Dennis Yu is the CEO of Blitzmetrics, a digital marketing company which partners with schools to train young adults at no cost. He’s an internationally recognized lecturer in Facebook Marketing and has been featured in The Wall Street Journal, New York Times, LA Times, National Public Radio, TechCrunch, Fox News, CNN, CBS Evening News and co-authored “Facebook Nation” – a textbook taught in over 700 colleges and universities. Universities. He has held leadership positions at Yahoo! and American Airlines and studied Finance and Economics at Southern Methodist University and London School of Economics.
Speaker 1: (00:20)
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, affiliate 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 poor ads. Let's get into it. All right, welcome to another episode of the rich and poor ed podcast. This is your host, Zach Johnson, founder and CEO funnel dash. I am so excited to have on the show today, Dennis Yu, the CEO, CIO, and CTO of blitz metrics. Dennis has got double decades of experience when it comes to online advertising, uh, paid advertising and is just like prolific when it comes to, uh, online education and helping business owners get up to speed and really simplify, um, the world of paid advertising.
Speaker 1: (01:23)
So Dan has been featured on a ton of articles. I mean, if you don't know who Dennis Yu is, and you're on the show, you've been sleeping under a rock, but it's been on the wall street journal, uh, you know, tech crunch, um, for, I, I think social media examiner you've been on, uh, ad week. Um, I mean, and obviously, you know, you, you're speaking at like pretty much every social media marketing conference, uh, there is. So we're excited to, to spice things up with Dennis and, and kind of throw a curve ball. Talk about some, obviously some rich ads, some poor ads, uh, but really talk about some things that we haven't heard Dennis talk about in the past, which is the financial principles of, uh, of scaling ads and particularly around how he structures his revenue shares, how he structures his client contracts.
Speaker 1: (02:15)
I think he's doing some really interesting things in the world of online education right now, by partnering with some influencers. So without further ado, Dylan, what do you say? Should we bring them on the show? Oh man, let's get them on. Y'all are going to geek out over this. I'm already geeking out already, so let's make it happen. Let's do it, Dennis. Welcome to the show. What's up Zach Dylan. Yes, man. We're so excited to have you on it's dude. There's very few people that we have on a show. That's got, you know, as much experience as you. I mean, I'm looking at your LinkedIn right now, 20 years, man. 20 years. Yeah. I mean, you know, 20 years as the CEO of yourself, right? Dennis, you love it, man. I built my
Speaker 3: (03:00)
First website over 30 years ago.
Speaker 1: (03:03)
That's awesome, man. Well, I am excited to have you here. Why don't you tell everybody, what, what are you up to now? What are you excited about right now? And what's on the cutting edge.
Speaker 3: (03:16)
You know, I've been talking about local for a long time and I thought this would have happened 15 years ago, but now because of the acceleration and people going online, there is no better time to serve local agencies. Before we started recording, I was telling you guys, I was in Indianapolis at a conference with 300 chiropractors. Can you believe that all together, not zoom actual in-person in an arena. We were all spaced out. Well, not spaced out as in crazy spaced out, but you know, six feet distance. And I spoke from the stage and drove a hundred thousand dollars of revenue in 60 minutes by selling 40 packages at $2,500 each. And then the recurring on that is a hundred thousand dollars a month. So that's a six figure agency started from zero to 60 minutes and it's chiropractors. And I think the opportunity in anyone who is so serving dentists and doctors and real estate agents and chiropractors, it's so easy. If you know how to collect video, like we were talking about before and then the cost of traffic on tech talk, Facebook, Twitter, even YouTube is so cheap that it is easy now to drive sales for local service business. It's not here.
Speaker 1: (04:34)
Here's what I love about that, Dennis. I,
Speaker 3: (04:35)
I think that, you know, you've got
Speaker 1: (04:39)
Pretty sizable agency going on with like how many VA's did you say before? You've got it.
Speaker 3: (04:44)
Yeah. A triple digit. A couple hundred, couple hundred VA's okay. Yeah.
Speaker 1: (04:50)
Interesting. There's so many people that like, are not like that organized and systemized in their business and in their agency to be able to speak on stage and onboard bat, many clients. And that says to me like, okay, here, here's a guy that, uh, has systemized not only your sales process, uh, which wherever he starts, but really you systemize the backend on, on the services as well. So good to see you, man, on, on, you know, the success of that event. But you know, services is, is, is very difficult, um, to systemize, to, to the level of scale that you've done. So I'm excited to dive into that today.
Speaker 3: (05:30)
Well, if it's, if you treat it like a SAS, so whether you create software that people are using, or whether you're selling packaged services, I believe all services are products and all products or services, and some people call them productize services. And so for us, whether we're executing through a team of VAs or through software that we have, and by the way, I think of VAs as being just a step ahead of the machine, right? We haven't quite gotten to the point of automating that. So we're using DAS, right? In my opinion, it's the same thing, because if I'm not having to do it, what's the difference, right? If a VA is doing it or a piece of software is doing it, I'm just looking at the cost and quality, right? Yeah,
Speaker 4: (06:09)
No, I love it. I totally love it.
