Why Convert ROI's Testing Ads at Scale has Them on Target to Spend $10M+ in Q4/20

Zach Johnson

Dylan Carpenter

David Schloss

Episode
08
|
Season 1

David Schloss

,

Founder and Advertising Specialist, Convert ROI

Various

David Schloss founded Convert ROI in 2013, just two years after he graduated from the University of Florida with a BS in Tourism and Hospitality Marketing and Management. The agency, which manages over $2.5M per month in paid advertising via social advertising channels, has a dedicated focus on building relationships with clients interested in an integrated advertising approach. Convert ROI enables businesses to succeed by taking complicated social ad plans and seamlessly turning them into easy-to-follow revenue producing campaigns.

Key Takeaways

  • The secret to spotting a winning ad on as little as $200 a day.
  • The savvy advertisers’ reason you should never blow off Facebook reps.
  • Why warm audiences are great for inflating engagement but worthless for this key metric.
  • How to game credit cards for (employee) fun, profit, and disaster-proofing ad spend.
  • Why patience pays off big time when you make these incremental shifts before you scale.

The Transcript

Season 1
,
Episode
08
Transcript

Host:

Cool. How's it going, everybody? Welcome to another episode of the Rich Ad, Poor Ad podcast. Today we have David Schloss, the founder owner of convertroi.com. He is an OG in the game, has been running ads since '07, has a massive account that, shoot, is valued at around $2 billion right now, runs a ton of ads for Fortune 500 companies, and probably roughly manages 2.5 to 3 million a month. So welcome, David Schloss. Thanks for coming on, man. We'd love to kind of have everybody get to know you a little bit more, so go ahead and introduce yourself there.

David Schloss:

Awesome, man. Really appreciate it. So yeah, David Schloss. Like you mentioned, been running ads since 2007. I started in college when I was at the University of Florida. Basically did not see the wave of people running social ads until around 2010 and 2012. That's when a lot of people were finally starting to transition. But the real breakout was around 2013 when people started running a lot of Teespring ads, a lot of apparel-based stuff back then, scraping custom audiences and things like that, UIDs.

David Schloss:

So I've been in the game as long as a lot of people who maybe first started out in the corporate side of things, because I know Facebook started some ads back then in '05, '06 for them. I started back on the public side, when anyone could join, was open. That's when I jumped in, right? So when you were able to spend five bucks a day and get 1,000 clicks, that's when I jumped in, and I've seen the evolution of the platform, when they brought on WhatsApp and Instagram and Oculus and all these things, and been testing out as much as I can on this platform.

David Schloss:

But also, I mean, it basically changed my life. I mean, it brought me out of the hole twice. I almost went bankrupt twice, and if it wasn't for ads and understanding the platform and helping people scale their businesses with it, I don't know what platform I'd be running ads on right now, but it wouldn't have been Facebook. But thankfully, they've continued to grow. They're a huge company now, and many of us, including myself, have benefited from it.

Host:

Oh, yeah, man, that's just wild, how long you've been kind of part of this game. To kind of see where you kind of come from, it's just absolutely awesome there. Just so everybody has some context, as mentioned, you mentioned you're kind of roughly spending 2.5 to 3 million a month on average. But during those holiday seasons, what do you think that climbs up to? Because I know you kind of mentioned earlier, and I was like, "Ooh, it's going to be a good one."

David Schloss:

Yeah. So I'll use the last two years as an example, because that's when we had the biggest push. In the last two years, last year, during October through December, we actually spent roughly $7 million a month on average. That was just last year, and then the year before was actually when we had our breakout. I'll tell you, in one of the companies, one of the products we were selling, the year before that, we actually had October was more of a cascading thing. October, we spent five million, November, we spent six million, and then December, we spent nine.

Host:

Wow.

David Schloss:

The reason for that was because we had a product that broke out to the point where Facebook actually wanted us to write a case study about it as a success story. We were selling a mobile accessory for iPhone X back then, iPhone X or any other versions prior to that, where it was basically a mobile phone charger that would go in your car, right? It was back when you there weren't that many providers of this product, not even on Alibaba or AliExpress. This was a private label thing that they developed on their own. You would stick it in the dash of your car. It was magnetic. It would stay there and charge your phone wirelessly. So it would just hang off your dashboard.

David Schloss:

At the time, there are only two other companies that were selling something like that, and I took over the account, because, for some reason, their ad manager prior just did not know how to scale it. The first month I took over was October. So they were like, "Hey, man, your budget's open. You can do whatever you want, because we need to start pushing right now." They didn't know that the first day, I was going to start spending 10K a day. "You said it was open, so I'm going to go ahead and do whatever I want. I'm going to go ahead and push this thing."

