How Do I Pitch My Boss on Cost Caps?

[00:00:00] Richard Gaffin: Welcome folks to another episode of the DTC hotline. Your direct link to advice on everything ecommerce. Call or text, 866-DTC-2263 to get all of your burning ecomm questions answered. You can leave a voicemail. You can leave a text asking whatever's on your mind.

Our operators are standing by and speaking of which. We've got them both with with us today coming live from sunny Southern California, CTC HQ. Well, actually I should say in this particular instance Tony is coming to us from, where are you coming to US from Tony

[00:00:31] Tony Chopp: Southeast Michigan.

[00:00:32] Richard Gaffin: Southeast Michigan.

So sunny, Southeast Michigan. Mr. Tony Chopp “The Chopper”. And from CTC hq, Luke, “The Weatherman” Austin. How are you guys doing?

[00:00:42] Tony Chopp: I, I'm, I'm here for the hot takes. Richard. I'm,

[00:00:45] Richard Gaffin: There we go.

[00:00:46] Tony Chopp: I'm

[00:00:47] Richard Gaffin: Hell yeah.

[00:00:48] Luke Austin: It's already, it's already heating up in here. Tony's got the sunglasses

[00:00:51] Richard Gaffin: Yeah.

[00:00:52] Luke Austin: I've got the AC cranked down in the office. 

[00:00:54] Richard Gaffin: Awesome. Yeah, we're, we're excited

[00:00:57] Luke Austin: coming from the

[00:00:58] Richard Gaffin: about this

[00:00:59] Luke Austin: coming from the orange, the orange county of the

[00:01:01] Richard Gaffin: Midwest.

[00:01:02] Luke Austin: we're all, we're

[00:01:02] Richard Gaffin: We,

[00:01:03] Luke Austin: mood here. I got the Hawaiian shirts of, of sorts. We're, we're ready.

[00:01:07] Richard Gaffin: yeah.

[00:01:07] Luke Austin: Ready

[00:01:07] Richard Gaffin: Well, yeah, we're clarifying that Luke's shirt is more of a quote vacation shirt in that it's sort of linen and comfortable. But I dunno, we're we're, we'll get 'em in Hawaiian one these days.

[00:01:16] Luke Austin: that, yeah, my, my understanding of the attire was under the category of vacation button-ups, so we're all wearing vacation button-ups.

[00:01:25] Richard Gaffin: There you go. All right, well, whatever gets us in the mindset. So, lemme just quickly say a couple words about how this works. We get questions from listeners as well as questions from members of Admission, which is our ecomm training subscription service here at Common Thread. And then we let Luke and Tony off the leash.

We let 'em answer these questions, give you their hot takes. And give you their answers. So let's talk to our first question of this week which is a question that was actually asked of you recently, Tony, and I'm interested to hear both of your takes on it, which is when we get a lot, what do you do when nothing works?

Now this is specific to the Meta Ads account of course, but what exactly, what do you do when nothing works?

[00:02:07] Tony Chopp: Start a new business. just kidding. Just

[00:02:10] Richard Gaffin: Sure.

[00:02:11] Tony Chopp: take.

[00:02:12] Richard Gaffin: There you go. That's a hot take.

[00:02:13] Tony Chopp: This one was in, was interesting. I think I, I feel like the answer's like kind of boring, but it was a. Okay, the, this is the thing. So a lot of the, a lot of the stuff that we talk about in CTCs general, POV is really applicable for really large advertisers with a lot of media spend.

And I, I think this comes up in conversations with the admission community where we have smaller investments. So this particular, this particular brand was, you know, number one, a lower a OV, which puts a lot of pressure on, on the whole system in general. And number two, a smaller advertising budget.

So you'll, you'll hear us talk about like seven day click attribution at, you know, as the, the way to do it. I think it's important to like. about like, yeah, that's cool if you have hundreds of thousands of dollars a month in media to invest, but if you don't, you probably don't have enough signal for that. So that's like a thing where you gotta look at expanding the, the amount of signal that you have. You know, we, I think Richard, if I recall from the conversation, we're like, yeah, let's get some, get some seven day click and one day view in there to get, to get

[00:03:18] Richard Gaffin: Yep.

