Am I Wrong About Creative Testing & Manual Bids? Jordan Menard Thinks So. transcript

Jordan Menard thinks I am wrong about everything in all of life. All of it from media buying to what is driving human behavior at the core. And I thought it was a great opportunity to have him come on and tell me. Uh I'm kidding about that. Jordan, >> that was a lot of words to say that you're a Dodger. [laughter] >> Yeah, that's true. We got Dodger hats. Jordan and I probably disagree about some things, but very smart guy.

I've been in the game for a long time and so I'm very glad to have him on the show. I will tell you on this show, I consider my job to be primarily a teacher. Uh, and so I don't actually bring many people on very often who disagree with me because I I'm not really primarily trying to bring out debates. I'm trying to tell you what I think is true. In this case, I I have watched Jordan's content un uh unfold for a while.

I've seen some of the success he's had and I've wanted to hear a little more directly about what he thinks is true as a way to sharpen my own thinking about this and hopefully yours as well. So Jordan is the co-founder of Instant Hydration Monster fast growing hydration brand. He can tell you more about the ins and outs of that business in a little bit, but he's been at it for a long time. And we're going to talk today about creative testing methodology, about the debates he's been doing.

Um, we might even get into whether or not humans are uh motivated by self-interest. Who knows? Who knows where this conversation will go. Yeah. Yeah. There's all kinds of stuff. But there's the voice of Jordan right there. Let's get into it with Jordan Menard right now. What's up, guys? Um, thanks for having me, man. I've uh seen a lot of these episodes and we've been talking and uh yeah, I'm I'm stoked to be here. >> I'm just glad you brought your Padres's hat.

Just I think you got to rep you got to rep the team. >> I knew you were a Dodger fan, so I got to rep, you know, you got to stand in your hometown team. >> Do your part. Um, >> okay. As tempted as I am to go to the World Series with you, I think we should I actually want to start on Crefesting right away. We're going to get to the debates you've been doing. You did one with Charlie T, you did one with Andre Lunv, who's a friend of mine actually.

Um, and you've done um creative volume, you've done manual bidding, uh, and all those things. The point is, I haven't heard you say from the ground up what your methodology is. Um, and I haven't really heard your full critique of something like I do, which is sort of launch everything in a manual bid, right, and scale campaign. So why don't maybe to start you can tell me what you think is true about creative testing on meta because you've got some really impressive success under your belt and I would like to hear about um sort of how you approach thinking about the core problem which is how do you learn and scale what ads are working learn what ads are working what ads are working as fast as possible.

So talk talk through that wherever you want. >> Yeah. So, um I think people that have heard me talk about this um can attest to this, but I've been saying the same thing for like years at this point, right? And um I think let me give a little bit of context about kind of my career arc so folks can understand like why I think this way. But you know, I've always been really interested in um scale with a K as Jason Applebomb has coined it, right? which is getting a single brand or account to you know six figures a day steadily and beyond right um and it started when I was the director of user acquisition for consulting.com like 2015 era um 2016 and uh maybe a little later I don't know I suck at calendars um but uh that was the first time I I like took an ad account you know just pushing spend scaling and it kind of opened my mind to what was possible And then I started an agency where I worked with some of like long form creative.

It was like info but it was some of the biggest info markets marketers in the world. Um you know Jordan Belelffort, the Wolf of Wall Street, Robert Kiasaki, Agora Financial, Tim Sykes, the Morrison brothers, I could go on and on. And um then I switched to ecom, right? So I got to the ecom game like relatively late, probably like five years ago. Um, but I still had that same like I want to scale stuff like and so I, you know, I built a, you know, a boutique agency that did everything.

We made creative, ran Amazon, ran Google, ran Meta, uh, email, SMS, and really just hyperfocused on um, brands that are really trying to scale. And um, we got Rise Superfoods as a client running their their growth when they were doing about a million a month. And you know, we scaled their ad account from like 10k a day to like 150k a day in one year, right? It was like the fastest. And then once that happened, I was like, "All right, this is all I want to do." And then um the founder of Rise uh tried to steal my employees um as a way to say thank you.

And so um I decided to go get his biggest competitor um Everyday Dose and um partnered with Jack. And shout out to the Everyday Dose team. and uh Mike Ghost, Jack, miss you guys. Um and we did the same thing, right? And now Everyday Dose is just crushing like you see him in Target and um and uh yeah, so really really great things happen there. And then uh while I was there, I started my own thing. And so you know this I I've done this multiple times, right?

This like really like fast growth in CPG. And um when you are growing an ad account to that level, right? It's no longer about like one single thing that works. It's a combination of all of your systems working together to produce this result that allows you to scale profitably. Right? And if you've seen my Twitter, um there's what I call natural CAC, which is this number that Meta wants to charge you. And if you can pay that number, you you can pretty much get like infinite customers, right? you can get you can really scale.

And so, you know, I experienced this enough times to like where we'd find this number from like a blended aspect and then we could raise spend, you know, 300% and go from 20K a day to 70K a day and CAC would go up $2. When you're doing that, you have to the system that we found that work the best. And I'm not dogmatic about this because like I it's my opinion or I'm like passionate about it. It's because we tried everything and this is the only thing that is like reliable for scale.

And that's we take we organize our creative by concept, right? So every single concept has a batch number. It's unique to that creative. A concept of a video ad will be one video ad with three different hooks, three or four. A concept for images would be like an ad that says like um you know the eliminate muscle cramps, right? Um and so that will be the text and that's the concept, but it'll have different very different images, right?

One red, one blue, whatever, right? We we in order to make creative actually diverse in meta system like that copy isn't super relevant but the visual what makes up that image is right and so we organize these concepts with batch numbers and put them directly by concept into an ADO each concept gets its own adset $100 a day and uh we have a big u I've been saying this for so long and you know Colum Maguire has now taught it to a bunch of scale it where it lies.

So $100 a day, run it for a couple days, starts working, and you just increase that And what we found is that oftent times that creative testing campaign will be one of the highest spending campaigns in the account, right? Um it's very stable. Um, and there's some other adjacent benefits that come from it regarding like frequency and like omnipresence that um, we could drill into if you want, but I I think um, sorry I'm so long-winded.

