Cody Plofker Goes DEEP On Meta Media Buying transcript

[music] If you come to the Andrew Ferrris podcast because you want detailed deep dive serious media buying strategy, you are going to love this episode of the show. Today I have Cody Ploffer, CMO of Jones Road Beauty, a large like big 8 figureure DTOC brand. Cody is spending hundreds of thousands of dollars with his team per month. I'm assuming it's some months getting to the seven figure stage if not all months at this point in their business's life cycle.

He's just spending a lot of money. That's really the point. And so he really knows what he is talking about. Plus, on top of that, Cody is talking with other brands all the time. I know he's done some consulting in the past as well. Cody sees a lot. And therefore, it caught my attention when he told me that he switched over to the majority of his spend going to bid caps. I said, "Cody, you got to get on the podcast. We got to talk about it.

You're a very smart marketer. You're a very smart media buyer. let's talk about what brought you there, why you did it, and anything else. And he said, "Great. I have some questions for you." Anyway, I would like to do that. And so that's what we did. This is, as I told Cody when we stopped recording the call, this is sort of a media buying 401 [music] sort of thing. I think we did not shy away from getting into detailed, specific kinds of questions.

And so, if you are newer to media buying, I think this episode is going to challenge you and stretch you in a good way. You should listen and pay attention and write down your questions. If you're more experienced, I think this will there'll be some stuff for you that you really really like as [music] well. The point is Cody really knows his stuff. He is able to talk at a really detailed level about this and you are going to like hearing from him because he knows what he's talking about.

Let's dive in to my conversation [music] with Cody Ploffer, CMO of Jones Road Beauty. Hello and welcome to the Andrew Ferris podcast. Thanks so much for joining me today on the show. I have a great guest for you. You know him and love him. He is Cody Ploffer, the CMO of Jones Road Beauty and a super experienced, super thoughtful, super smart media buyer extraordinaire and marketer extraordininaire beyond just being a media buyer.

And today I brought Cody on for a very specific reason, which is that he and I and a couple others have started chatting a little bit in a Slack group and Cody told me something that just made my heart so happy. If you've listened to the show for a while, you'll not be surprised to hear that when Cody told me that he's spending most of his money on bid caps these days. I wanted to fly to New Jersey from Los Angeles and just give him a hug immediately.

I didn't. Instead, I invited him on the podcast to talk about what convinced him and why he's doing that and then to talk about sort of how Jones Road is going, anything else that our media buying, marketing minds get to from there. So, we'll see where the conversation goes. But it is Cody Ploffer. Let's not delay it anymore. Let's talk about how to grow a brand with Facebook ads and maybe some big caps. Yeah, man. Thank you.

Thank you, Andrew. appreciate it. Definitely don't deserve all those kind words, but I appreciate it. Also, I love the title of the Slack group. You named it eight kind of operators or something like that. And I just loved it. It's like a bunch of like CMOs and media buyers, so we're not really operators, but I love that. Yeah. And also, it's it's mostly I think eight figure, not nine figure. So, you know, I don't know.

Is it is it because there's nine of them or can they all run nine figure businesses? Is that what the nine operators thing is? Do you know? I thought it was the size, but not sure. I assume so. Yeah, you're right. Like, we're not technically operators. Dave recooks in there and he's like actually the president at birth. So he probably is bitter that I called him a kind of operator and not a real operator. So I mean if he's still running ads out he's a he's a kind of operator.

No, I'm just kidding. Yeah, I think so. Yeah. Yeah. I'm the least operator of the group actually. I think I'm the only one who's not brand side. So but I think everybody's also kind of always talking to other brands and doing some advising. So that's been a fun group to have. I actually like I know a lot of people are in a lot of groups like that but I am not. And so I, you know, I DM uh just because of being around CTC and for00 groups still just from my history working with both of those folks.

So I'll DM Taylor Holiday and and Dave Recook a decent amount. But I didn't have a group like that of people who are sort of outside of my main circle that I had been in personally. And so I've immediately found like, oh, this is why people join Slack groups like this. Like it's really helpful, really nice to have like people I trust to talk to and and do all that, you know? Yeah, it's it can be really really really helpful.

So yeah, you said you you told me the other day that you spent six figures in a day with the bulk of it on bid caps. So I'll just leave that there and then you go from there. You and I have talked a little on Twitter, gone back and forth a little bit on Twitter, not not a ton about this and I've seen you sort of publicly go in so many words like uh should I be trying this? That's what it felt like you were kind of saying.

I was pretty anti a little bit. I was pretty anti a little bit. I thought I'm not a max like you are. I wasn't trying to downplay like yeah I didn't necessarily experience you necessarily that anti but anyway. Go ahead. We were running every not everything on lowest cost but I I have experience with cost caps you know throughout the year last year especially this this time period we ran a decent amount but never full cost cap so a ton of lowest cost and you know for us like we're bootstrap we're profitable we optimize to me and AM targets so it's you know not all uh spend as much as you can like like ethan blended really matters to us and so theoretically there are so many things I love about manual bids that actually just make sense I just think we didn't have the outcome that we were looking for.