David Schloss:

First month, we were just ... On day one, we started at 10K a day. "Oh my God. It's averaging a 4X ROI out of the gate. Cool. Let's go to 15K a day." It was just push, and it got so aggressive that we were like, "Screw it. Let's target worldwide," because at first we were only doing US and Canada, and then they were like, "No, screw it. Sell everywhere." We were selling millions of dollars a month of this little gadget that cost 50 bucks.

Host:

Oh, man.

David Schloss:

50 bucks. It got so bad that the manufacturer got mad at us because we almost made them run out of inventory. So we had to get a second supplier during the holiday season and have them produce at a rate that they weren't prepared for. So it actually got to the point that, by the end of the holiday season, they had three different companies helping produce and ship the same product in China.

Host:

Wow.

David Schloss:

We had special shipping rates, too. So it's like we literally could have had something bought over there and shipped to someone in the US within seven days-

Host:

Man.

David Schloss:

... because we were selling so much.

Host:

Oh, yeah. I imagine once they see that volume, they're like, "Okay, these are some awesome businesses to work with. Let's go ahead and make it a little bit more worth their while, too," I would imagine.

David Schloss:

Yeah, exactly. That was actually the breakout moment for me when it came to communicating with people at Facebook. Even when they had the agency partner program in its infancy, I remember the day it was released, I got an email, and it said, "Hey, you already qualify for the preferred partner." I mean, premium, you have to be spending like 20 million in a quarter type of thing. I'm like, "Well, if you look at my holiday spending, I guess I already kind of fit that bill. But when you look at it from a consistency standpoint, I'm one level below what maybe a major corporation would be getting in terms of support from Facebook."

David Schloss:

So immediately upon them opening that platform, I was like, "Holy ... Damn, I'm only one level below where I want to be," and that's not bad, to just do what I was always doing. So yeah, I've always had a great relationship with the people at Facebook. I've always talked to marketing reps like they're regular people. I don't just shoot them away like, "Oh, yeah, you're just entry level." No, I talk to everybody. Unfortunately, sometimes that could be 20 different reps, but the big thing is now have a dedicated one, so it's not that big of a deal. But yeah, that was the beginning of me having a lot more ... I wouldn't say leeway, but a lot more people to talk to when things go a little crazy at Facebook. At least I have someone to talk to about it.

Host:

Oh, yeah. I mean, you said it perfectly there. I mean, especially with the amount of accounts you have access to, I'd imagine you have so many marketing experts hitting you up to where they may not be able to provide too much value, but hey, you have somebody on the inside for at least a little bit to kind of help navigate those roadblocks, because that Facebook ecosystem is just wild.

David Schloss:

Yeah. Yeah, you never know when you're not going to have someone to talk to, so you might as well take advantage of it while you have it.

Host:

Exactly. So let's go ahead and take a page out of the Rich Dad, Poor Dad, discuss the financial principle side of things. So with these massive budgets for these clients, I mean, how are you coming up with test budgets? I know you mentioned that one client said, "Hey, you've got free reign to spend whatever," but when it comes to kind of more of the average clientele you get, do they give you a set amount, or how does that kind of play out there?

David Schloss:

Yeah, most people in the beginning we'll start with a set amount, because they're not truly sure where their point of scale is, right? So they may be setting up a budget of, let's say, $20,000 in a month, right? Now, they may expect me to start out of the gate spending 500 or maybe even 1,000 a day, right? Because they know that some advertisers, they'll spend 1,000 a day on day one, but they'll start cutting it back, right? It's really just throwing everything at the wall to see what sticks.

David Schloss:

I've always told people that I know how to figure things out for as little as $200 a day, and I can figure it out pretty quickly, because there's ways that you could determine if an ad is getting any sort of traction, whether it's from an engagement standpoint, a click standpoint, or sales, for that matter. Then you could take that and sort of create your second round of testing.

David Schloss:

So, for example, let's just use, let's say, a course that's $497. It's a webinar, and you're just trying to generate some registrations, right? At 300 a day or 200 a day, you're not really targeting a lot of audiences, right? You're not. Even if you set them to 50 a day or if you're doing a CBO and you set it to 200 or 300, you're not going to put more than maybe four to five audiences in there. So what I usually would do is everyone says start with your warm audience. That's cool, but I don't always want to start with the warm audience, because that's going to be very different results from the cold audience, especially click standpoint or engagement. I use warm audiences to inflate engagement and CTR, but I don't use them as the running metric of whether or not something's going to convert, because they already know who you are.

