How To Create & Analyze Killer Ads

In this article I share specific methods for ad creation and performance analysis. The first strategy is taking a strong stance for your brand on something. It's not good enough to just have a strategy for an ad. If you're the brand owner trying to make your own ads or an advertising agency trying to make ads, you need to make sure that you can either talk the customer into a strong stance, or, if you're the brand owner, have a strong stance on something. You need to stand out from the crowd, and a mindset behind what you're trying to achieve with your ad at first is really done well if you can have a really strong stance.

[This is a transcription] See, a lot of brands are concerned that if they take a strong stance on something they might end up alienating certain customers. Though that may be the reality, your brand is not going to attract new customers by tempering its personality. You need to let the personality of the brand shine, and that means having opinions and saying things that are actually sharable because that's what it takes. If you're doing boring work, you're not going to get good results. Things that are exciting, captivating, attention grabbing, those are the things that get shared, those are the brands that get shared. Those are the things that are worth mentioning, get you word of mouth, and really help brands grow.

As you move towards creating ads in this process, remember that the first step is picking what you want to say and making sure that it is a strong opinion that you're willing to stand behind. If you're not sure about whether you want to go strong onto an opinion or not or how strong you want to go, I suggest making a rough version of the ad that's very cost effective and then just sitting on it. Review it after a week. If you're not sure about posting it or how you're going to feel if you post it, wait another month. Then if you feel after a month that "I'm really confident in posting this post, this is my brand, I'm not going to be concerned about this post afterwards," move forward because it's the right direction.

Once you have your strong opinion and your goal and your stance, then you can move forward with your advertising in a specific strategy, but before you start writing headlines and copy, what you really want to do is figure out why customers are buying your product. It's not just because the shorts are red. If you read a book called "Competing Against Luck," you'll find out that what you really want to ask is, "What is the job to be done?"

What I mean by that is if you're in a train station about to get on a train ride and you buy a magazine, it's probably likely that you didn't buy the magazine because you really like it. You probably bought it to entertain you on your train ride. That's what I mean by the job to be done or finding out why people are buying your product. Once you know that, you can attack ads in a much different angle.

If you're not sure about the answer, then you shouldn't be confident until you ask people, "Call your customers." Call 100, 500. If you have customers, get as many on the phone as you can and find out why they bought the product. Not why they bought the purple. Why they bought the product. What did they want the product to do for them?

Once you've got an idea of why people are buying it, then you can put that aside and start thinking about the brand features and narrow in on what makes it better than it's competitors. Start writing them out in bullet point format. Don't worry about how many there are. Just get all of the information out there as much as you can because you're going to compile all this and break down the best items that you can work together to make the best headline.

Work on the benefits. What separates? What differentiates? Write it all down. Figure out what makes this particular product the best. It's at this point you take all this information and start working on a storyline for your brand. If helps customers identify the brand from others. It helps them come back because they recognize the brand and appreciate it. This can only be done with a unique experience which comes from engaging in a unique way.

This is what we've become so good at. You have to find a way to communicate with customers or clients that makes them feel like your brand is different from every other brand and makes them remember your brand. Even if it's not time for them to buy, they should still think about your brand all the time when they're thinking about the subject. That's the number one call you get from this customer because they know that it's a unique, memorable experience, and hopefully, in a perfect world, they're sharing it with their friends as well. Then you get that word-of-mouth, which would be the ultimate goal.

Okay, we've got our strategy. We've talked to customers. We've got our storytelling. We're going to create a unique experience. Now it's time to write the headline, not the body copy. Just the headline. It's the most important part of your ad. Eight out of ten customers will read your headline, but only two out of ten will read your body copy. That makes headlines the most important thing ever. It is really like you're selling them on whether or not they should care about what you want them to look at. Headlines are the number one thing.

When you start writing your copy, don't worry about how long it is. Don't worry about what words to use and what not. You're going to rewrite the thing 150 times maybe. It doesn't matter. Just try to articulate everything that you've been planning this whole time, right? We have a whole bunch of different strategies and unique things that we're trying to apply and goals we're trying to achieve.

Just get that all in an organized manner on the page. Then start writing sentences, very long sentences, run-on sentences, but make sure that the sentences get all of the information into them. Then take a step back once you write 10, 20 lines of copy and start looking at words that match up or are said frequently. Those are going to be key, key terms for you to try and achieve the goals, because remember you have your mindset already about what you're trying to achieve, and this copy is going to come out after you've done all this prep work. You're going to be in your subconscious pretty ready to write something that articulates what you're trying to achieve pretty quickly.

Get it out there. Once you've got a bunch of copy written, don't worry about refining it yet. You're going to take a step back and look at all the copy you've written and think, "Okay, what's the angle I'm going for on this ad? Does this seem like an ad that maybe I should ask a question for or an answered question, or should I use social proof in the ad, or should it be very literal and use more of the creative for articulating what I'm trying to achieve?"

There's a million different ways to write the ad, but take a step back and think about, "Okay, I think this should be a really indirect ad, and I'm going to create a lot of mystery with this ad and I'm going to try and get click-throughs up, and then the landing page is going to be really, really straightforward with the information that I provide," or is it a question answered that is kind of rhetorical, as it were?