Speaker 3: (06:12)
So I want to hear about this,
Speaker 4: (06:14)
This winning ad, man. We're, we're looking at it right here. And Dennis, you've seen a ton of ad campaigns,
Speaker 3: (06:23)
Right? So like this is, I'm pretty excited about, um,
Speaker 4: (06:28)
Why this is a rich ad and you guys are obviously managing a ton of spend.
Speaker 3: (06:33)
Are your clients totally curious, by the way to know how much ad spend you guys?
Speaker 4: (06:38)
I mean, across the board,
Speaker 3: (06:41)
But uh, walk us through, you know,
Speaker 4: (06:45)
This particular rich ad, why it's working and
Speaker 3: (06:48)
What you love about it. Good. Let's start on the one on the left. So this is for Ashley furniture. They're now called Ashley HomeStore. They're the world's largest furniture manufacturer and retailer. A lot of people say, what about Ikea? They're way bigger than Ikea. Ikea doesn't have anything. Yep. Doors are bigger, but there's way more Ashleys. And the next time you drive down the street and you're like, Oh yeah, Dennis was talking about Ashleigh. That must be one of them right now. This is where people, they don't intentionally lie, but they mislead when they talk about ad performance, because you can eat what is true. And then let me tell you what I didn't say. Okay. So this ad on the left, we spent $66 and 73 cents and we drove $10,000 in revenue through the POS, not fake revenue. This is cash register revenue match back as an offline conversion.
Speaker 3: (07:46)
And you guys know Facebook and Google both allow for offline conversions where you upload the leads or upload the sales from your POS up in the Facebook for matching on name, address, phone pixels, you know, email, that kind of thing. They might look at this and say, wow, it has 158.9, six ROIs. You put in $1, get back $158 in sales. That's pretty good, right? Yeah. Sign me up. How about the one on the right? This one says, it's the Darcy sofa for $399. I think there's six colors that you can get this sofa in. And it's great for college kids who are poor and they're otherwise sleeping on the floor or shopping at Goodwill, but you can get a brand new sofa for $399. That's sort of comfortable. And there's a video there, of course, which gives us higher engagement, a lower CPM, all kinds of good things that Facebook's looking for.
Speaker 3: (08:39)
Of course we know video is important, which is where most of our VA's are. They're editing video. That's our little secret. And here we spent $23 and we drove $8,000 of revenue. That's pretty awesome. Right? And the ROS even better, it's 33,000 hundred 45%. So spend a dollar get back 330, $8 in revenue. And we've done this over and over and over again. It sounds great. Right? Who wouldn't want that? So then what's the cash. How do we drive the sales? So what am I not saying, Tommy, tell me, what are you, what do you think done? You get things five or six things. I didn't mention that. Yeah. I mean, they're so simple and sleek. Um, so I mean, yeah.
Speaker 4: (09:32)
And how long it took that revenue to come in.
Speaker 3: (09:37)
Uh, let me throw on standard attribution, which on Facebook is a one day click and our, sorry, one day view in 28 day click. So standard attribution, which is also last click. There you go. Yeah. Okay. Tell him what you think. What was he missing in here in the story? Um, man, a headline on that middle ad. I don't know if that was planned to be, but that's throwing me for a loop to be completely honest with you. But yeah. I mean, I'm really not sure to be honest with you, these basically look slick, but it had to have been targeting super local, super refined, or these bigger audiences, smaller audiences where you're optimizing for purchases using conversion campaigns. One more video of you or any engagement to kind of maximize the reach. I mean the amount of variables are just unreal, but it's it's I like the store visit assets.
Speaker 3: (10:25)
You kind of added into here. It's where often conversions, there are sometimes tricky, but when you kind of unlock that kimono, they're beautiful. So, I mean it's yeah. So in this case, we're optimizing to a store visit because we know that they go into the store. They're very likely to buy one and three people who go into the store. They buy a couple of things I didn't mention is that this is bottom of funnel. So if we go several steps up into the top of funnel, the ROIs tends to not be quite as good. Why? Because the people that are converting at the bottom of the funnel, by the time they get there, they've already seen 10 of our ads. Dude, I fell for it. And again, I fall for this every single time. I'm like a victim of this every single day and ad buyers group or any Facebook group. And I'm like, Oh, those are really good stats. And then my, I get all excited, my Greek lines going, like I can pull that off. And then you're like, Oh yeah, he was just sharing retargeting numbers.