[00:03:19] Tony Chopp: and all it one is not right or wrong, it just means you gotta think differently about how you set the targets.

So, I don't know. What do you think Luke?

[00:03:29] Luke Austin: I would say the first thing that I wanna understand within the context of the, the feeling or perspective of nothing's working is. What separating out the symptom versus the disease in this, in the situation to understand the things that we're looking at. That we're saying aren't working, most likely indicated by specific data points or metrics or comparisons of data sets against one another or year over year comps. It's important to understand which of the things that aren't working or that are showing up negative in that scenario are symptoms versus the actual, the actual sort of disease or sickness that that's causing the issue at a root level. An example that would be. Our ROAS on meta, or our CAC on meta has been month by month degrading inefficiency.

We've been seeing consistent declines in efficiency and our ability to spend at volume. The volume has been decreasing as well, so we're seeing less volume and we're seeing lower efficiency. Let's go solve for meta roas. How do we fix meta roas or meta C? Well, in that case, th this is, this is a recent, recent example or conversation of where this has come up. Where if you take two steps back then what you start to see for the business is returning customer revenue is down. Year over year pretty substantially. So our returning customers aren't coming back at the same clip as they were. Our conversion rate on our brand search campaigns for our core branded terms is down substantially year over year. And the, the key metric leading to the degradation efficiency on meta is the conversion rate is is, is also down that the, the other metrics look solid. So in that case, what we're doing is. Immediately you can kind of go for, okay, we gotta go fix our metas and meta. But when you take a step out and look at both your customer cohorts returning in new, and then each of your channels, and when you start to see things like returning customer revenues down year over year, brand search conversion rate is down year over year.

The, the conversion rate on our email channel, we're getting less revenue from. You start to uncover broader foundational impacts to the business that are affecting every channel that are, that are the core thing to solve for. And an example of what those could be is competitor bidding has increased substantially across platforms and there's high, much higher discounting from retailers.

And so what's happening is across Google this year versus last year. You have a swarm of other retailers that are selling the product at 20, 30% discounted rates relative to yours, and you also have more competitors that have entered the space because it's easier than ever to start a direct to consumer ecommerce business or launch a product. So you have more competition and you have. A leaky bucket in the bottom of your funnel because these, they, they're taking the demand away. That's one very specific example, and it could go down the other ways, but what I'd say is get clear on what the, what the on what the actual thing is that's causing the symptoms that you're seeing.

Show up in other places and then go solve for that thing, because that's the foundational challenge to solve for, that's going to then dissipate to every single channel.

[00:06:30] Richard Gaffin: Yeah, so essentially, oh, go ahead. Go ahead, Tony.

[00:06:33] Tony Chopp: gonna say one more thing. I remembered the conversation. The guy we were talking to was saying. We're, we're cranking on TikTok, which is sort of the opposite of what we, what we often encountered. A lot of times that channel can be, can be harder to unlock. To Luke's point about like being more specific, I'm using words like cranking and like things are cooking.

So it's all pretty general. But, I didn't, I didn't ask them in that conversation and admission, like what, what type of signal or attribution or whatever else they were using O over on TikTok, which would be an interesting, interesting question. But yeah, I think like to, to Luke's point around the, the general statement of nothing is working is sort of problematic as as a foundational starting point.

[00:07:20] Richard Gaffin: Right. No, I think that's a good, good point. Like maybe a way to summarize it is oftentimes, yeah, this question gets asked with the context of my meta a account is not working, what tweak should I make in meta to make it work? And, and, or, you know, and you know, oftentimes the response to that would be something like more creative or whatever.

And that may be the case. But I think part of what you're saying is like, well, the fact that like, that's not working. Indicates that something else entirely may be happening that has nothing to do with the platform, and that's the thing that you need to diagnose before you actually kind of resign yourself to the, the idea that nothing works on meta or something like that.

[00:07:56] Luke Austin: That's exactly right. And

[00:07:57] Richard Gaffin: Yeah.