From a high level, that's like how I think about it and approach um, creators testing. >> Okay. Uh, scale it where it lies. Uh, I've I have tried this in part because I've seen you talk about it. Um, I I like the point. So, there's a lot of places to go here. Let me uh I think I think that's a uh what you're talking about is a relatively common thing, but you do have a distinction there that is diff that is different than some people say.

So some people um will say like you should move your best performing creatives into a scale campaign or something like that. U but that sounds like not what you want to be doing uh from from your perspective. You think >> in an AVO? So so so the eventual version. >> Okay. Oh, do you do both? >> Well, we have like a scaling we have other scaling campaigns. Sometimes those are manual campaigns. Um, and we graduate winners into them, but we leave them on in the and keep stealing the >> And sometimes the is the is the best performing campaign. >> Uh, oftentimes.

Yeah. >> Yeah. So, what's the point? So, uh, I'm not necessarily disagreeing, but I'm just curious. What's the point of the scale campaign at that point? Why not just scale it for where it lies into eternity? And and what what's the point of moving to the scale campaign at all? because each adset will get to a certain amount in daily budget and we like to keep that stable um profitable um and we found that there's like a limit right and that can range right but let's just say it's 4K a day right with 4K a day you know we want at that point certified winner we take that into an ASC and sometimes that ASC will spend 60k in one day right sometimes more um depending on >> if if it's a manual bid, you're saying it'll it'll range a little bit based on the performance of that. >> No, I'm saying this is uh this is all highest volume, right?

The the the range of manual bids is a major downside, right? Yeah, that's a major downside. >> Okay. Um so, so okay, so but the scale campaign you're saying is a is sometimes a manual bid campaign but sometimes not. >> Yep. >> So, okay. So, maybe I misunderstood you. So then so okay so the so you want you have some limit on this on this creative testing campaign the scale it where it lies campaign we'll call it the scale it where it lies campaign you have some limit of spend per ad set and that's just based on performance >> yeah and it's based off like I know this is a weird answer but it's based off like a lot of feel right like we we'll find that in this ad account for example because this methodology has been I've seen this work in every single ad account right The one thing that is reliable is this Now, sometimes do we test different like with CBO?

Yeah, for sure. Sometimes, you know, it doesn't it doesn't it doesn't work every time. I don't think anything does. I really don't believe in a one-sizefits-all for this. Um, but that has been the most reliable thing I've seen in my career. Right. And that campaign and, you know, people like again Colin Magcguire, Maren would all say the same thing, right? Yeah. And a lot of the killers I know. >> Yeah. Lots of people, lots of people say that for sure.

Yeah. And so, so yeah, I think like, you know, we want to get that to like a stable limit, but we have so many adsets because we test so much creative, right? And CVO isn't even supposed to have more than 70 adsets, right? I don't know if they I think they increased it, but it doesn't matter, right? We have hundreds. We make hundreds of bashes a month, right? And so it's like the only thing that really works at scale is that methodology.

And then what ends up happening is because the everything's built up that it pays for the losers. If you look at the overall CBA, the campaign super stable, all the losers don't affect everything, but they get their spend. Um, and in a world where we're paying to produce that much creative, the idea of not putting $300 on a concept that I spent to make just seems like a very poor use of capital. Um, and so yeah, that's why we all we end up doing this with all our biggest accounts.

I think uh one of the better arguments in favor of that approach that I've heard people say is um is is the notion that uh that the cost of the losers uh is actually is pretty low on multiple levels. One of them is that you um actually uh may be sort of feeding the account still in some ways that are hard to see. But then another way is that uh is that basically if that is the cost uh that it required to get the total thing to be a much bigger number then that's a cost you should pay and I actually totally agree with that that like if that is the only way to reach a very large number then you should pay it even if even if you've got some ads performing a.3 or whatever whatever you know way below your your account that that makes perfect sense to me.

Before we get any further in this episode this is not an ad. I just want to say please leave your comments here. Is Jordan right? Am I right? Do we have things both right and wrong? like uh like what do you what do you think? Leave a comment in this video and while you're at it or uh or or on this podcast. While you're at it, go ahead and like as well if you wouldn't mind doing that and subscribe so you don't miss out on future episodes.

I want to engage with you there. Also, it really helps me and if you like this podcast and you want to help me, it's a really simple thing you [music] can do. Thanks so much. Let's get back to it. So, okay. So, then let me ask again um about this a little bit more. I I want to understand as clearly as possible what you're saying. So, um, so you said something else, which is like hundreds of ads per month, hundreds of batches per month for these clients.

So, let me ask about that. So, if you're at, let's call it 10, let's call it, uh, 5K per day in spend, okay? If you're down there, do you turn around and advocate to the client like, "Hey, we can get you there really fast, but what it's going to require from you is a whole bunch of creative and you need to pay X amount." Essentially uh essentially like are you pushing really hard on people to create huge huge amounts of creative volume? >> We so we I don't offer agency services.

I mean um forgive me I know you I suppose in a path in life. Yeah. >> Yeah. Yeah. For sure. So motif it was always a question of what are your business objectives right? Like I can promise you like I don't love producing a ton of creative. It's expensive. It's you it's hard to find truly great creative people. Um they're out there, but like it it's a you know it's gnarly, right? And so we do it because we have to. And so I would always have very realistic conversations when we would be doing like FPNA work with the brand of like, okay, here's what you guys are looking at for the year.

Here are your goals. Okay, like if you want to hit that, you know, you want to double your ad spend. It's like creative production needs to come up in uh in the same ratio, right? Like if you you I always use the uh metaphor of like a a bonfire, right? Like a an ad account is like a bonfire. If you want to have a massive one, you have to constantly be feeding it logs. Creative is the logs. Some of them burn longer than others, but Right.

It all. And so, um you know, I would always just kind of use that analogy. >> Yeah. Okay. Yeah. And I mean I think once again I think we're we're 100% on the same page there. Um is um do you want to just quickly weigh in on sort of creative volume versus quality like in terms of uh do you have any thoughts on that? People like to talk about that issue just while we're kind of talking about creative for a minute. >> Yeah, it's like a there's a lot of false dichotoies in our community, right?

Where like people they posit some like um you know the there the the reality is you need a lot of really good creative. >> Yeah, that's right. Yeah. like you need a lot, you need high quantity of high quality creative and anything less is just like a very um you're it's suboptimal, right? And the question should really be like how do you make systems that regularly produce a high volume of high quality content like that's where the discussion is. >> Yeah.

