From Stalled Growth to Record Profit: A Deep Dive transcript

I just had a client have their best nonh holiday month ever. And it happened remarkably on the back end of actually stalled out growth. And so they went from stalled out growth, even hurting in some profit to having their best month that wasn't a holiday ever. And it happened in a way that I think fits into a narrative into a into a timeline that is really familiar in e-commerce. You're just sort of stuck. You can't seem to break through the ceiling that you're at.

And what do you do when that happens? It's not that everything is a disaster. It's not that everything is wrong. It's just you're just kind of stuck. So, how do you handle a business that's in that place? What do you do about it? I'm going to break down for you exactly what this business did. And I'm actually going to show you the percentages of their spend on different campaign types. I've got a lot of data from this episode, sort of a deep dive case study on a recent win, and I want to show it to you.

I think this will be really relatable for a lot of brands who are in a really tough spot, and I think it'll help you a lot. Let's get into it. All right, let me set some context for this episode. So, um, this is a brand that was growing. It was growing really, really well, seeing kind of really massive earlier stage growth while they're in the seven figures and all that. And, um, by the way, I'm going to quote some numbers here and all of the percentages are true, but I have actually anonymized them a little extra.

So, um, but I'll give you a general sense of where the business is at just to because they're not numbers that I can necessarily share. So, um, so this brand was growing, um, uh, for a long time. they were doing really well and having really big monster growth kind of early stage business numbers and they sought to keep that going last year in particular. Last year this brand um p pushed forward with a bunch of creative uh diversity and volume because that is what people like me were saying to do.

I mean AJF Growth was producing a ton of creative ourselves for this client. Uh we're launching all of it in manual bids, all the stuff that I normally talk about. They also were employing other creative agencies to work on this as well. And so we were just launching a ton of creative, putting a whole bunch of money into that. We were also scaling up OPEX in a few other ways, bringing on some different folks to try to help out solve some different problems.

Um, spending money all in the in the with the plan of generating a really big Q4 in particular. Uh, because this is just, you know, like a lot of brands in e-commerce is a brand that uh had high expectations for Q4. Um and and so there's a particular bet being made around holiday impact and gearing everything up for that reinvesting profits to to generate a really big Q4. And the problem is it didn't really work. Um the Q Q4 uh was up year-over-year in revenue but not in profit.

In fact, it was not up that much in revenue relatively speaking. Uh certainly relative to the investment. Growth was sort of stalled out. And in fact, we got kind of beat up on some unit economic things that we didn't see coming. And you put that all together and it was a really disappointing time. And it turned from an exciting kind of ramp up time to being stuck. And and I think there was two things that were happening and this is I think the really common scenario that a lot of brands get into.

Uh I've seen this a lot of times. Okay. So first of all there was the moment itself but the the the truth is whatever happened in that moment the business wasn't existentially threatened. This is a smart operator who knew how to make sure that he wasn't just going to like full-on run out of cash. He um he has had run at a high margin in the past. So he knew what he was doing. Okay. Um and and as he was doing that, he uh he we did have a bad Q4 for sure, but also it just it wasn't so bad that it looked like it was going to kill the business.

So in some ways, I think the the greater challenge in the business was that it sort of felt like we had done all the right things that you're supposed to do and yet we were still stalled. And so then it became this question of like well how do we make this business work in the same way like what do we do? How do we how do we deal with the fact that the that growth had stalled out? And I think this is the most important thing that we did and and by the way this all was happening this conversation was happening also as tariff conversation was ramping up and um and you know the tariff numbers were getting really crazy there for a little bit.

So there was just all of these things threatening the business um between stalled growth and previous unprofitability and whatever else. As that conversation was happening, uh the place that we sort of came to was what if we just sort of accept the position that we are in and instead of trying to force the growth doing all these things that we were trying to do, what if instead of doing that, what if we just accepted it and tried to run this business as profitably as possible and think differently about how we spend our money uh than we did before so that we could just uh sort of take the profit while we look at some other And so what I want to show you is what happened when we did that.

We became relentlessly focused on profitability. And I'm going to break down for you exactly what happened in the midst of that because I think it's really instructive. So um so I'm going to I'm going to share my screen. Now if you're listening to this and not watching that's okay. Um you should still be able to follow along just fine. But uh but if you are uh if if you do have a screen nearby, it may help you. I have a few slides to uh to help you kind of view this.

