Specializing in paid social, performance creative, and digital education, Nick Shackelford’s overflowing co-founderships include structuredsocial.com, Geek Out Education, KEEPARE. Shortly after attending UC Berkley and then graduating from Saint Louis University with a BA in Communication Strategy & Media Studies, he joined the LA Galaxy professional soccer team where he blocked goals for two years before re-entering the marketing world as a Global Social Coordinator for Resolution Media. He went on to serve as Senior Digital Strategist for Agency Y, helped introduce fidget spinners to the US with his Figetly company, then joined Common Thread Collective as a Senior Digital Strategist and later as Director of Paid Strategy. From there, he went on his co-founding spree of three companies which he is involved in today,
Sit in on this riveting conversation with stellar seller, e-comm expert, and media buyer Nick Shackelford who probably broke $100M in yealy ad spend during Q4 2020 for a variety of 8-figure brands.
We’ll talk about the 3 things a brand has to have or he won’t market their products. Why creative templates work - with proof from one ad that returned $72,427 on a $20,475 spend churning out profits for 6 and a half months.
What made him reluctant to give up on an ad despite spending $5,000 and it sitting on a 0.72. Plus why he’s deliberately putting a lid on staffing growth and how he makes clients feel a lot better about paying big bills fast.
Speaker 1 (00:01):
On this episode of the rich dad, poor ad podcast, we have an awesome guest, Nick Shackleford, he's responsible for shoe spending roughly 55 million right now who may break a hundred million during Q4 and ads. We dive into some awesome kind of main areas of focus on the growth side of things. With specific clients on their side, we dive into their framework and templates of building awesome, creative, that converts, and kind of how to be more efficient on the capital side of things while controlling, you know, payments for their clients that are some big seven figures, but make sure as soon as this one, there's going to be a ton. You don't want to miss out, buckle up, get ready. The juicy one.
Speaker 2 (00:38):
Yeah. I wish we were able to do a little, the screenshot I'd have it up right now. So I'm going to count. We'll review across the 125 accounts we've had to date. And from January to September 17th, I would say we're about seven months, eight months and nine months in
Speaker 3 (01:01):
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. Welcome back to another episode of the rich ed. Poor ed podcast is your hosts, Zach Johnson. I'm with the one and only D C Dylan Carpenter. How are you doing today, Dylan? Good, man.
Speaker 1 (01:38):
Y'all better buckle up because we got a super bad-ass guest today and she has and be juicy. You're like,
Speaker 3 (01:45):
I am a little schoolgirl about today's good. Um, man. Yeah. You you've been chatting about this guest for like a month now. You're like, Hey wait, wait, when do you think we can get them on? I love it. All right. So gosh. Yeah, today's guest is he's, uh, he's not the co-founder of one or two, but three companies runs a structured agency which should performance, uh, media agency. I don't even know how much this guy manages in ads, but it's gotta be upwards a figure. So we're going to dive into it. He's also the co-founder of geek out education. I'd say this is probably like the highest level mastermind and a group of media buyers that you can hang out with. And they really are bridging the gap in, in community from like just black affiliates that are really jumping over into like full-blown e-com, you know, working and, and really, uh, really diving into win-win relationships with, with clients. So it's a really interesting niche that they put together their on, on geek-out. And now most recently the co-founder with constant creative double Ks, which is fancy some fancy footwork there on the, on the, on the branding side. So we're gonna, we're going to get into it, man. Sh sh should we bring him on the show down? What do you think? Should we just, it's been real. Let's go ahead and get this guy on here, man. Nick, Nick shack. How you doing, man?
Speaker 4 (03:11):
I'm very, very well. This, I was wondering how this introduction was going to go, but I'm very, very thankful to be honest. I know we've all been in the same service for quite a while and it just took us a matter of time to get together. The COVID has been good, bad, stressful, not Sargent for a lot of people. And I'm finally able to make the time to find the right people to connect with. And so very, very thankful to be here today. And you did kind of give a great intro. There's a lot of things going on, but at its core, I think the easiest takeaway to say is paid media growth. Like we are in this bad boy. And, and I, I hate to characterize myself as just a media buyer because that's, it's always much more than that as us as business owners. That's where I'm most happy. Like if I'm in an ad account and I have no calls that day, like I'm absolutely for lack of a better term, I'm geeking. Like I'm absolutely.
Speaker 3 (04:00):
So I did give us, give us some, give us some stats on, uh, on the agency side structured agency, you know, like how much media do you guys touch a year month right now that, that, uh, you're either managing or influencing in some shape form or another capacity for your clients?
