YouTube Ads Underreport Revenue By 70%. Here's What To Do About It transcript

YouTube is Under reporting the revenue impact that it has on your business by 70% on average you can multiply every dollar that Google says you make from a YouTube ad by three and a2x to report the True Value it has just on your D Toc brand on average those are the numbers shared from 190 incrementality tests that house analytics ran and Olivia Corey shared on this podcast very recently and I want to tell you right now that if you hear those numbers and don't know what I'm talking about and didn't hear the conversation you need to go back and watch or listen to that episode it is the top link uh Link in the show notes of this episode it is right there for you so you can go check it out and you need to go do that it is a fascinating episode with the best data set that I've ever seen around the power of YouTube ads and that is a number that I've had questions about for a very long time um about what is the true impact everybody has always told me that YouTube advertising ing is much more impactful than what Google shows you in its dashboard and what Google can measure on a click basis because as Olivia and I discussed so much of the impact happens on a view basis not on a click basis which is very hard for meta ads focused advertisers to get their heads around okay so if that's true and if that's the case what do we do about that okay and this is something that Olivia and I only got to a little bit in the episode because it was already a long episode but what I want to do now is tell you exactly what I am actioning with my brands and with my clients because of the conversation I had with Olivia it is a significant conversation in our space I think it really matters um that episode had so much information on it that uh it was really crucial that I I just think if you listen to that you got to stop and think what does this mean for my brand and so I'm going to tell you what it means for my clients who are all as I mentioned in that episode in the low eight figure range D Toc some more Omni Channel than others and so I'm going to talk to you about um exactly what I'm doing I've made a list and and I've actually already started to do this um since recording that episode it's been a couple days since I've recorded with Olivia and I've already started at this point to chase down uh clients of mine and think about what I'm going to do with them and how we implement this okay um and so to frame this up um I I want to tell you what I think are the two questions facing basically every um High seven low eight figure brand okay and those two questions in terms of attribution incrementality part of the reason um I'm negative towards a lot of attribution software and don't think it's very useful is because for a lot of seven figureure Brands and early eight figure Brands as Olivia and I discussed the the impact of your advertising on uh on on your business is too obvious and too clear and so you don't really need incrementality testing you run meta ads you see the clicks you see what me meta reports and revenue and then you just watch the revenue in your business and see what happens and if it goes up and it goes up a lot then you can tell that it's because of the ads okay and so it's kind of that simple but there is a point for nearly every business where two questions become Paramount and I have had this conversation a million times with Brands okay and and and it is basically and is these two questions and they're always the same questions and they're the same same business sizes and business ranges okay the first is what in the world do I make of Google in Google ads even the phrase Google ads is kind of not a very helpful phrase because what what when you say Google ads it refers to a whole bunch of different things at once it refers to branded search ads it refers to YouTube prospecting ads it refers to display ads it refers to shopping ads it refers to Performance Max as its own mechanism for delivering nearly every kind of ad that I just told you so how do you think about the different campaign types the different possibilities and the row ass numbers in those platforms a five: one or let's let's call it a 2:1 Rass on branded search means something extremely different than a two to1 Rass on even a categorical search term and that's before you talk about a 2 to1 Rass on a YouTube ad and so sorting out all of those distinctions with Google ads is a mess it's it's part of why um so many people get screwed spending bad money on Google because it's so hard to sort through all those details that it just makes it really difficult by the way if you're looking for a good Google ads agency I have a partner that I work with a lot just email me podcast aaf.com and I will make a recommendation to you of somebody that I work with on most of my clients okay people who I trust to help sort those things out all right um so uh because I look at Google ad account of your Google ad account and it's just a mess of that kind of thing people sort of get taken to taken advantage of all the time there um Okay so so there's that Google ads how do you sort out the incrementality of different campaign types and of how much we should spend there are we under spending are we overspending is it some are we spending right on who knows no Brands know nobody knows the answer to that question so there's this huge thing sometimes to the tune of like a third of their meta ads budget like it's a really big line item and they really have no idea if it works and the problem is as again as Olivia and I discussed those Brands often can't afford you know pushing six figures a year maybe in incrementality testing which is where house is and and you know there's some Alternatives who are to offer some other incrementality tests but um but it's hard to get answers to those questions without having a huge budget is the point okay from an incrementality perspective okay number two the other big question is what about the halo effect of my meta ads what about the halo effect of my of my Google ads and my meta ads on Amazon and on my other channels but let's just focus on Amazon