Speaker 3: (11:18)
And the same thing is on Google. So I can show you the Google numbers when someone types in Ashley furniture and they get the maps and directions and they go to the store and buy the RLS is fantastic on that. Right? And some people would argue, well, that's cannibalizing organic about 20%, 25% is cannibalizing organic, but still the ROS is incredible. But what drove them in the typing that into their phone was that they saw our ads on Facebook and on YouTube and Instagram and Twitter and everywhere else that then cause them to think, huh, I need a new couch. Right? Or they're driving by, they get hit with an app. Cause we're, geo-targeting, we're, we're hitting these people with tons of content at every stage in the funnel. So you know, that Facebook, for example, has awareness, consideration conversion. As there are three levels of the funnel and when you run ads on tick talk or Cora or the other social networks, you know what they named those three stages in the funnel.
Speaker 3: (12:15)
Now they give the exact same name. That makes sense. It looks like collusion, right? So here, middle of the funnel consideration, bottom of funnel immersion. So we take these same assets and we run them across every one of these networks. So they're all retargeting against each other. And that's how we're able to also there's another thing I didn't mention. Imagine it was Dylan and Zach's awesome furniture store. Oh, I like this versus Ashley furniture. Right. And somebody is driving along a 45 year old mom and she sees on one side of the street. Dylan is Zach's awesome furniture or Ashton furniture on the other side of the street who she going to go visit? Obviously John's got he. Yeah. Dylan would probably probably me the best looking billboard outside of the store there Dylan's got he's much younger. He switched better looking, having a free carwash. You could win with Cougar Bay. You could have the leopard skin couches if you can draw them in.
Speaker 2: (13:23)
Yeah. Right, right. That's funny.
Speaker 3: (13:26)
The advantage we had here is that there's such a well known brand for such a long time. It's the reason why McDonald's is the number one hamburger company or food company on the planet. It's not because they have the best burgers, but when people are driving down the interstate and they see, you know, John's hamburgers versus McDonald's, they're like, I know John's hamburgers could be good, but I might also get diarrhea. So I'm going to go to McDonald's. Right. And the name recognition is so key. So we always take on clients that have strong name recognition, not folks who have just started their company, even if they're really excited and all that. I never, never fall for that separate punch. We take company in their neighborhood. They don't have to be national brands like, you know, the golden state warriors or red bull or guys like that. We run ads, Starbucks. I'd love running ads for Starbucks. One time they gave us $17 million for frappuccino over the summer, which isn't to here's the thing though. I want to talk about this for a second. So let's talk, let's dive into that second, because I think for the agency audiences, let's say this show could really learn a lot about how you've really systemize and got very clear on just who, who, who you can work with and who you can't work with. Right. Yeah. And it's very, a lot of early agencies. Um,
Speaker 1: (14:52)
And honestly established ones are just, you know, taken on any client they're either on the turn and burn model or, um, or they're just trying to ramp up and, and, and clients are in and out the door within, you know, three to three to six months. Well, what I, and I, I really didn't, um, it took me years to understand this and it, it was a, it was a breakthrough for me. And you talk about it so naturally as if it's just, you know, so matter of fact, and as if you've known for 20 years, but you know, I think like the 80 20, the 80 20 of agency growth is client selection. And it's picking clients that I want you to highlight, which is one that will actually work with ads, but two really picking clients that will scale, right? Like if you're, if you're an agency and you're taking a percentage of spend and you're picking clients where they're no matter what, they're always going to spend five grand a month, cause like they won't scale it.
Speaker 1: (15:52)
There it's just a matter of time until that client turns out. Right. And so in software, the, the dream is this kind of idea of like net negative churn of where the revenue accelerates, the actual number of, of clients that are, that are leaving. And if you can achieve that in the agency space where you're picking clients where it's like, Oh yeah, this whole work very easily. And like, you'll be able to scale very quickly. And like our retainer will scale as well. I think that's key. So talk about some of your criteria. That's literally check a yes, yes or no box in terms of who you guys will work with.
Speaker 3: (16:32)
Well, first off there's whether the client is local or non-local. So in this case, the chiropractors and the furniture stores and the real estate agents are all local and you're right. They're capped out and how much they can spend per month, but would you rather have a thousand folks that are spending 5,000 a month and easy to maintain and paying you every month or something that's risky that could scale to millions because it's some econ product or it's some B2B service, software, SAS kind of thing. You have to decide which poison you want. And we do both, but we think that local is actually the easier one. But if you are world-class that optimization, then definitely go for it. And if you're going down that route, the way I look at it is first, are you looking to, or are you looking to help them start growing as in going from zero to a million, or are you helping them scale, which is going from a million to 10 million to 50 million.