Speaker 4 (04:18):
Yeah, I wish we were able to do a little bit. Screen-share I'd have it up right now. So I'm going to count or review across the 125 accounts we've had to date. And from January to September 17th, I would say we're about seven months, eight months and nine months in, we just spent over 52 million. So we will, we will be close to that eight figure this year. And that's probably the biggest record that I know a team that I've been a part of. We've been a part of obviously early, early on timber to even see why we have some massive spenders and obviously a common thread as they were growing that spend was up there. But what we chose at structured purely, I obviously we'd run a little bit of email, a little bit of social. We just handle Facebook. Some people are downloading and snap, man. We were putting that work in there. And I think if you more is what everyone's going to do, I don't see why this shouldn't be a hundred, hundred million spend.
Speaker 3 (05:11):
Speaker 4 (05:12):
Dylan. I will send you the screenshot. So you all, you will not doubt me on this. I promise.
Speaker 3 (05:19):
Nice for crap. So yeah. So do you work with like, what's the sweet spot in terms of how many clients you guys work with at any given time?
Speaker 4 (05:27):
Yeah, this is, this is a fantastic question. I know that a lot of your audience is actually either agency owners or media buyers in themselves. And it's funny because I asked Dylan before he was like, yeah, we can meet by myself. I can handle between probably 10 to 20 depending on the client. And we started to make our own internal matrix of what a client looks like early, early on. I used to explain a perfect brand and I'll say brand versus client. And just so we're clear on who we actually serve as we only do. E-commerce I wouldn't say just physical products, but that's kind of like our spot. Um, a brand that we choose to work with is three parts. First part is, has the founder done this before or understands the value of paid media is the product is, are clear USP's that can be said about this product, versus it just being a bottle of what's that what's the lose USB is what can we create angles around if you're just winning on price point, it's really difficult for me to be motivated or my guys to be motivated and deal structures have to be mutually incentivized.
Speaker 4 (06:27):
So first do they get it? Do they understand paid media that's on the founder level or the team level is the product unique enough for us to kind of support and partner with and is the deal structure mutually incentivized? And a lot of our questions is like, well, what does it mean to incentivize deal structure, usually low minimum and then upside on increase in spend and increase the profitability that's as a channel owner, right? Like we're not across Google, we're not across the other platforms. That's all you can really ask for. And trust me these last couple of months have been very interesting to explain to clients like, yes, it's not your performance dropping. It's actually a dry drop in tracking. That's been on our shoulders to try to figure that out for them.
Speaker 3 (07:04):
Yeah. So walk us through like a typical setup, right? Like talk to me about a percentage of spend and then percentage of profitability. That's a tough one, right? Cause like you don't have those numbers.
Speaker 4 (07:16):
No, no, no. You're absolutely correct. So a very good situation for us would be a minimum ad spend of about a minimum outstand about 50,000 to 75,000, which means we're taking our 10% on that initial port, anywhere between you're looking to at least pay us between five to 7,500 on just the paid media side that will kind of taper off. If you're going to go, Hey shack, we want to do some content with you. We also want to do email and SMS. Then we'll kind of work with you there. But the main takeaway is minimum is between five to 75 and that'll drop away depending on how spend increases. And we're always, always down to negotiate a percentage of like if we're spending above 75 K and the roast is whatever we deemed profitable or not profitable based on the margins, whatever the brand will provide us, that that number of, of ROAS on account will be in consideration to what your Shopify net or whatever your net is sidelines.
Speaker 4 (08:10):
So for brands that we work with a very, very brand I'm very proud of as a Luca Downey out of the, out of the East coast, out of Rhode Island, they sell jewelry. Um, we have a success metric tied to platform, but we also have a success metric tied to 3.5 return site-wide to my overall spent. And why I believe that's important is because for a lot of these brands, majority of that traffic or majority of the audience is being built for email for Google, for Amazon is coming from their paid traffic, whether that's Facebook or snap or whatever, their dominant sources. So we, we do need to hold ourselves to a platform. But if we pull back to say, hit ROAS targets, what are we doing to the rest of their business? So we do need to, to those numbers and I would love you guys' opinion if you guys believe that, Hey, I've never heard of that or, Hey, that actually makes a lot sense. What do you guys think?
Speaker 3 (08:56):
Well, I think profitability is really tough, right? Because you don't have access to those numbers and you're pretty much relying on a trust relationship with the client. I mean, yes, you probably get access to their Shopify confirm revenue numbers. Um, and maybe it's, maybe it's like a net revenue of just, you know, spend the less, you know, what's in there, their Shopify, but, uh, that's, you know, that's a big part of where I think agencies need to go. And I think you're leading the charge there next. So congrats is like, if you looked at media buying five years ago, it was totally enough for somebody in the media buying shop to be like, yeah, I just drive clicks. Like I don't worry about AOV optimization of the funnel. Now, like that expectation is there. You gotta be able to deliver value on both fronts. I think the neck, the third lever is really thinking about profitability.