David Schloss:

But if I see that the ad can get a lot of engagement or even a solid click through rate, let's just say above a 2.5%, with the warm audience, I'm like, "All right. I've hit the nail on the head with my people. I wonder if this also works with the cold audience." So I might apply 125 a day, for example, to warm in the beginning just to see what happens, and then I'll put maybe 100 or 150 a day as an example to the cold audiences. I'll start with lookalikes of the customer list or even a lookalike of maybe the lead list or something like that, just the standard stuff that you should start with anyway, right? Nothing different.

David Schloss:

But like I said, I already tested it with warm for a day. I see the CTR's looking strong. Engagement's there. Let me just use the post ID, carry it over to the cold audience, and see if they respond even closely to what I'm seeing on the warm side. So I've launched to these cold audience people, and I'm getting, let's say, a 1.5% click through rate, but the engagement is very similar. I'm okay with that. I can still run with it for an extra day or two. Then if I see that maybe the lead cost is at a level that makes sense on both sides, both warm and cold, now I know. I've done a small test. Let me ramp this up from 200 or 300 a day to 600 a day and see how this runs, right?

David Schloss:

For anyone who's curious, this is an auto webinar, because you could see them doing it slow and steady. I'm trying to find the momentum before I really crank this up. If this was a live webinar, you don't have that time. You might have a five or six-day stretch to get as many registrations as you can. So on day one, you're just going to throw everything at it. You might throw 2K immediately at everything and then just cut back and let it run for the rest of the time. But with an auto webinar, you can go slow and steady. Right now, most of my clients who run webinars are doing auto webinars. So we'll do things like that. We'll start 200, 300 a day. Then we'll boost it to 500, 600 a day.

David Schloss:

If we could see that the CTR and engagement are still aligned, but the lead cost isn't quite where we want it to be, that means we have a messaging problem. If we see the click through rate and maybe the CPC and all that is starting to ... The CPC is going up, the CTR is going down, but the leads are still coming in, that's fine. All we're really looking for as a metric is getting those leads. But the ad click through rate and the CPC is giving us an idea of whether or not people are even paying attention to our stuff, because that's what we want in the beginning. We need to make sure we're grabbing attention, and if we're not getting attention, no one's going to opt in, right? So we do that slow and steady pace until we see not even a purchase. We just want to make sure people are going through to the webinar.

Host:

That proof of concept, more or less.

David Schloss:

Yeah. We're just trying to prove the concept. Then, of course, our rule of thumb with something like a webinar is we don't even want to make a massive change until we've had at least 300 people watch the webinar, not 300 registrations, 300 viewers. So if it takes you 600 registrations before you can get 300 viewers, so the 50% watch rate, and let's say your leads cost you 10 bucks a piece, you just spent 6K before you have to determine if you need to make a change.

David Schloss:

That's why we're trying to keep that lead cost low in the beginning, right? That's why you could see we're doing incremental shifts in the beginning, before we do mass scale, because too many people go mass scale in the beginning, spend 5, 10K, and they're like, "Oh, nothing's working." It's like, "I could have told you that with 2K, if you just gave it some time."

Host:

Oh, yeah. Yeah, I mean, I think that's spot on. So even if they're spending massive amounts of money, I mean, you can really test these smaller budgets to kind of just test the needle a little bit and see how much it moves. I mean, I think that's a really valuable concept that people don't really grasp, just think you need to spend a bunch of money on Facebook to kind of get tests, when, in reality, you don't necessarily have to. But, of course, it always depends on the average order value, the conversion cycle, and whatnot. I mean, even a watch rate at 50%, that's awesome. I feel like we've done a ton of webinars, and it's usually 20 to 25. But that's pretty killer there.

Host:

Now, with these accounts, I mean, even the bigger spenders, I mean, are they on Facebook billing invoices, or I'm trying to think of how they're kind of maximizing this, because, I mean, there's so much more on the backend offers, whether it's points, cash back, or something to where with these big budgets, I mean, it's pretty lucrative there. Would you happen to have any insights on those?

David Schloss:

Yeah. So of course when an advertiser is spending over 100,000 a month, that's when things get really creative, right? You have some of these clients of mine, like the corporate ones. The corporate ones will be on the Facebook billing cycle, right? They might have Facebook Credit, and then you just pay the big bill at the end of the month type of thing, whereas others, let's say like the e-comm guys that I work with, they might spend 200K a month, but what you don't realize is that 50 to 100K of that every month is put on a Chase Sapphire card. Then the other 50 or 100 is put on an Amex Platinum card. Then the other 50,000 might be put on a cashback card.