Speaker 3: (17:29)
And the biggest mistake I see here for people who are going after e-com is they think about the potential of what's possible without realizing that going from zero to a million is way harder than going from 1 million to a hundred million. And the people that want to go from nothing to a million, they you're really an investor and business partner and co founder and their company. And you need to be treated as such. You need to have equity, you need to believe in it. It needs to be your primary thing. You can't be working on five different companies because that's like trying to be in professional basketball and professional football and professional ball. And like all that at the same time, like you won't be able to do it cause the market's just too competitive. Right? So if it's, e-com what I look for, and this is why I like working with, like, when we had the warriors, we did a rev share deal.
Speaker 3: (18:19)
We had 1% of the revenue that came through, which doesn't sound like a lot, but actually it was a lot of money that money coming through Ticketmaster, especially during the playoffs, it was a lot of money. And we did that because we knew we had a winning team and thus running ads and having goals, content, and targeting in place. So back to the original question, screening always know of that potential client. And we call them a partner. If they're a rev share, what are their goals, content and targeting getting. So in this case with Ashlyn furniture, we said, we want to get a 20 ROIs. And we, I think we're being paid on a 14 ROIs. So for every, we said, you know, rather than agency fees and such for every dollar you pay us, we will guarantee $14 of revenue net pretty often. Right?
Speaker 3: (19:10)
And they're like, well, that's fantastic. But in order to have that discussion, they need to know what a profitable ROIs is. So whether it's e-comm or furniture, they need to know for a dollar they spend, how much do they need to get back that's profitable. And they won't know. So you've got to set up their plumbing. You have to figure out how profitable their other marketing channels are. In this case, we know that furniture is about a one to 12. We know that across TV and direct mail and whatnot, that when they spend a dollar, they get back about $12 in revenue. Is that $12 in profit? No, they've got costs. They have margin. They have overhead to pay. So their break even is about a 10. So if they get a 12, they're doing pretty well, right? So ROI is not the same as ROIs.
Speaker 3: (19:53)
So we said, okay, well, if a 10 ROIs is your breakeven and we do a deal at 14, then that's a win for you guys. Right. And if we can get, and what does a store visit worth? And they said, well, in a store visits worth about $12 to us. Okay? So if we can get a qualified customer into the store, $12 measured by Google and Facebook on a cost per store visit, then see here, we're looking at these, actually. We said, you know, we'll give it to you a 10, right? If we can get this for you at $10, or you can just pay us sort of other stores, we said, you know, $10 per store visit, how many store visits do you want right across how many locations do you have? And then our actual is coming in at seven 56. So what does that mean?
Speaker 3: (20:38)
That means we're an affiliate. You guys know how affiliates work. So we're there, they're buying it at 10 and we're, we're selling it to them. Or our cost is seven 56. So we're profiting $2 and 50 cents per store visit. Right? And then we're going through 10,000 store visits. That's a lot of money, right? How are you use their brand? What do you think their brand? That's the thing. That's why we got qualify them. Right? We're qualifying a plus. We know that it's, it's a well known furniture company with lots of lists, 750 locations across the planet. We can drive tens of thousands of these per month. They already have huge name recognition. We do a ton of retargeting, which is going to work. Of course, we then have a bunch of mid funnel stuff. Anytime they have a big 4th of July sale or whatnot, we just crank up the spend and we know it's going to be profitable.
Speaker 3: (21:28)
Why? Because we can look at last year's results and see how they performed. So it's reading the future. I know exactly how ads are going to perform because I can look at what's happened before. And anything else that we've run. So there's very little risk. These ads that are running, continue to run. In fact, this other couch I was showing you is not even in stock anymore, but it's so it's what is it? This couch here, this couch here, this Darcy soul is not, they don't even make it anymore, but it doesn't matter because once people come into the store, they forgot what it was. It was like, Oh, what was that cheap couch? And like, Oh, there's this couch. Okay. I'll buy that.
Speaker 5: (22:04)
No, I do have, how are you tracking store visits? Is it a beacon? Um, I mean, I'm curious how you're actually kinda seen that for traffic come through. Cause I've seen it done so many ways. Yeah.
Speaker 3: (22:14)
It's hard. There's many ways to do it. Although I'm going to tell you the easiest way to do it. That almost nobody knows on Facebook. We choose the store, visit objective and Facebook tracks the store visit for us. They report on how many spills is there. When you look at how Facebook reports on store visits, you can, that's a whole rabbit hole. Basically. They know where like, w what is it? Minority report, or, you know, big brother knows where you are. They know whether you're just walking through the mall and not actually going to the store. They know if you're kind of like lingering. They know if you're walking through the aisles exacting, they know if you're stopping to go to the bathroom, like they know they know what you're doing. Right. They know if you're in a car, they, they, they know whether you sat down, right?