And it's funny, I've actually never heard anybody who advocates for high quantity say otherwise than that. But people constantly sort of straw man them uh about that and like, "Oh, well, you say quantity, what you mean is it's bad." It's like, "No, it's >> I don't mean it's bad. It means there there might be stair steps and how you get there." Like, I I tend to think that in the in the system design process, it's actually easier to build a system for volume first and quality second. >> One, it's not hard to do that. >> That's right. >> It's so easy to spam jump content.

It's hard to come up with new angles and new concepts and like actually do the work, right? Like it's the but but if if you really want to scale to the levels that we are trying to push to, you have to have a high volume as well of, you know, really quality stuff. Like there's no way around that because every creative dies, right? Like there's no creative that will last forever. Um and so, you know, you you always have to have a roster.

It's very similar to the MLB, right? Like you need a farm team that's constantly bringing up great talent that can win at the highest level. >> Yeah. I've actually Yeah, it's interesting. I've actually talked to somebody with in with some real knowledge who who made that almost exact comparison of of of uh think about it like like a sports team like that. [music] I continue to think that one of the biggest advantages I have in the space that I am in that's with my um agency business that's with the e-commerce business that I'm building just just the very very beginnings of everything that I am touching is my relationship with more [music] staffing in the Philippines.

More staffing is a hiring firm based in the Philippines built off of their involvement in US-based e-commerce businesses. So they're not some monster all-purpose staffing agency. They came out of US-based e-commerce businesses and they can help you staff basically any role in your e-commerce business. And the thing I love about more staffing is that they they realize being in the Philippines themselves, being a bunch of freaking killers themselves, that there is incredible talent available to your business in the Philippines.

And that you shouldn't just be thinking about how do you make how do you make the cheapest hire possible. Instead, you should be thinking the true economic advantage that you have in other parts of the world is that your money goes really far in the Filipino hiring market and you can also opport um your your quality of life and your quality of business also goes really far. By offering um high quality jobs that pay well um by Filipino standards in the Filipino market, you will attract great talent.

And that's really the key idea. If you are, what let me put it very simply. If you were thinking about hiring Filipinos as like $3, $5 an hour um talent and and [music] just like assistant level talent, you're just totally missing the opportunity. My everything I touch, every business I touch is is touched in some way and is meaningfully impacted by Filipinos. I I definitely employ more Filipinos than I do people in the US.

Couldn't be happier about it. My relationships there have been critical to what I'm doing and they will continue to be critical because of more staffing. can be for you as well. Whether any part of your business, you should be looking and seeing just taking some interviews and see. And the thing that's so great here is um is more staffing will also even guarantee you one year on any talent they put in your business. So, um so if they if you hire somebody, they don't last for a whole year in your business, they will refill that position for you for free, which happens rare, but it happens um because hiring is hard.

So, go to more staffing.co/af. If you have an open position in your business right now, just take the call. Just see if there's look at some resumes, take some interviews and see if there's somebody who could fill that position for you there. I guarantee you your dollars will go really far to hire to for finding incredible talent and uh and it'll be a great opportunity for them and for you. It's a win-win. You'll retain that talent really well.

Just go do it. Staffing.co/af. Here's a question for you. Convince me that your This is I think actually a very hard thing to sort out. Convince me from your logic um that the reason that you have been successful has more to do with your media buying. Well, you might not you might not even say this way, but convince me that the media buying creative testing method is the thing that's driving the success as opposed to just the creative volume thing.

And that might be precisely the false dichotomy you're talking about. And so I I don't mean to really put them against each other, but like here's what I'm really trying to say. It's feasible to me that what you're actually great at is thinking about the unit economics, thinking about the LTV profile of these businesses. You just referenced three supplement or like food and bev, you know, high LTV kind of brands in a row.

Uh Rise, uh everyday dose and instant hydration, you know. Um so, so you know, those brands can can support a whole bunch of money. The natural cat concept lends very well to that idea which is that like you can actually add enough more volume given the unit economics and LTV of supplement businesses like like like some of these are like you it's I mean just from a return on invested capital perspective it makes a lot of sense to spend a whole bunch of money really fast.

So yeah, >> it's all it's all based on like it's predicated on CAC LTV, right? That that is the entire model. That is the payback that you know that LTV and depending on how you look at it, you know it what metric is your northstar. That's if you do it right, that determines your CAC, right? So it's not like you just like we're going to lose a bunch. It's like no, if we do this, our cash flows will be this. >> Yeah, that's right.

And so you want to push that as far as you can and then design the rest of your business behind that to support that. And I've actually seen you say that which is like essentially if you can figure out how to make money at your quote unquote natural CAC. Um then then that is the actual pathway to the most scale the fastest. And so that that becomes the onus of the CEO which is like figure out how to do do your financial business design so that when you find that number where you are crushing everybody else and I have a theory about natural CAC that u that I I want to run by you but um but I I think you're broadly right about it is is is I would nuance it a little bit but uh but but broadly right about it but um but then the then the design then the business uh operator's goal is to figure out how to make the business work at that CAC basically uh because you get so much volume.

Okay, great. So, so one of the things I want to run a long caveat, >> please, please, please, please, please. Yeah, >> if you don't think you're playing this game because you need first purchase profitability, you are playing this game because your cap goes up every year. That's all wanted to add. >> Um, yes. Uh, that's a good point. Here's what I wonder. What if I took your economic sensibilities and your creative system that you just referenced, mass volume of high quality creative, and plugged it into my creative testing method.

Okay. Um, so let which is just uh launch a man at a manual bid and we could put that manual bid wherever you want, but I'm not saying it has to be first person profitable. Like put it put it to where it produces your natural CA, right? So that's that's fine. Um, okay. So let's say let's say we did that. If I told you that, how what percentage of the scale do you think we would reach? And obviously, this is an a ridiculous question, but like but like, you know, let's let's take it 100k per day and spend, you know, that kind of core metric for you.

Um, if we did it sort of my my way and you got the creative and the unit economics that you just referenced and the LTV just referenced, >> but my my method, how how how much spend would I get per day, do you think? Like how much am I hurting myself and my listeners by telling them to do this is really what I'm asking. >> Yeah. So >> I'm not asking for a true data driven answer. I'm asking for your sense of it. Like I'm asking for you to try to weight how important the creative testing method is in this whole process. >> Yeah.