[00:07:57] Luke Austin: may be in instances where you're seeing other channels or customer cohorts underperform because of other reasons, and the answer is actually. Launch a bunch of new creative on meta, continue to scale there. 'cause you have to make up the gap elsewhere, right? So it doesn't direct, it doesn't redirect the responsibility in that way. But if if we're losing out in demand relative, if we're not spending enough on on, in our core branded search and shopping campaigns and have. Comprehensive comprehensive covering of the SERP related to our core search terms. Then it's just gonna continue to perpetuate to some way, whereas the resources in that case maybe go towards towards solving that problem.

And then the effects of that are seen across your other channels as well.

[00:08:39] Richard Gaffin: Cool. All right. Let's jump to our, our next question here. So partially 'cause you, you brought up TikTok. So, one question that could kind of come outta that same session was, our creative is going off on TikTok, but we're not getting the same reaction on meta and. It sounds like part of your answer to that was just around like check the attribution settings, but if you are in that position where one channel appears, you appear to be having serious creative success, but on the other it's completely dead.

Generally speaking, what's happening there?

[00:09:18] Luke Austin: So step one, standardize the signal in which you're

[00:09:21] Tony Chopp: Yeah.

[00:09:21] Luke Austin: the platforms in,

[00:09:22] Richard Gaffin: Mm-hmm.

[00:09:23] Luke Austin: which you, which you referenced Richard, which is look at everything through the lens of contribution or IROs to the business. Can't, can't take any action prior to that because the. Incremental impact of reading is going to be very different for, for each of these channels.

So step one, standardize the measurement. Look at either by using incrementality benchmarks based on a data set of tests that we have access to and some of the other partners have access to or running your own tests which is the preferred method, but get to a place where you have a better apps opposite comparison, the true incremental impact of each of these channels that then you can know what sort of gap you're actually. actually sussing out.

[00:10:06] Richard Gaffin: Mm-hmm.

[00:10:08] Tony Chopp: Yeah, I think the first, the thought that popped in my mind is it's a little bit of a self-fulfilling prophecy in the sense that. Let's say you launch on TikTok and you find early success it's like a snowball effect. You feed it more budget you feed the pixel, ends up with more conversion data the audience is targeting, gets sharper. Et cetera, et cetera. So it sort of accelerate, it, it, the starting point I think matters for the perception of the acceleration, right? This thing got going and then it started cooking and it's, it becomes a self-fulfilling prophecy. in some ways, that experience of that self-fulfilling prophecy might. Be like something that's coloring your experience of meta which is proving to be more challenging and leading you to the conclusion that nothing is working or it's all not working. So what I would, what I would offer is that the way, the way that I think about really any channel is, it's a, it's a matter of committing to it.

It's not, does this work or is this not gonna work? It's, we're gonna figure out how to make this channel work. A function of that is what Luke talked about in getting the incrementality measurement right. A function of that is making an ongoing, consistent, persistent investment in media and creative development to get, to get in into the party, so to speak. Literally every advertising activity is incremental to some degree. Whether it's going and talking to your, your mom about the product, and that's like, you know, probably a pretty easy sale and like highly incremental versus a billboard on the 4 0 5 or US 23 if we're in Michigan.

[00:11:49] Luke Austin: Yeah.

[00:11:49] Tony Chopp: which is gonna sort of be, have a lower incrementality or wider reach, but it, it's, it's just about like, if you wanna be a an advertiser that advertises on billboards, well stake your claim.

Go and figure out the math behind it. And and it's, and it may or may not, like, lemme say it this way. Every single one of those endeavors is gonna have a different acceleration feeling and cycle to it.

[00:12:15] Richard Gaffin: Yeah, so let's talk about, just because we're on the subject here of secondary channels anyway, the question that we got recently was, what is our view generally speaking on secondary channels like TikTok, Pinterest, Snapchat, et cetera. Now, I know this is something that we've talked about on in other content before, but I think it'd be good to kind of get.

A sense of what you guys maybe, maybe what I should say is, what's your hot take on secondary channels right now?

[00:12:39] Tony Chopp: So I have a hot take. I, I think

[00:12:41] Richard Gaffin: go.

[00:12:42] Tony Chopp: I think people expand way too early.

[00:12:44] Richard Gaffin: Mm-hmm.

[00:12:45] Tony Chopp: This is different than saying expansion is wrong 'cause it's not. but I think, I think a lot of businesses that we interact with are putting energy into expansion when there's still quite a bit of room to go through Meta and Google primarily.