David Schloss:

So they're rotating cards, but here's the thing. For some people, they're going to go, "How are they doing that in one account?" I didn't say they were doing that in one account. They have two or three accounts running. So one account's the cashback account, one account is the Sapphire, and the other one's the Platinum, right? We segment out not just the cards. We understand the purpose of having multiple cards. One goes down. Something happened with fraud. That account goes down. We have to have the ability to rotate, and they're not virtual cards, by the way. These are real cards. Okay? I have some clients who have upwards of 15 credit cards, because they run a lot of traffic. So they have to move things around, and God forbid an account gets shut down or a card gets hit for fraud because someone stole it. Well, don't worry. We've got plenty of other cards that rotate, right? They're always prepared.

David Schloss:

But even with the major corporate account that I manage, this billion-dollar company, they're just running on Facebook's billing credit system, the one where it's like, "Oh, we're running on your credit. Then, at the end of the month, we'll just pay it." The reason for that, it's just easier on their accounting. One month, we might spend 100K for them. The next month, they want to spend 300. Especially because they're more in the insurance game, there are certain parts of the year where insurance is hot. So they want to leave that open credit for when they're going to spend the most. So there's only certain pockets of the year where they really want to up their budget, and then other times of the year, they want to spend very little.

Host:

Yeah. Timing is everything there. Now. With these accounts with all the 15-plus cards, I mean, what do you think the benefit they're most intrigued by is, cash back, maybe some sort of 30-day float or something? I mean, if you have that info, I mean, what do you think that trigger is?

David Schloss:

It's the float. So think about Amex, right? With Amex, they have the you could pay later type of thing, but it's always a 30-day delay, right? So even if the card is due at the end of the month, you have 30 days to pay it. That does help with some businesses, especially with e-comm. Then you have things like with Sapphire. When you're a big spender, they actually have some times where you could pay upwards of 60 to 90 days later, depending on your history. Of course, with a lot of these guys, they have such great payment history that it's okay that they could be a month behind, quote unquote behind, on something, because Chase knows that they'll pay it.

David Schloss:

But the reason why they have all these different types of cards outside of the points ... The points are always great. Don't get me wrong. I have one client that gets so many points from advertising that he's buying his team gifts with those points every year, right? It's his way of providing them with a holiday spirit type of thing. It's like, "Here's your gift. Here's your gift," because it's coming off of all the money they've made from those points. It's like you made all this money from everything you've spent, and then those points are attributing to "You get a Macbook. You get a TV," that type of stuff. It's cool.

David Schloss:

But then the cashback ones are always interesting, because a lot of the accounts we have cashback cards on are actually retargeting accounts, [crosstalk 00:16:16]. They're accounts that basically run all the time with the best performing ads from warm audiences or I'll call them semi-warm audiences, like visitors, engagers, things like that, and the reason why we have the cashback cards on them is because they don't have a lot of changes going on in those accounts. Rarely is there ever a shutdown, if ever, because it's just running to people who want their stuff, anyway. It's all retargeting-based or dynamic retargeting on the stores and whatnot, and we know what that budget's going to be, because it's very fixed. We're spending the majority of our money on things such as cold audiences, but hey if you're spending $200,000, $300,000 a month, you might be spending 25 to 50K on just retargeting.

Host:

Yeah, easily.

David Schloss:

Put that on a cashback card, and you're straight. You're making a good amount of money back. Once again, my clients are so thankful for their people that a lot of the cash back they make just is put towards something in the corporate environment, meaning, "Who wants to take a trip this year?" The whole team goes on a trip with all the money they got back from the cashback card, right? Or maybe they do a raffle at the end of the year, and it's like someone's going to get a free $5,000 vacation. That was paid for with the cash back. It's not coming out of their pocket, right? So they use these as incentives more than just, "Oh, I'm going to put it back in my pocket and go buy myself some cool stuff."

Host:

Oh, for sure. I can only imagine how many businesses are just racking up fly points from COVID and everything to where there are probably going to be so many COVID employee trips after this. It's going to be nuts.

David Schloss:

Exactly, exactly.

Host:

Well, heck yeah. I mean, that was juicy there. I always have to take a little segue trip and kind of dive into some rich ad and poor ads. You down?

David Schloss:

Yeah. Let's do it.

Host:

Heck yes. So what are you feeling first, the rich ad or the poor ad first, David?

David Schloss:

Let's do the poor one.