Speaker 3: (22:58)
So the store visits, I've never done a store visit campaign like ever. But like, are you just like, you just pop in the address of each store or like your local properly, your, your GMB, your Google, my business, and like your lat long than it. And they use like Yext or these other tools to make sure it's accurate. Because if that store is in a strip mall and it's not exact, and there's 20 other stores in the strip mall, then it can mess this up. I guess, like, where's the Facebook poll, the in store visit from. They just pull it from the Facebook page. Do you pull it? Are you pulling up the store where that user is on their phones? So you remember, I think it was 10 years ago, maybe eight years ago, Facebook required us to separately install messenger. So messenger used to be part of the Facebook app, but then they made it a separate app.
Speaker 3: (23:47)
Right. You know why they did that more screen property? No, that's what people thought. And a lot of people complain. And of course their official reason was, Oh, well, it's such an important app that it kind of needs to live as its own app. But the reason it was, they wanted an app on the phone to track where you were. And Facebook knew 10 years ago, that mobile was going to be where it's at. And all the information in your phone is always broadcasting where it is because it's pinging for a wifi signal. It's pinging for the cell tower. It's communicating who it is to that. That's why there's all this enemy of the state, you know, minority report kind of stuff, where all the shopper tracking, I don't want to go into all the tools and technologies there, but there's a lot of tools out there that will, like you think your phone is anonymous. People can track who you are and what your goals are. That's pretty cool.
Speaker 4: (24:39)
You trust Facebook story, you know, uh, conversions,
Speaker 3: (24:44)
It's accurate. Yeah. A lot of people
Speaker 4: (24:45)
I'm thinking more like rudimentary of like, how does it know where your business is? Like a multi location?
Speaker 3: (24:51)
Oh, they've licensed data from everyone else. So they know it's accurate. Yeah. And I've gone up and down with their teams. I've flown into their headquarters and talk with the engineers about how they do it. And I'm satisfied, very satisfied with how they do it. Okay.
Speaker 4: (25:06)
Oh my gosh. You know how many people that are paying tens of thousands of dollars right now? Cause they don't trust that number or cause it was never really used.
Speaker 3: (25:14)
Yeah. If you're local and you want to get people into the store, why are you going for website clicks or leads or video views or engagement? The people that like common and Sharon stuff are not the people who necessarily buy, okay, we've done tons of tests to show that that's the case. And the algorithm does that too. We've done. We've had meetings with Facebook and the Instagram people too, which are part of Facebook. And we found that there are people out there who just click on stuff all day long and never buy anything. And if you choose that engaging, you know, you, you choose the objective of video views or leads or whatever. You'll get cheaper leads. You'll get cheaper video views, but you might not get sales. So for our case, for local, we chose store visits and it worked and it store visits tied back to the thing.
Speaker 3: (25:58)
Remember we talked about rev share. We were being paid on for some of these guys, some on a rev share. And as in like, you know, the 16 ROIs and others were being was a $10 store visit. So if, if we're being paid $10 per store visit, what objectives should we choose in our ad campaigns or visits Facebook, give us what we want. So now we told them what we want because it ties with our business objective. The thing that we're being paid on, then Facebook does all the work for us. Now we just gotta put in the ingredients, we just got to put in the content, right? We've got to run our ads the right way that we're monitoring to see how we're doing. Look at this campaign name. If you can see this year, it was three underscore store visits. This campaign's called one underscore top of the funnel awareness. This one to underscore engagement. We're just driving remarketing all the way through. And this is how we're doing. We're monitoring the combination of store visits and offline purchases. And we tend to find that they go together, right? What do you know? I'm literally
Speaker 5: (27:04)
About to go test a store visit campaign later tonight,
Speaker 3: (27:09)
I'm about to open a store in a pandemic just so I can run this ad. This episode is brought to you by funnel lashes ad card. The only charge card exclusively for your digital ad spend. And if you're an ad agency that manages seven or even eight figures a year in media and ad spend for your clients, and you're looking to double your profits over the next six to 12 months, then check out ad card. See the typical agency model is this. You charge 10% of your spend who make 10 to 20% margin at the end of the day. So that's really one to 2% of your clients spend that is profit in your business. The easiest way to double that is a really find a way to earn in that one to 2% cash back of the card that is on file of your clients as ad account.
Speaker 3: (27:58)
And before ad card we, you had to do was invoice all your clients for their ad spend upfront, which is really difficult on a cash flow basis and very difficult ask. And then you had to put the card on your own MX or whatever card of choice to get that level of value back into your business with ad card, it's entirely different and streamlined. You simply get your clients on ad card and make yourself the agency of record and you'll get the cash back. As long as you're managing the ad spend, it's a great way to double your profit without doing any additional work. Check it [email protected] I love it, man. This is cool. All right. Let's switch gears here, man. I want to talk about, I want to, you know, I want to talk about a poor ad. Should we do, should we do this done? Yeah. Yeah. So this
Speaker 5: (28:49)
Actual ad I got hit by yesterday. I don't even think I'm a Virgo, but it's the one I sent via email to you, Dennis.