So, I'm going to share that now. Okay. So, the first thing I want you to see as I walk through all this chart is that year-over-year we spent less money during this month. So, we drove uh I'll just tell you like a 15%ish total revenue growth year-over-year because that's the baseline. We're going to talk about profitability in a little bit, but 15% total revenue growth. So, it's not like a monster year-over-year growth.

Although I should say that uh I know from um some of the public data that CTC posts and um and Steve Recook posts uh that that uh that was definitely counter to the trend. Lots of people were were going backwards year-over-year. So we felt really really good about that. So we had uh modest growth 15% growth and we did that uh while uh being much more efficient. This is the first thing you see is our spend, okay, was down 14% year-over-year and yet our AMER was up uh was up 20%.

Okay, so um went from a 1.46 to a 1.89 year-over-year in AME and uh and spent 14% less money. Now, that is the first and crucial thing. We had made the decision because we wanted to really push profitability that we were going to try to grow less aggressively and instead we were going to take more upfront profit. And I do think that many brands need to think this way. Many brands ought to slow down their growth plans except that the um that the nine figure brands you hear about that have incredible growth all the time, you know, uh some of the stories you hear on on X and and elsewhere that they're actually outliers and that if you can grow a little more slowly and more profitably, you will build a better business.

And I love highlighting those stories. There's a lot to learn from those stories of outliers, but this is a moment where I think it's different and and uh and this was a much much more effective way to generate profitability in the business. and I don't really think it's going to hurt him very much in the long term. Okay. Um now that said, secondly, another critical part of this uh is that um at the same time, the new customer revenue actually went up.

Okay, so the new customer revenue, the spend did go down, but the new customer revenue went up. And that is a really remarkable thing. And I'm going to talk about why I think that is in a little bit. What I think is going on there, how did we do that? How do we deploy uh money that much more efficiently? Um but that is part of this here like part of the growth happened just because our spend was so much more efficiently and effectively managed.

So I'll get to that in a little bit. U but that's a critical part of this. Okay. And now another part of the reason and this is important to note that this brand did so much better year-over-year is that their returning customer revenue grew year-over-year. Okay. Um I have highlighted here 45,000. Again, that's actually an anonymized number. You should really look at the 23% increase in returning customer revenue year-over-year.

Why did that happen? Well, in part it happened because we spent so aggressively last year. And this is the probably the one caveat I want to bring up with the strategy that I'm mentioning here, which is that um for for the this brand, you know, that has a meaningful but not gigantic returning customer revenue percentage. Okay. Um you know, they're they the aggressive spend the year before is part of what created a high amount of returning customer revenue in this month.

And we did reap that and that won't last forever if we slow down spend. Now, like I said, in this particular month, we actually generated more new customer revenue than we did the year before. So, we're fine in that respect. And better allocating dollars really helped us um generate more volume. So, at least on the new customer side. So, that was no problem. But this is part of what happened here was this returning customer spend.

I'll also note that one thing we were doing this year that we were not doing the year before was spending on returning customer revenue um on ads. Now, it doesn't represent the entirety of this 23% increase in return on customer revenue year-over-year, but I do think retention campaigns are incremental. I see it over and over again. You should be spending some money on retention campaigns. Okay, so uh new customer spend was more efficient, generated more money, and then when you put that all together, of course, the result is that you get much more contribution margin.

And this is where it all really all comes together. 88% increase year-over-year in contribution margin for this business. This is a high margin business. So, um, so they did really well here. It's not an insanely high margin business, but it's a high margin business. So, they did really, really well on, um, on this year-over-year moment. Okay. 88% increase in CM is a really, really big increase. But that's what happens when you spend less, make a little bit more from new customers, and generate more return customer.

That's quite a combination of uh, of outcomes, and that's how you get a whole bunch more CM. So, that's the sort of situation that we found ourselves in. And what I want to do is break down how we accomplished that because I actually think our playbook here is fairly replicable for a lot of brands. And it's not the story you hear. Like I said, the story you hear a lot of the times is monster growth. You know, gigantic changes year-over-year.

This is actually more like modest growth, but much more profitable. And we don't tell the story very often of an 88% year-over-year profit increase or CM increase. Anyway, it's not true. 88% profit increase. But that's actually an incredible outcome for a brand. And if you just do that all the time, you can find ways to keep generating more and more contribution margin, then the actual topline revenue growth number matters a whole lot less.