So the creative testing um campaign will get you to a certain level and then you need other things to get you to another level. And as you continue to hit these plateaus where you need to break beyond them and spend and build, you know, enhance your systems and everything like that, there are different challenges with each of those plateaus, right? And I think a lot of people have seen this in their own accounts, right?

The first one's like 5K a day. It's like easy to get an account there, kind of hard to get it beyond, and then it's like 30k a day, right? When you start spending a million a month, that's like this big thing. And so many people stop right there. or maybe they get to 50, but very few people go beyond that, right? And so, let's talk about some of the the theory behind um your creative testing, right? >> Uh well, let me just >> could I get I want to hear you say it, but could I get to 50K a month and spend on my creative testing method as far as you see it? >> 50K 50K per day, excuse me.

There's too many there's too many variables to just like but but I like >> but with your creative with with your creative approach and with your unit economic approach and with your sense of where the CAC should be like if I can find natural CAC if I have the LTV that you're referencing if I have the unit economics you're referencing and I have your creative but I have my creative testing method can I get to 50k per day and spend >> yeah I I mean there's a lot of presuppositions here that make this question very hard but to just answer the question proper I would say yes you can get to 50 no you cannot get to a high >> okay great That's that's exactly what I was asking is like so you think the creative testing method is at least 50% of the of the of the way the value gets created there. >> Yeah, for sure. >> Okay.

Okay. Great. That's great. >> So now go ahead and Yeah. >> Okay. Kind of. So let me let me Okay, let's >> let's kind of like fast forward this a little bit. Let me >> hypothetically let me grant you that cost controls always function flawlessly. Right now >> we don't have to grant that. I don't believe that. No, no, no, no, no. Let's let's do this. Like, let let me let's grant that. Okay. Let's show you that cost controls always function flawlessly even though you would you just tried to stop me because you know that they don't.

Okay. >> That's right. That's right. >> They still ignore the ecosystem effect. Right. Meta is not an isolated auction. It's a living ecosystem. Every campaign influences downstream performance, traffic volume, retargeting pools, bottom of funnel audiences, email list growth, abandoned cart recovery, and overall LTV. Right? Manual or cost cap bidding restricts volume for efficiency, but it's the illusion of efficiency, right?

It's short-term precision that causes long-term decay. spending 50k one day and 35k the next because you you know the CAC would have gone up or down or whatever. Um that is instability. And when you have a system that needs a ton of traffic all the time, manual bids create a liability and you bring less data, fewer customers and you starve every downstream channel that compounds volume, right? And then when you look at like volume volatility and top of funnel dropping then retargeting drops then email drops then SMS list shrink and when you are really scaling into you know six figures per day multiple six figures per day right you'll see that though that CRM is what keeps your cap down right you have so many people I use the analogy of the sponge right you know let's say your website converts at 5% right like 95% of people don't purchase, right?

They're filling up the sponge. And then you use your CRM to ring it all out. It brings your CAC down. You get a bunch of customers. It's almost like Meta knows that your website is relevant and then it's easier to scale, right? And so those shrinking lists convert worse over time. Retargeting costs rise. You're forced to back into expensive cold traffic and blend skyrockets. And then your your your your manual bids start to remarket more and more and more and more because Facebook needs to get those cheap click those cheap conversions to keep the spend going.

And every dip in spend weakens Meta's learning. And so you know this is a short-term efficiency optimization that becomes a long-term liability. Ecosystem health is the true metric of scale, right? Like real effici real efficiency like compounds across channels. Stable traffic fuels email remarketing, LTD, and those pull CAC down over time and manual bidding just breaks that flywheel. >> Fantastic. Thank you for saying that.

I have two two questions in response to that. Number one, why isn't all you just argued that you should make your cost cap higher or lower as the case may be? Like more aggressive because >> I'm glad I'm glad you said that. I'm glad you said that because let's go back to the natural CAC premise, right? Well, the whole premise of natural CAC is that I can increase my budget disproportionately to my CAC inflating. So if that's true and you agree with that, isn't that onface defeating of cost caps?

Because we already have a natural cap. Why do we need an artificial cap in there? >> Uh well, because you would you would set it relative to the natural CAC. Now, I I I'll tell you what I sort of don't agree with about natural CAC is that it Well, I don't know. I I'm I'm I'll tell you I'll tell you exactly what I think about this. Um what I think you are calling natural CAC is actually what I would call marketplace CAC or something like that.

I don't I don't mind the term natural CAC. What I what I the thing the dynamic I think is happening I actually put an episode into this. I should have sent it to you ahead of time because I'd be curious how how you think if you think I'm getting it what is happening right there. I think what people miss is that meta actually functions more like Google ads than people think. Um in terms of uh Google ads, right, is like the problem is that there's a limited number of searches for a term that you're bidding on. and therefore the value or the the cost of the searches drives up uh to a sort of some natural inflection point at which the market no longer values the click more than the cost.

So an example of this I've used for example is like uh I've talked to some injury attorney lawyers uh at points like I just like ran into them on vacation there was in a beach chair next to me and I was chatting with them and they're talking about their CPC's um on their Google search campaigns. Do you want to just guess what their CPC was on their Google search campaigns for the categorical terms? I have no idea. >> It was it was like 150 bucks for a click.

Yeah. Um and it's and and it's for a really obvious reason which is that the click is worth that to them. And Google searches Google search is an au is an auction. >> Google now we should never put it past big t big tech companies to be rigging rigging the game in some way here. Like Google actually was sued for this. But the point is that there's an auction dynamic and a marketplace dynamic. And everybody sees that happening in search because we all know there's like x number of searches for injury attorneys per month and that's all the searches and so all the people are going to come in there and bid for them and that's that right uh I think people forget that meta is an auction for customers who have a certain amount of value to a certain amount of players and >> there there's a flaw in this presupposition right like we we we're presuming a false equivalency yes meta is an auction no meta is not a second price auction.

Like >> it is it is a second price auction. >> It's not >> it's it's it is. Is that not true? I >> I'm almost certain I've read that from before. I've certainly said that in a lot of places. >> I I it's not. Meta is a a Vicory Clark Grove auction which >> it it quantifies the value of an advertiser holistically and then charges them based off the harm to the other advertisers in the auction. namely they got that space that uh digital billboard if you will um and the other advertiser did not and so depending on your uh relevant score everything like that and this is a big issue with manual bids is that the bid is just one component so here's what I'm saying yeah let's say that you are less relevant than someone but you are bidding more than them right like Meta views that as a harmful action to the auction because you're for and So those types of signals I do not think are good to send to Meta, right?