Host:

Okay. Heck yeah. So I'll kind of give some context for everybody. As mentioned, we'll kind of post these links in the show notes so individuals have some kind of context here, but with this actual ad here, it's The Unhindered Voice. It's the truth about hitting powerful high notes. So it's all about singing, and the amount of engagement on this is absolutely unreal, but it seems to be kind of a special training on hitting those higher notes when singing. But, I mean, it's got 450,000 views, over 1,000 comments, 1,000 shares, to where this actually looks like a good ad, above the surface. But I know you mentioned it's not. So David, let's go ahead and kind of rip it apart, give the strategy, the context behind it so kind of people can dig deep and see why this didn't work, actually.

David Schloss:

Yeah. So what's interesting is, on the surface level, you look at the ad, and you're like, "Oh, this thing must be cranking. They must be doing great." You're thinking that mainly because of the fact that it has so much engagement, right? The video itself had hundreds of thousands of views. But what people don't realize is that that same ad, when it has that much engagement, the click through rate's insane, it's a 4% or higher, the lead cost is low, what was weird is that we'd get all these registrations for this webinar, and then when the webinar came, we would rarely break even on the webinar. So I'm like, "Maybe the webinar just needs some work," right? That's always the first thought. Maybe the webinar just needs some work. So let's rerun this ad again, because it's doing so well. So many people are registering. Let's just use it again.

David Schloss:

So we keep reusing this same ad, because it just hit the nail on the head every time, $2, $3 registrations all day, sometimes even less, depending on the audience we're targeting. You'd think it's a singing offer. Why isn't it converting if you're just targeting everyone who's a singer, right? What we realized is that when it has to do with anything singing, there are 90% people who don't take singing as serious as the 10% who want to do it for a living. So we'd get a lot of people registering who just simply wanted to be better singers, but they didn't want to do it professionally or they didn't want to do it more even semi-professionally. The offer is particularly for people who want to do it professionally. So we'd have a lot of people registering for this webinar who just simply did not want to take that next step.

David Schloss:

But the ad itself was doing so good that, on the surface, you'd think, "Man, this webinar must be killing it. They must be making hundreds of thousands of dollars a year or millions of dollars." Nope. We would be spending $4,000 or $5,000 a webinar, and we'd barely ever get to break even. Most of the time, we'd actually be losing money every time.

Host:

How much have you spent on this ad, individually, you think? Was it [crosstalk 00:20:42]?

David Schloss:

That one ad itself spent $30,000. That one ad, and it did not break even.

Host:

Man, that's a beating there. Shoot.

David Schloss:

Yeah, and, on top of that, I mean, it built such a huge list that I remember telling the client, I'm like, "Hey, if you could just tweak the offer and say nothing about being a professional singer, but more of 'Just be a better singer,' maybe this thing will convert." I remember. I had said this over the phone. He's like, "You know what? I'll give it a shot." We ran the webinar just like a basic, "Hey, sing better at parties. Sing better with your friends," just make it something more of a "Just sing better," and even that didn't work. I'm like, "How the hell is this not working?" We went as broad as we could, and it still didn't work.

David Schloss:

That's when I realized this space is just full of hobbyists. Everyone wants to just be a great singer, but they don't want to do it professionally. The ones who do want to do it professionally will spend thousands of dollars working with people to make sure they can at least sing onstage somewhere, and they may never even become a professional, but they'll try. It's such a small amount of people that you actually would be a better coach, a singing coach than you would if you were trying to do an offer that was a couple hundred bucks.

Host:

That makes sense there. So, man, just a ton of tire kickers, it seems like, in this audience as a whole.

David Schloss:

A lot, a lot. I mean, tens of thousands of tire kickers is what we had, and it just didn't work out. I mean, that was the worst ad we had from that campaign. We had other ones that did just as bad.

Host:

Man. This is that cream of the crop when it comes to the bottom of the bucket, huh?

David Schloss:

Yeah. I mean, of course, I always made a joke to him where I'm like, "Hey, maybe if we just showed them how to start a business, it would change everything. Everyone wants to make money from home. Maybe we can find a way to tweak this and try something else." But that's not his business. It was more of a joke. But it's one of those things where when you have a broad offer, getting in shape, make more money, find a relationship, you could target anybody. You could target people who play Xbox and get people to sign up, right? It doesn't matter, because everyone wants to get in shape. Everyone wants to make money. Everyone wants to have a good relationship, right? They're broad. This is a singing offer. It is specific, even though lots of people want to be good singers. So we were just not hitting the nail on the head. We were hitting the nail on the head and getting them intrigued to show up, but we weren't delivering the message that would get them to buy anything. So we just had a lot of problems there.