Speaker 3 (09:50):
And then in order to do that, you have to have financial conversations with the clients, right? You gotta be breaking down cogs, you gotta be breaking down refund rates. And so I think that having those conversations on profitability is another thing, but that all exists in the ecosystem of PR like something that I think you actually should be qualifying your clients for. It's like, how are you going to fund growth? Right? Because like, you guys know you can deliver in terms of, you know, if you're properly vetting these clients, you guys know what products will scale, what won't. And the last thing that you guys want is like, yeah, we just crushed it. But you know, they don't have VC funding. They're not willing to leverage debt or they can't leverage that because they don't have the margins. And so I think the agencies of the future are going to have their hands just as much wrapped around the finances and the profitability and how they fund the business than they do right now with just the funnel and the conversions and the, uh, and the media. Right. It's not going to be enough to just be like, Oh, they canceled it because they ran out of money and just point the finger. Right. So that's, that's how I, that's how I look at it.
Speaker 4 (10:59):
No, you, you can't do that. Cause there's there's days. And we've been at this game for long enough, which is why we kind of built consecrated, which is why we're focusing a lot on the creative. And that's kind of obviously why we're here to talk for ad rich ad. But this, this, this industry, like if you aren't having the conversations, and even though you're a quote unquote, finding success, a brand is going to tell you, Hey, like we just can't do it. Like you might be profitable over here, but if you're not profitable across the board, it doesn't matter whether we're winning or not. They're going to fire us anyways. Cause they just can't pay us or can't fulfill that check.
Speaker 3 (11:32):
Yeah. And I think the, the, the telltale sign of this is like, when you're bugging your client to spend more on ads every single week, and they're just telling you no, but all the KPIs are like amazing to you. You know, that's time for you not to just like keep nagging, that's time for you to dive deeper with the client of like, alright, we need to have a conversation. That's up the books of like, you know, outside looking in, like, this is a great campaign, like what's really going on in the business. And those are the, those are going to be the people that keep clients for, you know, years and become true marketing partners and get earn-outs and get an upside. And, and their rev shares, you know, don't stop when they become like super big numbers. True. Uh, so yeah. Anyways, I digress, but Nick, let's dive into this rich ed man.
Speaker 4 (12:24):
Absolutely. So the easiest way for me to communicate this is this is a brand that we've, I've been fortunate very, very fortunate enough to be with them since for about two and a half years. And this is if I were, it sells a commodity in his classes, and this is a product that it's easy to communicate. You, you know, what is happening, you know, what is going on. And right now, is it easiest to buy? Just like literally play the video on my screen and talk through it.
Speaker 3 (12:51):
Speaker 4 (12:53):
make it rain man. And D if you, you have this link, it is in there. It's I, and I'll exactly tell you exactly what creative it is. So what, what we're witnessing here and w we've been doing a very, we've been spending a lot of our time developing the templates so that when we have our designers, cause constant creative came out of our, our actual designers for the agency. We on average flow between 15 to 25 brands, depending on the season, depending on the products coming into Q4, we're only bringing in, uh, or only operating with 22 brands. And that's because of bandwidth. And we're choosing to not kind of grow, which say what you will, maybe we can't hire as quick. It is what it is. A lot of the time being spent now is understanding what to creative needs to be made and what do we need for these upcoming campaigns?
Speaker 4 (13:41):
So our designers are going, Hey, we're working on the same brands we want to kind of like, what else can we do? We get more, more, excuse me, more styles to practice on. So we opened up our own kind of feed. The term is dog food. We're feeding ourselves what we're currently doing. And we're allowing it's constant creative to fund the development and the building of our content department. Because we know as agency, if you look at it as like separate P and email brings in its own revenue, social brings in and its own revenue content has to support across the board. And it also another way to build the stickiness across each of our, each of our brands hard stop. So through causing creative, we've been building our own self-service platform that allows brands to go, Hey, we need this type of creative made for us.
Speaker 4 (14:28):
The thing that we've learned over doing this for the last five months, the articulation of our traditional e-commerce brand, that's doing under a million under 50 million. I think those are the two bricks. We either have the early, early people or the people that just want to have help on the accurate side. They can't articulate exactly what it is that they want. That has been the biggest feedback of that. Everyone's going, like I want type of ad and they show examples. That's the easiest way to bring to us. We'll be looking at majority of the ads that are working. There's a ton of a template, okay. This happens. Here's your hook after the hook, here's the solution that solution cuts into a potential UGC or social proof cracking back into product development potentially on boxing, but it's literally pieces you plug in. So this creative, why it was so successful is because it's under 15 seconds. So we are going to get full deliverability on feed, whatever platform you choose from the initial, and I'm going to play right now. So the sound might go off and I'll let this play all the way through. I lied, I'm cutting it in the first five seconds.