Um and that's >> but I mean what what does a manual bid have to do with that? Like what why why wouldn't it have signal that you're harmful to other people in an automated? >> Because if the platform is bidding for you, right? Again, you're and and this makes sense, right? If you think that Meta's auction is second price, then manual bids make a ton of sense because you pay what the guy below bids you in a second price auction, right?

Right? So you're ensuring that sweet spot. But if that's not true and what I'm saying is actually the framework of the algorithm, then manual bids are just one component of a holistic value score that is assigned to advertisers. Meaning if my relevance is low but my bid is high, I'm signaling to Meta spam. >> And so you think that harms the account? I'm saying I don't want to make any conclusions beyond that's not a signal that I want to give to Meta, right?

And every single every single cost cap account I've ever seen, that's all cost cap. The the bid is way too high, right? And they have to be in order to get the delivery and then when Facebook grade breaks, they blow through spend and then they go ask refunds. I've look, I've I've read the lightning. I've been there. Yeah. Uh the problem is number one is it doesn't function with Meta's content retrieval system the right way, right?

Manual vid is just one part of the process. And what they're good for is setting a lower bid at a something that like you'd be happy with and then you know it that's why we use them for scaling, right? It's a good check back. But as like a one like the only thing for an account, I I I don't think it's effective. Okay. So, this is super helpful. Is that's definitely interesting. I I have uh I have specifically heard and read I've met as a second price yield auction before, but I'm really fascinated.

I'm immediately googling this. I uh um I need to think that the hell >> I did. I did. Yeah, I see. Yeah, the second price the second price auction thing is actually a relatively small part of uh of why I am a fan of manual bids. But I I still don't understand how it would be the case that if you're launching a bunch of ads uh that the manual bid would have anything to do with sending a signal to to Meta about your ad relevancy. >> Maybe it doesn't.

It's just it's a thought that I have. I also don't think that like like okay let let's grant that it doesn't do that right. Um sure >> the ecosystem effect is still the biggest problem, right? Because >> well I don't so come back to that. So here's here was my here was my response to that which was okay. So, let's just let's take a target row because it's just easy easy to use the number. Oh, we'll use a we'll use a bid cap, which is what I prefer.

Bidcap and target r. Okay. So, um so we'll take a bid cap and we'll say just we'll just make up numbers and say let's say I have a $100 bid cap on 7-day click. Okay. Um and I hear everything you're saying, Jordan. I'm like, you're right. I need to feed more consistent spend. I need to build my list. I need to get the impressions. I need to do all those things. I want to maintain some level of spend, right? Um something like that.

And it and I start to get less spend because of that. And let's And my cat goes down with it, right? or or or my CAT stays the same. Uh and if I increase my my bid cap, my CA goes up. Like just it does the thing that it's supposed to do. Like you said, we'll assume it's working perfectly for this. Okay. So, why don't I hear everything you're saying, which is the ecosystem effect means you have to keep spending to make money.

Okay. Uh and say, "Fine, I'm going to raise my bid cap to $120." Like, you're right, Jordan. I need to spend more money. What? Because because I've heard this argument a lot of times. People conflate I think this is another false people do a lot. People conflate the idea of manual bid with some CAC price in their heads, which is like or like like uh whatever. It's like I I don't care. I mean, if you have >> Well, it's a cost per result bid, right?

So, it makes sense that like >> No, no, what I mean what I mean is they they conflate it with the idea of bidding for efficiency, not for scale. And they, you know, they have this idea in their head that like that like that means that you you only care about like uh efficiency and not scale at all. And I just don't think that's true. Like if I hear everything you're saying and I want more scale and I can afford it and I have that creative system, why not just raise the bid cap and still use manual bits? >> Because I I don't why would I like what where what value at is that?

Right. If and again >> because there's still some threshold at which you would rather keep the money than spend it. That's that's the value it has. >> Yeah. But that's one of >> that's what the budget does, right? >> Yeah. was except that the the in your system that you described to me, the budget now requires a human being to go make data decisions about the about the flexing and scale the scaling up and down of budgets at a at a system that you just described as having [snorts] hundreds of pieces of creative per like week or whatever, you know.

So, it becomes so complex that basically and I I mean this literally, no human can reasonably make decisions in that system without without being and I and and that includes me. I'm not it's not about who's good or bad. I'm just saying people are making these decisions based off of like nonsense statistical principles that it's like yesterday it was performing better so they start they start scaling it up and that you know whatever.

And I bet you are less prone to those kinds of biases than others. You've been in the game for a long time but but I watch so many like I look at so many accounts where it's like the ads some ad got turned off because I had two bad days or whatever you know and it's just like come on like there's no sense of small sample uh noise. There's all these different things. So, if I have a manual bid, I could say there's some threshold.

There's some threshold, and I bet this is true even for you. There's some threshold at which you'd rather pocket the money than spend it, where it's actually a cost center if I spend it on the ad. And if that is the threshold, fine. That's the threshold. Um, but you want meta to go flex as much money as possible under that threshold as possible. And and then if you can't hit that threshold, suppress that. That's that's that's the reason why you'd still use it. >> Yeah.

Um, yeah, I I I I see. I don't I don't think that addresses the ecosystem effect of let's again let's grant that it works perfectly, right? Yeah. You're saying hypothetically we would save x amount of dollars in we we would have a higher contribution margin percentage or um you know may maybe you're even trying to say we would have net more contribution margin by spending less. >> Absolutely. Yeah. >> Okay. So let's or or or by spending more faster actually uh or because because you have that threshold and meta can go can go that ad is ripping go scale it so I don't think it's just an efficiency mechanism >> sure >> I actually yeah >> adding the the concept that adding a constraint would scale more than no constraint I think is like logically on face we can dismiss that >> but you don't want you don't want more scale unless there's unless it is at a certain cost >> I I I understand so again Let's grant that, you know, Meta's cost controls function as they're designed, right?