So this brand can run really profitably. Okay. And so the next thing I want to show you before I get into some takeaways from this moment is that um is the is a couple of the media buying changes that happened in this account that I think were part of this at the level of tactics to help us be much more efficient with our spend. Okay, the first is I'm going to show you year-over-year the exact number of campaigns, adsets, ads um that were all live in the account and the percentage of our spend that was on Torass bidding and the percentage that was on bid caps.

Okay, there's $0 spent on automatic bidding in this ad account. Okay. Um but um but this brand, as you can see, had very similar numbers of campaigns. Went from eight in 2024 to 14 in 2025. So that's obviously a big difference, but adets almost exactly the same. 167 live adsets during that month of 2024. In 2025, it's 163. If you are serious about driving profitable ad traffic to your business, if you are serious about performance marketing, if you are serious about funnel optimization specifically for those brands out there that are running like tight funnels, advertorials, landing pages, where that's a really big part of your ad spend, you should be using Vermont. you should be using Vermont uh because it is the most robust landing page funnel building offer building software of which I'm aware.

It is not just a landing page software that layers on top of your website and then people click through it and go to your site and check out. It is a fully self-contained funnel where almost all of the behavior happens except for the actual Shopify cart itself. And that means that you can customize every step of the customer's journey. It's really built to make it so the performance marketers who are trying to um constantly improve upon the funnels that they are attaching to their ads, uh that those performance marketers can do what they need to do quickly and easily with their landing pages and offers and cart upsells and all those things without ever having to touch the website.

And that's the beauty of it. It's going to be a great experience for customers. It's the fastest loading software I've ever seen for websites probably of any kind, particularly for landing pages. Um and again, you can just do all kinds of cool stuff. Easy bundling, easy subscription options, easy measurement if you're running tests on things, all built within software, lots of AI integration to allow you to move really quickly with these sorts of things.

Really simply, if you are if you're serious about building, like I said, performancedriven funnels, if you're serious about taking uh content and making it custom to the ads that you are running so that when you run a new angle, you can actually message that angle all the way through the funnel, you should be using forat. You should at least get on a call, check it out, take it to the software, see for yourself just how good it is.

It's really slick. Go to form outcommerce.comf to give it a look today. And this is every ad that spent at least 1 cent in this in this month year-over-year, okay? Went from 827 to 1,09. Now, what that's 200 more ads that were live at some point during that time. What I will tell you is the distribution of the ads doesn't look that different in lots of ways. And in fact, this is actually this is just counting all ads that spent something.

And because we are spending more TROAS, it's actually maybe even less total live individual pieces of creative or it's really really close because uh the way we run our bid caps in TROAS is we run the exact same ads in both side by side. And this would count both of those ads as one ad or as two different ads, not as just one ad. So if I have the same ad, I launched at Bidcap, launches, just because I quickly grabbed all these ads um uh and just for this chart, they're basically the same.

So, the point is it wasn't a massive amount more ads year-over-year um despite some of the efforts we had made last year. Now, if you were to look at November and December last year, you would see way way more ads um relative to the year before and that didn't necessarily work out well. So, um so this maybe does tell you something about the limits of creative diversity and creative um volume because we were able to make these ads go a lot farther.

And I think this is where I've heard some people critique some approaches to manual bids and to volume ad creative. Uh may maybe it is the case that if you can have less ads spending better, more efficiently, you can actually um create more value. It fits a little bit of what I was saying uh in an episode I recently did uh about recent media buying changes, recent approaches to my to my media buying and and it's a subtle change, but the big thing here is much more emphasis on staying out of the learning phase and trying to consolidate ads into less adets.

As you can see, there's less adsets per campaign in this year year-over-year. So we can get more ads out of learning, let the machine learning work for us a little bit more, all while still running manual bids. So that's part of what's being reflected here. Less adsets per campaign for that reason. And again, probably a very similar number of actual active live ads, maybe even less year-over-year. Now, I don't think that always works.

And I'm going to tell you, we are still emphasizing at AJF Growth creative variety and volume. that hasn't changed for us at all. But continuing to find a structure that allows us to launch lots and lots of ads um without um pushing ads out of learning is is a critical part of this. I think I think that is really important. Okay. But the biggest change by far year-over-year you can see is that we spent a bunch more of our money on target rows ads versus bidcaps.