So, we're in the disruptors program and as we started kind of planning, you know, prepping for holiday in Q4, one of the strategies that came up, they call it ABS now, but they were calling it IBS, which is a terrible name, but inflated bid strategy. And I was like, guys, you got to change it. So, I think it's accelerated accelerated bid strategy now. But it's essentially like how do you maximize volume? How do you maximize spend when there's really strong demand but limit downside? because you know we've got these days we'll do you know a good amount of our revenue in November and in Q4 and these peak days where we're going to spend you know like last last week we had three days where we were spending over 100k just on meta you know three days in a row and let's say it's double a normal day like we're not just going to turn up a new campaign or just you know double the budget on a existing lowest cost and like that's a big risk what if your CPA suck that day and you're not having the performance so and then you've blown 50 grand or something right like it's really risky to go do I I mean, I don't know about you, but like whenever I've had to do that in the past, uh it's like stressful to me.

You know, I'm updating it constantly, probably more often than I should because I'm like I I actually, especially now that I've been running vidcaps for so long, anytime I've I have to do for an account for some specific reason, I have to run auto bids for some little part of it, which I'm a definite bid maxi, but there's uh some moments where I still have to do it. I hate it. I like I I'm like turn up the budget. I just feel terrible, you know?

So, anyway, keep going. We've had a lot of launches this season. So, our plan was to kind of start testing it and running it um a little bit earlier in the year. So, I think September we kind of started running it and launching it and just playing around with it. Just trying to get a feel for, you know, volume efficiency, what the levers are. I think a lot of it is so much art, you know, where it's like, you know, your numbers and you do the math, but you kind of have to get a feel for the ad account and what days are we going to rip and spend, when do I need to pull back and and increase them.

While we're doing this accelerating strategy, the campaign budget is actually high. It's like 500k. We'll probably ramp it to a million. That's like the max we could spend. And then we will put uh obviously there's a bid on it. And then you put an adset max. The reason for the really high uh budget is because that removes a pacing mechanism. So normally even on a bid cap, you aren't going to show uh an impression for every available person and user that could convert at or below the bid cap because it's got to paste your budget throughout the day.

So, it might hold back on some that you might be actually available to win in the auction at a let's say your $45 bid cap is your goal. There might be some earlier in the morning, but if the system notices that, hey, we're going to spend too much. They've got to actually pull back and pace it. But on like Black Friday, you don't necessarily want to do that. So, you can ramp the budget up super high, that allows you to kind of remove that pacing mechanism and you'll actually show for every conversion, every, you know, user that actually, you know, assistant thinks you could convert at that at your bid.

But then if you don't actually want to spend that and you've got AM goals and things like that, you can control your max daily spend at the adset level with this with the max and that actually doesn't override that pacing mechanism. That's how it was explained to us. Super interesting. I actually didn't know that. So, when I'm running bid caps, I consider it a mistake if I ever hit my budget in one day and I consider it a disastrous mistake if I if I max out my budget two days in a row because sometimes you just spend more than you expect in one day and that just is what it is.

But I always keep my budgets way my campaign budgets and I run CBO everything but like I always keep my campaign budgets way above my actual spend. And that's precisely because of the thing you just said, which is that I want to make sure that like the the system can get every user at or under my cap, assuming that I have no inventory limitation. And if I do have an inventory limitation, then I approach it from the angle of just lowering my cap.

I just try to take more marginal efficiency on each each product I sell. Dave's analogy of like the steering wheel versus the guardrails is so great. Yeah. I don't know if I've heard him say that. What can you say it? I mean, on this is on cost caps, but really plus any manual bids. is like your bids, your caps are the steering wheel. That's really how you should be steering and driving and your budget is your guard rails.

Like they're there to prevent you from something going wrong, but like that's not how you should be controlling. That's very helpful. Yeah, that's a really good analogy. That was a Dave Recook. I don't want to pretend that's me. Yeah, I don't I don't know. Don't give that guy credit. But do you ever run into a scenario where you feel you'll spend your full amount? you know, Facebook acquisition looks good, but AM is not where you want it cuz that that's how we control spend cuz like we could actually spend more.

Facebook performance could look good, but AM would probably be not great cuz we're spending too much relative to the blended ecosystem. How do you measure that? I have a feeling I know what's happening there, but let me ask a question about it. So, are you looking at that AM on a daily level? Yes, I mean I'm willing to have fluctuations on a daily level, right? like we want to look monthly and you know we'll look 7-day trailing and you know it's fine to have a a bad day but you know if you have three days that are bad in a week it's probably hard to have a good week.

Yeah, that's probably true. And you guys are doing enough volume to where you you're sort of incessantly out of a small sample size problem, which a lot of people, you know, I've seen somebody say to me the other day about like, oh, why did Facebook spend so much when it was like so much higher than my bid cap or whatever? And it's like, well, you got five purchases in two days. Like, it's it doesn't tell you anything, right?

So, are you bidding 1 DC or 7DC? One day click. One day click. Okay. Is your CAC target on one day click as a ratio? Let's call it a rorowass target. Even if you're bidding as a CAC, right? So, is your rorowass target on one day click? the same as your AMR target? No, because I mean we get I don't know what percentage, but like you know we have a good amount of organic traffic, a good amount of direct. So there's probably less of a correlation between our Facebook row and our AMR for compared to a brand that's you know more reliant on on Facebook.

My question then is let's say you uh double your spend day overday and you're able to spend much more at your CAC target than you thought you could, right? So you set your AMR target. Let's go. I have no idea what your AMR target is. Let's call 1.5. Let's say you're at trying to aim at a 1.5 and you set your CA target to a one exactly on one day click a one break even, right? If you double your spend and you have other traffic in that mix relative to what you expect, then it's going to drag your AM down, right?