I I'll know that's not true, which is a whole another argument, right? >> Well, well, I mean, another way I could ask it is like how many spend reimbursements have you had to ask for? >> H like three ever. Yeah. >> Yeah. Okay. Probably more. But it's something, right? Like it all manual bids break, right? They they do. And so >> there's there's a solution to that. But yeah, >> even if we grant that they function how they're supposed to, which like again not true, it still doesn't take into account what I'm talking about with the ecosystem, right?

In Meta's ecosystem, efficiency isn't how many levers you pull. It's how fast your system learning your how fast your system learns. Manual bidding, you are putting a number, a static number in response to an auction that's changing all the time. And so by the time you respond and make an optimization, by nature, you're already behind. On top of that, the the biggest thing is that how do you there's a you stop the flywheel when you cut traffic.

You get less email, you get less and so over time, that is a very real limiter because you are not letting the ecosystem flourish the way that it could if you had more stable traffic. and on a long enough timeline that eventually breaks that growth flywheel and caps you at like 50 60 70k a day. >> I don't Yeah, the reason I don't think that's true is partly because I've seen accounts to spend more than that uh you know on manual bids perfectly fine.

But uh but secondly because uh I um I just think I just think my response that is exactly what I said earlier which is fine raise the cap. Like if if if because at that point you're saying you'd rather have the traffic at a at a worse CAC than than to save the money. That that's what I hear you saying. You're saying it's too important to the system to get conversions and to get data and to get learning and to say nothing of building your email list and your awareness and the impression matter.

I actually agree with that. Like uh and and this is I think the mistake people who sort of listen to somebody like me might make which is like this idea that like everything is just about squeezing efficiency. Um, you know, there's there's a lot more you could say about sort of organizations that handle this information poorly, I think. Um, but at the same time, I I just think fine, raise the cap. This is where I would say like you're you're you're assuming in in that response that you would just raise the cap. >> If I if I raise the cap up beyond what I would want to accept, then the cost cap becomes functionally useless. >> Well, so that's the point is that is that you then have to make a decision. you know, and I've definitely made this decision playing mine plenty of times with clients, right, which is like, would I rather pay more for the customer or would I rather uh have more efficiency with less customers?

And that's true no matter what betting method you use, right? There's going to be times where you have >> what what I'm saying, you're right. You're you're right. What I'm saying that that how you respond to that is the internal link between building a flywheel and a growth engine or building something that is self-contained and limiting. Right? It's like when you are and again I would say like how many accounts do you have that are spending multiple six figures on all manual bids, right? >> Yeah.

Not not right now. Not right now. >> Yeah. >> I I have never seen that. I've never seen a all manual account spending over 150k a day. I've never seen that. Right. And so what I'm talking about is like these are the methodologies that we utilize because we have to. You talk about how like it it's so complex that no one can manage it. It's like this is why I I love when people say media buying is dead. It's like you're telling on yourself, man.

Like you you never had it to begin with, you know? And so like I think for us like we have a very tight team. We have a a a senior a junior and you know they everything's looked at in Northbeam on a one-day acrual click basis 7-day as well. We look at percent of new traffic. We have a whole SOP on how we're responding to these things. And the reason I know it works is because I look at the P&L, you know. >> Yeah. Yeah.

Well, I what I believe is that what you're doing is working. Like that's why I had you on, right? It's because I I like I I it's not like I it's not like I think you're you're wrong. >> I don't think you're wrong either. I think there's just a certain point where you can't get past that if you have cost controls. >> Yeah. And and in my experience, every time I have tried to address a threshold of spend problem by changing the bidding method, all it has done is made me less efficient at the same threshold.

That's all it has done. It is it has just made it so that the distribution of my dollars has gotten worse at the same threshold, including trying the things that you're doing. And this is why I come back to what you said earlier, which is like I actually here's my my most honest theory about what's happening for you is that first of all, you're right about a really core thing, which is that spending a lot of money at a and designing your business around a certain CAC is really effective.

And in fact, it's so effective if you can do that, especially in the opportunity selection game that you've played, which is like businesses that are built perfectly for DTOC, right? Like the like a hydration business for example is something where I'm like, you made the right move. like that is like between the trend but not just the trend it's like it's like about the delivery mechanism the logistics of delivering a subscription product to a customer at a at a predetermined timeline that is like perfect perfect DTOC economics so I'm like >> everyone everyone says I'm right now but when I first did this everyone's like are you crazy like so saturated like it's funny how >> funny funny how >> no no yeah well I think that's like you know saturated quote unquote but if but if you're skilled in understanding how DC businesses Then I it makes sense to me.

I'm broadly Yeah, I'm broadly bullish on on on DDC and in a way some people are not. I think a lot of people like complain about I think it's good. Anyway, so there's that. But I also think that a lot of your success is because of what you're describing both at the economic level, the LTV level, opportunity selection level, but then also the creative output level. I think when I hear you say that much creative is being put into the ad account, I'm like that I I here's my theory to answer my own question earlier.

I think if you gave me all of those things in a business and manual bids that our scale numbers would be relatively similar. I might have a little more than you. I think with manual bids, but probably not a ton ton more because I bet you're good at >> think you have more scale. >> Uhhuh. At the same spend because I believe because I think manual bids uh create scale by by distributing each of your next dollars to the best place next.

And I actually think that's the path to scale that like the efficient distribution of your dollars essentially by reducing spend on losers and increasing spend on winners and producing a lot of winners fast. That's how you end up getting the most scale. That's why I think I don't know if it will be before or after you hear me say this, but at some point in this conversation, Jordan talked about texting his friends, having some group texts where they are sharing a bunch of things that are working and not working and and what they are learning and post-purchase upselles uh for their businesses so they can be grinding away together in their businesses.

And um the thing that's uh about that is that Jordan is on something there that's really important which is that uh that having a community of people that you trust that you really believe in who are not selling you anything who are also seeing success who's thinking you trust having that community of people in e-commerce [music] is an insane advantage an insane gift and you can access that community through my friends at Workspace 6.

Workspace 6 is a private community closed community for e-commerce operators only. So actually a person like me, an agency person or if I was selling software, I would not be allowed in that community uh because uh because they don't have anybody who's selling you stuff. Instead, it's a private community based on Slack for operators including in similar and slightly ahead of you revenue stages as well as top executives in their companies to share knowledge, share learnings, share um software reviews, agency reviews, all those kinds of things.