Now, I've published a lot of content about this. I talk about it a lot because I still think this is a slept on tactic, but it's really critical. uh what you can see year-over-year and I'll I'll repeat the numbers for those listening is that 50 57% of our ads in 2025 were spent on target rorowass ads versus in 2024 it was only 7% of our ads were being spent on target rorowass ads. So uh a huge huge change there from a very small minority of the account to the va v vast majority of the ad spend and that's that's total dollars spent by the way is what that is and that's a really big change and I think that's important.

I think it's really important in this business. I think it's important because it allowed us to go and reach um the all of the customers we could possibly reach with the same ads while targeting pretty high efficiency, high AOV uh along the way. And we see in this account all the things I normally see, lower AOV for my bidcapped ads, higher AOV for my TOS ads. If you don't understand this, like it's just so important to get this straight.

As a manual bid, the target ROS tool is a a variation of highest value bidding. The bid cap is a variation and and sort of a governor on um lowest co uh lowest cost bidding, right? Highest volume bidding. Okay. So, one's optimizing for the lowest CAC, that's bid caps. One's optimizing for the highest value customer, that's target rorowass. And so, when you when you um when we pushed more of the account this way, we just saw this increase in value and in efficiency.

And I think that really did make a very big difference. Another thing you can't see here actually that does go into the bakedin numbers is that we completely cut our branded Google ad spend year-over-year. Um, and that I think is a really fascinating thing. That wasn't a huge amount of money, but it was some money and we cut it and just have seen nothing uh but uh continued efficiency, especially this brand has no other retail channels and so there's just no reason we decided to run it.

We just cut it and didn't see any real difference in performance at all. So um so a little bit of additional CM from that as well. That's another big media buying change. We also have a little bit of money going towards some YouTube spend here. Again, not much in this. It's it's it's relatively immaterial, but it would be another change year-over-year that maybe um according to some incrementality tests did seem to contribute um something.

So, um so that's that's that. The other big difference here is that a huge amount more of our money got spent on a different set of products. This particular brand had three main products that were driving the account. I've just called them product one, product two, product three. And then I've got a fourth bucket here for promo ads. What I mean is just sort of ads with the brand name on it that during promotional periods during this month um you know had just a discount offer.

So it just said like brand name up to 40% off or whatever the offer was. Okay. Um and and just showed a showed a product photo. But but those are really sort of not product specific. Most of the ads in this account are product specific though. And again what you will see is a really big shift in this account uh to where in 2024 product one was 60% of the spend product two 16 product three five and the rest was promo ads.

Okay. In 30% of the spend went to product one. 52% of the spend went to product two. So year-over-year product two went from 16% of the spend to 52% of the spend. And that is by far the biggest difference. Product three also slightly more than doubled. But the big needle mover here was that product two spent a lot more. And I think this is directly connected to the last slide I showed you, which is the move to target rowass bidding because product two tends to have a lower AOV than product one.

So does product three, by the way. And when we added more T-RO S bidding, we were able to generate higher AOV versions of that of of our ad of our ads for those two products than we would if we would have just been on bid caps. And that's a critical point because when we were just on bid caps, we just couldn't get the CAC low enough to get real volume on product two and product three, despite that we had previous evidence, by the way, that product two was a really important product um in in the total mix here.

Okay. But when we switched to target rowass bidding, we were able to reach up the AOV spectrum just a little bit, like not a crazy amount more. It was maybe 15% more. And that allowed us to exist at a CAC that made sense as we were able to go up there, find customers who are really high converting on those products. And that ended up, I think, being a huge part of why we're able to drive so much more value uh uh volume on these couple of products.

We also had a couple of ads that just performed awesome. In this case, we we s had some ads that we sort of resurrected. They were never turned off, but we just um just sort of relaunched them, changed the thumbnail. That's something I mentioned in a recent episode. U because we just had the suspicion that there was probably more life in them. So, that seemed to help as well. That wasn't the overwhelming thing, but it definitely added some spend to the mix.

Um I again I mentioned in a recent episode that if you change the thumbnail of your ad, it forces Meta to reid it because uh remarkably an ad idea is saved in meta system at the thumbnail level. So, if you have an ad that you want to see if it'll work and it seems to have died out and you want to try it again, duplicate it, change the thumbnail, and see see what will happen. It will force Meta to enter it like like it's a fresh ad in the auction.