Speaker 3 (15:37):
Well, we didn't hear it, but thought that'd be great. And then it, you know, for everybody, uh, ever listening, you can also, we'll, we'll link these up as well on the, uh, Richard pour a.com/podcast for, uh,
Speaker 4 (15:51):
Next episode. Appreciate you guys. Thank you very much. You probably should have articulated that beforehand first five seconds, or you were already showing the product name, the product and her exclamation of how much that she really, really likes is, Oh my God, this is unbelievable. So it's already hitting you with a statement of your current career. It's like, why is she doing this? What is she talking about? It looks like it's just classes. It's always well lit UGC style face-to-face and it can kind of continues on with simple graphics, kind of keep people kind of pulled into it. This ad has been running this exact style with a rotating in different frames for the last six and a half months. So I call this a reach out for two reasons. One it's profitable above their ad spend total ad spend on this one specific ad is $20,475. And the return is $72,427. So to me, w plus it's a simple template that we can kind of reproduce over and over. Yeah.
Speaker 3 (16:46):
Oh my gosh. And it's been running for six and a half months. That's always really nice.
Speaker 4 (16:50):
Yeah. Usually like the issue that we're starting to find is how do you, how do you repurpose this? How do you get this to do something else other than die out? Because it's a huge thing. I know one of our great friends, Zach stud always talks about our best performing ads, dying out. What do you do? How do you address it, where you probably relaunch it and go through audiences or start changing out the transition, start changing out the borders. Somethings that we're are trying to test and flirt with is pulsing borders or making the image smaller so that it looks different on the feed. And don't have data back for that yet. But I really, really do hope if anybody is listening and running tests definitely hit me up and tell them, Hey, smaller images work better with large borders, posing, borders, something I'm really curious about. Hmm.
Speaker 3 (17:28):
Yeah, yeah, no, we, um, I L I love that. I like you're giving me all kinds of ideas right now, Nick, on how we could do a better job. Like we're sitting on a billion in ad spend across 50,000 accounts. And like there's so much more we could be doing in terms of back testing, like these, uh,
Speaker 4 (17:50):
Creatives across all these, uh, across all these accounts. Um, well, you know, thanks for that. So honestly, this is what this is kind of fortunate or unfortunate, depending on who's in charge of the project. Um, you, if you have a unified naming structure across the entire agency, and it's been something that I've been trying to get the team on board, not, not just UTMs, but I'm talking straight from campaign all the way down to ad level. And that unified UTM will be our, sorry. The unified naming convention is going to start populating, just trends with like what's working across the board. Facebook has done a beautiful job by creating ads reporting to, to be able to pull in, like, it took me two minutes to let you know, like, Oh cool, we're on pace to, to spend 52 million across the beginning of the year. Now you can still pull that in add potentially the ad level.
Speaker 4 (18:39):
If the naming conventions are right, that's a couple pivots away from finding out feed four by five 15, second UGC. First, if we get all of our templates in line, but man, this has been about a year, a year and a half of building. So I built to get our UTM naming conventions. Oh gosh, man. If I had a nickel for every time, I heard that if the team, the team buckles down and everyone's going to be launching was gonna be tons of dash copy, copy one, two threes. My OCD was going to go off the charts. You know, this, this is going to be a fun tangent. One of the things that we built in like FunnelDash beta days when we were building out an analytics tool, nobody would ever do this. Right? Cause we were like, Hey, you gotta use these UTMs to track your stuff. What we did is we just had our clients connect their Facebook ad accounts. And through the API, we just had this like rotator that would just go in and just fix everybody's links like every hour. And it would just adjust, uh, um, the UTMs and it was so nuanced. Like I appreciate it. You would appreciate it now, but like that feature doesn't exist anymore. Um, I love that. Oh yeah, you would, you would appreciate it. You'd buy it. And then you'd be my only customer.
Speaker 5 (19:57):
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Speaker 5 (20:43):
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Speaker 4 (21:27):
I don't know if it's the brand or if I don't know the product, but we, we primarily sell to females across the board, but we look at our portfolio of brands. We do have some male focused products, but majority of the female buying products and this adds from a solid beauty based out of Australia, they are launching in the U S and I believe looking at it visually, which obviously I'll send it over to D it looks like it should work. It has the social proof. It has the branding. It has a use of product and it is bleeding cash. I'm saying like, this is just on one out on one outset. We spent over $5,000 and it currently is sitting on a 0.72. Now, technically we should turn this off and why the justification is for this specific brand is like, it's the highest CTR and account.
Speaker 4 (22:15):
And it's technically below CPM that doesn't say. We never make decisions off of that. But this ad, for whatever reason, I don't want to give up on it. It got a 7% click to purchase ratio. AOE is 113 bucks. So I'm like, guys, we've got to keep this running, but it's not proven profitability on Facebook. And if I were to let this run, I'll run through it again. It's split screen with UGC testimonial at the bottom, sped up for her to actually try it on. So it is, it is very engaging because she's moving so quick, but man, it's not doing the job,
Speaker 5 (22:48):
But it's still running is everything. Yeah, because it's true
Speaker 4 (22:52):
Out of all the brands, the easiest I posted this earlier this week, the way that we look at a lot of our products now is, or a lot of our ad sets specifically is okay, what's the click to purchase ratio? What pages are we running to? What's the AOV and what, um, what's the cost of like the carts Regan, because we know we're going to kind of build up bottom. We always work off a lot of our downfalls and correlations. That's kinda how we like to buy media as human plus scientific as possible. It's not, it's not a perfect science, but we believe that it could potentially be, um, this ad tends to this ad style tends to do well, but for whatever reason, all the other metrics look good, except the fact that it is not profitable.
