How To Solve The Biggest 4 Cost Cap Media Buying Challenges transcript

I manage millions of dollars of AD spend per year for my clients on meta ads where 99% literally 99% of the spend is on manual bids that's bid caps cost caps and Target row ass bidding I am a huge believer if you know any of my content in manual bids as the best way to maximize both volume and efficiency in an ad account and there's no better way to do it but there are also challenges it is difficult at times I'm aware of that and so in this video I'm going to give you four of the biggest challenges with running media spend on meta ads with manual bids and exactly what I do about it I'll give you the preview right now what happens when they break how do you line up optimization and outcome what do you do with promotional moments and why is it that you get so little spend on new creative sometimes that's what I'm going to go through right now I'm and going tell you how I deal with each one of them let's get into it all right overwhelmingly the biggest challenge with running bid Caps or or cost Caps or Target Roos campaign is that sometimes it seems like the uh actual outcome you get is not in line with the target you set okay and I have put a lot of content into this idea in the past um if you just look through my channel and search the word bidc cap you'll see a lot of different stuff about that or cost control uh you know there's just a ton of stuff about that if you like any of the content I'm giving you you just subscribe to my channel like you know if you are interested in manual bid media buying anything like that I got a ton of content on this okay but so I'm going to just assume for a second that you're basically doing things right quote unquote okay and and what I mean by that is that like there's nothing fundamentally broken at the level of your pixel you understand how to set your target relative to your unit economics all those things but there are still times when they seem to just not work I'll just give you like the simple example here like let's say you set a cost cap of $100 and you consistently get an actual cost per acquisition of $150 on your ads okay what do you do about that this is one of the top questions I get about manual bids if not the top question people go I don't understand it's I'm I'm telling meta that I want to get a certain outcome the promise of this tool the thing that makes manual bids so great is that meta only spends if it like quote unquote thinks it can get your desired outcome for you so it can get your ca Target it can reach your target row whatever and that's what I want like that that's obviously the best way to buy media it's so helpful because you can just set an efficiency Target let meta rip um and that is really great right and so it should simplify things but so much of the time there is this challenge what happens when the actual outcome you get is not in line with the target it happens with any kind of bidding method that you do now um there's so many things that I could say about this and I'm going to resist the temptation to go down a lot of rabbit Trails for example if you're running bid caps your actual CAC is going to come in under the bid cap that's not that's a feature not a bug um I'm going to assume in this that you've set everything up correctly like I said uh I also I'm going to assume that this is not in reference to some particular moment that's promotional moment or something like that like this is like an ongoing problem that happens so I'm thinking of like Evergreen ads here something just doesn't seem to be working for an ongoing way and I've heard this a lot okay so what do you do um okay when they break let's just assume all that happens okay and let's just use my example before if you getting a $150 CAC on a $100 cost cap and you really want a $100 Target there's a really really simple solution to this problem and I've used it many times in many accounts okay and it is to Simply adjust my cost cap relative to whatever consistent outcome I am getting okay so assuming that for example my actual CAC is one and a half times higher than my cost cap right so if I have a $100 cost cap I'm get $150 C that means the actual the actual performance is one and a half times higher than that then I will simply set my cost my cost cap at 2/3 of the price of that I actually want so in this case if I want a $100 C I would adjust my cost cap down to $67 now you have to keep an eye on this at some point there's all kinds of reasons this could happen at some point maybe meta like shifts this around and you eventually actually do start getting your actual CAC based on that and you have to go back up and meet it so you have to watch this closely okay there's also a Temptation here to behave in small samples like the actual first thing I would do in this case is probably just trust that meta knows better than I do if meta is not giving you your actual outcome in a short sample then it's just because because small samples are small samples right so like if you put a $100 cost cap and you get $150 CAC on three purchases that doesn't mean meta is broken that means weird things happen in sets of three um in fact small samples are larger than you think right so 50 purchases is still a relatively small sample for example okay so um so I'm gonna assume that you've gone through that stage right but this is like a persistent problem but even though that's actually probably the problem is that you're just not being patient enough with the reality of the outcome okay but if it is an ongoing problem I have seen this in accounts before where it is an ongoing problem okay The Simple Solution is to adjust the target relative to uh what it's actually giving you and if you do that this tool still basically