I'm not a certified investor but the point is like I've seen Brands where there's like literally 150% uh annual ized average return average annualized return on their money between the ad dollars and the uh the dollars that go into their product and it's like like spend the money go go spend more do everything you can put every dollar you can that is a money printing machine go spend on that and do that in fact that annualized return is just in the first year of that and this is another place people um misunderstand the LTV in their business and it's sort of similar to my point uh my second Point earlier about sort of the the awareness value Beyond The 28-day Click window there's also a returning customer value Beyond one year people talk about uh LTV in these time frames that are again almost totally arbitrary like 30-day LTV 90-day LTV one year LTV yeah well year two is going to get here and while again I understand you probably can't play a cash game where you wait to be profitable until year two or whatever it is another argument for deploying additional dollars in your ad account because customers don't magically stop buying after one year there is additional value there and if you're trying to grow your business then you know now they're not going to buy it the same rate as they were in year one but if you have 100% LTV in year one let's say 50% LTV in year one there's a good chance that uh let's take the 100% example okay that that's pretty healthy LTV but if you have 100% LTV in year one if you're cpg business or something there's a pretty good chance that even as people churn there's still another uh so uh again we'll use we'll use dollars here to make this easier right so that means that let's say they spent $100 on day one in your business on the first purchase 100% LTV would mean they would spend another $100 over the course of the year in year two there's a pretty good chance they're still spending on average another 30 bucks and that's real money right because if you're going to keep acquiring customers over that time that 30 bucks is going and you acquire enough of them that's going to add up into year two your business will still be here and it actually maybe another 10 or 15 bucks in year three so those LTV considerations are a really big deal and it's true in other channels and I'm going to talk in a second about other channels but let's say you have an Amazon halo effect or a Target halo effect because you're selling into Target or something right well customers don't just only buy once on those channels either so if I buy mons from uh if if every purchase I generate on the website uh generates another you know quarter of a purchase on Amazon or something right let's again just on average let's say right well that first quarter of a purchase is going to produce LTV off of that as well and so there's these Downstream effects to be thinking about for your ad spend and again part of what I'm getting at here is that all the things being equal if you're making money on this and if you're able to there is additional secondary value in spending your ad dollars to grow your business in a way that can be really really good this episode is in the weeds of meta ads in some ways and if you are looking to grow in your meta ads uh knowledge and you're trying to grow your business and get your head around a lot of the principles I'm talking about I want to remind you that my friends at admission are the best place to go to get better I get asked constant detailed questions about like what should I do in my ad account if if if this happens or what should I do if that happens and look I get it people like Hear My Episode and they they want to know better what to do in their own ad accounts I think that's great the problem is I can't answer all of those questions and in fact I may not even always be the best one to answer those questions but look there are ways to get structured course material to get the best in current media buying principles tied to your financial outcomes that you are trying to do um trying to hit in your business and current cost controlled like using cost caps bid caps Target Ros campaign setup for ads so you can get the best possible set up run your ads yourself if you're spending less than $50,000 a month on meta ads you should be running your ads yourself in general and you should do it with help from admission admission is a mix of courses like pre-structured courses from the best Minds in D Toc at Common Thread Collective that are coming straight down from Taylor holiday and his team uh who is again in my view the the the best thinker in D Toc advertising maybe like certainly at the very very hot top of the list so you're getting the best information quality presented to you in structured courses so you can take the kinds of things I talk about all the time Implement them in your out account then you also have ongoing Community with uh in private webinars and other people who are in it with you uh who you can learn from and learn with and coaching and this is so helpful you get access to ctc's com thread collectives media buying team at $150 an hour uh to do ongoing coaching with you and if you go through the link in this Show's episode notes in this show notes of this episode did I say that right uh that first coaching call is free so you can actually get like people who are deeply experienced buying media in the way that I think is really best uh to look at your ad account with you and get those really specific questions that you have answered and make sure your setup is right again that first call is free if you sign up for three months you actually get four calls free if you sign up for a year in advance uh uh and there's also a 30-day money back guarantee so if you don't love admission you can get it to get that offer you have to go through the link uh in the show notes uh on this on this episode so go through that link whether you're watching on YouTube or watching or listening on Spotify Apple podcast anywhere there is a link to admission there go through that link sign up for admission get structured guidance on how to set things up with courses like Google best practices 2024 conversion copyrighting fundamentals how to set monthly Revenue targets meta ads campaign structures in 2024 recently updated so that you have the newest and best like those are all how to determine the number of ads you need to build like all of these things that I talk about all the time go to admission sign up today now I'm I'm talking here about brands that are making enough money to deploy the ad dollars that have the cash all those things and and I know some people are probably listening to or watching this and saying yeah we should be so lucky but there just is this value to be considering um in these other ways that uh that you yeah you should be thinking about okay and finally uh number six this gets to the last uh the last uh point that I just alluded to which is the halo effect on your other channels and this is something that I think is really misunderstood this is where it's extremely hard to actually measure this right there is no Amazon Rass that is reported if you on Amazon and Amazon is certainly the number one channel where this is going to happen still 50 or 60% of e-commerce on in the US happens on Amazon it's a huge portion of the total available pool of e-commerce shopping okay so um so it's a big deal to get this right and it's the place where the second place most people go before they enter retail you know brick and morar Retail Etc but of course Amazon's not going to show you a meta ads Rass and you can't optimize for it in meta ads that would be great if that was the case but they're just not going to do that and um and so it can just be it just there's always people hesitant to go like are we sure that our meta ads are producing additional value on Amazon are we sure that's where the Amazon revenue is coming from Etc and the answer is yes you should be sure like again over and over one of the things I see is that branded search on Amazon happens because of meta spend so that Brands even