Speaker 5 (23:32):
It's funny because I think you've mentioned that kind of correlation Excel sheet. You are,
Speaker 4 (23:35):
You mentioned that a while ago and I love those
Speaker 5 (23:39):
And cart ratios, checkouts and whatnot.
Speaker 4 (23:42):
And those were my bigger accounts. I love that stuff you have. I mean, there's, there's some brands, for instance, we were selling, um, neon signs. So we have an unbelievable neon sign brand that we've been working with and AOV 600 bucks. What do you have to wait at least for 200, 300 all even dealers, they even want to know this is potentially going to go wide. So I was very fortunate enough to work with a good team and we're promoting the Nikola truck, right? That is by far the largest brand that I personally have been able to go against in the most recent time outside of obviously the apples and, um, uh, nugs and, and June shine and a couple of these other like on the email side, but NYCLA has been, I'm very for this industry and very, I'm a Tesla current driver, but I cannot wait for that truck, that hydrogen truck that we're making and conversions are a thousand to $5,000 reservations. Right? So my, my, my, my CPA target was three 25. We're thankfully operating between about 175 and two 50. But man, you've got to spend a couple thousand bucks to figure out if that ads can actually be work
Speaker 3 (24:46):
Well, you are, uh, we were doing an episode. It was the last week about something a little bit more tangible, you know, somebody selling high ticket stuff or professional services, you know, in that two to $20,000, it's the efficiency of capital, right. Is just like, you know, you got to spend a thousand dollars to know if you're, it's like, if you're on target, uh, yeah. Versus like, you know, 50 to a hundred dollar AOV, you get this, you get to spend 50 to a hundred bucks. Right. And you know, my, most of my career has been B2B SAS. Right. And so I did not like understand this for, for a long time in terms of, yeah. I just focused on CPA and ROI. But when you start to really think about, you know, how efficient is that level of spend, what is the result of that efficiency?
Speaker 3 (25:36):
Well, you can accelerate and learn so much faster. Right? I think a lot of why, you know, DDC does so well is because it's so capital efficient at this 50 to a hundred dollars price point that, you know, every single week, like you can throw something out and test in B2B. Like if you're, if you're doing like a trial, you're doing some scriptures, you're doing anything high ticket. You, those optimization cycles are monthly at best. They're probably more like quarterly. And so you're really, uh, that capital efficiency ultimately is like, how many times do you get to cycle through learn and test? And so that's why we shifted our whole customer acquisition for on the B2B side to books, right? Like we're like, uh, you know, like a 30, $50 book is, it's not e-com, but we can learn just as fast on lead generation. Um, get somebody to buy a book either. It's the agency growth book or rich dad, poor ed book. And we know, um, you know, within that week that we're, you know, being capital-efficient, we're hitting some, some leading metrics, uh, to really make the thing work and scale. So I'm like a hundred percent with you there, but like selling a semi-truck it's like next,
Speaker 4 (26:54):
Do we are, we we're building our best. So we've been working with a data scientist again, we're trying our best to be as how would you say this? Like systematic to the point where everybody, everybody involved, whether it's the media buyer, that the brand, you have to answer three questions at all times. Like I firmly firmly believe in this over the years I've been in it. You have three questions that if they call you and you wake up and you can answer these three, they're gonna be like, appreciate you. Uh it's what has happened? What is happening? And what are you going to do any time? Those are the three questions. What has happened? What is happening and what are you about to do? You can break that down any way you want, but that's layman's terms too. I know it has happened because I understand what's happening.
Speaker 4 (27:38):
I'm doing this currently. And by me doing this currently, I expect this outcome. That way they feel competent, like, okay, you've got this, continue to do what you need to do. And what's the hardest thing in the agency world. The fact that it's human capital, like you could only take so many brands unless you want to grow. That's why you have the Hawks. You have the mute. Six is you have the common threads that are 60, 70, 80 people, uh, even, even promote w a hundred plus people on social side. We're going that, that model of building out one-to-one or one to five, one to eight is stressful, especially when they need to be putting most of their creative brain to choosing the content that they need to do. Well, man, if you can build this simple by correlation of when we're making decisions and how we're making decisions, you still need the human element because there's nuances of CPCs and the wants. It's a Patriot running to everybody's on the same page. I get why you're doing what you're doing. I can run it forever. I'm sorry.