What's working, what's not, so that you can get access to the best information from again people who are not selling you anything. And you can have those relationships all the time. Plus, you can just have friends in the trenches with you who understand what you're going through in the weird world of being a DDC operator that we exist in. Those relationships really really matter. So, um, Workspace 6 is so so valuable.

You can get the going for the first month for $1. Uh, and there's also, um, no commitment. So, uh, it's really really um, easy to get in and check it out for yourself um, if you are an operator or an executive in a company uh, that is that is that is in the DDC landscape. So, workspace 6.io io is the place to go to check that out. I love the guys at Workspace 6. They've been helpful to me, encouraging to me. They've been on the podcast.

They've uh they've offered me great thoughts. They've recommended guests who have been great people in their space. Um I read their newsletter. So go to workspacics.io, check it out for yourself. If you need community, people who you can rely on and trust to share your learnings, get better, get smarter. Uh man, it's going to be really it's going to the the relationships that you will build in Workspace 6 will pay for themselves and more.

Go check them out today. Workspace 6.io. I actually want to ask one more question that I've been thinking about recently with stability. And of course, like you're doing this at more volume than I am right now. You may may well just be right. I just may be wrong. So, I'll just totally grant you that. Um stability. Um do you spend the same amount of money uh at midnight as you do at noon for in your accounts? >> Um no. >> So, uh so why is that not instability?

But dayto-day changes in spend are instability. because there's less demand at midnight than there is at 9:00 am. >> And you don't think that's true dayto day? >> I think that is true dayto day. But what I'm saying is that even if the manual bid thesis is correct, the practice of the ecosystem effect, the loss of email popups, the loss of add to carts, the loss of site traffic, the evaporating of bottom of funnel audiences, >> all those are true at midnight though.

All those are true. Everything you just said is true at midnight. Rolls. That's true for everyone at midnight, right? At 9 at 9:00 a.m. like when if your cost cap if if the auction got $4 more expensive and your cost cap can't hang anymore, then you are missing out on traffic that you need to get if you were buying that same amount of traffic yesterday. >> So, but it's not but it's but but again, you're you're willing to grant that happens at different hours of the day.

Everybody understands that there is a difference in DAOU basically active users on the platform at midnight versus at noon. And nobody complains that you get 10x the volume or whatever the number is or 5x the volume at noon as you do at midnight. But the moment you do that same thing dayto day, everybody's like, "Oh, it's it's so unstable." And I think what I would say is move your vision of stability. Look at it at the level of weeks and months and then suddenly it's it actually isn't any less stable.

Like it's just an arbitrary decision about about which ones of things uh happen. And and I because what I really think is like imagine you're advertising to uh you and me, you know, a couple guys who are working during the day. Uh you know that that kind of deal. Um you and I are the target customer. You and I are on a podcast right now. We cannot be scroll. I don't know, maybe we're doing some scrolling, but we can't scroll too much right now, right?

Um but but maybe at night after this and after my kids go to bed, I can scroll. What that changes if I'm advertising to stay at home moms whose kids are in school or something like that. And so what I have also seen with manual bids is that they massively disproportionately spend at different hours of the day instead of pacing more evenly throughout the day based on very different ways for very different brands um who are reious customers.

And so so what I think is that when it is annoying by the way it's super annoying to spend 10 grand today and 15 grand tomorrow and 40 grand on Sunday or whatever. It's really annoying. Um, but uh I think it's the same thing that's happening, changes in DAUs. And in fact, again, I think there's a way to scale up and down spend with those changes more efficiently by letting Metag chase those at different times and reducing it a lot of times.

So >> yeah, I I I really like that um thought process. I think it's probably like the best defense I've heard of this position. I think like again if that ecosystem effect issue is real then over weeks and months you will continually get a compounding opportunity cost loss in that traffic and that's what we've seen. Um I would much prefer to run it your way. Um yeah but dude this is the great part about Meta, right? Like you there's not one sizefits-all.

Like I'm sure that what you're doing works for you and what I'm doing works for me and I think it's really cool to have these conversations of difference opinion. >> Well, I'm I'm a I'm a look for truth guy. So, I I appreciate that that consiliation that that that kind comment and the way to sort of move towards me. The thing I'll say on their side is one of us is probably more right than the other and it may well be you.

That's why I had you on for this. So, >> yeah. I mean, one of us one of us is definitely more right than uh [laughter] >> Yeah. >> And there are rays to tell. >> Yeah. Yeah. Yeah, I I I think that's actually the hard part is it isn't there aren't necessarily ways to tell. Uh I mean this lie, right? >> Uh they do because people pick different opportunities and so uh so getting to the spend level on an inst on on a subscription DTOC brand is really a lot of variables. >> Yes. >> Um okay.

Um all right. So but but but certainly Jordan, I wouldn't go to your out of account doing everything wrong because if you're spending that much and so effective, then there's probably a point at which it's it's just not not worth switching things around. Even if I thought you were wrong, like I just wouldn't >> I I feel the exact same way. >> Okay. Um I want to I know we're just about out of time. Uh thanks for doing this.

Let me let me ask you one last thing. We didn't get to your debates yet. Tell me, you debated uh the the legendary professor Charlie T um about um whether or not creative volume matters. His big counterintuitive opinion is that uh creative volume doesn't matter very much. I actually have really not engaged with his content almost at all, but uh that's that's like one of the comments I've seen. You also work uh talked with my friend Dr.

Andre Lunv. uh brilliant Russian uh engineering aerospace engineer PhD who's gotten into man into met as he's a big manual bid guy >> um and a big creative volume guy actually too um so just tell me about those how have they been what have you learned from them what have you thought about them what have you seen in the responses to them I'm I it's a cool thing >> yeah they dude they've been good I think um you know I I think the first debate was good just like I feel like everyone knows like the truth right that like of Of course, you have to have that much creative, right?

And I think it was good for kind of like um that resounding once and for all like all right, like let's call it as it is. Um and then yeah, his response after that was wild. Um >> I didn't see it. So you So yeah, you you got him to summarize that, but I didn't see it. >> Oh, dude. Like yeah, he he would not I mean 85% of people voted for me and he would not stop talking about it like trying to convince everyone that he actually won.

