Josh founded CVO Acceleration. As a Digital Marketer Certified Partner, my mission is to help you break free from the myth of the "one size fits all" approach to digital advertising so that we can find the approach that works for you and you alone. You can head to cvoacceleration.com today, check out a Case Study where we did over a 1500% ROI in the first 6 months with a 7+ figure E-Commerce client and book your strategy call so we can get to work.
On this episode of that rich dad, poor ad podcast, we have a special guest Josh Marsden, who is the creator of the arm five formula, where he kind of coaches e-com businesses on scaling their ads while remaining efficient. We also kind of dive into the acquisition, the retention, scaling up side of things and kind of what you need to know and how to create a marketing strategy for it. And on our financial side of things, on how it's good to keep an extra line of credit. And really haven't, you know, about two times your ad spend budget, just in case you need to scale up or scale down a little bit, make sure to tune in on this one. It's all marketing related. Don't miss it.
Well, let me start with a result. So, um, we had a client for example, here in July, and this is, uh, throughout July, they made $456,754 in revenue. And they only spent 43,238 and 42 cents. So they actually made back 812% on every dollar spent on ads. And, um, and this is a company that has worked with us for some time. They've really had the arm by formula implemented and like truly dialed in. Um, but that's the type of results. The on platform that can get companies. And we, we S we estimate that we do about 300 to 600% on average ROI, depending on how long they've had the arm five formula implemented into their e-commerce business.
You're listening to the rich add poor ed podcast, where we break down the financial principles that rich advertisers are deploying today to turn advertising into profit and get tons of traffic to their websites without killing their cash. These advertisers agencies, affiliates brands are responsible for managing over a billion dollars a year in ad spend. You'll hear about what's working for them today. They're rich ads and we'll roast their Epic failures and crappy ads on the internet with core ads. Let's get into it.
We are back everybody. Welcome to another episode of the rich dad, poor add podcast, where we dive into what's working, what isn't working and some cool financial tips. We got your host, Dylan Carpenter in the house and Mr. Zach Johnson. What's good, man. Dude, I'm doing good. Hey, well, sweet. We've got a very special guest on today. Josh Marston, you know, he's a serial entrepreneur, the host of the e-commerce performance marketing show and kind of all in on the teaching, you know, ads for e-com businesses, but mostly the creator of the arm five formula, which is a super juicy tactic we're going to be diving into today. So without further ado, what's up, Josh?
Hey, how's it going guys? Thanks for having me on the show. Yeah, man, I'm excited to have a recovering agency owner on the show.
Yeah, absolutely. Man. I'm still licking my wounds from the past seven and a half years.
Hey man, you're alive. I survived and I thrived. Yeah, that's cool, man. Well, I'm excited to dive into your transition,
But give everybody a little bit up to speed on, you know, what you're up to now. I think, I think most people listening probably know you as Josh Marson, you know, the, the Facebook ad agency guy, but you're onto some pretty cool new things. So get everybody up to speed. Yeah. Yeah, of course. Um, yeah, I've been running, uh, an agency since early 2013. Um, but as of, uh, the publishing date of this recording, uh, I have now transitioned out of that and I am now helping e-commerce business owners apply my arm five formula, which helps e-commerce businesses maximize their return on ad spend, uh, by implementing nine key systems that I've recognized through my agency experience that every e-commerce business needs in order to maximize the ROAS. Uh, so I do that now, um, with the arm five formula accelerator. And then on top of that, I also have, uh, some e-com businesses also that I am managing and scaling through partnerships and, uh, different, uh, team members and things like that. So I'm really excited for what I'm doing right now today. That's awesome, man. So let me get this straight. The arm five formula has nine tips in it. Nine systems, correct? Nine system. All right. So five core systems and four bonus systems.