Speaker 3: (28:56)
Yeah. Zach, I don't know what you are either, man, but let's go ahead and roast this bad boy. I think it's a terrible ad. You know, personally, I'm not a Virgo. It's very feminine. Um, this was,
Speaker 5: (29:08)
This is actually on my newsfeed yesterday.
Speaker 3: (29:10)
So I mean, all right, Dennis, first thoughts, go ahead and rip it apart. Well, first off wax wing store, I don't know who that is or what that is. And then that profile picture on the left, it's clearly an ad, not because of the light gray sponsored, but in the newsfeed, I need to see things that look like a human, like a friend of mine would have posted. So if that was a public figure page and it was Dylan Carpenter, right? If there's a picture of Dylan Carpenter here and it said, Dylan Carpenter, then I might be willing to see the rest of this ad. Cause it might be interesting. Cause maybe he said something funny about it. I didn't even, you know, let's say I don't even know what to add, but right off, because I don't have any trust with whoever wax wing store is. I don't even look at the rest of this and then the pink shoes, maybe I'm not in the roses and the who knows, that's weird. At least it's vertical, right? So we know, we know on mobile, it's going to take up the whole newsfeed also. There's no social proof. So that is weird. And they see there's no likes or comments, but there is, I guess one share.
Speaker 5: (30:15)
And you know, it's the guy who owns the store trying to flex on it. Like
Speaker 3: (30:19)
Yeah, of course, but
Speaker 5: (30:22)
I'm not even a Virgo. I'm a Libra. So like
Speaker 3: (30:28)
Gonna leave it to my birthday is October 6th, bad targeting. But it's when you go straight to a product. So if you haven't seen their stuff before, if you haven't seen someone endorse it and you go straight to a product, that's like a bum on the street with a cardboard sign trying to sell you on some $5. They haven't established cross. They haven't told you a story. People buy because of the story. So if they had some sort of thing where now there's this Virgo and they fell in love and I don't know some story behind this thing here, maybe right? Plus it looks like it's female targeted
Speaker 5: (31:00)
Your thoughts on having the link in the actual copy versus having some sort of headline to click on, you know, with an actual CTC
Speaker 3: (31:06)
Versus the, get yours here. That's part of the same issue of trying to sell too early, before building trust. That does hurt you organically, especially on LinkedIn. If you try to post a link in there, but I don't think it's that big of a deal. Why? Because the first thing that people look at is on the top left, who's saying it. So the second thing that people look at is the creative, the image, right? And the third thing they look at, if those first two are good as they look at the copy. So the copy doesn't matter unless the first two are solid. Oh my gosh, there's this
Speaker 5: (31:37)
So much wrong with this ad. I love it though. I mean, you know,
Speaker 3: (31:41)
Awesome. Well, thanks for it. I'd also make it a video too. I would make this some like blinking pink and black and green thing that just captures your attention. Actually. No, this has likes to keep it classy. Well, I guess everything about this is wrong. Yeah. The key Catherine, you've got triple punctuation there with the exclamation points. That's not allowed because you can't have more than two of those things you have bait. Yeah. This, this is, this ad will get disapproved,
Speaker 5: (32:14)
Man. I was this close to converting on it. So I mean close one down. I love it.
Speaker 3: (32:21)
So switching gears here, man. Talk to us about, uh, some financial principles of scaling ads, right? So on the show, which we're trying to help marketers get a little bit more educated when it comes to, uh, the, the financial
Speaker 1: (32:40)
Aspect of advertising, right? So we've had folks come on here and really talk about payback periods and fundraising and cash and, um, and, and deal structure. But I think you've seen, um, quite a bit. And I think on this side really more for the, the agency, you know, audience agencies constantly just struggle with, with poor financial metrics. Right? A lot of them are either on like net 30, 60, 90 terms with their clients or they're they're they're uh, maybe like pre COVID. They could get away with like some pretty hefty, like set up fees. But with all the agencies, you know, coming into the space, they're getting pricing pressure. So what are, um, what are some best practices and tips that you might have for, uh, for listeners?
Speaker 3: (33:29)
Well, number one, if you have the balls charge up front, we had a client who started with this last month and they wired us in $500,000 upfront. We want the media budget. Why? Because they just wanted to have, they wanted to write one check that was the media budget, plus the fee. And that's great for us because then we are in all the credit card miles, you know, airline miles, that kind of stuff too. I don't like the idea of post pay. So when it was like MGM or Nike or Allstate insurance, and we were doing stuff with them, they would pay net 60 and net, net 90, which is brutal. Yeah. Remember we had campaigns that were running for Quiznos, which, you know, they're, they're a competitor to subway and we were spending, I think two 50 or 300 a month, which was a lot for us to carry is, you know, you never want to tie up that amount of cash, even though you do want to earn the points at certain points, like I'd rather have them carry that.