Because you're adding in a bunch of 1:1 ratio spend against a target of 1.5. And so my guess as to what would be happening there is that it's going to pull your AME down if your target is built on your unit economics. And let me pause. Do you do you think that's what's happening there? Yeah. Yeah. It's the proportion of paid versus organic traffic, you know, of acquired customers is going up. Yeah. So, what I would say there is like this is where ratios are are unhelpful, I think, sometimes because the ratio target is usually set irrespective of volume.

So, me M me is actually a particularly rough thing here because it also bakes in your returning customer revenue. So, like I've got a client who has been really used to running his business on me and so he's thinking about things like, okay, I really want a 3 to1 me all the time. I I don't even remember if that's the actual number. That's how much that's how little I care about. I've worked with him for 6 months and I I don't remember what his old MR target is, but he's wanted to run an M.

And so he's been frustrated at times because we'll spend a bunch more money than expected because we're hitting our target, right? Our CAC target. And so it pulled his NE down because it makes the ratio look worse even though, and this is the crucial thing, his contribution dollars are actually going up. So the ratio comes down, but he's actually producing more contribution dollars as a raw number. Even contribution margin as a percentage can be deceiving here because it's actually possibly the case that you could sell twice as much stuff at 50% of the contribution margin as a percentage than you expected, right?

So maybe you take a 10% contribution margin instead of a 20% contribution margin, but that's a whole bunch more contribution dollars. It's the same thing as like you know a grocery store or something which famously operates on thin margins and maybe a grocery store get this 2% blended margin or operating income at the end of the year. I don't I don't know exact store margins are but something like that, right? But if it's a big enough number, who cares? who cares than the margin is as long as the raw dollars are there because you know percentages don't pay bills.

So that's probably the thing I would look at there if it was me and and that's definitely the way I think about this is like the ratio metrics am is helpful and I mostly use it as a it's a check on my attribution essentially I think it's like a good better best me is better if you got nothing right it's better than going off Facebook rows amme is is important for the reasons that you mentioned but if you really can do contribution dollars and that should be your northstar I totally agree with that I think part of that is just operationalizing it like I know CTC does a good job of that I'm sure you have a good system setting up your dashboards in your sheet where you're actually getting like a daily read on that.

I totally agree with that. There's also a complexity question, right? Like, you know, how many SKs does Jones Road advertise against where like a blended number may not actually be that helpful. Whereas, like if I'm dealing with a brand with like a couple of main SKs, it's the vast majority of their sales. Like I can just kind of slap a blended average contribution margin off of that stuff and it's probably close enough for for comfort, you know?

So, no, that's long-term goal is is for us getting there. Actually having a a real-time contribution dollar number that's actually not estimating but actually bringing in cost from Netswuite and and bundling that with spend. So, we're getting there. I think status does that where it will it will output that I think that contribution margin number in status CDC's tool does will just produce that for you and you can also do it against forecast which is helpful and this is where like you know this all comes back to and I think you've been really good about this I think on a lot of stuff but where all this stuff comes back to sort of tying your marketing to true financial metrics you know the ultimate attribution system is your bank account it's just like if you can sort of tie something back to that then it can be really really useful because if you can ramp your contribution dollars against a fixed opex.

Well, that's just that money flows straight to the bottom line. So, that's ultimately what we're all after, you know? Yeah. There's I think there's it's just like a good, better, best, but that's like the the high level thing where we're trying to get to and maybe that's it. Yeah. So, now I mean we will just have those again those guardrails to prevent us from spending too much. Hope we're not doing that especially at a time like this.

But like we'll ramp up like we had those days where we had a few days we're spending you know over a hundred in a row and then you know we've got a big kit launching in about a week and then for Black Friday that's exciting. We don't do like normal um sales, but we do like exclusive. We got like holiday kits that's pretty pretty big in beauty. And then we've got uh like mini miracle bombs. So like our bestselling, we've got like many of them and people go crazy for them.

And we've always sold out on the first day, sometimes second day. So this year we have, you know, what we believe is plenty of inventory. So I'm so excited. And you know, bringing it back to bid caps, like that's been our top spending campaign, you know, over the last month. And that's just going to let it rip. like we'll probably have days where we're spending double what we were last week. And again, I'm super excited about that.

But just have some confidence. There's still some things you got to like look out for cuz it's not it's not a perfect system, but uh yeah, it's been huge. Yeah. What I found is that like it really forces you to pay very close attention to things like is the product set that you're advertising actually what people are buying? How's your AOV at the adset level? Is there a difference in your AOV for shops and your website?

You you have to start really noticing those kinds of things. In that respect, it sort of forces you into some precision, but it also forces you out of making a lot of decisions that are very frustrating in some other ways. And you know, you said it's not a perfect system, and I think everybody actually theoretically agrees with the idea that it would be great if VidCaps works for them all the time. So that's the kind of trade-off is like not so much do I want it to work cuz everybody loves the idea of being able to spend only when it's profitable.

It's just some people I think are frustrated when it doesn't seem to work, right? The best critique of bidcaps I've ever heard, though I think it's still wrong, is uh Jess Bachmann saying I said something about, you know, oh, you can spend as much as you want only at or under your actual target. And he said, well, that's what it says on the label. And I think that's a pretty good critique. It's like, yeah, theoretically that's right.

But I have not actually found that to be a major problem for my accounts, but I have seen sometimes where you have to play with it a little bit and Facebook will underspend or overspend uh in the early days of setting it up especially. I think bid caps are better at that. I don't know. Has that been your experience that we have had on cost caps in the past, you know, more of an overspend issue? Sometimes you'll have a day where it's above target and I think bid caps are a little bit better at not overspending above target.