Okay? And so, we did that and we had one ad that that got some additional spend year-over-year. Again, not the overwhelming majority of it or anything like that, but it was a meaningful contributor. That seemed to help as well. Um, okay. So, that's all the things that we did, and I think that's really important to say. So we focused aggressively on contribution margin, focused aggressively on um living at a higher margin.

We got really serious about cutting a bunch of spend in a lot of different places. We embraced target rorowass ads and then we also uh focused some creative and focused some of our efforts really on on um on a different product set that was spending. Now I should say when I say we focused on that different product set, what I mean is Meta allocated spend towards a different product set. like we didn't really do a lot to to purposefully tilt things toward that different product.

Um there is one other change on that product by the way. Um and I'm going to get to that in a second because I want to walk through these four ways that we did it because there's some stuff that you can't see in this data. Okay. The first is that um we actually extended one of our promotional moments in a really effective and creative way. And this is totally um hats tip to the founder of this brand who made a brilliant move here.

Um but instead of um there was a shipping cut off for a specific for a specific timebased reason for a promotional moment and a lot of times right people are going to say like okay cut it off cut cut your ads when the shipping cut off goes away. But what he did instead was said what if we just ran the sale all the way through this date okay when when the cut off would be and uh and just took a few extra days of promotional volume and that really worked.

It wasn't a It wasn't again like the the same as like during the peak time run up to to this uh to this holiday, but it was to a um it was uh a meaningful amount of of spend that became additional to what we would have expected otherwise if we had just cut off our sale. In fact, in general, I would say this client has done something really smart, which is that um he's embraced promotionality as a um as a strategy. And this came directly out of a conversation that I had um with him and with McCoy Mkeley, the CMO at Portland Leatherg Goods, former guest on my show, really smart guy.

McCoy had said uh that at Portland Leather Goods, they just embrace promotionality between their sitewide offer and then a really consistent and regular rhythm at Portland of running sales. And they're just they're just comfortable with that. They don't think it's cannibalizing their full price purchases. They know their customers love sales. They're fine with it. The sales consistently drive a bunch of extra volume.

So, they just find places to consistently run them. And so this client said, "Why don't we just run more sales more often or extend them a little more often?" And he's not on sale every day all the time or anything like that, but he's finding ways to give customers offers that they care about. And for both new and returning customers is making a meaningful difference and driving volume. And so far, there is no evidence in this business that has cannibalized anything.

So, it's just a smart tactical decision that's attentive to the data at hand. And uh and again, he's got enough margin to do this kind of thing, and it is really, really good. Number two, increased the embrace of troas bidding. I already talked about that a whole bunch, but I do think that was a really major factor, the level of media buying tactics. Number three, consistent variable creative output. We did see plenty of different creative spending this year than what was happening last year.

And of course, we're always generating more creative. And I think there's always an element here where you just got to keep doing this all the time. We continue at AJF Growth to build a wide range of creative output and to build a system to create lots of highly variable ads. our system is getting better all the time assisted by AI etc. And that is a way to do this. And that is an important part of this whole total spend, right?

Um part of the way you generate um uh additional uh value for the business is by having more ads that can hit at your target. And even if you decide to spend spend uh less money in terms of spending um uh you know what your AM target is or what your rorowass target or whatever, so you spend that money more efficiently, having more ads that can spend out your target really does work and really does matter. So continuing to do that all the time is really important.

Certainly, if you were to look at the ads year-over-year, um you know, while it doesn't look like a huge difference in volume, there are different ads that are spending, right? There are more ads that are that are taking up some of that spend um uh or there there are different ads that are spending and that are and that are hitting above target than the year before. And I think more of them are hitting at that higher target than they were before.

Okay. And lastly, continued CRO and offer testing. And this is something that I just think is smart by this particular operator as well. Um, and I think this is part of what was happening with the reason product two generated more value leading into those moments. Um, he had tested specific prices. Uh, he he had done some price testing on a specific part of um, product two and and really thought about how he framed the price of product two.

And because he had done that price testing, he had found some spots where there seemed to be um, more profit per visitor on that product. He used Intelligjam. I've told you when I do my Intelligjam ad reads and there's one on this episode, right? Um I've told you that like uh there is just this beauty in the simplicity of being able to run price tests where you can see very clearly the profit per visit outcome and throughout the year this operator's been running regular tests and we've never had the mega smash hit test that led to some gigantic crazy breakthrough 50% increase in volume or whatever, right?