Speaker 3 (28:33):
Calm down. Calm down. Nick is not passionate about this at all at all. All right, man. So let's dive into this next segment. Let's talk about some financial principles for the people that are in advertising, media buying, you know, and, and, uh, what are, what are some of the things that either you're working on yourself in terms of how you are structuring your relationships with your clients, how are you having, you know, these financial conversations and to what extent with your clients? Uh, but what, what advice can you give, uh, on that front?
Speaker 4 (29:11):
So this is very top of mind. So this and this wasn't planned before. So any of the lessons, like, I didn't know, these are the three main questions coming. I knew the rich and poor, but this last one is something that I I've been thinking about internally with our partners, because we obviously, we do the traditional model of percentage of spend or minimum, right? We do a lot of the invoicing about seven to 14 days. So we let delayed attribution kind of catch up because a lot of our, our success is based upon the metrics that we hit at certain spend levels. So we spend X, it falls between the success metric or the next success metric. That's what we're able to build upon. And that was agreed upon a contract prior, if a brand isn't savvy to whether they're agreeing to what they're spending on, they're going to get this bill 20, 30, $40,000.
Speaker 4 (29:58):
They're going to be like, Holy, I'm not paying this. So we're currently in talks with other partners, even we've been trying to do as ourselves. We have drawn a perfect solution outside of using just a Google dashboard and adding in a percentage and then doing our own custom doesn't correlate with custom metrics there. I don't think it's perfect. It will improve. Um, but we're, we're wanting brands to a, at the beginning of each month talking through it. And this has been something we've been doing forever, but now it's more of a transparent, updated rather than being manually in the team, doing it on a Wednesday and Friday. It's every dollar we're spending. There's obviously a percentage that we are, we're making on that depending on the success metric of that day. And it's not really on a daily level, you can't do it as much because there's so much nuance and change every two weeks to have.
Speaker 4 (30:41):
Then obviously again, finding on the month, we're building the dashboard that will highlight as you're spending. Here's what you expect to spend and your bill is for Facebook. And then that margin above it is the percentage that we're taking on the ad spend at the success metric. So now that they're able to log in, see, okay, this is what I'm spending on a pacing ad. This is what my true ROI is because this is what the agency fee is on top of it. And I can expect my build in a must to be somewhere around this area. And that way they have no excuse other than like, Oh, I haven't checked my, my, my dashboard. I haven't checked the updates in so long. And now then when they get that check, they can either be like, Hey, let's payment plan, because obviously we're in a time of COVID and yes, there are some brands that are doing fantastic. There are some brands that are like, I would love to break up these payments. What are these terms? Can I get to 30 days? And at the end of the day, it's our job as partners to make sure that they have the cashflow to spend. So that we're usually the most expensive bill for them at anybody that produces any, any high spend. And so that conversation is a very intimate one. How'd you guys know,
Speaker 3 (31:46):
Oh dude, it's the rule of large numbers. Right. And you gotta be really careful because, uh, yeah, there's a couple challenges I see with, with folks in the space, right? Is, you know, once you start sending invoices for anything that's 20, 30, 40, $50,000 a month, it does it like as much as you want to say what the ROI is like our highest retainer and our agency will look 45 grand a month. It didn't matter what are our results, right. It was like, it was the rule large numbers, which was, yeah, we're not like we don't want to pay that anymore. And so you can solve this. I should say, you can go down a long rabbit hole to solve this through better analytics and justifying, but the rule of large numbers, and I don't want to pay large numbers is an override against that. The other challenge I see,
Speaker 4 (32:36):
And I'm not trying to poop Hill on your parade here, but, uh,
Speaker 3 (32:40):
It's really cashflow, right? Because you want that attribution to, to, to catch up, right? So you have the month of all the months, September that you got to operate on the account, you got to wait until, and correct me if I'm wrong here, but this is what I'm understanding. You got to wait until October 15th to send in that invoice. And then my guess, if you're serving e-com, they're not going to pay on October 15th. They maybe you maybe got some good clients. Maybe you're just hitting them their card or their ACH, but maybe it's, you know, it's taking them 30 days to get that in maybe 15. I don't know. What would you say? Yeah,
Speaker 4 (33:18):
This is a great, this is a really, really good topic. So we have on all launches, we're having to stagger them. It's cashflow for us is very, very important because of how big the team is and pay periods. Right? Everybody has to deal with this stuff. The brands will pay anywhere between seven to even sometimes 30 days, depending on how large it is and what I've seen. If you have a brand that's back to back, you're saying them back-to-back checks above $20,000. You're going to get questions, right? Like their, their CFO, their, whoever is checking the founder. That's looking at that check. They're going like, let's just, can we go analyze, like, is this money worth being expensive? You're going to get looked at. So what we've been having to do is if we start seeing, and we have a trigger on our, on our dock to two months back to back above $20,000, that triggers us to reach out to the brand and be like, Hey, we're going to make unique creatives for you pro bono, because that's, that's tangible.