Yeah. I mean, if you think about it, right, a cost cap is taking an average and a bid cap is bidding up to or under your target. So, by definition, cost caps are trying to get you an average CPA at the target that you set. In that case, you know, by definition, an average is going to have some conversions over and some conversions under your target. But, I don't I actually haven't run cost caps very much because I'm so committed to vidcaps.

So I have seen seen less things there. We are running them in ASC as well cuz we don't have access to bid caps there. But actually I think pretty much our whole account is on a everything conversion optimized is on a manual bid now. I I find that ASC cost caps to be running very similar to lowest cost. Maybe we've just got our our caps too high. It will kind of sometimes not spend full budget but it's like pretty stable.

I'm really liking that to be honest. So like I'm not you know I'm not dogmatic about it. no problem with lowest cost, but um it's been a fun experiment to to test out. I think the only the negative is kind of like you mentioned, you really got to be thoughtful about how you're bundling things, how you're kind of grouping them. You know, in a BAU manual campaign, you can do different I really like it because I like having less campaigns.

I'm fine to have more adsets as far as the data and you can split things by how you want to control spending from an inventory reason, from a geographic reason, but also from an AOV and and margin reason. The problem with ASC's with only having one adset is like you need a bunch of different campaigns and you know especially for smaller brands but even for us I just don't like having too many campaigns. I'm the same way.

Like I have at least one account that for a long time was spending almost $300,000 a month and it was one campaign. It was just one BAU campaign website and shops a million adsets in it and that was it. Now it's a very simple excuse set for that brand and yeah. Okay. Let me ask you a question though. I remember you saying at some point tweeting and you were looking for pe for input from people who had spent a whole lot of money on caps.

You know, the tweet was something like who's spending a million dollars a month with caps, right? And so I think one of the things that people are concerned about with running caps is and this is true for all cost controls, right? So big caps, small caps, minerals, any of them. The concern people have is that they will not be able to get through enough spend. Essentially, the logic is that cost controls are an efficiency mechanism, not a scale mechanism.

And so it's going to suppress your spendum for those reasons. Is that right? That that was previously your concern about it. And and by the way, that is a reasonable concern. Like you guys are running a big good business over there. You need to be able to spend a bunch of money. Like so if you can't get through your spend, it's a problem. So yeah, that was your concern. And if so, how have you found that to actually play out since since adding those into your to your mix?

Yeah, that that's a really good question. That was a concern, especially because we weren't necessarily having efficiency issues. You know, we were just trying to grow and scale. So it's like why limit that? So you know performance was really good. So really the way that we were you know optimizing performance let's say we efficiency wasn't where we wanted is we just every few days increase or pullback spend. you know, obviously we're making we're running tests and and optimizing ads, but really it was just withstand overall and that's kind of how we, you know, optimize and balance our overall efficiency.

And that was fine, but I think, you know, it didn't really allow us to really take advantage of, you know, what it was like I agree with a lot of your thought process and Taylor's about, you know, machine learning and and not trying to make allow the media buyer to make too many decisions. Definitely. I was there on the whole, you know, CBO thing, there on broad targeting, like all that kind of stuff. There on looking at spend and not trying to, you know, override the breakdown effect.

But then I was like, well, why am I doing it on the spend level? Like, why do I think I can I can make the best decisions about what days we should be spending more. And I was just reacting and I was just like, hey, our AM was actually a little bit better than target the last few days. We can bump up and a little bit not. And we'll still do that, but we'll do that now with caps rather than doing it with, you know, lowest cost.

So that was kind of why I also believe and I've seen like for us is like I think especially when you get to our size we're probably a little over reliant on meta but I think meta is the best platform in the world at demand capture if somebody's in market ready to buy conversion optimized ads are just like the best thing in the world. I don't think it's the best for creating demand especially as you get to a certain size.

I think for eight figure brands it's totally fine. Seven figure brands like don't worry about I also agree with you on this like don't worry about other platforms. don't worry about Tik Tok or YouTube. Like meta is going to be your best bet. I do think when you get to a certain size, it gets very difficult to reach new people and just purchase optimized things. So, we've spent the better part of the last 6 months and continuing to try to find other places just to kind of reach new people.

Part of that is is things we're doing like meta different upperfunnel campaigns and things like that. Obviously, there's some, you know, YouTube and TV, but I think when you can bring your own demand, conversion optimized stuff is just like the best thing in the world. And so what we found is whenever we have these big product launches, these big moments, that's when we can really rip spend. It's kind of like that four peaks theory.

So it's like don't just try to rely on meta to, you know, allow you to kind of spend a lot and find people and create demand. Like do things off platform. Have product launches, have partnerships, have whatever it is, you know, build your demand that way and then capture it with these conversion optimized campaigns. Growing brands very often need to make a specific investment in the operational supply chain, inventory forecasting, inventory management side of their business and are normally unequipped to do it if they're earlier stage [music] founders.

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I mean, if we hit forecast for this month. Yeah. You'll have to graduate from the eight kind of operator Slack group and it'll be like 8 plus 1 nine kind of operators. Yeah. Yeah. Great. I actually hadn't heard you say what the numbers was before, but I had assumed you guys were high eight. Um, that was kind of just from hearing you talk. I think I don't I actually don't know why I thought that, but anyway, I think that's totally right.