But over time, he's piled up little win after little win after little win, all statistically significant. And uh and certainly that is part of the reason why we're able to generate more volume at more profitability because you do that on top of all the other stuff we're doing and you win. This brand could not have done the price testing and offer testing that they have done consistently for as long as they have done it without the good folks and the beautiful software of Intellig.

I love Intelligjam. All of my clients literally use Intelligjs at some point um for something at this point right now. They're using it for simple split tests. They're using it for price testing, for offer testing. They're using it because they are operators who care about running profitable businesses. And they know that part of the way to do that is by making the most of every website session on their site. every time a customer is on their site learning a little bit more about how to present their products in a way that is best for the customer that's the right price for the customer uh with the right offer for the customer and intelligence is the tool to do that so whether it's simple split testing like some people are using it for or like the kind of stuff that I was talking about for this brand ongoing consistent price testing to answer questions about where they should be pricing their products um you can do that with intelligence all of it comes with uh not only simple easy to use software that does not require like a whole bunch of dev work or anything like that to get going on your site.

Just basically plugs right into Shopify. It's extremely easy. You can get like your first first test set up probably within 10 minutes of uh adding the software. It's really easy to use. On top of that, it measures everything by profit per visitor. This is the beauty of Intelligjam. ties into your product data in Shopify so that you don't just know like in you know conversion rate changes, revenue changes, whatever, but actually is the actual profit that is being driven by the split test you are running uh actually higher or lower which is a really big difference depending on what you're doing.

When you're running a sitewide offer, if you uh take a uh go from 10% off to 0% off, right, in in your email capture, you go from 10% off to up to 30% off. like it it makes a really big difference to know what's happen if you change your free shipping threshold. You need to know not just is it converting more customers, but is it actually generating more profit? And so Intelligj helps you do that. You know why it's great.

I've talked about it so much. You can get 20% off your first 3 months with my code ferris 20 fs 20. Go to intelligjs.io. Get that started today. The link's in the show notes. You should be using Intelligj if you're running an e-commerce business. Come on. And what I want you to see about this list more than anything else is that none of this stuff is like the thing that is uh some gigantic crazy lever. Okay? None of these are insane needle mover things.

What they are instead is doing a bunch of things right. And the simple little phrase I've thought about here is spend smarter not harder. Right? Spend smarter not harder. That's really what uh what we're talking about here is that it's a bunch of little wins. You extend the promotion a few extra days. You run your CRO tests throughout the year. You keep going with a good system for creative output. You embrace the best of media buying all the time like TRO alongside bidcaps as information comes out about that.

You know, we'll be testing in fact just launched a test on that is incremental attribution setting. If that works then maybe it makes our spend takes our spend and makes it go a little bit further. And you do these things over and over again and it allows you to run much more profitably. And the the beauty of that, right, the beauty of that is that um at at the end you have a business that even if it isn't achieving monster growth in terms of topline revenue, it is much more profitable year-over-year.

And that's actually where the value of the business comes in. But there's actually a second tier of value there. Okay. Um I want to talk about it in a second. The first thing I want to point out here is that um accepting the reality of the situation in the business was actually a critical part of going forward. And if you're in a spot where your business is sort of stalled, okay, and you can't seem to get anywhere, but you're not existentially threatened, right?

Then there is, I think, real value to saying, "What if I just assume that this is the reality of things?" And instead of thinking that I'm going to have some massive win that's going to overhaul everything for the day, especially at the tactical level, for the day-to-day tactical level, instead what if I just embrace excellence, embrace operational excellence all the way through the business, run a lean opex, keep hammering away at my unit economics, um spend my money with a profit first approach that's going to generate money on first purchase, especially if I don't have a monster LTV.

Okay? And if I do that, I can run a really, really profitable e-commerce business while doing something else. And this I think is this next point I think in some ways is the actual critical point here. Because what this operator is going to do from this situation where we had this great month is he's not just going to sit on all of that profit. He'll pocket some of it, of course, and that's great. Instead, he's going to think, how do I reinvest that money into the growth of my business in the best way possible?

And the the sort of lazy answer to that is you just spend more on ads. And that's fine. you can spend more on ads and it can work uh to to in its own ways, right? O over time. The problem is it's probably not the best way to actually generate the highest return on your money. In fact, if you were to look back at this particular business's history, by far the biggest moments of growth have happened at the level of product, introducing and overhauling product in ways that made it much more appealing to the customer.