Host:

No, that makes total sense. To just kind of recap for everybody, I mean, 450,000 views, a ton of engagement, 30,000 spent plus on this ad, and didn't even get to that breakeven point. So it goes to show the audience, kind of understanding it's really everything there. Now, let's go ahead and dive into this rich ad.

Host:

This one got me wanting to do this program, no joke. I mean, shoot, we're looking at 7.9 million views, thousands of comments, 2,500 shares. I know you've mentioned this ad's been running for 14 months. But just so everybody has some context, Adam Frater, transform your physique without lifting a single weight. So it's a big calisthenics program. It's a killer video. The comments are epic on here. But David, let's go ahead and take it away, man.

David Schloss:

Yeah. So this ad has been running for a very long time, and what's interesting is that you could take a fitness offer. This is calisthenics, like you mentioned, and you can start slow, right? So you can target the US, see what happens. If it does well, move it to Canada. Does well in Canada, move it to the UK. Maybe even move it to all of Europe, and you just start introducing more countries as you go, because that's what we did. It was country to country to country, because a lot of people, when they see something working, especially a broad offer like this, yeah, you can go worldwide. You definitely can, because we're doing that. But it's one of those things where when you do country by country, the ad doesn't get stale as fast.

David Schloss:

So we just went from country to country, and as we did that, we were like, "Yeah, we'll do two, three months in the US. Okay. It's doing well. Let's move to Canada. Oh, it's good. All right. Two, three months have gone by. Now we're doing six months in the US, two, three months in Canada. All right. This is doing good. Let's do the UK. Man, this thing's crushing immediately in month one. Let's move it to France. Let's move it to" ... We just kept opening it up, and next thing you know, 14 months later, I'm like, "Why is this ad still running? We have a bunch of other ads, but this one still works." Yet it's because the engagement's crazy. I mean, you saw it's almost 8 million views. It's 21,000 reactions or something. Comments, I've lost track. It's all over the place, and it's just because it hits on that emotional hot button that everyone wants, which is "I want to work out with no weights." A lot of people don't want to work out with weights at all.

Host:

Oh, it's a huge barrier of entry. Yeah. I mean, so ...

David Schloss:

When you look at the guy, you could tell he's not lifting heavy weights. He's just shredded. He's just shredded, and all he does is calisthenics. That's his main thing. He works out outside all the time, and it works for people overseas, because it's like, "Hey, you don't have to buy any equipment." This course is really cheap. It's 60 something bucks. Now, of course, the funnel, by the way, is deep. The funnel, it's like at the end of it, maybe you'll spend 200 or 300 bucks, and that's not including there's a continuity offer way in the back for an app, right? So the long-term value or the lifetime value of this is way more. But we just want people to get in for 60, 70 bucks, and then we'll figure out the rest.

David Schloss:

Here's the funny thing. Our CPA is 35 bucks. So we're making money already off the front end. We'll even take someone that comes in for $60. You know why? Because we know the backend converts. So we only have to get a return on ad spend of about a 1.3 to be profitable. That one ad is doing way more than that. But overall on the account, we get to be as aggressive as we want, because, like I said, as long as we can get a 1.3, we're making money.

David Schloss:

So some of these screenshots posted on Facebook these days of people doing crazy numbers, I'm like, "That's cool, man. All we have to do is spend 200 or 300K a month on this, get a 1.5, but then the guy's hundreds of thousands of dollars in profit off our 1.5. So you tell me what works better." I'm going for volume here, because the guy understands the more volume we can bring in, the more potential for his continuity offer on the back. As someone who used to run ads for a very popular app that only costs about eight bucks a month, it's in the fitness space, as well. It's in yoga. The guy would lose money on the front end all the time. We'd acquire buyers for 15, 20 bucks, but the people who'd pay $8 a month would stay for a year. As of today, I don't run ads to that guy anymore. But as of today, he has over 15,000 people paying eight bucks a month.

Host:

Ooh, that's some MR right there. Holy moly.

David Schloss:

Yeah. So it just shows you, when you provide the right value, people get results. It doesn't matter how much it costs in the front end. Just get people in the funnel and let the value sort of just come from people's results. That's what we're experiencing with Adam. It's like just keep throwing money at it and let the backend do its job, and we'll be fine. It's not about getting a five [inaudible 00:27:44] on the front end. That'd be great. Don't get me wrong. We'd all make a lot more money, but we know that we've been pushing this thing so aggressively for so long that even if we could just get a 1.5, we're doing fantastic. We could do a 1.7, we're doing great. We don't have to go crazy with it.