And I think the conversion optimized Facebook up to probably 50 million in revenue for most brands gets you really far at the prospecting level. And part of the thing there is like by definition if you can build a business that can get to 50 million DTOC, you know, or even like mostly DTOC, that means there are a lot of people who are potentially conversion optimizable in your total addressable market essentially. And so therefore, like Facebook can take you really, really, really far, I think.

But I think you're right, especially as you also increase your ability to capture demand in other channels. Like are you guys omni channel at all? Like we have retail stores, so we have got our own stores. We're not in wholesale. Okay, got it. Yeah. Do are you able to say how much of the business DDC makes up? 92%. Okay, got it. Well, we got three stores that are 8%. So, like they're actually pretty strong. Those are meaningful volume.

And I assume there's a plan for more stores. Yeah. Yep. Yeah. So, you know, I look at that and say like the more that you expand demand capture to those kinds of things to then especially it makes a lot of sense to keep building your awareness and all these things. And also, I just think when you're at that size, it it implies more brand equity. It implies more brand awareness. Like, there's just a lot of things that make it so that now it also probably implies more cash potentially.

And so, you can just sort of afford a longer payback period on some things. Like, there's a lot of reasons to start doing it at that stage. But it sounds like you're even saying even aside from sort of like other channels, uh, you're thinking about it as like, yeah, product drops, like creating moments that drive value. Besides product drops, do you guys do anything that create those kind of moments? We don't do sales.

We're trying to figure out, you know, partnership strategy. We had a a launch last week that was a, you know, limited edition. We try to put some kind of exclusive things in there, right? So, just like how you merchandise things, you know, we try to do it in in kits, so we got high OB to be able to spend against and then like if we can do partnerships to, you know, be able to, you know, work with other brands and get someone with their audience.

So, that's Yeah, but it's been a lot of product launches and things like that and then a lot of like exclusive limited things just based on some kind of moment. That's been like the biggest, you know, demand driver for us. How many of those things types of things are you doing throughout the year? You think in ballpark. I don't need a specific number. Oh man, it's crazy. Um, we probably just looking at our calendar right now, we probably average one and a half launches a month right now.

Yeah. Okay, that's great. It's slowing down, but it's still a lot of those because we're pretty new. Yeah. And I mean that's also like enough to keep emailing people and keep, you know what I mean? Like there's like a there's plenty to talk about there mixed with all the other stuff that you've already got going. So yeah, that's cool. You said you were going to ask me something or you had a thought about bid caps before we before we hit record.

Let me see if you've seen this happen. One thing I've seen happen, right, if you're, you know, using the bare algorithm, I guess, right? It's bidding off of an expected conversion rate. And you have to be careful is you can blow through stand coming off of a high conversion rate. We saw this last year with cost caps. We've seen it a little bit just with our previous launches. We were able to mitigate it a little bit, but it's bidding off of an expected conversion rate.

Let's say you have a product launch or a sale or a weekend or something like that and you've got like a 10% conversion rate. Meta's going to see that. It can deliver an, you know, an impression at a certain CPM and hit your target bid because it knows the conversion rate. Well, the second you shut that sale off, you run out of inventory or something like that. Meta has no idea that your conversion rate has now cut in half. that they're going to deliver the same CPMs that get you that bid, but now that you're converting in half or let's say you have a a website issue, you got something broken, you got something out of stock, you will actually still spend full budget at that.

So, I've seen that happen where we've like ended a sale and did a product launch or had something out of stock and, you know, media buyer accidentally left things on and that's when you can kind of blow through full budget. So, have you seen that at all? Yeah, that's 100% right. I think I think like this is a this is a good call out. You know, we're we're recording this a couple weeks before Black Friday. Like you nailed the mechanism there.

I think it's important for people to understand that, right? A bid cap or a cost cap works off of two expected metrics from meta, right? It's expected click-through rate and expected conversion rate. Now, the expected click-through rate, Meta is getting that data so fast and so constantly that there shouldn't be massive changes on that. Should be at the adset level. There should be less volatility on that sort of Meta should be able to predict and adjust predictions on that really, really fast.

But the whole beauty of caps is that like the expected conversion rate, one of the things that's great about it is that conversion rate is going to be a smaller sample activity by definition. It's the very end of your funnel. So if you think about like a click over an impression, there's going to be thousands of clicks per day even if you're not spending that much money. And Meta is getting a lot of information really really fast about that.

But conversions, you know, you may be getting a few conversions per day. And you know, for you Cody, obviously you're spending a lot more money, so you're getting a bunch more conversions per day. But Meta is going to have to constantly be updating its forecast of your conversion rate. And that's that ECVR number, that expected conversion rate. And that's what's informing the way that your bid is entering the auction and therefore like the expected CAC that you're getting in the auction.

And so if your conversion rate is significantly higher for a couple of days, for example, because it's Black Friday or something like that, right? Then Meta's most recent data set is going to have a conversion rate maybe twice what it's going to be tomorrow. And yeah, product launches, sales, anything like docs. I think the move there is to come out of a sale and to adjust your bid caps down or your minimum rorowass target up.

I think like overcompensate though. I think you have to like overcompensate probably, right? That's right. Yeah, adjust them significantly down and overcompensate so that you sort of assume that that will happen. And then what will happen is is relatively quickly I think meta will believe Meta's production modeling is using basian logic to to forecast. It's constantly regressing your conversion rate against its larger sample set.

It's a larger data set. So, it will eventually figure it back out, right? I think there's a delay, though. I'm kind of I'm waiting for an answer from my reps of like what the delay is. I do think there's a delay. There should be a delay. That's part of the point of the cap, right? Is that like it's easy to forget that like sample sizes take a little while before they get truly large. You know, hundreds of conversions may still be a relatively small sample.