Um but then the second debate I thought um there was just like it was uh it wasn't moderated well. It wasn't I don't think it was like really set up the right way. Um I would love to have this discussion with you actually and I think the resolution model where we have like resolved um that's a really great way to test like the how the argument functions in a real world scenario. So um yeah dude if if you were up for it I would I would be down.

Yeah, maybe I I was, you know, I we'll we'll put this out there. This will get people a lot of the way there. Um I I think it's a really fun thing. Were you a debate? You you had the resolution model. I mean, I've seen some of like the Oxford Union debates, some of those kinds of things online, but I was never like a debate guy before. So, is that something you you were comfortable with? I thought it was a cool way to handle the discussion as well, which is like it clarifies what the central question is. >> Exactly.

Exactly. Yeah. I so I debated in community college um and actually had a full ride scholarship to Southern Illinois to go like be a lawyer and uh I dropped out when I found affiliate marketing that summer cuz I was just like I'll never forget it. I was like I haven't left my room and I'm just acquiring customers for businesses. This is the future. Like this is the future. And so when I dropped out, Todd Graham, um, who actually still does like some of the presidential debate correspondents for CNN, um, he calls me and he's like, "Hey, I just need to make sure I understand this." Like, "You are throwing away this opportunity for what?" And I told him, "I want to run affiliate marketing on Facebook." And he goes, "So, you're dropping out of school, throwing away the best opportunity you've ever had in your life because you think you're going to sit on Facebook all day and make money?" And I was like, "Yeah, >> yes, that's exactly what I'm doing." That's awesome.

Um, that's great. Okay. Uh, Jordan, we're out of time. Uh, do you, uh, have any last comments that you want to make? Anything that we didn't get to that or or is this a question I really like to ask people right now? Is like this is the thing that you've been talking about, but um, but, uh, is there anything you're just like hot on right now in the DTOC space that is just like a little a little thing that you think is like a a big big help? whether it's media buying, could be totally unrelated to media buying, could be about your supply chain, I don't care, but just uh just anything anything super top of- mind for you that you just with with an audience that you'd like to get out. >> Yeah, I think you kind of hit on it actually.

I I think there is this new breed of agency owners turned brand operators that um I think is creating this new wave of digitally native brands that will ultimately start to encroach on the incumbents in retail and start fighting for shelf space. And um as I've kind of seen this trend and participated in it myself obviously as I went from like a agency owner to a brand operator um I think a lot of those guys are are picking the right thing from the jump.

I think a lot of those guys are thinking about it the right way from day one. I think um and I think that you know if you I think about the model more think about your your revenue model more and if you have a bad one be honest about it like don't don't pretend that your revenue model is good when it's not because it'll kill you. Uh, so I think that's something I've really been interested on and you know the guys I talk to like in my group chats and stuff like you know we're always talking about post-purchase upsells and you know hi you know all that stuff and so you know all those things are great but if I can recommend anything it's like think right like think start thinking effectively um and let that be your guide as opposed to just like uh flash in the pan this comes up let me go after it kind of thing. >> Yeah.

Yeah. I'm starting a brand right now. Uh very much I think a side thing is I don't expect that to be my main thing anytime soon or anything like that. But um but it's it would it would break a lot of the rules that you just said. It's not it's definitely not uh the the um highest monetary opportunity of anything that I could think of so far as I can tell. I mean I don't know maybe a little crazy but >> don't you think like it's not necessarily about optimizing for highest monetary right.

It's like understanding your model, right? >> Yeah. That's that's right. Yeah. It's like playing play play long-term games, right? Like don't um Yeah. >> Yeah. >> Good stuff. >> All right, man. >> Thank you so much. >> Very fun conversation with Jordan who came on to argue like knew that we were going to be arguing and that was um really awesome to for him to do it. I think some really compelling things in there. There's a lot that I um took from that conversation.

Even if I didn't quite take his creative testing method, um I still do think that there's things that he's saying that are so clearly right, which is that there are CACs at which [music] you can spend a whole lot of money. Um I did an episode previously about natural CAC to that end. There's uh that uh a creative system that produces a whole bunch of highquality assets is really really important. I love that point. Um and I love the way he's thinking about sort of designing the economics of your business to create the outcomes that you want, opportunity selection, all those things.

And even the baseline idea that the the sum might be greater than the parts or the whole, you know, you know what I'm saying? The whole might be greater than some of the parts. Anyway, uh that idea with the sort of ecosystem concept of how your ad spend works. I think that's really right. Uh even if I disagree about the best way to get there and there's a really good way to think about what's going on in your business that way.

Um so yeah, lots of stuff that actually principally I think Jordan and I really agree on and I know I'm going to be thinking about it a little bit more. Um big big big thanks to Jordan for doing that. Go to instanthydration.com, check their Black Friday offer. He specifically told me to to have you go look into that. And I think that's that's right. Go check that out and follow Jordan on X. The link for that is in the show notes.

If you want to see us argue some more, it's Jordan [music] Wings. And uh and Jordan is a lot of fun there because he's constantly chopping it up with not only me, but a whole bunch of other people. Again, link for that in the show notes. If you're an ex person, you probably already follow him, but but there you go. Uh you should subscribe wherever you're watching or listening. Hopefully I'll have more conversations like this.

Maybe even we'll bring Jordan back on at some point. You should subscribe to not miss any of those. I've got a bunch of other interviews lined up. I have probably the fullest interview calendar I've had in a long time. Uh what do we have? We got Popsmith Founders coming. Crazy story from that. Monthly episodes with Patrick Kadoo, my my um COO about kind of things going on there. Nazarin Jafari is coming back. She hasn't been on for a long time to talk about all kinds of things going on in that business.

She had her first million dollar month ever in revenue, which is amazing. So, she's going to talk about that. Got Katie Mamari from Kaden Lane monster business. So, just all kinds of good stuff. chasing down Jess Bachmann again from Fire Team. Those conversations are always fun, too. So, um, so definitely subscribe wherever you're watching or listening. You should email me podcastfgrowth.com with any thoughts. You should, if you would like to work with me, uh, on any of the things that I am doing, you should go to ajfgrowth.com, fill out the form, and and, uh, and maybe there's an opportunity for us to work together at some point.

We're not taking on new clients quite yet, but for next year, we probably will be. So, uh, get the conversation started there. Thanks so much for watching, for listening. Thanks to my sponsors. Um, as always, I am super grateful for them. I'll see you next time.