[00:13:05] Richard Gaffin: Yeah, let's your take Luke.

[00:13:07] Luke Austin: Yeah, I, I agree with that. I, the. Getting, getting to, I think it's a worthwhile exercise for brands to think about how could I become how can I become a nine figure direct to consumer ecommerce business, just through Meta and Google. And, and focus on that. And then at like the, the more nuanced then approach should be okay, then there's probably points at different times based on your resourcing, et cetera, that you could expand out. But, but putting it that way of how do we get to a hundred million dollars DTC eCom through meta and Google and becoming very there, there is. volume. There is enough impressions there. There's, there's enough to be able to grow through those channels in addition to things that you do on email and own channels, et cetera.

But in terms of acquisition, advertising channels, getting to nine figures on meta and Google, and building the organizational structure and resource investment and alignment with that will. Allow you to capture as much of the opportunity as possible relative to the platforms prior to then expanding and going elsewhere. 'Cause to Tony's point. Many cases, we'll see, you're like, it's, you know, you're 30, 40% tapped out on a channel and not even close. And then thinking about, okay, let's devote other resources. And what it does is our, our perspective to Tony's earlier point is that every channel is incremental to some extent.

So measure it and get the, the incrementality factor, and it's. There's gonna be some level of investment that works for every brand on every channel. It might be a dollar, it might be a million dollars, it might be 10 million. So you have to go discover that, but there's incrementality available for every brand on every single channel.

The the main opportunity cost though, is what the, the, what the change in focus does to the organizational rhythm and the resourcing that there are opportunity costs in all of these things. When we have. Multiple additional channels that we're considering additional teams devoted to those additional tech stacks that, that we then have to go set up and issues come about.

Additional things on the accounting side. 'cause now we have TikTok shops and we have to pay out creator fees and this whole thing. Like there's, there's an opportunity there. But if you just focused on how do we get to nine figures on, on Meta and Google. And build up the organizational rigor and focus around that. I think brands would see that they have a lot, a lot more available to them with that being the key focus rather than always in the back of our mind. Okay. Are we getting tapped out on meta? Do we, do we, should we be exploring this? Oh, Criteo looks interesting. Let's spin it up next week. Yeah.

[00:15:35] Richard Gaffin: Yeah.

[00:15:35] Tony Chopp: Yeah,

[00:15:36] Richard Gaffin: Okay.

[00:15:36] Tony Chopp: sorry. You said, you said something. There's Sure, there's opportunity. There's also opportunity cost such as life, both sides of the coin. One, one more thing I want to add to the opportunity cost side. 'cause we're some of the stuff that we're building over here at CTC is circling in on this. It takes approximately 60 clicks to build a campaign in meta. It's, it's a laborious process. So if you want to go over into Snap or. TikTok or Pinterest or wherever else there is the, the really basic understanding of the opportunity cost is 60 clicks times 60, clicks times 60 clicks times 60 clicks. and then connecting back to this idea of like your, your ability to scale into the channel and have it. Be effective, like the slope of that curve, how fast it's gonna happen is gonna be different. So if you're gonna go into this other space, but sort of halfway, like foot in the water, like toe in the water, but not committed, you're kind of likely just wasting your time.

You're, you're better off. Get meta and Google, push 'em as far as possible, and then go, all right, we're gonna go make YouTube work,

[00:16:47] Richard Gaffin: Yeah, that makes sense.

[00:16:48] Tony Chopp: or whatever.

[00:16:50] Richard Gaffin: But yeah, but basically in summary, like nail meta and Google and then. You can kind of figure out your next steps from there, more or less. Cool.

Hey everyone. I just wanted to take a few seconds here to talk to you about admission. Our membership program here at CTC, that gives you access to one-on-one consultations with our growth experts, as well as weekly live events and access to our gated library of ecommerce trainings. This is the best way to work with us here at Common Thread Collective if you're in the six to seven figure range.

Now, to get started, all you have to do is book a call with me. To talk more about it@youradmission.co. That's your admission.co. Alright, back to the show.

[00:17:34] Richard Gaffin: All right, let's let's jump to another one here. So this is a question that we got recently that we've also gotten a lot, which is around CPMs.