Speaker 4 (34:08):
That's something that we know we can work, that some of that we know is valuable for us as well. And it's a mutually beneficial because the brand's going to go, thank you. We already know we're investing in that. Let's, let's get that. We already make ads as well, but that's just like the above and beyond for them to be, have a little bit of peace of mind of this check is going for not just the management and the growth, which it's, it's hard to, it is sad to say that we have to defend the bill that we have earned, but that's just the nature in which we're in
Speaker 3 (34:36):
Out of the, to be honest. Like I, I think that the agencies that really understand the like, in e-commerce it's difficult, right? Cause like e-commerce is struggling with cashflow just as much as the ad agencies themselves are struggling with cashflow. Right? And so these guys are just beg, borrowing and stealing, trying to get every single financial product that exists. Right. They're tapping into Shopify capital, they're tapping clear bank. They're trying to tap Brex. They're trying to tap like everybody on the sun. And I think that bringing an incorporating some of these, you know, financial products into the entire ad spend entire into the entire, um, agency fee is really how you can have a lot more control over it. And, uh, and also have a lot more control in terms of not putting yourself to like, is the client going to pay the bill on time or not?
Speaker 3 (35:41):
And what's their cashflow and like, how are they going to receive this $50,000 invoice right now and own that. Right. And, um, and so I'll do like a live native advertisement for ad capital right now. Cause you're queuing me up. But yeah, it is like it, you know, one of the things that, um, that the, the, the opportunity we see in the world of advertising is that agencies take a percentage of spend. And for when you're funding ad spend exclusively, it's on a percentage of spend and on a card, you know, it's all about the rewards and the percentage of spend. Right. And so the, and then on top of that, you have this revenue share component that is the ultimate, like dream for, you know, ad agencies, right. Where they get X percentage of, of revenue and clients are always like, kind of scared of like, Oh, okay.
Speaker 3 (36:36):
You know, let's put a cap on that. Some, some level of extent, right. And so like, if you were to just like put all of that together, one of the things that, uh, I see a potential for in the, in the space, um, and we're getting like early adopters that like yet it is where all this is bundled together in the sense as like, Hey, we're going to fund your ads. We're going to manage your ads. And we're going to take maybe not 10% of spend, but we're going to do all of this for 15 to 20% of your spend. And then in terms of repayment, it's going to look basically on taking a percentage of revenue, right. We're going to automatically take 10% of your revenue until the principal I E the entire ad spend, plus the agency fees. And then plus our, I should say, all the ad spend plus the agency fee and the financing fee get paid back.
Speaker 3 (37:32):
Right. And that could take, you know, three to six months, but getting paid back daily over that three to six month period is like, just as good, if not more consistent than like having to wait 60, even 75 days. Um, worst case scenario, 90 days to just get that one big check, that's really difficult to, to model. And I don't think like, everybody's going to like jump on that train. They're going to kind of block and tackle like bits and pieces of it. But, um, at that level, you're, you're proactively, you know, taking re you know, Romans and pay, you know, and, and paying yourself daily, which helps the agency from a cashflow perspective, right? Like if you look at, um, strike point media, they can do this. I haven't seen him, I do this e-com, but like, they do this because they serve like finance.
Speaker 3 (38:25):
Right. What they do is they say, Hey, look, this is all the media and our management fee. And you've got to pay us like upfront and they send like that full invoice. And then, you know, it's a matter of, for the incline of like, okay, maybe we'll just fact, you know, factor out this invoice, or maybe we'll get somebody to fund the entire invoice, but the agency's getting all that, you know, paid up front. So they don't have to like float their entire operations for like 60 days. And if you look at, if you listen to that episode, it's an amazing episode because he went that changing, like that went from him being a million dollars in debt. And like just having no operating capital in the business to having exponential growth in debt-free, those guys are doing like over 20 million top line now. And, you know, he talks about just, you know, being on the front end of the flow of funds versus on the backend and hoping clients pay that. So I don't know. I think that the agencies listening to this are really gonna appreciate it, and maybe there's going to be bits and pieces, you know, that they put together to solve this problem, but it is, uh, it's, it's a pain, you know, it's, it's a pain for sure. In how you think about like getting payment from your, from your clients.
Speaker 4 (39:41):
Yeah. I think the easiest solve that we have currently is obviously diversifying services. So we have every cash from, from whether it's your email side, whether it's your social sideways, the content side. And we've starting to just on a very simple, simple model that I think people can be very aware of is people usually plan to launch at the beginning of the month. Right? What if you can just stagger that in there, if I'm going to finish out the 15 versus I'm going to finish on the first now, when we launching brands, that's that that's that effective billable date and some Browns people. I know people listening are going to go, why don't you just get them to prepay? Why don't you just get them to put that card in, have that conversation and let me know how that goes. It's no matter how much they love you and trust you.