Well, the five stands for the five profit amplifiers. Gotcha. So, yeah. Um, but there's nine systems that, you know, I've recognize and that's what I help e-commerce businesses apply in my program. Yeah. You know, I really think that, I feel like you really started to hone in and focus almost exclusively on e-commerce maybe two, three years ago at this point it's from when I started really noticing it. Um, and, uh, I, I feel like that's done really, it's done wonders for you. Uh, I, I feel like that was a really solid move to, to focus and apply your skills in that. Yeah, no, I appreciate it, man. Um, yeah, it was, uh, late 2017 when, uh, you came onto the e-commerce success summit. That was essentially my pivot point when I decided to niche down into specifically e-commerce and, and make sure that our marketing match that as well.
And since then, you know, yeah. We've had some massive gains, you know, in the agency. I mean, um, 2019 and in 2020, um, have had some tremendous results on the, uh, the sales side and also the results side, uh, with the agency, which is why I've been able to step out of the agency. Um, but yeah, it was a, it was a good move and, um, I had no idea that, you know, COVID would happen. Nobody knew that would happen. And, um, you know, looking back, you know, I feel like that's, uh, the universe led me to niche into e-commerce this way I was prepared for 2020, because e-commerce is booming right now.
Oh yeah. I mean, especially with all the black Friday Walmart and target on opening their doors, uh, you know, with all the e-comm ads I'm doing, I'm expecting just the flood Gates to open. So I am so amped up about it. Yeah.
Yeah. Sam, totally. With your e-comm brands
Out of curiosity, what do y'all spend during the first three quarters versus that Q4? Is it a pretty substantial lift?
Oh yeah, definitely. I mean, fourth quarter is, you know, where clients, you know, in, in my past agency experiences where they really kind of go all in because they want to end the year on a good note obviously, and they want to also spend as much money as possible as this way. They, you know, they look nice to, uh, you know, their, uh, their government, whether they're us, Canada base, et cetera, you know, this way they could write off as much as possible. Um, as far as like amounts, I mean, I couldn't give you like a clear statistic, but typically the, uh, the budgets go up, I think around like 40%, more or less, uh, going into fourth quarter.
Oh yeah. I mean, it's going to be, and especially with the COVID year and the elections who knows what's going to happen, but Hey, take advantage of it, right?
Yeah, yeah, totally. Yeah, absolutely. And the thing is that, uh, our, our in five formula too, it's really designed to build your top of the funnel consistently and keep building it. It's not like a, a typical ad strategy where you just go direct offer. You know, it's really more of a full fledged marketing strategy. And so going into the fourth quarter clients that have the arm, and I really prepare for it because they've got a massive warm audience that they can retarget and they can show their offers too. So I'm really excited for, for a previous agency clients, current arm, five formula accelerator clients, cause they're, they're going to crush it here in the fourth quarter.
Well, man, I'm getting amped up here and about this. So, I mean, let's go ahead and segue this bad boy into the rich ad segment. And, you know, what's working when it comes to the RFI formula, how does it all come together? And, you know, when it's all placed together properly, how those results kind of turn out?
Well, let me start with a result. So, um, we had a client for example, here in July, and this is, uh, throughout July, they made $456,754 in revenue. And they only spent 43,238 and 42 cents. So they actually made back 812% on every dollar spent on ads. And, um, and this is a, you know, a company that has worked with us for some time. They've really had the arm five formula implemented and like truly dialed in. Um, but that's the type of results. The on platform that can get companies. We S we estimate that we do about 300 to 600% on average ROI, depending on how long they've had the arm five formula implemented into their e-commerce business. Um, and it really just comes down to implementing nine key systems. Um, you know, you really have to maximize every click and lead and customer you're getting from digital ads to really see the greatest ROI from advertising.
I know you guys know this because you guys are veterans. Um, but a lot of e-commerce businesses are somewhat new to e-commerce that aren't quite at seven a year. They don't really get that. And, uh, they have a very limited view when it comes to how to use ads. They really look at ads as getting customers, getting sales, um, and they, and they don't have this long lifecycle, uh, strategy in their business. And they need that because when you have it, you know, that's when you can really dictate your cost per customer, because you can acquire people cheaper. And then on top of that, you can maximize your revenue from your customers after you received them as well. So I can go into these nine key systems if you want. I mean, I don't know what you want me to talk, but
Bring it on. Let's go ahead and shape it out. Cause I'm kind of curious, I'm the bad boy as well.