So CPMs often feel like they're sort of the, the kind of black box. Metric that you can't actually affect, blah, blah, blah but okay. Let's say CPMs just generally have started going up. Maybe they're going up disproportionately to what you might expect or what's been in the past. What should your next move be?

[00:17:59] Luke Austin: Ooh, there's so many. Okay, so the symptoms. The symptoms and the gotta think of a better, the cause and effect isn't a good thing, but like, it, what's, what's the symptom and what's it resulting from? So there, there are a number of things that can affect CPMs. Here, here's one that we should all be aware of, which is when you optimize for seven day. Oh, when you optimize or click only on meta versus click plus view, your CTR is gonna increase dramatically. And your CPMs are also gonna increase dramatically just by, just as a function of you optimizing for click only. So one day click or seven day click only, versus seven day click, one day view. so, now in this instance, I doubt that's the case 'cause someone's, but like the why bring it up is because. The sim, simple adjustment and optimization. And what that's gonna lead to is like your CPCs are probably pretty similar or, you know, or in a tighter range of fluctuation relative to what they were.

'cause your cts went up and your CPMs went, went up. Now in, in that case, what's what you're driving for a click oriented objective, which Qlik oriented objective is higher. Incrementality has a higher incrementality factor than Qlik plus view based on the studies that studies that we've seen. So that's to be expected.

So, you're getting. Charge more for that audience 'cause they're of higher

[00:19:07] Richard Gaffin: Mm-hmm.

[00:19:07] Luke Austin: more incremental audience. In that case, I want higher CPMs probably depending on, depending on the brand. As long as the campaigns are getting enough signal, I probably want higher CPMs. 'cause they come with a higher click-through rate and probably come with higher click only.

ROAS and IROs. At the end of the day, maybe for, for larger brands, that's probably the case. I bring that up because that's an imp important one. To highlight in terms of CPMs. Good, bad. they, there's, there's not a, they don't live within higher CPMs being, being a negative signal or lower CPMs being a positive signal. It's all relative to the objective. And the, the other metrics that then lead to what the end outcome is, which is the, the return on the return on the ad spend. So that's how I just frame it up in terms of. Us looking at CPMs and projecting onto CPMs it our perspective that an increase or decrease is good, bad, or otherwise is can be a really unhelpful exercise because it's. We haven't seen, we haven't seen meaningful correlation in our data set of CPMs against roas click-through rate against roas. S These metrics aren't good predictors of what the efficiency outcome is. They're very loosely connected to what the, what the efficiency outcome is. Because they, they all live relative to one another and things like optimizing for a different bid strategy can have a meaningful impact on. on the outcome. Now, that's more of a non-answer. Tony, do you have, do you have any thoughts to build on that and make that a, a more helpful answer?

[00:20:41] Tony Chopp: Yeah, I, I mean like the conversation around CPM or CPC for that matter, sort of, it, it just reminds me of the, the olden days, like pre outcome based bidding controlling for those things was kind of like the only mechanism for control that you had. But it we're a long way away from that. And know, like the other thing about CPM and CPC like the cost of the traffic is the thing, the thing about these advertising platforms is like you're participating in an auction and you're, you're in that auction against other advertisers is the, the other advertisers, the competitors are, are the primary thing that's impacting the cost of the traffic. That's gonna change outside of, completely outside of your control. so this, this is a, this is another non-answer unfortunately, but it's one of those things where I feel like it's a place where digital marketers get stuck on.

[00:21:52] Richard Gaffin: Mm-hmm.

[00:21:53] Tony Chopp: A focus on one piece of information in a highly dynamic system, like a butterfly effect type system, that, to Luke's point, doesn't show correlation to the final outcome, which is, you know, ROAS or, or, or a cac, which is what, what we're finally after.

So it, it's like something that people talk about because. It's something to look at, but I don't know how useful it's, or how much that you can actually do to affect it

[00:22:25] Luke Austin: Let's, now

[00:22:26] Tony Chopp: Sorry. Here's a hot take. I got a hot take.

[00:22:28] Richard Gaffin: Let's go.

[00:22:29] Tony Chopp: your CPMs and you're selling like apparel or cosmetics, for example, go sell auto parts and you'll have a, eighth of the CPM.