works for what you want it to do right because let's say use my example earlier if you set a $67 C uh cost cap and you're getting a $100 outcome then it's doing what you want it's spending more and less at different times uh on each campaign it's giving you all of the outcomes that you want to have uh relative to the Target you just happen to have to put in a different number for the cost cap than the actual one this is still annoying in some ways don't get me wrong okay but it's still the right thing to do so just behave just adjust it like that and typically this happens when it happens it sort of happens at an account-wide consistent level so you could sort of set all of your cost caps like let's say you have cost caps on five different campaigns you could set them all this way okay uh and that that should work well so that's the number one thing I would do when they break the very simple solution to this is to do that and the other thing you can do here on this is just ask yourself the question is it better for me and for my business if I miss high or if I miss low or if I miss on the side of efficiency or if I miss on the side of volume and this is a different question for different businesses right higher LTV businesses might actually prefer to miss on the side of more volume than on efficiency and you know if you really need to make your money on first purchase if that's absolutely where your profitability is then you probably want to miss low you want to miss on the side of efficiency depends on your cash situation all those things you can do that and make the adjustment instead as well right so maybe to use my example earlier if you're like I actually really want to make sure I get the volume so maybe you set your target at $80 or something like that or if you're like I really want the efficiency maybe you set your target at 50 like yeah you know it it can really change based on those outcomes as well so that's the way I do it ask myself the question which side I'm going to miss on and then make an adjustment based off the actual outcome relative to the Target if you do that the tool could still work great okay number two lining up optimization and outcome this this is also could just be called being patient okay um and and what I mean here is uh it is very hard for people to get it in their heads most people are optimizing for 7-Day click or 7-Day click one day view okay that's that's what most people optimization settings are on the ads and then they go and start spending and three days into to a campaign spend or an ad spend they look at it and they go oh no I wanted a $100 CAC but I'm getting 150 you know to use that same example okay if that's happening for you it's very possible that all the only reason that's happening is uh again this is frustrating it's very possible the only reason it's happening is that you just haven't waited the full seven days yet and that there are more purchases that are going to come in in the optimization window that you have set and this gets all the more confusing if you have view conversions in your dashboard or in your optimization rather um if you do that I recommend just getting rid of those I think that they add basically nothing there's some argument that maybe they send more signal to meta I haven't seen that really play out um you could use engage view conversions maybe those those seem to be a better way of looking at it but uh but basically if you have view conversions in your optimization window that's going to only muddy the waters even more so what I recommend is in this case is that you just be patient you have to just know in your head if you're a media buyer that if you are optimizing for 7-Day click that you uh can't judge the performance of The Campaign until every day of spend has reached a 7-Day window okay and that also means that let's say you launch ads on Sunday okay and then uh you go all the way through Saturday now you got seven days from launch except that Those ads have also been spending on Monday Tuesday Wednesday Thursday Friday right um and so even though you are now have seven days since the first ad launched the way that Facebook meta reporting Works you're going to see all the purchases together and it's going to actually have six of your seven days of spend now are actually not in their full complete attribution window cycle okay so this is a patience problem where you just have to recognize that if you're if you're uh optimizing for seven-day click it takes seven days to see the results and I see this people get this wrong all the time all the time there's actually another version of this problem on the other side which is the one day click version of this if you're running one day click ads which I I use one day click fairly often um but if you're running ads on one day click then you also have to recognize that that's only telling you a little sliver of the true value of your ads so it's not quite the same problem but uh but if you're running one day click ads well it is possible that your ads are actually performing great first of all you're limiting the sample size to even smaller so recognize there's going to be more noise in a smaller sample size statistically speaking okay but secondly recognize that your ads are producing value Beyond day one but you're only reporting on day one so you just have to know that it's going longer than that your ads actually producing value Beyond day seven as well in fact they're even producing value Beyond day 28 uh even though that's the longest window that Facebook will show you but you still need to know that just in that you have to line up your expectation of the outcome with the optimization window you have set up okay so that's the point people will also do this where they