okay this is this question is even bigger and more true the more channels that you are add so if you have if you have like Mass retail brick and mortar then this question becomes even more important okay um so what the what are the what's the effect of my spend on those other channels and this is another question that almost nobody has the answer to right everybody knows it does something and you see it but like people are going like well I don't know is there some increase in spend and Olivia shared a fascinating metric she said on average again this is not necessarily your every brand but on average there is a 50% increase in revenue on your Amazon business from your meta spend okay roughly 50% it was like 53 or something like that but roughly 50% okay which means for every dollar that meta reports in Shopify okay there's a there's additionally 50 cents in Amazon that's a lot 50% more value than you think she says for YouTube ads that number doubles it goes to 100% basically okay again it was like 97 or 99 or something but again same idea right around 100% for every incremental dollar That these channels that YouTube produces in your D Toc brand there's an additional Dollar in Amazon and I should say that re re that for meta as well for every incremental dollar aside from what it reports in platform okay for every incremental dollar you produce in your Shopify business there's another dollar on your um or another 50 cents for meta on your Amazon business okay so you get the idea right 50 cents from meta a dollar from YouTube which is a huge impact on your Amazon business okay so how do we think about that because of it now that is a starting Place average that is extremely helpful to begin to build some hypothesis off of for your business so in light of that if YouTube is drastically Under reporting the revenue that it actually produc is if there's way bigger halo effect than most people are thinking about what am I going to do about that okay um and I'm going to tell you uh exactly exactly what I'm going to do and what I'm doing with my clients okay so number one okay does this mean you should start going and throwing money into YouTube advertising because it's way more incremental than what's reported in platform and my answer to that question is no um I I've thought about this a bunch in the last couple days since talking to Olivia and and I I think there is a crucial thing thing she said that is really easy to lose sight of all right and it is that whatever that average number actually is first of all there is a range of outcomes and I'm actually trying to get some clarification from her in fact by the time this is published I may have that clarification and may have published it um but if that is true if that's an average I'm going to probably if I'm already running YouTube ads I'm probably already going to adjust in my mind the number up the impact up but I'm also not going to do that without having something really important which is creative testing budget I think the mistake here potentially for Brands is to go throw money at YouTube without any real way of measuring the impact and without any real way um of of thinking about like creative optimization because the truth is like just like any other channel YouTube is going to have its own creative requirements and its own creative needs and it is important in fact that that you can think through what kind of creative approach is actually going to matter and probably even burn some money on that question because if you can't if you can't do that then you're going to have uh a real chance of wasting a lot of money on an average number that doesn't necessarily work out okay so what what I'm going to do with my Brands is say okay when if we're in a cash position to make a larger investment if we're at a spot where we can think about it then I'm going to think about it and I'm gonna first ask that question do I have some budget to lose on this okay that's the first question I'm GNA ask do I actually have budget to lose is it is it okay including some production budget because I'm going to probably produce ads slightly differently than I am on my meta ads and if I do if I have the ability to start spending that money um then I'm going to then I'm going to start to do it and I'm going to start to measure and the way I'm going to measure if I cannot afford incrementality testing software is pretty simple I'm just going to measure against the bank account outcomes if landing pages are any part of your advertising strategy right now or if they are about to be if you're serious about scaling your ads with landing pages you've got to look into format if you haven't done it yet format is simply the most robust best performing uh easiest to use at real scale landing page builder that I know of there's a lot of things on the performance level that I love about forat the way that the enhanced pdps that are connected to each landing page are built right into the landing page in ways that are really fast really seamless experience for customers the pages load really fast but beyond that the ability to spin out Landers really quickly uh to spin out custom Landers really quickly so you can connect Landers pdps even incart upsells directly to different ads so if you have different ads promoting different aspects of your products you can sort of uh tilt each Lander in different ways towards the really specific value proposition that you are advertising you can do that at a lot of scale extremely fast and then measurement is also extremely easy like if subscription is any part of what you're doing you can see the percentage of uh of customers who take your subscription offer versus your non-subscription offer really easily in the measurement you can measure AB test extremely easy in their Builder and the the sum total of the whole thing is that you can end up having landing pages be a highly efficient part of your strategy instead of a highly friction filled part of your strategy which in my experience is one of the main reasons people don't use Landers uh as often as they should on top of that Vermont is building and currently uh has but is building all the all