[00:22:42] Richard Gaffin: Hmm.

[00:22:42] Luke Austin: Yeah. So yeah, that's, that's exactly what I was gonna do is like, let, okay, let's play the game for a second. I wanna improve my CPMs dramatically. Okay. Let now Tony and I gave all the caveats of why. not, but whatever. That's for fun. So increase my CPMs dramatically. What do I do? Run ads.

Run ads in in the UAE run ads in Bangladesh. Run ads. Sell, sell. Start selling your products in Mexico, you're

[00:23:06] Tony Chopp: Run display ads. Run display ads.

[00:23:09] Luke Austin: yeah, but now, but the, and the point being, okay, now another one. I wanna see increase. I wanna improve my CPMs dramatically. It launch a new, launch, a new product that's in a new category that serves a totally different customer base.

The auto parts example is like a dramatic version of that, but let's say you sell primarily women's apparel and then you launch fitness shoe that serves more of a male demographic. You're gonna see lower CPMs relative to that male, and you've unlocked a new a, a net new audience. those are the levers that are gonna. dramatic impacts to the business overall in which you're actually gonna reduce change in CPM, not as the objective, but, but just the fruit of expanding the business in that way. So that's more to say you wanna do those things, you wanna see a dramatic impact. This relates to the question earlier of like. What to do when, when, when nothing's working. Do you expand internationally? Do you land launch a whole new product category that serves a whole new audience subset that changed the economics of your business because you do, you are competing in a different auction. Those, those are the things to think about.

And then more tactically, you can request from meta a share of voice report. I think that's what, it's, what it's called, Tony. Correct me if I'm wrong, but share, I think share a voice, which shows over the past year they can break it down by week. Your, the auction dynamic and some of the other brands or competitors that are showing up in your auction and how that's changed over time.

So helpful. Similar to what? To what Google will give so you can diagnose like. are there auction dynamics in play where there are other competitors entering the auction that are driving things up? For me, you can't really do anything about that except for to understand what the, what the players are doing that are affecting your category and niche, and then be able to have, you know, more competitive strategies in relation to that.

So that'd be a tactical takeaway.

[00:24:53] Tony Chopp: Yeah, you could. I mean, yeah. Yeah, you could. To your point about the, the attribution thing, like go, go optimize for an upper funnel event as opposed to a, as opposed to a purchase, you're gonna get lower CPMs and probably potentially lower quality traffic as well, which is kinda like we can just talk in circles about this forever.

[00:25:12] Richard Gaffin: Yeah. Well, it sounds like kind of like the, the CPMs are never a primary question to be solved, right? Like they're only unless like, so if you quote unquote, wanna solve CPMs the way to, hold on. Can you hear my dog?

[00:25:26] Luke Austin: Yeah, we got a barker on our

[00:25:29] Richard Gaffin: Yeah. She's going crazy. Hold on. Give it a sec.

[00:25:32] Luke Austin: Mailman.

[00:25:33] Richard Gaffin: Now they, we have a, the neighbor dogs also bark, and so they bark at somebody passing by and then she barks at them. So it's yeah, a vicious cycle. But anyway.

[00:25:43] Tony Chopp: a hot take right now.

[00:25:44] Richard Gaffin: Yeah, I know exactly. We'll have Mickey edit it out. She doesn't need to be on, she doesn't need to be on mic.

She's already previous enough of a princess here, but okay. So the point I was making is that like solving CPMs aren't, isn't necessarily like a primary. Issue to be solved. 'cause like you're pointing out Tony, like if you want to solve for CPMs, the idea is to go find cheaper inventory. Right? And there are different ways to do that, but finding cheaper inventory may actually require you to change businesses altogether or unlock it like an entirely new product line.

And if you're doing that for the sole purpose of lowering CPMs, that's not a great reason to make a big business decision like that.

[00:26:23] Tony Chopp: Well, yeah, I think it, Luke and I are kind of saying the same thing in different ways. Like the CPM is kind of the end Noe of the system, right? So like the, the pro the road leads back to product offer messaging. Are the things that are gonna, are gonna move the needle. And if you are in fact seeing CPMs that are rising dramatically over time you, I think you have to ask yourself some questions about your, your product, your, your offer, your marketing calendar, and those sorts of things.