have sday click and one day click in the same account but then they'll then they'll um hold them to the same standard but that doesn't make any sense because if you have six more days of attribution set up in the in the opiz window then of course the CAC is going to be lower on that than elsewhere so you need to know the difference between those two things it is time to leverage overseas talent in your business if you are not already doing it and my friends at more Staffing can do it more Staffing is one of my longest running sponsors and partners basically everything I touch at this point is in some way supported by more Staffing I love them they are fantastic and what more Staffing is and does is there a staffing agency in the Philippines to help connect you to incredible talent for your e-commerce business or your agency business in the Philippines they can fill a whole lot of positions and if you're thinking about uh Filipino Talent as $5 an hour virtual assistant you're missing out on the opportunity you're undervaluing the opportunity in a really big way you can look to like manager direct or even executive level hire some of the sharpest people I have worked with in e-commerce like and I mean this are are folks I've worked with in the Philippines who have staffed every part of e-commerce businesses and more Staffing can connect you to more people like that uh more Staffing does that while also guaranteeing you uh one year on every placement they that they bring you so if they bring you a a uh a new employee from the Philippines for your team and that person doesn't work out for more than a year because you know all hiring is hard and there occasionally that or misses they will replace that person for you with no additional recruiting fee um I just love them they're really great people that are going to help you build your business and you really should be thinking that way because you can hire at the top of the market in the Philippines for much less than it would cost you to hire in the middle and bottom even bottom of the market in the US and so that there's a good opportunity for absolutely everybody um involved in the process uh to get great talent connected to Great businesses in the US go to Mor staffing.com coaf to get started with them today tell them I sent you uh you will love working with them like I said literally I mean this every part of basically what I touch in e-commerce right now is tied in in some ways with more Staffing and so you're going to love working with them too more staffing.com um if you go to my website I'll send you a unit economics calculator I use to do this all the time I also did a video recently uh called the details of managing cost caps day-to-day or something like that I think that's right um if you go to that if you go to that video I I walk through how I use my unit economics calculator to do this with differences between one day and seven-day click I'll send you that for free AJF growth.com sign up for my email list send you that for free I'm not going to spam you so um so you can go check that out and that can help you think through where to set Targets on one day click 7day click and with a recognition of 28 day click as well how to how to do that relative to unit economics okay so go check that out all right um okay so uh that's number two lining up optimization and outcome that's a patience issue okay number three promotional moments this is really hard okay this is the hardest thing I've seen I think I've made the most progress on this I've ever seen so if you've run manual bids before during and after promotional moments you know what this can be like we just you know I'm recording this video and we just had Black Friday like a month ago look like it's just really hard when the value of a click changes drastically from day one day to the next because if you think about what powers manual bids okay um it is included one of the things in there is an expected conversion rate okay and meta has an expected conversion rate for your ads and that is what tells meta um okay here's how much you can spend at a time because this is uh and and reach the outcome that you're trying to get when you run manual bids so if for example in your expected conversion rate if you uh are ex if meta is you know for 30 days in a row you're getting let's just call it a 3% conversion rate okay we'll call a 2% conversion rate I'm going to make the math easier on myself for a 2% conversion rate okay you've got that for 30 days in a row then suddenly you launch a sale or it's Black Friday or there's some big cultural Tailwind or whatever and suddenly every click is worth twice as much to you okay and now you have a 4% conversion rate on your ads manual bids are not going to know that right away they're not so on day one of your sale what's very likely to happen is that your ads will perform much more efficiently and where usually what manual bids are so good at is moving up and down with the available volume relative to your target cost on day one of a sale manual bids will not scale up fast enough right if you've run manual bids for a while you've experienced this like you know you're you're running at a one: one let's say that's your in platform Target okay on sday gler right uh and so you're running your one on a on a on a one to one row ass okay and suddenly your ads uh you know are running at let's call it a one and a half to one and you're like dang it I want more volume I a one to one where I win you know I whatever right I'm just making those numbers up for for whatever businesses okay so um so you're running at a one to one and suddenly you're producing one and a half and now you're frustrated because you didn't go get the volume you can now look if your sales running for long