And so one of the great things about running Bidc gaps is that Meta is able to sort of quote unquote think about that problem of like how to use backward-looking information to predict the future which is a very hard problem. Like Meta is able to you know quotequote think about that problem much better than I am certainly and even like seriously trained you know stat heads. So but there are things that they don't know.

There are things that they don't have access to that'll take time. Now I also think meta probably has you know it's got access to what's happening on your site to some degree. it's got access to happening to what's happening, you know, in platform. And so, one of the reasons I don't worry about meta under spending a lot of times when people are really worried about this idea that like, oh, meta's not even giving these ads a chance is because I think meta is getting a lot of information at the engagement level of ads that it can then use to predict what's going to happen down the funnel.

And so, I I think Meta learns very fast. But your point is right, your point is right. That's really what I'm saying, which is like you have to sort of overcompensate for this thing. And by the way, the reverse is true, too, which is that if you can expect a big increase in conversion rate, you actually may want to raise your bid caps a little bit relative to the moment. Oh man, you're so right. Yeah, you're 100% right about that.

Yeah. [clears throat] And the the thing that I always point out here is like right now, if you're listening to this and you're still a week or two out from Black Friday, one thing that you're probably like you might not be thinking carefully enough about is that you're going to get more delayed attribution than usual over the next couple weeks. People are going to click today and they're going to come back to your website in 3 weeks and they're going to give you their email address or or phone number because they want you to remind them when your sale comes because they all know Black Friday's coming.

And so the conversion value of that audience is going to be higher partly because that delayed attribution mechanism where if you track this the gap between one day click and 28 day click behavior on your website but then also you know like you said like the issue of conversion rate. Oh, one last thing here, which is that by definition, if your conversions are piling up much faster than usual, then that also means that Meta is getting more information quickly and it's a lot easier for it to probably update its forecast quickly.

So, I like I want to be careful to not tell everybody like raise your bid caps extra on Black Friday because like you could blow through a lot of money really fast. But that plays in both directions and so you should be aware of it. No, you're right about that. I have been doing it our strategy kind of coming off of these is bringing them down, right? Kind of however we see conversion rate go down. So if we see a, you know, 20% day or day conversion rate, I'm bringing caps down at least 20%, probably more cuz probably raise them before conversion rate went up.

So sometimes we're bringing them down like 30 40%. And then we're also putting the ads limit cuz we just don't want to spend more. We know kind of we have enough data to know like how hard sitewide revenue drops off after a sale. So if we want to keep a me target, like we just know like, hey, we got to spend this much this day. So I will cap that just to be like, hey, just in case the system is kind of slow and we're delivering more than we should.

That's our cap. So we we probably run into them a little bit more than you see or I know like you prefer to and plan on it might just be at like that high spend. Just trying to be really conservative about it cuz otherwise it could blow through and that's that's the one thing that keeps me up at night about them. Yeah. Yeah. Some of this is business goals gold and capitalization too by the way. There's a question I always ask people when they say like, "Hey, like the average is coming in here, but I'm a little unsure about what I should do relative to this and this." And like what I always say is like, "Okay, if you're going to make an adjustment, which side are you comfortable missing on?" Right?

Like some people would much rather overspend, have a worse return on a short window, and be glad to get through the money. Some people are so conscious of like maintaining profitability, and there's there's all kinds of reasons for both of these things, right? It might be like you have massive LTV, you might be willing to eat it a little bit, take more of a loth on the front end. If you have low cash in the bank, you might be like, we've got to absolutely protect our cash.

And so there's a couple reasons why you would you would approach this this way. But I always try to ask that question. Like which side are you comfortable missing on? Do if that's the way I would I would answer this question to some degree is like if you really want to make sure that you maintain your profitability, then air on side of being a little more conservative and yeah, you might not spend $10,000 you wish you would have spent afterwards.

You were right about that. That's actually what I've told my media buyer on trading is like I'd rather understand bring the caps down too much after sale and then we can always walk them back up. That's right. You guys are growing fast enough. You're making plenty of money. Like you don't need to go and like blow cash. That's like not good for anybody. Yeah, I did that last year. Like I I didn't know this as well. I was not as well versed in cap.

So we blew through some some spend kind of the days after our sale that you know I was not that thrilled about. But that's a good learning lesson that we'll you know we'll keep our eye on this year. Any other cap stuff or because I maybe have some questions for you too. Uh, so I got an idea. So here's another thing. I I know we were talking about kind of the concerns before and that but we've actually been able to spend pretty fully.

One thing I think is helping this is a little bit more difficult and harder to measure. We're testing a lot of upper funnel stuff. So we're testing a lot of like reach things and we're using house which is a incrementality testing platform where we can run you know geos and cuz you're not going to see any clicks on them. Um there is an incremental lift. It's not super efficient. I don't know exactly what our cost per metal could should be on like an upper funnel thing.

Like it should be a longer thing. We're running a pretty long like 8week test that we actually started in Septe end of September that'll go through Black Friday. So that one I think is helping. And here's what I would do. Tell me what you think of this. If I didn't have access to something like house, here's what I would do. I would run an upper funnel campaign. So probably like a reach maybe video view campaign in a certain part of the country.