the time uh AI more deeply into the software so that you can actually uh spit out copy for your products really quickly and easily if you're doing advertorial style content for example you can find easy ways to to build that so there's another point of friction reduce it's just really robust really awesome stuff um the one client that I've used it with for me has increased their spend by 50% I'm exploring with other clients all the time as soon as they're ready to start making landing pages a more serious part of their strategy uh so I could say a lot more about this but I love for go to formont commerce.com give it a look at least get your eyes on it see if it's right for you formont commerce.com it's really really awesome and this is a really important point I think at this stage of business I I think that the simple thing to do here is to just watch and see does my p&l work and does my am work and those are the two metrics I'm going to use so am new customer Revenue over total ad spend okay let's say I have a brand that needs a two to one so they get $2 in new customer revenue for every one total dollar of AD spend roll up against every channel all right if I suddenly increase my ad spend on YouTube and add let's call it 50 Grand in a month of spend okay just make up a round number all right uh 5050 Grand a month and spend and suddenly additional two meta there is another 100 Grand in new customer revenue and if I have some historic sense of the relationship between meta's reported revenue and my new customer Revenue then I can see the impact or not on the business right so I need to see an addition $100,000 in new customer Revenue to be at that same two to one um while while also um uh being careful about the fact that I'm spending on other channels at the same time so I'm just watching the revenue impact that's the first thing I'm going to do and then the second thing I'm going to do at the same time is watch my total p&l impact so this is this is where like you might generate some revenue from returning customers or or other things like that and so I'm just going to look at my total ad spend and forecast out okay if I make this investment if I spend 50 Grand on YouTube in this next month if I do that here is what my p&l needs to look like for that to be a worthwhile investment for me and that again is a crucial point and the reason it's crucial is that as long as at the end of the day your business is growing and you're hitting profit targets at the level of p&l and you have the cash to support it then ultimately your investment worked and that an unsatisfying answer for a lot of people because it's not directly analytical and down to the channel enough but that's the way that I would think about this so in stages it would be like okay number one is it okay if I lose some money here so like I'm not going to do this as a magical Channel diversification thing okay this is the this is like the real mistake a lot of Brands can make they could go I need to diversify channels because meta isn't working and meta isn't working that way well therefore I'm going to go over to this other channel instead stop don't do that if meta isn't working fix meta spend your time on meta first do not diversify away from meta when it's working poorly diversify it from away from meta when it's working well when you have messaging that you know works you can repackage into a different Channel when you're generating profit Etc but the meta machine and the profit in the business needs to work now and now YouTube now there's some evidence some databack evidence from 190 incrementality studies that says okay this definitely can work for D Toc and so I can go test this but I'm not going to go do it unless I have the position to do it and then when I when I first do it if I'm not ready to go invest in serious incrementality software maybe that's a little ahead of me still then I'm going to say okay the bet I'm going to make is I'm going to make some I'm going to make I'm going to put some spend onto YouTube I'm going to measure at the level of new customer Revenue am and p&l and if those two things work out that will really be good okay so that's the way I'm going to approach this from Brand to Brand I'm gonna assess their situation assess their financial situation assess their appetite for risk assess their goals think about it in those ways and I'm not going to do it for Brands where meta is struggling okay thankfully none of my brands have meta that's really struggling right now you know various levels of performance relative to forecast but nobody's like really struggling and and so that's the that's the issue okay all right um and then secondly secondly I'm going to prioritize brands with Omni Channel distribution and this is I think a really important Point too one of the implications for me of the idea that YouTube creates a massive halo effect is that brands that are set up to capture Demand on a channel that is more view based um that if you can capture demand in more places um then it can be really good and and so so what I mean is like if you're running click-based advertising like meta right where it's like click to the site and um and and then immediately go by based off a landing page it's tightly built or what PDP it's tightly built whatever and so there's like there's a reason to like click on the ad and then go by right now the more that's the case the more that I'm going to focus on the d2c side but for YouTube right like another thing we talked about was that some 60 60 some odd per of YouTube videos are watched on TVs if that's the case and you have to measure based off of not click basis but more of a view basis and there really is incremental um value based off of that okay if that's the case it makes more sense to me that you would want to be able to capture that demand because now you're not getting somebody to click and go to a specific place now you're sort of motivating an action and then the person can think about where they want to go purchase and and that means you know maybe they're going to go purchase again on an alternative online retailer um specifically on Amazon if you have some presence