Yeah, that sounds good. Yeah. So these nine key systems are acquiring customers cost-effectively which obviously everybody wants to do. Uh, but it's also having good follow-up systems, uh, good content marketing, uh, customer activation strategies, customer monetization strategies, and Omni channel strategy, a budget allocation and affiliate utilization, and then add scaling techniques as well, which is the last one, because once you have all those other systems then add scaling will, will really benefit the business because they've got the other AI systems in place. And they're really seeing significant profit coming in from their ad spend. So go ahead and repeat those back. Oh my God.
That's what I was going to mention. Are these things, are there differences? Is it all at once? How do you kind of have that in play?
Yeah, well, it depends on what's working. What isn't, you know, in a company that is working with me, you know, cause if they have good customer acquisition, I mean, sure we can optimize and we, and we will work together in my program, but they might, might need some other of these systems implemented. And so I'll tell them to go through that module in my program instead of just going through it from a module one all the way to module nine. Uh, so just really depends on the company that I'm working with and what their strengths and what their weaknesses are as they enter into my program.
What kind of questions do you ask before they even kind of go into your program to kind of get a really Phillip it's a good fit there?
Uh, I asked them like, for example, like, uh, I mean simple stuff, like, uh, how much are you making in your business right now per month? Uh, what are your biggest challenges right now in your business? And what I'm seeking here is I'm seeking, you know, I'm having a hard time getting advertising, uh, to work or be profitable or I'm having a hard time scaling, uh, which that's really like our core customer. That's like our number one avatar. Um, when they say stuff like that, that's when I'm now I know I could really help them, uh, with the arm platform.
That makes total sense. I mean, when it comes to the scaling side, are you just kind of more or less assisting on the digital marketing side? Do you help them with production saying, because you know, we have a lot of, you know, individuals who love scaling more or less, but scaling is one thing, but in the back end of the business inventory shipping, is that kind of something you dive into with the four and five formula? Or is that something more on the actual client themselves?
Yeah, that's on the clients themselves, like, uh, operations and fulfillment and sourcing, you know, that's something that they have to have like intact and they have to have those systems are really optimized this way. They can scale. Um, I have friends and colleagues that are experts in that stuff. I'm not, I'm more of an expert in scaling on the marketing side.
Oh yeah, no, I totally get that because yeah, I've definitely scaled some then realizing, Oh, Hey, we put it out of inventory and I'm like,
I hear ya. I hear ya.
Oh shoot. That's quite a case study right there for the RFI formula.
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Now, when it doesn't go as planned, let's dive into this written, this poor ad segment and what kind of happens when it doesn't kind of all come together more or less?
Well, you know, when an e-commerce company is struggling, let's just put it that way. When they're struggling to get ads to work, uh, they probably don't have the marketing strategy really dialed in where they know who they're speaking to. They know what message works. Um, they don't have like a good funnel or a good website it's really optimized to convert, um, or if they are getting customers, but they're like around breakeven or slightly above that, maybe up to 200% ROAS. Uh, that's still really not enough because, you know, as we all know a typical e-commerce business maybe has like a profit margin around maybe 20, 30% more or less, you know? So, um, so they really have to optimize the backend and, um, and, and they do that through implementing a lot of the systems that I went over with the arm five formula, because once those systems are in, then they're able to really properly monetize their customers.
They're able to properly monetize their leads, they're on the maybe fence or clicks or on the maybe fence. Um, and then the Roaz goes up and then they can start really scaling their ad spend. Um, obviously there's some techniques there, uh, which I go over in my program. So this way they can do it smoothly, but, uh, once those systems are in place and the Roaz goes from breakeven to 200%, then it goes up to let's just say 400, 500% ish or more, then, you know, those scaling their ad spend makes a lot more sense at that point because their numbers are really dialed down
Most definitely. So, I mean, when it doesn't go as planned, what are some of those nightmare stories, you know, big losses that, you know, break even at worse? Or is it something where people have, you know, taken a beating for, you know, one or two months for it kind of kicks back up and, you know, gets optimized more or less?