[00:26:58] Richard Gaffin: Yeah.

[00:26:59] Luke Austin: Yeah, and, and by the way, the doing this with any other metric, click through rate or conversion rate. In particular will yield the same result where there's many, many hours. We have all spent in conversations around how do we improve conversion rate.

[00:27:14] Richard Gaffin: Mm-hmm.

[00:27:15] Luke Austin: when you try to affect any one of these metrics in isolation from one another, you just end up creating a problem elsewhere.

Okay. Our conversion rate is higher. But now the problem is our a OV has dropped dramatically, or our click-through rate is below where it used to be. 'cause these, like, they all just oscillate. Like it's, those metrics are pretty much baked for whatever your funnel, whatever your offer is to the customer audience you're going after, that's and the creative that you're running against it.

So if you wanna affect those things, have a new offer that gets after a different audience and or. Additional creative units of growth that help to impact the, those parts of the formula rather than impacting an individual metrics themselves, because then what? You're just gonna like, it's just whack-a-mole with those metrics

[00:27:59] Richard Gaffin: Yeah. Okay. Well, yeah, and that's an an important general point to make is that no one metric can be your north star. Really. Like they all have to, they function more as a constellation than a single point, I suppose, except for contribution margin. Well, which is like again, yeah. Is the business successful or not?

And you have to have some way to of measuring that. But there's no one metrics in the chain along. Or in the chain that leads to contribution margin that's more important than the others. This, this whole kind of group of things that come around. Contribution margin. 

[00:28:29] Tony Chopp: You're, if you're looking, if you're focused on CCPM at a, at a, in a, in a meta account, you're pretty far away. You're

[00:28:36] Richard Gaffin: yeah.

[00:28:36] Tony Chopp: distance away from contribution margin.

[00:28:38] Richard Gaffin: Yeah. Okay. I'm gonna ask, I'll ask you guys one final question here, which is interesting because it's both a bit of a life question while also being a tactical question, which is this is a question we got from somebody who was having an issue pitching cost caps to his boss, and he was like, how do I pitch cost caps to, to my boss to overcome his objection?

His specific objection was, you're gonna get a dip after three months because med is being so conservative that you're draining your data set. Now, I don't know how. Much truth there is to that or whatever, but that's the specific in objection in this case. But let's have both of you guys pitch cost caps to your boss who let's say in this, in this hypothetical scenario is really reticent to do so.

So let's start with let's start with you, Luke.

[00:29:26] Luke Austin: If I'm interested in the financial wellbeing of the business I have an obligation and probably a vested interest in making sure that any dollar deployed has some expectation of return against that dollar as a core function. The objection that you referenced and the hesitation tied up in it is exactly what I would. Exactly what I would want to have in place for the business to make sure that there is an expectation of return against the dollars being being invested. Otherwise there is not having cost controls of any type set on campaigns is there's no expectation of return. It's saying we're gonna spend these dollars regardless of the outcome and given the green light to do so.

So the campaigns. Throttling spend back or getting a lower spend volume as a result is, is a feature not a buck

[00:30:22] Richard Gaffin: Mm-hmm.

[00:30:23] Luke Austin: expectation of return against those, against those dollars. What it, what it allows for is. Problem solving in a dimension that actually moves the business forward, rather than just increasing budgets or lowering bids as a, as a, as a as the lever to produce a different, a different outcome,

[00:30:42] Richard Gaffin: Mm-hmm.

[00:30:43] Luke Austin: exactly what, what should be required of the broader team as well.

If there's no, if there's no cost control or expectation or return over time period, then our, our the meta efficiency is below target. Well, the easiest lever is let's just drop the budget, 20%. So, so in the next few

[00:30:58] Richard Gaffin: Mm-hmm.

[00:30:59] Luke Austin: the efficiency's gonna be there, but these are just bid and budget. Tweaks that we're doing on the campaigns, we're not actually launching anything net new.

If there's a constraint of return on the campaigns, then what that does is you can't just go and start tweaking the budget and bid to be able to get to the outcome. What you have to do is net new creative volume, net new creative formats, more volume and diversity of creative net new landing page and offers and funnels and things that actually produce a different business outcome that aren't just adjustments and, and to the, to the bid and budgets of, of the campaign.