I mean I have a brand that was spending almost nothing on Amazon and started to build what became like a nine fig business a line item Revenue item I should say uh Revenue line item on on their business on Amazon while spending very little on ads there and it's exactly what I just talked about some combination of new customer Revenue starting there branded search off the back of um all the other meta ads that we were running and all those things and then LTV off of those on the back uh on the back of the first purchases on Amazon and as we have grown spend in that business we have clearly seen Amazon grow with it I just looked at another brand not the one I was just referencing but another brand that has really deep Amazon analytics and we could directly correlate the search rankings um on and even the search volume of particular products in relation to the spend on those products on meta uh and seeing the search rankings on Amazon because of that like just to where it's like crystal clear in the data that suddenly they're selling a lot more stuff in fact we were experiencing a contribution margin decline on the D on the D Toc set but an a contribution margin increase on the Amazon site that more than made up for it and uh and the contribution margin decline was because we were actually acquiring customers at a loss on DDC that was a strategy so every additional dollar we spent the more successful we were on on our ad spend on meta the worse our contribution margin looked on the website because we're acquiring at a loss so if we doubled our spend let's say right it would just make our CM go down except that at the same time uh at the same time we were seeing the Amazon CM go up so much much that it seemed to have um uh have it seems to have not only uh evened it out but actually uh got so much additional contribution margin via our Amazon business that it it was worth it we were actually positive contribution margin on the total spend despite being negative uh on on D Toc if that makes sense the point being there was like a huge halo effect on Amazon okay at the same time a retailer for this business reached out like proactively in a call to the DDC business said hey how come your your branded search uh went up so much and it's like well we suddenly spent way more money on ads that's why and we started paying really close attention to it now I don't have the exact details of this but I have story after story after Story another brand I was talking to huge brand that's in uh you know all of the big um Mass retail brick-and mortar stores and they started seeing D Toc Decline and what happened as D Toc decline they started pulling back revenue on their ad spend but then they realized oh okay our Target sales went down at the same time and and at some point realized oh wait the the Facebook ad spend was powering the whole thing every channel that they were in and they had really big Mass retail relationships and so it was mattering everywhere that they could go there just is value and this makes so much sense right I was looking at at one brand day that was like you know 2,000 purchases in the last uh month or something off 60,000 clicks I I don't remember if those numbers are right or what that exact conversion rate is so don't worry don't hold me to the numbers but but basically there were like 58,000 clicks that didn't purchase you can't tell me that if you are also in serious retail settings including the largest digital retailer in the world or in the US Amazon um and also in other brick and mortar Andor other online retailers you can't tell me those 58,000 clicks are not worth anything of course they are those people were they clicked because they were interested in the value proposition you stated in your ad that's why they're interested in the brand and while certainly uh not all 58,000 are going to do anything there's some interest from that that is going to matter in the rest of your business and I'm starting to believe more and more that the halo effect is actually much bigger than most people think this is hard to measure there's not a great tool that I see to measure it except to measure things like branded search volume on those channels Revenue Amazon by product is a good way to look at it um you know you could use a third party tool like helium 10 or something like that to to sort of break down your really clear listings um listing data but um but I I just think there's much more value here than you think the the one caveat I will add here is that what so far looks to be the case for me on Amazon is that the more aggressive your d2c offer is that is not repeated on Amazon the more likely it is uh that people are going to buy on DDC DDC and the halo effect is smaller so what I mean is if you're offering like 50% off for a new customer let's say on DDC um then it's unlikely that that customer is going to jump to Amazon because they save way more money buying it from their site but if your listings are basically the same in both places Amazon and DDC it is much more likely to be the case that plenty of people are going to actually go buy on Amazon because Amazon is the best shopping experience in the world like you get the product you know especi especially if they get if they're Prime members they get uh they don't pay for shipping uh whereas you know they're paying for shipping on your website you know that kind of thing there's actually savings for them to go to Amazon on top of the fact that it's convenient the checkout is easier they're used to it they they trust it you know all those things right uh they can make a return really really easy like all of those things really matter um to make Amazon a better shopping experience and as long as the closer the offers are together the larger the halo effect that's the point um okay uh so let me repeat the six okay number one 20 day click Rass this is there's more value across these six categories U and so know these six categories from your metas span number one 28 day CL Ross don't limit yourself to one one or seven days number two the days beyond the 28 days especially the awareness and just sort of General growth uh stuff that's a little harder to measure okay number three uh incrementality understanding that meta ads is very very incremental um number four retention uh that there's value to your spend for past customers that you may not measuring both by directly targeting them and just from spillover effect uh number five LTV make sure you're measuring that to some degree just to begin with build cohort forecasts in your business and at the same time uh just just watch the LTV uh factor that into the value your driving and then number six uh Amazon and other channels as well having some sense of halo effect there is real value there um if you keep an eye on those six things what you will probably see is that meta is producing value for you and if your business is still not profitable despite this it's possible that you have other problems that are unrelated to meta something like your gross margin something like um your Opex Etc but those that meta uh value is real and if you want to grow your business you should be deploying it on what I think is by far the most valuable Channel be deploying it as effectively as possible on that channel and dig in Focus there and resist the temptation to go uh get to Omni channel to fast with your ad spend because there's all this value that you can and should go capture thank thanks so much for watching and listening to this episode make sure to subscribe wherever you are doing that and get other episodes from me there all the resources that I reference in this episode as well as uh the unit economics doc that has the delayed purchase multiplier that I mentioned is available on my website at AJF gr. comom just give me your email address it'll get kicked over to you automatically uh and uh look out for more future episodes that are coming I got all kinds of great interviews uh lined up uh lots of good stuff looking forward to hearing from you at podcast AJF growth.com or on Twitter at andrewj Ferris talk to you next time [Music]