Yeah, well, you know, I help people get out of that situation. So I've never had, I don't have any stories about people getting into that situation, um, with my help. But, um, you know, some of the companies that I've worked with, I think that, you know, it just, it just comes down to like, I've seen people just really just trying to drive traffic, using digital ads, whether it's Facebook or Google, but usually it's like Facebook that I seem to attract probably because I've authored two books on Facebook advertising. And, um, and typically like what I hear and see is just the people not getting Facebook ads, uh, to work, um, above that 200% row as, um, or not at all. Um, cause I that's who I really truly help is in my program is I help companies that aren't at seven figures a year and you know, those people typically aren't, uh, getting their Facebook advertising to work well or work at all.
Um, and typically what I see with that is it's just a strategy, you know, it's, it's their strategy. Um, I think that's what you're looking for here is their strategy is so much about direct to offer, um, driving people to their website, for example. And, um, and they might get their numbers to work a bit, like I said, maybe break even 200% at the most, but that's not going to help them really, really scale. Um, unless they've got some of these other systems in place to really maximize that ROI and also to reduce the CPA as well. And it's because their strategy is just so simple and singular when it comes to trying to get customers from Facebook ads that they're not thinking about an entire top to bottom marketing strategy, because top to bottom marketing strategy, as we all know is all about generating that awareness first and foremost, and then moving people down to that engagement and then moving people down to that conversion and then moving people down to that monetization and with Facebook ads to be able to really, really scale, you have to have that comprehensive approach, uh, because Facebook's algorithm rewards you when you do that.
Um, and so if you're using, for example, content at the top, whether it's blog articles that you're driving people to, or whether it's video views, that's going to greatly reduce your cost per click and cost per view when you're getting people into your funnel, which is going to reduce also, you know, your CPA as well when you go to convert them too. So that's, that's what I've seen happening with a lot of e-commerce businesses are struggling, is their strategy. Isn't comprehensive taking into account a real marketing top to bottom strategy with their Facebook ads. It's very much just straight to conversion, straight to conversion, straight to conversion. And unless you have like a really killer offer or you have really, really good messaging, um, and you know, obviously targeting the match or you're writing a trend, it could be really challenging to, to do that. Like some people have success with it, but that successes are few and far in between. Versus if you really want to be able to tip the scales in your favor, you want to really have a comprehensive top to bottom marketing strategy because that's fundamental when it comes to Facebook advertising.
Oh, without a doubt. I mean, it's, you know, it's, it's, you're never going to have a one hit wonder. So I think understanding the customer lifetime journey, whether it's a content marketing approach or direct response approach, the amount of variables are just unreal. I mean, it all comes down to that marketing strategy and, you know, coming full circle. So, I mean, I think that's a killer killer area of opportunity there. Yeah, absolutely. Ma'am now we're going to dive into Zach's favorite portion of the podcast, the more financial principles side of things. So we've had a lot of agencies talk about shoot transferring, you know, credit card points that Bitcoin scaling ads, you know, forming partnerships, you know, what kind of financial tips would you bring in one kind of question I would actually have, you know, especially with these e-comm brands scaling up this season is how do you kind of have a conversation of letting the client know, Hey, if we're spending, you know, a hundred K we're looking to boost it up 40%, do you have that cash flow? Do you have the inventory kind of sale scale this more or less? How do you gotta have those conversations with those clients?
Yeah, so, you know, our clients, uh, for the most part, I mean they typically have good solid lines of credit, but if they don't, we definitely recommend that they reach out to, you know, funnel dash and checkout add capital, um, or, you know, there's some alternative options out there, but, uh, you know, I've been a big advocate of FunnelDash and what they offer Zach, I'm giving you some kudos here. Good job with your business hours, as long as you stay on this stuff. Well, yeah, well, yeah. Yeah. So it's so simple, you know, um, you know, I always, uh, you know, recommend that someone have like a good solid line of credits that is, um, equal to, or up to two times their typical ad spend budget. And so if their ad spend budgets like 50,000 a, then they want to have a line of credit 50,000 to 100,000 to be able to really like maximize the fourth quarter.