there that's a place where sort of is the most obvious place somebody would go go pick and then if again if you have a big brick and mortar presence I'm going to I'm going to care even more about that because now I've had what are clearly high quality Impressions that make an impact on customers judging by all the incrementality scores okay um and if that's the case then I'm going to think about so I I think you see what I'm saying right if there's more places to capture the value of the spend it's more likely to me that my YouTube spend is going to pay off it sort of der risks the investment a little bit and if that's the case then I'm more willing to spend there so I've already started a conversation with one of my clients about wait a minute we're seeing the meta imp impact the meta spend impact on our Amazon Channel um okay on our Amazon business we've we've had a recent spend increase okay um in fact I'm gonna uh I don't I don't mind saying this this is Chris creser and adapt Naturals who I I don't know if his episode will be out by the time this one is out I'm going to try and get this one out probably right after my Olivia episode but go check out that episode we talk in detail about the growth of his spend he's had a bunch of spend growth um recently if if it's not out yet subscribe to my channel which you should do either way okay um you could go check uh the link right now stop what you're doing subscribe to this um so that you don't miss out on this and by the way I'm going to have Olivia back at some point for sure we're going do all kinds of different things chop up that data more like I'm excited about it it's not agreed timelines yet but I just promise we're going to do that at some point because it was a great conversation so subscribe wherever you're watching or listening okay um but uh but for Chris crer and adap Naturals I've already reached out to him and said hey we're seeing Amazon growth on our business based on an increase in metas spend recently now maybe we do want to think about a YouTube investment now I don't know what we're going to do about that I don't know if we're going to if we're going to spot where it makes sense yet when I you know I talk in that episode with Chris I've already had that conversation about how meticulous we are about cash planning if some cash opens up and we can think about that um and you know we can go look at that cash forecast and say okay Now's the Time to make that investment then yeah then I think it would make sense for us to consider some additional YouTube investment okay but um but we're gonna we're going to watch and see that so for my brands that have more of an omni Channel presence I'm going to move more and more um of my thinking to um how do I move towards YouTube a little more more aggressively okay again it just der risks it a little so again you add that to what I was saying before measure it on the p&l do all those things and you see what happens all right um in all of that there's this question like I said which is do I have enough budget to do it I'm not going to do it to try to save my business or anything like that I'm going to do it with a brand that's already doing well and wants to expand okay if you're running ads on multiple channels you can handle the install of your pixels with a One-Stop shop replacement for Google tag manager from Billy that's b. a uh Billy is a very easy very fast way to get 100% server side tracking uh for every channel that you are using like within a few clicks without uh any help from a developer really at all it's extremely easy to set up there's all kinds of great features to make the most robust tracking available for you and your sites uh billy. is what I've used for my clients for a long time give it a give it a try for yours as well again 100% server side tracking which helps by the way with lightning fast page load times which is really nice for your brands instead of having browser events as well at the same time as Cappy um specifically if you're running um Facebook ads uh and you have the the traditional Shopify installation you should be testing Billy against your traditional Shopify meta ads integration test it side by side go try it out for yourself see if you get better events manager reporting better event match quality and better performance down to the level of Rass in your ads just take the same ads split them out and see what happens if you run them with Billy versus your current pixel setup it's that simple that's what I've done for my brand is what you should do for your b. to get started with Billy today so again the more channels that a brand has the more aggressive I'm going to be um I'm going to measure the impact of forecast and actuals there's another really highly specific thing that I'm going to do after that episode and that is that I'm going to unreservedly embrace demand gen campaigns this really stuck out to me in my conversation with Olivia which was that demand gen more if you know Google ads well you know they're moving away from video action campaigns and YouTube to demand demand gen campaigns um if that's the okay then I'm going to do that some the reason it's worth saying this is because advertisers sometimes get annoyed when there are new versions of product ad products that they're used to right this has certainly been the case with pmax where it was like standard shopping smart shopping then pmax and pmax is this kind of like annoying mess in Google where nobody can tell what's happening and nobody can tell if it's doing anything and the incrementality scores are all over the place and blah blah blah okay if that's the case then it's annoying well what what Olivia was showing right is that demand gen campaigns have performed really well and so to me that's like that's I think a really good indicator and so with my brands that are that are testing YouTube shorts now already and I've already got some of them doing that and you know where where Google's already going to move us eventually towards demand gen campaigns I'm just going to do that with a lot less hesitation than I had otherwise you know there's sometimes when you're running media buying or when