Host:

Oh, yeah, especially with these types of brands. It's an LTV angle there. So now, how much do you think this video has spent? Out of the 14 months of its life, would you say 100K plus, 300K plus?

David Schloss:

Way more. Way more. Way more. That one ad itself is probably approaching 500,000 or more.

Host:

Wow.

David Schloss:

The only reason why I've lost track is because this guy's running three different offers across three different accounts. So I don't really even know if I have this ad in the other account, because we have one account that's the main spender. We have one account that is the best performer account, meaning all the best performing ads eventually get moved over here and they run in this other account. Then we have the third account, which is the retargeting account. So the big spending account, which is just all the testing and everything, for some reason, this ad continues to run in that account, because we test it with everything. We test angles. We test audiences, different layered audiences, lookalikes, everything, lookalike with an interest, interest only, no interest at all, all of that.

David Schloss:

So this ad is almost like the test dummy, and it's definitely spent way more than 500,000, now that I think about it, because there was a couple months where this was the main ad running in the account and we were spending 100,000 plus just with this ad as the primary ad. So probably closer to a million, I'm sure.

Host:

Jeez.

David Schloss:

But it's one of those things where it's very rare you have an ad that runs for that long anymore. Let's say from 2014 to 2018, there were quite a few accounts I ran where ads were running for 6 to 12 months at a time, consistently. That was back when there weren't as many quarterly changes or monthly changes at Facebook. The big changes where twice a year. Now it's almost every month. But back then, it was very rare. So when there was a big change, your ads would take a dump, and you'd just switch them up. Now it's like you've pretty much got to switch up your ads every week or every other week. But for some reason, this ad just continues to perform, because it hits the nail on the head every time. [crosstalk 00:29:59].

Host:

Oh, yeah. Well, man, that's quite a rich ad there, possibly a million spent, hitting that 1.3, 1.4 area range. But it goes to show understanding your LTV is a gold mine for these scenarios. With that poor ad, I mean, hey, spending 30K, not even breaking even there, sometimes the messaging just isn't right for the kind of audience there.

David Schloss:

Exactly.

Host:

I mean, these are some killer rich ad and poor ads, man. So to kind of wrap this up and kind of dive into the final roast segment of the podcast, we are going to be roasting a random ad we found in a Facebook group. You ready for this one, man?

David Schloss:

Let's do it.

Host:

Sweet. So we've got the M Brush. It's a back brush. It's a huge product, it looks like. "Get your back brush now. Easy to get your back and keep your body clean. Want to grab it on Amazon? Place an order on Amazon. We will cover the full price for you. New Amazon accounts are not eligible for this offer, and there's limited stock, so hurry." This ad just reeks of not converting by any means. I know you made a good point. It's going to Messenger for an e-comm brand, which is pretty ridiculous. But give me your thoughts real quick on this ad here, because it's pretty terrible.

David Schloss:

Yeah, there's really no benefit as to why I should buy this thing. I get it. The picture sort of shows you, "Hey, you can scratch your back with it," and that's cool, but it has this feel of a Wish.com ad. I know for a lot of us who see those ads, you're like, "How did that get approved?" Right? Because there have been some really crazy, outlandish ads that have been approved from Wish, and it's just because of the fact that they're a well-known company and international has a little more leniency when it comes to their rules of what the ads can say or be in the imagery.

David Schloss:

But with this ad, there's no reason why I should buy it. The readability is terrible, because everything's bunched together. All the text is ... There's no space. It's just crammed in. The emoticons, which are just two arrows, are also black. You can't read it. Everything is bundled together. Then, on top of that, it's talking about Amazon with a Messenger link where it just says, "Get it now." There's nothing there that clearly says why I should even look into this thing, and then you're taking me to Messenger. God only knows where you're going to send me in Messenger, because you're not telling me why I need to click the button below.

David Schloss:

With e-comm, most people, when you're going to Messenger it's because I want to send you a code, a discount code, right? But what's the incentive of the discount code? Tell me the price of the product. Oh, it's 40 bucks. But if you click the button below, we'll send you a 15% coupon to your Messenger, and you can use it immediately on Amazon. That would make sense, which you didn't even tell me that. Not even in the ad. It's not in there at all. You're just telling me what's allowed and what's not allowed, which shouldn't even be in the ad. It should be on the page that they're going to or in the message you're going to send them in Messenger.

David Schloss:

So, essentially, the image has nothing to do with the text. The text has nothing to do with the image. The title of the company I think is M Brush.

Host:

Yeah. [crosstalk 00:33:06]. It's got to be.