enough meta is going to adjust to that over time you will start spending more probably spend more on that first day of that sale than it would if you were um if you were still getting just a one to one like you'll get some additional volume but it will take meta some time to realize quote unquote that the new conversion rate is real to update its expectation of the expected conversion rate and therefore you will probably underspend the moment now I've talked about this in a few other episodes I'm not going to go into the ton of details here but the simple thing to do here that I think well actually let's talk about the back end of this first okay I'll TR tell you how I'm managing this on the back end of this you have the opposite problem and this is actually usually the bigger problem most people are normally fine with a little extra efficiency on day one of a sale but what happens when your sale ends and your conversion rate goes back okay so I you know I just ran some sales for Black Friday for brands that were that were ran for 20 days or something like that you know by day three or whatever meta is locked in to the value of a click on your campaigns and it's just kind of moving up and down in spend for me which is great makes running a sale really easy it makes me makes it so that I can capture the top end of the volume that I can get much easier than if I had been trying to do this myself like I love this this is why manual bids are so great one of the reasons why okay but then the sale ends and the next day my click is worth a lot less money what is meta going to do it's going to keep spending for a little while like your click is worth a lot of money okay even know your click is now worth less money and so this is a challenge because this is where you actually start burning money you know you're let's say again you have a one to one Blended row ass Target in your account this is where you'll like spend you'll have multiple days at like a 0. five or something because and you'll and you and you'll overspend the moment and suddenly like 10 thousand dollars is just wasted in your business okay so what do you do about those things for a long time what I've done about those things is proactively adjust my bids towards the outcome that I want so what I mean is I lower the bid on the first day of a sale and I raise the bid a whole Bunch on the day after a sale okay but um and I'm still doing I'm potentially doing that some okay uh or or flip that you get the idea right I I I tell meta to get me more volume early in the sale um than it's actually going to on its own or vice versa I tell more efficiency after the sale okay you get the idea uh so I proactively do that I basically I basically put my thumb on the scale okay um of my bids to tell meta um what I wanted to do okay but I've come to do something else with this now as well which is that I manage these moments specifically and I don't manage many moments like this but I manage these specific moments with my budget a lot more almost like a traditional Auto bid approach um and especially after a sale I found this to be really helpful what I do is I'm now after sale I'll just leave my bids where they are but I will proactively really drop my budget usually I never want to reach my total budget if I'm running manual bids because let's say again let's use my example earlier if I have a one to one row ass Target and I have a $10,000 a day budget let's say and uh on a campaign if I spend all $10,000 of that money then that means there was some additional volume available meta spent the entirety of the budget there's some additional volume available at my Target and I want all the volume I can get at my target or I want to adjust my target to get more efficiency but if you hit your budget then that means that there was either more volume or more efficiency to get um so take one of those and adjust it okay so in General that's again the beauty of this you want the bid to be the governor of your spend not the budget but after sale what I've started to do is I basically know especially with clients I've worked with for a while basically know how much money I expect them to be able to spend after a sale right I have one uh you know holiday oriented client where they came out of their holiday sales and all that and I just know they're going to go from let's call it 50 Grand a day and spend to like six grand a day or something you know like a whole lot less money okay so what do I do I just drastically drop my budgets so they're going to get to six grand and I uh per day and until I am producing the outcome that I want fairly consistently at that I'm just not going to raise the budgets and let the manual bids go I'm going to be willing at that point to lose a little bit of upside on the way manual bids work in order to make sure that I don't just light money on fire for a non- sale moment afterwards and so I'm using budget more proactively to set my outcomes than before and I'll do the same thing during a sale um in that case I you do have to actually adjust the bid itself because you want to tell meta spend more but instead of giving meta like a gigantic budget and saying spend spend spend spend spend I'll set the budget to my day one expectations of the sale and make sure I'm getting the outcome I want before I really uncork the budget and let it go okay um because because at that point I want the the budget to be the governor a lot of times I forecasted a daily spend in these moments specifically especially if they're big and important moments I have some expectation for how much spend I can get through this is harder in the earlier stages of a business because you don't have historic data on this but the longer you've had a business the more you know about how