Let's just pick half the country, right? And I would run two big cap whatever it is campaigns. One in that part of the country and that one another. Keep everything the same same caps and just see what you can spend more on. And I feel like that could give you like a quick proxy of like, hey, there's there's more demand and more spend, right? You've actually created the demand so that your bid caps are going to go work more efficiently or spend more.

Yeah, I think that's super interesting. I I mean, the only thing you have to watch out for is audience size relative to each of those. And if the audience makeup is the same, you might have some difference in demographics. It's like there might be a lot of variables there. But I think your basic point is right. I'm curious if you're geo targeting. Have you consciously run them in places where your stores are? We have it.

Now we're trying to limit that as a variable. So we're not even looking at our store performance on that cuz when you do it with a house, it kind of randomizes it and they kind of give you the DMAs to target or exclude. So I actually don't know for sure, but we don't want to look at that as a variable. In the future, I would love to because what's pretty cool for us is like we don't really do much marketing for the stores.

Um, and most signs point to it's it's digital that drives it. I would probably be pretty confident that like if we ran a test our meta team house team has said look we probably have to have more stores because like if you're nationwide and wholesale you can run media in one region and kind of see that ours there's too many variables going on to get a good read. I would be pretty confident yeah in that as well. It's just it's it's harder to measure.

Are you guys on Amazon? No we're not. Okay that's interesting. Okay. So it's all DTOC and then your digital and then your store and then is your store CRM tied back to your Shopify. Yeah, I would say thank you. Yeah, we use Shopify when we run those geo tests that we're only looking at online. We don't look at store um just to try to remove that as a variable, but yeah, it's I just wondered if you could see that. That's really cool.

Yeah, I mean people also sort of underestimate this. They're just like I've got stores with conversion rates in you know 3 4% whatever it is. It's like that means 96 out of 100 clicks are not buying. to say nothing of all the video views and ad impressions on those things like that byproduct value of that spend is going to affect your demand capture in other places whether it's a store or retail setting or Amazon or whatever you know and so your approach to that reach test specifically with the measurement online is really interesting and what I also wonder is like how long the demand capture like the consideration cycle is for customer right so like probably much higher which is why we need like a long test for it yeah it'll be really interesting to see how how that affects Black Friday I think to see if you can attribute back black Friday, you know, any additional value from those from those folks.

We're hoping. Yeah. Yeah. Tell me how that goes and then we should talk about it afterwards if if it's something I will for sure. Yeah. Exactly. So, what happened is we actually ran a geolo lift test probably in the summer with reach. Hey, I didn't really know how to buy reach. It's so different. So, like all of the broad targeting that we did, it didn't work because it's no longer optimizing for a purchase event. This is just kind of side tangent.

So, it optimized for the cheapest impressions. So our main audience is probably it's like a 50 plus audience right on Meta. All the spend went to 18 year old or half of the spend went to 18 year old audiences right because that's the cheapest. Also a lot of the spend went to male cuz I used to oh like I only have to select that stuff and you know Meta knows but it's using such a different signal. However, we still saw a lift.

We still saw like one and a half% lift and we didn't even buy it correctly. So Meta team came back to us and they were like you don't really know what you're doing. They said a lot nicer than that but they're like a let's give it a better approach. our frequency was too low. Like I just didn't really know that stuff. And then B, let's run it for longer because we did a twoe test with a twoe look back. So like if the consideration phase is longer.

So that's why I'm really excited. Like we're doing a long test. I think we have a much better strategy about it now and then we're obviously filling this funnel hopefully for, you know, for Black Friday. So yeah, I'll definitely keep you updated on that. But I do think it's one reason. It's harder to measure just like in my bones. I do think it's one reason why these taps are actually working pretty well. Yeah. Yeah, you know, now that you think about it or now that you mention it, I'm like running something semi- similar for a retail partner for one of my clients and I'm thinking that I probably should limit the geos more because I'm so used to the broad targeting approach.

Do you have access to bid caps? Not bid caps, um bid multipliers. Uh maybe. I don't know what that is. What is that? They're pretty cool. I don't know if they're available to everybody, but one of the problems with kind of this consolidated approach is that, you know, you don't always want to bid evenly on the same thing. And so people will split them out. The bid multipliers are a way to be able to kind of keep things consolidated, but actually bid differently if there's some information that Meta doesn't know and the business knows.

So, you can do it. Let's say you knew that certain age groups were more valuable to you on an LTV basis in the same adset, you could actually bid higher on a certain age group. You can kind of, you know, increase the weight or decrease the weight of it to kind of, you know, force delivery to a different one. It's not trying to override the algorithm like Meta knows best when it has access to the right information, but it's a way to provide a little bit more information that Meta doesn't know to kind of give it signal to, you know, bid more or less on something.

So, you can do it I think you can do it based on, you know, geographic information um and then some demographic information. There's probably some other stuff. So, which is something we're gonna start playing around with. So, we can kind of bid higher or or lower on certain things. Super interesting. So like meaning like you could bid more on places where their stores like it might be more valuable let's say like you know a $50 conversion is your goal. you might actually accept a little higher conversion, you know, CPI in places where you have a store because, you know, there's a little bit more value that you're creating there from, you know, store capture, which we've seen like, so this was even when we were just doing conversion optimized stuff.

We had like a mascara ad take off and so for that week, our spend was really heavy on mascara and it wasn't normally like that and the head of the stores was like, "What are you guys doing?" Like everybody's coming in the store asking for mascara and like mascara was number one product. That's really fascinating. Yeah, that makes so much sense. I mean, again, like it's just so easy to forget that like your ads are running to millions of people, especially, you know, your guys' level of spend and your frequency is probably a couple, you know, like at that level of spend, it's probably decently high.