David Schloss:

Not even creative. Not even creative. Even if you gave me the name of the company, even if it just had something brush it, it's like, "Cool, at least it kind of makes sense, because the whole product page is about brushes," or maybe you can make it a little more generic, where it's like Top Ten Gadgets or something, because a lot of people use those generic pages to sell multiple products, because it comes off as a review blog, which would make more sense than the way it's being branded right now. When you go to the page, there's really no branding anyway.

David Schloss:

So if they wanted to turn things around, maybe they should establish more of a brand presence on the page. By the way, that's a little key we tell a lot of people. If you're starting something brand new, put up ten posts that make you look like a legitimate company, please. That way, when people go and research you, you don't look fake. Then maybe even have a landing page up. That way, if people go and research you, there's something that they can look at, not a Shopify store with one product listing. I'm talking a landing page, because then there are plenty of companies who operate just off landing pages. They don't have to have a full store. I know plenty of businesses doing crazy numbers with just landing pages. If you don't have something that makes you look legit and your ads look like the way that this ad looks, no one's going to buy from you, period.

Host:

I don't know, man. I'm really sold on this non-slip grip and long extended handle.

David Schloss:

I mean, it's those two things alone. Those could be in a great ad if there was a video to go through with it where it's like, "Let me show you the product and how it's used," because this is the type of ad that should be a demonstration. Instead, it's an ad that's just like, "Get a brush, and here's how," but it doesn't really tell you how. So it's just, "Get a brush." But here's the funny thing. Smart people like us will take the image, put it into Google Images, and see what other stores are selling the same thing, because this looks like an image that was pulled from the manufacturer, and they just plugged it into Facebook.

David Schloss:

So, once again, no uniqueness, no branding on it, no product demonstration. I'm sure even the manufacturer has a video that you could rip and maybe even edit a little bit to make it look different, and they didn't even do that. So yeah, it was a very lazy attempt at trying to sell a product, but they didn't even do a good job with the copy to get me to want to even click.

Host:

Yeah, this is a pretty rough ad, and I'm glad we had some time to roast it, because it needed to be roasted, without a doubt. Well, David, my man, this was an absolute pleasure to have you on, such an OG in the game, so much value. Really appreciate that. But how can anybody find you, Facebook, Messenger, website? What's the best way for people to kind of get in touch with you?

David Schloss:

Yeah. So if you search my name in Facebook or in Instagram, I'm always on those platforms. I'm the David Schloss with blue checks on both platforms. So that way, you know it's me.


Host:

Verified.

David Schloss:

That does help quite a bit now. Took a lot of time to get those. Those are where I'm at the most. I do respond more on Facebook, for obvious reasons, because I'm running ads all day. If you do hit me up on Messenger, please come with an idea as to what it is you want to talk about. Don't just be like, "Hey, thanks for the" ... It's like, "Thank you for telling me you watched the podcast, but is there any way I can help you?" I just want to know if I can help you. So come to me with something that you want some help with, and then we can take the conversation from there. Otherwise, yeah, just follow my content, let me know what you think, and hopefully you get some value.

Host:

Well, David, man, this is a value-packed podcast here. So hey, man, once again, thanks for coming on. Everybody, we're going to go ahead and end this episode of Rich Ad, Poor Ad. But hey, [inaudible 00:36:42] David.

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About The Podcast

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

Zach Johnson

Zach Johnson is Founder of FunnelDash, the Agency Growth and Finance Company, with their legendary Clients Like Clockwork solutions. Under Zach’s leadership, FunnelDash has grown to over 5,000+ agency customers managing over $1 Billion in ad spend across 41,000 ad accounts on. Zach’s private clients have included influencers such as Dr. Axe, Marie Forleo, Dan Kennedy, Dean Graziozi to name a few. Zach is also a noted keynote speaker and industry leader who’s now on a mission to partner with agencies to fund $1 Billion in ad spend over the next 5 years.

Dylan Carpenter

Dylan Carpenter will be diving into what he and his team are seeing in 200+ accounts on Google and Facebook when it comes to trends, new offerings, and new opportunities. With over $10 million in Facebook/Instagram ad spend, Dylan Carpenter had the pleasure to work with Fortune 500 companies, high investment start-ups, non-profits, and local businesses advertising everything from local services to physical and digital products. Having worked at Facebook as an Account Manager and now with 5+ years of additional Facebook Advertising under my belt, I’ve worked alongside 60+ agencies and over 500+ businesses. I work with a team of Facebook, Google, and LinkedIn experts to continue to help companies and small businesses leverage the power of digital marketing.

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