Um, and then going into the fourth quarter, and this is more tactical, but a, and I know this is a financial, which is the nature of the question, but going into the fourth quarter is it's all about building up that warm audience. Um, you know, because a fourth quarter is when all the sharks, you know, all the big fish, the Walmarts, the targets, um, you know, the big brands of the world, that's when they really throw in, you know, their ad spend into digital ads thinking, Oh, it's fourth quarter, or this is the time I can make a ton of money. And, you know, who knows what their role as is? You know, I have no idea, but you know, they can get away with it because, you know, they're an established brand, they've got deep pockets and they probably have a really solid customer lifetime value too.
And so like the typical business that is, you know, let's just say below eight figures to really prepare and have the most success going and going into fourth quarter, they've got to really have a solid top of the funnel built. And they also have to have like a solid, a budget as well, whether it's their own cash or whether it's a line of credit through ad capital, you know, it really can help them prepare for the fourth quarter. So you mentioned that they have two X, their monthly ad spend. I think that's an interesting metric, also kind of a good rule of thumb. We haven't heard that before on the show, walk me through your, your thinking. There is, it is, is it as plain as day as because you're going to spend twice as much money on ads going into November, or like, how did you, you know, what's the experience that ultimately led you to that two extra monthly ad spend in terms of a line of credit? Yeah, yeah, yeah, no problem. So, you know,
Speaker 4 (22:28):
We just want to make sure that we don't have limitations, you know, on the ad spend side, because
If we see going into, let's just say mid to late November and things are working really, really well, and we want to be able to scale aggressively. So this way we can help a client maximize their profits and the revenue from that point all the way until the end of the year. And so we've always told clients for the past few years, like you want to have ideally up to two times your monthly ad spend budget. That doesn't mean we're going to necessarily spend it. Um, but we did have a client, for example, last year that we told this to, and, uh, we went into black Friday and we just crushed it. Like we saw a 330,000 in sales during that week, which was awesome. Um, and I think that they spent like, maybe I'd have to, I'd have to pull up a rapport, but I mean, their ROI, it was at least 202,000, I'm sorry, 2000%. Uh, during that, that week of black Friday last year, I'd have to pull up like a dashboard image to see like exactly their stats. But, um, but
Speaker 4 (23:35):
That was the reason why we were able to do that though, was
Because we advise that client to make sure that they had a line of credit ready, because that allowed us to aggressively scale their ad spend during that black Friday week. And that's how we crush it for them. I love it. I love it.
She's always been an amazing guest man. It's so awesome to have you on the show. Tell her
A little bit about, uh, how we can support you, what you're up to next and how everybody can get in touch. That sounds great. Yeah. I appreciate you guys having me on the show. Uh, you can always, uh, follow me and find out more about email@example.com or, uh, the arm five formula.com. Um, and then you can also check out my show, which, uh, we, uh, published to all major social media channels, you know, YouTube, Facebook, plus we even publish it as a pure audio. So you can go to iTunes, for example. Uh, so check out the e-commerce performance marketing show as well.
Awesome. Thanks so much.
Speaker 5 (24:37):
Yeah. Thanks for having me on.
Thanks so much for listening to another episode of the rich ad pour at podcasts. If you're like me and listen to podcasts on the go, go ahead and subscribe on Apple podcasts, Spotify, YouTube, and rich ed [inaudible] dot com slash podcast. And if you absolutely love the show, go ahead and leave a review and a comment share with a friend. If you do take a copy screenshot of it, email me firstname.lastname@example.org. Show me you left a review. I'll give you a free copy of the rich add or add book to learn more about the book. Go to rich ed for a.com to leave a review that a rich ed or ed.com/review. Thanks again.
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Jason Hornung is the founder and Creative Director at JH Media LLC, the world’s #1 direct response advertising agency focusing exclusively on the Facebook ads platform. Jason’s proprietary methods for ad creation, audience selection and scaling are responsible for producing $20 million + of profitable sales for his clients EVERY YEAR