you're running ad channels and you sort of like move over to the new thing like gritting your teeth you just do it at the last second that you have to right I'm kind of like this with ASC on meta ads I just like I've tested it a million times it doesn't seem to help anything I don't like working with it um compared to my sort of CBO broad setup it doesn't add anything and so so I I don't really run ASC someday they'll probably switch me to 100% ASC and I'll just have to deal with it when the time comes but for now um I'm I'm not doing it with demand gen I'm not doing that with demand gen my mentality is go Embrace demand genen it can work okay enough about that the last thing I want to talk about is creative strategy a little bit and how I'm thinking about this from the perspective of creative if I have to develop new creative for YouTube ads um because this is a channel that is worth my investment and worth my time um I want to think about the way that I would do that and I would probably do it in two stages the first thing I would say is at the end of the day um you know the beauty of running meta ads if you're running video on meta that is working and that is effectively converting customers there's something that you now know for sure okay and the thing you now know for sure is that as long as the delivery can be done efficiently as long as the the machine can converse and optimize well enough basically you have a message that works right your message converts customers your message is compelling to customers so what I'm going to think about when I go to new channel is how do I repackage that same message in a way that's most native Andor effective to this channel so with YouTube for example like one of the things again that Olivia one of the things that Olivia and I talked about that I think is important is is just the notion that uh that maybe YouTube requires well first of all it certainly requires horizontal video instead of vertical video okay and so there there's like an immediate repackaging that you need to do if you're meta first and again that's why shorts is compelling is because you can take vertical video and put it right there but it also requires something else and the other thing it requires is potentially maybe a little bit more production value um again I talked to Jack Rubin about this it doesn't seem like you need to go like full insane beautiful very super expensive shoot that kind of level of beautiful but I think there is something to be said where it it probably isn't the like traditional like sort of you know um very lowy kind of ads that um that you might think of with meta I think you probably need to have a little more to it than that most likely I don't know I'm I'm not super deep here I'm hoping to actually bring on somebody to talk about YouTube creative strategy a little more experienced here um so again subscribe because um I'm in some conversations to try to make that happen this is one of my immediate questions but the first thing I'm going to think about is how do I repackage my messaging because the message if the messaging works you've solved a lot of the problem okay um and so now you just need to go get that message delivered to somebody else and that's the kind of lens I'm going to view things through um right away at the level of creative uh so yeah so that's kind of the core thing for me is at the creative level how how are how is your messaging working are you targeting basically the same customer if so how do you make sure you repackage that in a way that um that reaches them but the messaging ought to be the same you may need to retell the story in some new ways right you need to restate the message in some different different ways you may have some different things to play with because YouTube videos are unskippable at least in some placements and so maybe you have a little longer that you can use to get to the point you could do more traditional commercial style potentially there's all kinds of things like that where you know where there's like a reveal at the end um there's you know whereas in meta you got to really put put information up front usually um there's a lot of things like that but that's the core thing that I'm thinking about from the creative level is I can I can do this at the level of product think about unit economics the same way I would think about high high margin High LTV products the same way I would on other channels repackage that message and put it in a new channel so that's what I'm doing right now is thinking through those things trying to understand as best as possible what the opport is on YouTube um based on that conversation I would love to hear if you listened to Olivia or if you watch that episode and you have specific takeaways please tell me what yours are I want to know them I want to know if you're putting that into action any particular ways maybe you're just letting it rip because you heard uh you know 70% under Under reporting on YouTube and that's that you know I don't know um if that's the case please let me know I would love to hear from you podcast at ajg.com is the place to do it or do it publicly on um X would be the best place at Andrew J Ferris or you can do it on LinkedIn where I'm trying to get a little more involved thanks so much for watching or listening don't forget to subscribe wherever you're doing that you will uh like if you like this episode you'll like most of my content it's very similar to a lot of what I'm putting out about growth and how to build your DTC business for profitable growth over time uh with marketing tactics and strategies to do it so subscribe wherever you're doing that um please again as I said reach out to me at podcast aaf.com and go to AJF growth.com for everything I'm doing including to sign up for my newsletter goes out once a week very tactical tips about um how to actually Implement things things that I'm talking about and where I'm implementing them in the businesses I'm working with uh and of course follow up with firmat forat commerce.com and Billy b y. a uh to go follow up with both those great sponsors of mine um thanks so much I will see you next time [Music]