So this. is exactly what I would want, which is there's an expectation of return against the dollars being invested. And it also allows for problem solving in a way that creates something net new and, and taking the energy and the focus away from tweaks to bits and budgets as a means of getting that outcome.

[00:31:49] Richard Gaffin: Tony,

[00:31:56] Tony Chopp: Yeah. Hot, hot take. I want to, I'm, I'm pretending I'm the person in this question talking to my boss. I believe we can two x our monthly meta budget run rate in three to six months. As a, as a result of deploying this strategy, it's gonna require to Luke's point that we, we shift our focus into creating that new offers, that new creative. And I'm gonna do that to Xing in the of the budget run rate while. Maintaining while also increasing contribution margin as I go. So I'm gonna scale the budget profitably, and this is, this is the hardest thing to do. This is what, this is what we're tasked to do for our clients all the time. It's really, really easy to, to spend more media dollars, it's the easiest thing to

[00:32:53] Richard Gaffin: Yeah.

[00:32:54] Tony Chopp: the world actually. What's really, really, really hard to do is to scale media budgets while also scaling the bottom line out output. In concert together.

[00:33:07] Richard Gaffin: Yeah.

[00:33:07] Tony Chopp: And if I wanted to be really crazy, I would say whatever. Let's say our, let's say our media budget is thousand dollars a month. I'd say, all right, well, let's, let's try 150,000 on highest volume and see what happens to the bottom line, then let's try to get through $150,000 with a decent amount of that going through cost control and see what happens to the bottom line.

[00:33:28] Richard Gaffin: Yeah, that makes sense. I mean, I feel like to summarize a little bit of what you both are saying. Adding cost caps to your account, forces you into it forces you to solve actual business problems rather than solving account. Yeah, well, exactly. And in, if you actually solve an account with cost caps, you'll have actually solved the real business problem as opposed to solving like the, you know, maybe a account on highest volume or whatever you solve like a ROS issue by lowering budget.

You've increased your roas, which is great, I guess, but that doesn't actually have any real impact outside of the account or maybe even has a negative impact.

[00:34:06] Luke Austin: just traded volume and a, you've just traded one

[00:34:08] Richard Gaffin: Yeah.

[00:34:08] Luke Austin: other. So ROS is higher, but spend volume is lower. So this outcome is the same for the

[00:34:13] Richard Gaffin: Yeah.

[00:34:13] Luke Austin: Or it's, or it might be degraded.

[00:34:15] Richard Gaffin: Mm-hmm.

[00:34:16] Luke Austin: you haven't actually created anything incremental in that instance.

[00:34:19] Richard Gaffin: Yeah.

[00:34:19] Luke Austin: changes don't do that. Deploying net new units of growth in the form of creative volume, diversity offers, angles, landing pages, et cetera, are are the things that are actually gonna create incremental value.

[00:34:31] Richard Gaffin: Yeah, the pushback we always get is, of course, like, particularly on smaller accounts, is like, I'm not getting enough spend, and I feel like the pushback or, or the rebuttal you guys are giving is like, that's a good thing.

[00:34:43] Luke Austin: Yeah.

[00:34:44] Richard Gaffin: If you can get spend on cost caps, that's what you want. You don't want to get spend not on cost caps.

The point of having, or the, the goal of a meta ads account is to get spend while running cost caps. And if you're able to do that, you'll have succeeded.

[00:34:58] Tony Chopp: and use cost control, 'cause

[00:34:59] Richard Gaffin: Cost controls. Yeah. Yeah.

[00:35:01] Tony Chopp: the same,

[00:35:02] Richard Gaffin: Mm-hmm. Yeah. All right. I think that'll I think that'll do it for us for this week. So appreciate everybody listening in.

And real quick note, remember, if you want your questions answered on the pod, go ahead and call, leave us a voicemail or a text at 8 6 6 DTC 2 2 6 3, and we might play or read your question on a subsequent episode, but all right, until next time, for Luke, the weatherman Austin for Tony the Chopper shop.

Put him on Tony. I'm Richard Gaffin coming to you from Outer Space. Take care everybody. See you next week.