much you think you'll be able to spend on most sales okay and so um or again product releases whatever and so you you basically uh can use budget more proactively and while yes that may limit your upside a little in some cases or potentially produce some downside problems on day one of a sale if you generally have a sense of of a forecast for those moments you can generally be in a good space to where you don't miss by so much and and you can carry on and that's what you really want to avoid you want to avoid catastrophic spends right drastically underspending a moment where you could create a lot more volume or drastically overspending and wasting money um on ads that you probably uh just earned in the sale that you ran before okay so that's the way I do it use budget proactively um simple simple two-step here create a daily forecast for the for the especially the early days of a sale and then the time right after a sale um and uh proactively change your budget so that you can hit those daily forecasts and uh and then when you do that you should be in good shape okay all right that's the third one okay number four and this is the thing that frustrates everybody but me okay but uh everybody else all right and that is when you launch new creative with manual bids if you if you just again search my channel for the words creative testing you'll see I've put out a bunch of content on how I do creative testing with manual bids okay um but uh but if you launch manual bids okay with new creative uh excuse me if you launch a new creative with manual bids which is what I highly suggest okay there is going to be a lot of creative you launch that is simply not going to spend very much money ever and it's incredibly frustrating okay it's incredibly frustrating because you'll sit there and go we just made this new creative it has spent $5 why isn't Facebook spending more money on it to test it how could Facebook possibly know at $5 doll of spend if this is going to be good creative or not now I have argued elsewhere a number of things okay I have argued that um this is one of the greatest features of manual bids what it means is that meta is proactively suppressing ad spend of yours that is very unlikely to produce the out that you want that means you are wasting less money it is so great there are hundreds of thousands of dollars lit on fire every month every year and add accounts online because people are wasting it on quote unquote creative testing your creative testing method sucks it's not good it's wasting a bunch of money it is not scientific you don't even know people are making choices about what ads are winners and losers based on nothing it's a giant disaster so the fact that manual bids very often spend very little money on your ad account is a fantastic outcome it frees you up to do everything I say about creative all the time which is to produce a whole bunch of creative with very little risk of um overspending on distribution you can produce a bunch of creative because there's just so much less cost in distribution which means um which means you you can at the same time not have this risk involved with every new piece of creative that you spend which is that you're going to light a bunch of money on fire it doesn't go well it's great great great stuff but it's still frustrating I'm so excited to tell you about intellig gems which is one of those pieces of software that almost every e-commerce brand should really be using uh I have been working with them for a while for a bunch of different clients of mine using them for a really wide range of tests intellig gems is uh more than just cro software it's really about profit optimization profit maximization and they've built a tool that is incredibly robust for testing all kinds of stuff on your website to optimize for profit and so there's this simple stuff you can do like if you need a replacement for Google optimize where you you know sort of simple AB tests intelligence is a great tool for that I've seen Brands you know AB test pdps into the ground until they found the exact right one that works great that is an awesome use of the tool and I highly recommend starting there if you haven't done that already but there's so much more you can do besides that you can run full Shopify theme test like if thinking about a website switch over I recently watched a brand switch their whole website over uh to a new design and everything performed worse and they could have saved themselves a lot of headaches if they would have done a Shopify theme test in advance uh doing a full split test with intelligence you can do pricing tests this is magical like the I bet you one of the worst thought through decisions that makes the biggest impact in your business that is out there is the price of your product like people are so irrational about this they are so nervous to change things with intell GMS you can bring rationality and data to it you can literally split test the price of products on your site shipping thresholds is another area where there's all kinds of value to be gained and all of it can be tracked back not just to a conversion rate number or to a Revenue per click number but actually a profit number per click it's incredibly easy to use really fast to set up they've made the whole thing smooth go to intellig doio intel. to get started with that tell them I sent you it is really great software that pretty much honestly every e-commerce brand should be using if they're trying to optimize their website in any way I'm so happy to recommend them to you my clients use them you will love them too there are times when you put real time and effort into creative and it is extremely frustrating okay when you see it spend so little money and not know what's going on so what