And so what this brand can do, and we've had this conversation, is say, "Wait a minute, what if I do that same thing? What if I take this money and if I invest in something that's a much bigger approach, whether it's a product or something else that has a bigger chance to really swing things forward?" Because now, if you have a bunch of extra cash that you're sitting on, I mean, just take the take the 88% contribution margin swing I mentioned.

Let's just say you end up with $50,000 extra dollars at at this month. you're running profitably without that $50,000, but you get $50,000 additional to the profit that you already getting. You can sit on that $50,000 or you can say, "Man, that's a lot of money that I can invest into serious product development. I could actually hire somebody to do some product development for me. I could place some inventory orders and it's not the end of the world if I uh if I if that inventory doesn't come through." Like, you know, you could you could think about all kinds of different things and ways to invest a large amount of cash like that for your business.

And that's the critical uh takeaway here is that now this operator can say instead of trying and clawing to just desperately make it so that I I spend my way into growth and just expect that new another some piece of new creative is going to open the floodgates of ads right now. Look, AF growth is going to try and do that all the time. We're always going to try and generate creative. We're always going to try and generate that new winner.

We're always thinking about, you know, is there something we can do to have more winners faster or whatever. But the reality is for most businesses that isn't the day-to-day all the time happening. Okay? So you do that. It's part of the it's part of how you run an e-commerce business. But instead of expecting that to be the thing that drives you forward by by accepting this the situation in the business, running it as profitably and as lean as possible and then reallocating profit dollars from that moment into the things that are much more likely to create a large impact and a large outcome.

Now you have a much better chance of actually pushing the business back to you know 50% 100% growth whatever it is. Okay. And that I think is where it's looking. This particular operator is looking at things like is there a way to go serious with international? Maybe our the product maybe has some appeal internationally in ways that could be really interesting. Um there potentially would be some um some retail opportunities for this for this uh particular brand that that could be really interesting.

And so he's pursuing that and that takes some money up front. is looking at some licensing possibilities and some other product possibilities and thinking about okay are there ways that we could do make a larger investment in these ways that could could help this business go forward. So that's the way this business uh has played out. That's the way this business has worked and I think it's a really really um good way forward for more brands instead of trying to think how do I squee how do I tactics my way into the next growth moment right instead it's how do I manage excellently with a focus on profit and then do the things that are really going to push me forward and I think that's uh something more brands ought to think about if your brand is stalled that's what I would tell you maintain keep your head down on on excellent tactics keep doing the things that really matter there but then focus focus on profitability and see if you can push forward in bigger ways.

I bet there's more profit in your business than you think right now if you think this same way this operator did and that will allow you to think bigger and more exciting thoughts about what you can do to push your business forward. Subscribe to this podcast wherever you're watching or listening to it. That's what you can do if you liked this episode. You should also do the same for my newsletter. You can go to ajfgrowth.com to do that.

Uh, and uh, I think you will like both my uh, content ongoing on YouTube, Spotify, wherever you're listening to this, whatever. Uh, and on my newsletter if you like this episode, you really will. It's it's right in line with the kind of stuff that I'm trying to put out all the time and so you'll like it. So, do do that. Do that now. Subscribe. Maybe send it to a friend. It's going to help them, too. That would be a big help to me.

Uh, big thanks to my friends at Forat and Intellig. Huge fan of both of those uh, products. use them with my clients, including, as I mentioned in this episode, uh, Intelligjs for this particular brand. So, um, so definitely go check both of those out. The links are in the show notes for those. And, uh, I have a bunch of good episodes coming up. I'm still planning very soon to do an episode where I break down like exactly the financial details of the brand that I'm starting and why I'm starting it and sort of how I'm looking at that.

Uh, I've also got another episode with Alex Cooper coming up to talk about AI, ad creative. Uh, Alex is just great. I loved my last episode with him. So did you, by the way. People love that episode, so definitely don't want to miss that as well. Thanks so much for watching, for listening. You can find everything I'm doing at afgrowth.com. And if you want to work with me, by the way, you can head there as well. Fill out the intake form.

Uh it says there's a wait list right now. That's probably true by the time this goes live. Um but uh but that may be clearing up at some point here. So, reach out to me there. Thanks again. You know what to do. You know how to follow up to podcasts. I'll talk to you next time. [Music]