Speaker 4 (40:22):
And we've worked very, very hard. I know I've personally worked very hard to keep a reputation as a good businessman and someone that is reputable in the space that that's not an easy combo, right? Like you're asking them to give cash that they don't necessarily know is going to be there regardless of how well you did in the past month. It's sort of like the model we live by back when I was playing sports is you're only as good as your last game. Like over here is you're only as good as your last campaign. And that's pretty much yesterday.
Speaker 3 (40:47):
Yeah. And I also think it's vertical specific, right? Cause like there's people in local there's people that dealing with like doctors and they're not as cashflow and sensitive, obviously strike points in finance. So they're not cashflow sensitive, but like, if you're an econ it's not happening.
Speaker 4 (41:02):
I mean, they're almost, you're almost, and we know this for two reasons because we own two of our own brands. And so when we're looking at paying our vendors, we have our SEO team that we, that we have full-time hire. We obviously pay ourselves for running the media. Um, we have our content team, like they're our bills. And the last bill that we, our job is to, how do you manage that cashflow? I want to push off some of these checks that aren't knocking on our doors. It's not a matter of while you're rude. You're not paying your Dole time. It's businesses business. So you have to be very mindful where that cash goes, Oh dear you,
Speaker 3 (41:34):
Look, you listen to Josh Nez episode, man, that guy is like King of like pushing off and deferring bills. I mean, it's just like, how else do you build an eight, nine figure business? You know, with no VC money is like, you have to be just maniacal about, you know, your, your cashflow and, um, you know, large companies, large companies do this. Right. I don't know if you had experience with this, you know, in your early agency days, Nick, but like some of the big, big brands, like they're not paying their agencies for like net 90, 120
Speaker 4 (42:06):
That's brutal. Well, you brought up Josh. So Josh and I, and I, I credit a lot of what I've been able to do and the reputation that we built by building up snow. So when we work with snow back in, and this is the person, this is we, we work them structured. Then we took into common. And then I know now that they're managing an internal, but Josh, I, I credit Josh, the house I currently live in today because that's what two years ago, when everything was said and done like that success that we're able to build that product into, was able to put this house was able for me to afford to buy this house. Uh, we did some, we did some wild, wild things together and he, although yes, he's strategic and the cash that he deploys. He definitely knows where all the money's being made. And he treated us as a vendor, me as a partner and me as a friend, very, very well. So I can never speak poorly on, on where his cash is going. Cause I know my personal experience is that invoice came in, that that check came back real quick. Cause he obviously knew it was, he was driving a lot of his grip.
Speaker 3 (43:05):
Yeah, yeah. Yeah. I don't think it's necessarily a bad thing. It's all about setting expectations. Right. And being clear on what those terms are. Um, and I don't think, you know, having somebody on net 60 net 90 or whatever it is makes you a bad person, I think it's when they expect to get paid up front and it turns out to be what happened that one 20?
Speaker 4 (43:25):
Um, well this
Speaker 3 (43:27):
Has been an amazing show, man. I'm um, we really went deep into it, man. Like, uh, we really went like super, super nitty gritty here. I, uh, I hope everybody enjoys this episode. Tell everybody a little bit about what you're excited about right now.
Speaker 4 (43:41):
I can support you what you got coming up next. Yeah. Thank you very much for that opportunity. So we obviously we're we're we are sold out like you got LA, we are back in meeting in person. We're taking all our precautions. Um, so whether you believe in happening with Cody, don't believe with any COVID out of respect for everyone's where they're coming from. We, we are meeting in person. This is something that I was very, very, uh, this is why we did this, right? Like you guys are building a community on the podcast. There's people that your tribe, you're going to find that tribe they're going to want to come through. And you kind of mentioned it earlier. We have a very unique set of people. Uh, and it's true. So James comes from, I wouldn't say the blackout world, but we have the relationships in the blackout industry where various affiliates that we work with.
Speaker 4 (44:22):
Um, and we obviously are a staple in the e-commerce world. So we have eco, which is next week. We sold out in eight days, which pumps me the hell up. It wasn't a large venue. Obviously we're only doing about 30 to 35 people. Um, but we, our next one is going to be in Greece, currently planning it. And if everything works out as, as a coring and this, this LA one goes, well, I'll try to do another one coming in November. So the biggest, biggest pump is get back in there and communicate to everybody. There's no better time than doing this. Now. Obviously we all have Q4 to kind of prep for and constant creative. We're continuing to build good creative for people. So anybody has any help. You know where to find me I'm I am, I am shopping for it on the twits and I am nixed out before it on Instagram.
Speaker 5 (45:08):
There you have it, Nick, you killed it. Thank you so much for being so transparent, diving into it, giving away the goods. Appreciate you, man. Thank you so much. Thank you guys. Thanks so much for listening to another episode of the rich, add more at podcast. If you're like me and listen to podcasts on the go, go ahead and subscribe on Apple podcasts, Spotify, YouTube, and rich at [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 [email protected] 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 for a.com to leave a review that a rich ed or at.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