do I do about this how do you do what what do you do okay I do two things the first is uh we say three things the first is if somebody involved really really desperately wants to see how a piece of creative is going I will sometimes for their sake not for mine for their sake again put my thumb on the scale and adjust my bid up on new creative so that we they can see that when the more money is spent it is producing because what happens is somebody produces a new piece of creative they're excited about it they see a couple of purchases early on and then they go okay um this is probably a winner but meta is just not spending on it and so we go from the $50 it spent or whatever and I I will say okay I'm gonna I'm gonna add $20 to the bid cap and and we'll see we'll see what happens and and so now it spends $500 and inevitably I mean literally I mean this every time I've done this every time I've done this meta has been right the more it starts spending on it the worse it does and that money ended up being wasted but but look if somebody involved really wants to do that if the owner of the business really wants to do that if they really want to see how P creative works out and they just can't help but scratch the itch I will do that for them okay after that though besides again putting my thumb on the scale of the bid a little bit besides that I do two things number one I don't adjust it I let it do that because meta is telling me something about the potential performance and I don't want to lose the money I don't want to waste money on Creative that is not going to perform at my target uh it's just it's just an easy way to blow a bunch of money in an ad account and I don't want to do it uh I want to maximize profit in my business and therefore I don't want to spend money that is like that is um unless that money is likely to produce a positive return that just the same way that I wouldn't with like an employee who was not working out well or P of software that wasn't working out well I want to eliminate cost centers in my business so I so I assume that meta's machine learning meta algorithm is better at predicting the future than my brain and I have to remind myself of that sometimes right I have to like go have a little media buyer Mantra Okay and like you just do that but um but that is the first thing that I do the second thing I do is I try to ask myself the question what is why is it that I was excited about this creative but it didn't actually work with my customers okay and that I think is a helpful exercise because for some reason what it really means when that happens is that customers are not engaging seriously with your ads they're just not and so it is actually still feedback for you even if you don't get tons and tons of feedback on all kinds of spend it's telling you something especially if it's one of those ads that again you really are tempted to force spend to if it's spending $5 $3 a day whatever it is you get through 20 bucks to spend and it almost completely suppresses it I leave the ad on don't get me wrong because who knows things can change every once in a while an ad gets r comes back from the dead that I that I thought wasn't going to work out but it's extremely rare I mean meta is is even as gets more signal as it puts out 50 cents a dollar a day whatever on these ads which definitely happens occasionally sometimes it will happen but really really rarely does it does it come back from the dead so I leave the ad on but I try to ask myself the question as honestly as possible is this ad just less engaging than I thought is the video worse than I thought is the imagery worse than I thought is the hook worse than I thought whatever what why didn't this resonate use it as a moment to come to grips with and then go and launch your next B of creative be happy that meta created a tool somebody gave you a tool that allowed you to waste a little money in the ad account try to take the feedback as it is and then go and move forward and make your next piece of creative um don't kill yourself over uh you know oh no this didn't want this didn't work out like you don't have to beat yourself up right but like you want to move forward with some kind of knowledge of what's going on so that's what I do okay so number one uh problem when it when when things break quote unquote just adjust the target uh if if it's a persistent problem number two don't forget to line up the optimization with the outcome be patient if you're on 7-Day click wait seven days and see what happens okay number three if promotional moments use budget a little bit more than you normally would with manual bids number four if you're getting low spend on new creative accept it that's what I do those are the four hardest things I see but people wrestle with the most with manual bids that is my way of handling it thanks so much for watching or listening if you like this video you should subscribe to my channel I do a lot of stuff like this in the weeds of media buying as well as bigger picture strategy interviews with people who are really doing great in our space um and you are going to like more of my content if you like this one I promise so subscribe wherever you're watching or listening to this uh don't forget to follow up with my sponsors they're great I love them that is why I have them I actually use all the sponsors um that I work with as I hope you know and so that's why I work with them and happily recommend them to you and uh and thanks again uh you can follow up with everything I'm doing at jf.com You jge me on X andrewj Ferris you can also email me at podcast ajg.com and I do read and respond to the comments on YouTube as well on this video as well so go ahead and hit me there thanks so much talk to you next time [Music]