Speaker 3: (34:24)
Even though I do like getting a couple hundred thousand points every month, but I remember they switched over to a new system, a new system for processing invoices and all that. And we went to three months where they didn't pay. And I was right at the limit because I'm holding a million dollars in money. That's not been reimbursed on ad spend to call them. I want to say like, Hey, um, can you hurry up and pay? Cause we're about to turn off your ad account. Cause we can't, we literally don't have any more money. Right? What were you going to do in that situation? Tell them, Hey, we're out of money or, you know, demand that, or turn off the ad account or go to a friend and you know, go to the bank and say, Hey, I need a short term loan or go to the job.
Speaker 3: (35:08)
What are you going to like, none of those options are very good options. So I like to get paid up front. The only time we don't get paid upfront is when it's a fortune 500 company and they have some crazy accounting team where like, this is the way they paid their vendors and that's what you have to do. But in the last 10 years we've always been paid upfront and with smaller companies, they often don't have the cash flow where they can pay you 20 GS upfront. So maybe you start off with $5,000 and you that as a retainer over five or six months, but really what you're doing is offering them a financing plan. And as a performance agency, you guys know anyone listening, you know, that 80, 90% of the work is in the setup. And then the monthly ongoing, it's not as much unless you're tuning econ where there's a lot of testing, but usually the work is in the beginning. So, you know, instead of charging them 20 upfront and 2000 a month after you just charged them five a month, so you're giving a financing plan and anyone who's doing local or small biz or startup, what you're really doing as a financing plan.
Speaker 1: (36:15)
Yeah. I, what you just said though, the whole, um, the classic like agency billing for ad spend up front so they can kind of put it on the cart. So like that was a big part of, uh, a big part that we took into consideration with, with ad card and in building, it is because like Amex really hates those situations. Right. And, and really like these, these ad agencies that are, you know, spending like whatever 20, 50 million in spend, they're not quote unquote like credit worthy to really even have those limits. Right. So you're kind of lucky to end up with those level of limits. And part of inspiration was like, Hey, why can't like a client own the card and like pay for the spend. But then the agency kind of participate in the, the cash cashback and the rewards and incentive, um, because they're the ones managing the ad spend. Right. And, and kind of have that flexibility of who has it, but not have to go through all the shenanigans of like, I'm going to bill you upfront on ACH, put on my car. And then I kind of make sure that those line up, that's kind of an accounting nightmare.
Speaker 3: (37:25)
Oh, that's great. Hey, you know, coming up, you'll see it launch in a couple of weeks, you know, pit bull. So we have a pay per view that is benefiting charity and it's celebrating his timeless classics and we're doing a rev share with him. So instead of charging an agency kind of fee, we're getting 7% of the net and we're getting reimbursed on the ad spend based on a 200% ROIs. So we're paying $600,700,000 in revenue, which means we're going to spend about 300 and ads. And then we're going to make 7% on top of that. So we're taking 57%, 57 cents on every dollar that's coming through originally. And this, this show your how negotiations work. I said, Hey, if you guys want to run the standard agency approach, we'll just charge you 10% of ad spend. Right. So we'll just charge you like 30 grand.
Speaker 3: (38:22)
Right. And we spend 300, we'll charge 30 grand, which is what most agencies would do. But if you care about performance and they're like, Hey yeah, we care more about performance. Cause otherwise you'll just spend money and you know, it's too risky as, okay, good. Then we'll run ads on your account and it's your credit card. And we will be paid. I think we said five and a half percent. That was our fee of, of the overall revenue. And I said, but if we put it on our card and we are taking the cash risk and it's running on our account, then you're going to pay us 7% of the gross as our feet. And you see that they chose the latter, which is kind of what I wanted them to choose anyway. But if I didn't present the option of being a traditional media agency and also present the hits on your card option, then they wouldn't see the true value of us taking the financial risk. So I intentionally made those other two options available to underscore the fact that the performance deal needs to be paid or word in fronting. The risk is basically as a super affiliate where there's no other affiliates and they need to pay more for that. Right.
Speaker 1: (39:32)
Really interesting does how you're structuring this is you're really focused on people that have brands and you're really coming in and you're saying like, look, I know this brand is strong enough to hit XYZ, ROAS target, right. Especially if you're getting access to their ad account and you're, you're auditing it. And you're setting a benchmark in terms of that minimum threshold on that row, as which, you know, anybody that's working with startups or businesses doing less than a million a year or haven't been around and don't have that brand presence, can't make that level of guarantee. And, uh, I think you're bringing, you're bringing, uh, the performance marketing world to, you know, brands kind of in this like agency partnership, you know, structure, which is, um, I think that, you know, age, the agency name is, has gotten tarnished for lack of performance and performance marketing has really gotten tarnished for its lack of respect to the brand and, and sketchiness. And you're have really presenting it as a, Hey, we're your market? You know, I think partnerships is probably like the umbrella that you're, you're probably operating under, which I think is pretty cool.