Like, you're hitting people a lot with that. And some of those people are within a mile of your store and they're going to pop in and go check it out, you know? Like, it's funny. I always think about like, you know, David Oglevie talking so much about, you know, in his era about the key to advertising is that it sells products and it should be all about measurability and all this kind of stuff. But just think about how hard it was for those guys to measure the effect of their advertising campaigns relative to how easy it is for us.

And we're all like, "Oh, does that actually make a difference for in store sales and like, you know, that was their whole world for forever, you know, so hard." But it's probably why they were so good at it. And it's probably why I think we run into limitations if we're just looking at like a last click or something like that. And I'm I'm totally guilty of it. Like I'm trying to rewrite my brain and be more okay with these less trackable things or different ways to measure them.

Yeah. Okay. We've only got a couple minutes left and I want to be sensitive to your time. So here's my question for you Cody. I really like asking this question to people right now which is you're active in some communities of other people you know advertisers you're coaching folks as far as I know still I know you've done some of that in the past few I don't know if you have clients right now you know you've got your account all these things so as those conversations are happening for you in DTOC advertising right now what is sort of floating to the top of your brain as the thing you're just kind of noodling on interested in chasing something that you're most interested in whether it has anything to do with any conversation we've had so far or not what's sort of like top of mind for you right now that that you're just sort of thinking about.

That's such a great question. That's such a great question. I think for us it's a few things, but it's how are we going to, you know, reach new people because I think we've gotten to a point where it's just, you know, same same people over and over. So, I do think a little bit of that is channel diversification. I think that's a really controversial topic, but trying to, you know, find channels that have a higher percentage of new visitors while still being profitable.

Part of that is using meta to reach new people because a huge part of that is the different strategies. That's that upperfunnel stuff. Running like a full funnel account. It's just harder to measure. And then creative diversity. That's like the name of the game that, you know, Meta is preaching. So, I think those are at least like the three things that I'm thinking about to allow us to try to, you know, bust through a plateau and hopefully get to the next level.

It makes perfect sense. I mean, I think it's interesting you say like channel diversification is u controversial. Like I would say at your guys' size it's not controversial. Like it shouldn't be. Like when I preach don't diversify your channels like I'm preaching that to people who are like sub 30 million and even probably sub 50 million where it's like you can probably get a lot more juice a lot focus there probably really matters a lot but like there is a limit to that at some point meta is not the most efficient next use of your dollar and the whole logic of like don't diversify is spend your next dollar in the most efficient place that's the logic at some point meta stops being that place and it's maybe YouTube or PMAX or Tik Tok or you know I have no idea like it might podcasts or might be connected TV depending on all kinds of factors, you know.

But yeah, so that makes sense to me. Well, I'll be curious to hear you talk about that more as you keep exploring it and and sort of rethink your approach to some of the attribution stuff as you go do that more because it is challenging. At least for me, I am no expert on that kind of stuff. Yeah, it's learning a different game and it's being more okay with it's still measurable. So, I don't mean to just like throw money out there. is just so much harder to measure and it's a different way of looking at it and you can no longer throw up an ad in one day and get some instant gratification but it's like yeah let me run this six week test and let me spend a few hundred grand on TV or a few hundredk on reach ads and come back and and see if if it works or not so yeah I'll definitely give you update on that.

All right, promote some stuff. What should people do to find your content? Where should they follow you? Where should they seek to work with you? Any of those kinds of things? Twitter probably the best place. Cody Plah on Twitter. I write a weekly newsletter mainly talking about kind of everything we talked about just whatever is going on in my mind about you know media buying and growth and then also we are hiring a senior director of growth.

So you got to be local to you know New Jersey area whoever is super exciting to kind of come work with me and and come grow the team. Dude that is a killer opportunity if you're in anywhere the New Jersey area and want to go work with Cody that would be a great opportunity for you to do that. So go follow Cody on Twitter go sign up for his newsletter. Those links are in the show notes, of course, as always. Dude, thanks for taking the time.

I appreciate it. Of course, man. This was fun. All right, there's my episode with Cody. I hope that deep dive was helpful for you. I've got lots more content coming like that actually very soon. So, make sure to subscribe if you are not subscribed already. If you liked this episode, I have a couple episodes coming up that you will love, including a deep dive into somebody's actual ad account, another opening the books episode.

I've also got an AMA coming soon where I'm going to talk through sort of the details of bidcap and other media buying related questions because I'm getting a lot of them these days. And so before you do any of that though, before you do go subscribe to even me, go subscribe to Cody's newsletter. You can do that at get.codyyloffer.com. That link is in the show notes. And make sure to give Cody a follow on Twitter, Codyluff.

He is uh a really smart guy who who shares a lot of his learnings. He also has a mentor pass link in his Twitter profile. I'm going to put it in the show notes. I don't know if he's all full up, but if you can get his time, it might be worth it for your business as well. And of course, you can follow up with me in all the usual places, and jer on Twitter, podcast atajjfgrowth.com if you want to drop me an email, ask me a question, inspire an episode, anything like that.

And all the rest of everything I do is at afgrowth.com. Don't forget to go to more supply chain to get supply chain help for your business if you did not hear about that already. If you are growing your business and need supply chain help, go check out, take a call with more fractional supply chain by going to morow.co and use the code AJF20 to tell them that I sent you and get 20% off your first three months. Thanks so much for listening, for watching.

I will see you next time. [music]