Speaker 3: (40:51)
It's the clean side of affiliate marketing, right? I mean, you and I go way back when you think about affiliate or performance marketing and scammy stuff, scammy products and scammy techniques. And when you think about a traditional agency, it's media buyers where it's yellow page salespeople, people that are just spending money, but really in the world of good brands of well known brands, which include dentists and plumbers and people who have legit businesses not fly by night, e-com hundred dollars, military flashlight, you know, mask, whatever stuff like that, not predatory things you really don't see. And I know it's 2020, but you really don't see performance driven agencies. You don't because a, they don't know how to charge that way. B they can't drive the performance. See they don't have the name to do it. So if you're going to go, if you, and Hey, if you're just starting off and you don't have the connections to get a Nike or a pit bull or Ashlyn, and you want, you know, and then some, some friend of yours has some makeup product, right.
Speaker 3: (41:54)
That does something amazing. And you think it could be huge. Those people actually need to pay more than the big brands. And it seems ridiculous, but the big U and in some people say, Oh, but I want to start with the small guys. I, you know, it's too risky for me to start on the big brands, the riskiest thing you can do with smart to start with the small guys. And in the last month we've had 10 or 20 of these guys come through. I spent the whole day filming with Jake Paul, even show you the stuff that we did. Then we had his mansion. We have a $20 program that we're launching, which I stand behind. I think it's awesome. If you want to get a certification as an influencer of arguably the top, you know, the number one influence on the planet, $20, you get everything.
Speaker 3: (42:31)
There's no upsell. There's no trick. It's, well-produced why, because we put all the effort into it. Of course now we've got the custom audiences of all of Jake Paul's stuff. Just like with pit bull, we have his YouTube channel. We have his website. I mean, good grief, his email list. How do you not win? Why wouldn't you want to start with that? So negotiate a rev, share the big brands. Don't understand. Don't know that it's possible to get performance-based deals. They're used to paying a fee to a media company or agency or PR company or video editing production website, building whatever kind of company. But when you, when you show that you're driving them more revenue against their chosen business objects, like store visits as a business objective, right? Literally when we talked to the folks at Ashley and they want to know all well, how are you different from this other agency?
Speaker 3: (43:19)
Cause we already have these three agencies that do these other things and how are you different? And I'll say very simple. You're going to pay us only on the metric that matters, which of these metrics matter to you? How much money you spent, how many eyeballs you had, how many impressions there were, or how many people went into the store and how much revenue you got. Oh, and what if we, we, we, we stand behind our performance so much that we're willing to live and die by that. So if, if it's a one to two 16 ROIs, then, and we don't drive that guess who has to pay for the difference to get you up to the 16, we do, we have to eat that. But if we drive a 20 Roys and we get to pocket the difference, you know, of another agency, that's willing to do that. And their answer every time is no. And that's when you've won the deal. If you can stand behind it, if you can put your money where your mouth is and follow these techniques that we're showing you here, it's almost guaranteed to win. And then your political skills that are actually more important than your technical skills. But of course you need both.
Speaker 1: (44:20)
That's awesome. Well, there you have it. Yes. You absolutely crushed it on this episode of rich dad, poor ad. I love this man. This is, this is going to be going down as one of my favorite episodes so far so, and I really
Speaker 3: (44:32)
Mean that. And I know every a podcast host does that, but, uh, I love it, man. So yeah, you got a ton going on, man. And um, you got a ton of different partnerships, uh, you know, for, for those that are interested in reaching out or working with you in some way, how can I get in touch for business? Reach out to me on LinkedIn. I'm easy to find on LinkedIn. You can Google me and see all this, you know, but don't friend request me on Facebook, hit me up on LinkedIn. And if you're a personal friend of mine hit me up on Facebook, Twitter, Instagram, but I would love to see you guys grow your agencies. There's simple techniques that a lot of us are not applying properly. And now's the time, at least for me in my career to see other people thrive. The number one thing I'm working on is helping other agencies scale. And so it's an honor, Dylan, Zach being with you guys being able to teach, because this is what, when there's a crisis, there's more opportunity. And if you're not making money right now, you're, you're doing something wrong because it's easy to make money right now. No offense so easy. Yeah. I love it, man. I love it. Well, thank you so much for joining us. Really appreciate it. And we'll have you back.
Speaker 6: (45:49)
Thanks gentlemen. Thanks so much for listening to another episode of the rich ad for ed podcasts. If you're like me and listen to podcasts on the go, go ahead and subscribe on Apple podcasts, Spotify, YouTube, and rich [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 Zack at [inaudible] dot com. Show me you left a review. I'll give you a free copy of the rich add or add book. Learn more about the book, go to rich ed or a.com believer review that a rich ed or a.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