People already see the answer and, "Okay, yeah. I do want to know more about that." Start applying different strategies for writing the copy and refining down this list of 10. Take your top three long-winded sentences and refine them into questions or rephrase them as social proof, still not worrying about condensing them. Just try to get it out there in a way that is clearly articulated. Once you've got this long copy and different strategies, maybe three or four ideally, try to pick the one that other people respond to well. Ask coworkers, ask your wife, ask your significant other, a friend. Put it on social media. It doesn't matter. No one's really going to see this.

And put it on social media. It doesn't matter. No one's really going to see this until it's in the ad. Ask people to vote is a great strategy, and we've done it before. It works really well.

Once you have all that kind of feedback, just try to absorb it and apply it in new, fresh copy. Whether it's a question or social proof, indirect ad, whatever it is, and just focus on that. You've got long-winded copy in those strategies. Rewrite it a few more times. And then not worrying about the length of it. Just try and get the message you're trying to get across specifically correct.

Once you have that, then take that really long copy, and start playing with replacing two words with one. If you can condense and remove some of the fat from that ad, it's going to help get it down. Because remember, we live in a 30-character world, man. You have to be inside that 30-character world to really get people's attention. So just try to trim some of the fat out of that copy and try to condense it down as much as you can. And this could take a lot of time to get right. It's not that easy, but you've got to get it down.

Once you know the goal, though, for the ad copy, and what you want to achieve, it's going to be a lot easier because certain words you can't lose. Or you can look up synonyms and try and replace specific words that might make the flow easier. Once you've got your perfect line of copy done, you need to rephrase it four times. Five times. And load all those ads at once and create a split test. Do not just put one ad up even if it's the perfect ad because there's always one ad that's going to do better than others.

Once you've established the direction you want to go with the headline, then it's time to move on to the creative, which is the images of the ad. Now, there's a lot of different strategies that you can employ when you're going after the images. You can have the image and the headline build on each other, or they can work opposite. A lot of the time, it works best, we find, that if you have one work with the other.

What that means is that if you have a indirect headline, then perhaps the creative could be more obvious. Or if the opposite is true where the image is a little more mysterious, then the copy would be much more straightforward. That can create a good balance for viewers so they don't have to think too hard about what exactly they're looking at. If the creative happens to catch their eye, perhaps it's more mysterious and they read the headline. If the headline catches their eye, perhaps it's more mysterious and they look more at the creative. And remember, a lot of information can be left off of the ad because it can be on the landing page, and they can get much more detail there.

Let's talk a little bit now about what the images should actually look like. If we take a step back to when Facebook when public and they started allowing ads in the newsfeed because they wanted to get revenue up, there was a big influx of ads into Facebook. It was a new experience for people to be on Facebook looking at ads because it hadn't happened before. And when they did that, there were a lot of ads that were going up that were like stock photos, Shutterstock ads.

But we had a unique strategy that we employed. We put up amateurish ads that were kind of taken by a user with a point and shoot camera kind of at somebody's house, or in public, situations like that. We owned the rights to all the content, but it wasn't high quality. Now, at the time, that had to do with the fact that we didn't have the budget to actually get high quality photos done. But what it did for us is it made people viewing the ad feel like, "Wait a minute. Is that might friend? Do I know that person? Let me look closer." And it got their attention.

The same thing is kind of true today with influencers. You can get somebody who's organically being followed by people, which in this situation isn't necessarily their friends as much; it's a person with much more influence, but they still their posts regularly. They expect to see a post from them. So if they see them posting with their child or at a swim park, and then also posting with a stick of soap that they're advertising, it all kind of looks the same, and it has that kind of amateurish feel.

This is why I always recommend adding at least once or two of those amateurish self-shot style photos into your split tests because you just don't know if that's the type of feel that's going to resonate really well with people. A lot of the time we'll even just take pictures ourself, of myself, and put it up. Depends on the brand and what their budget is and what their restrictions are, but it's a great way to just test concepts. Hey, I have an idea of me holding this thing, or doing this activity. Let's put it up versus a couple other strategies and see which one does the best. Zero cost to the user or the brand that we're working with, and we get the data really quickly.

Once you have the data and you know what works or what angle to play, then you can go pay money and find people that can make or remake that exact idea and give you variations in a very high quality way. It saves you a lot of money when you're actually making a lot of ads and trying to figure out a strategy. Because before you spend all your money advertising, you want to make sure it's going to work. That's what's so cool about the age we're in. It's not like magazines or TV, you set a strategy and just see if it's going to work. You start a strategy, and you got the data to tell you if it is in fact going to work. Part of the job here of making great ads is testing what is going to work and what isn't, and then once you find it, you harp on it really hard.

But in the scenario where you don't have a lot of money and you don't want to go hire a photographer and get this high quality stuff, that's okay. You can go reach out to people on Instagram. Look through hashtags. Look on Pinterest. Reach out to the people that own the content and say, "Hey, I love your photo. We'd like to put it in an ad. I think our users would really enjoy seeing it. Can we buy it for $20?" "Yes, you can."

Or if you reach out and you like their photo, but they're not wearing the right clothing, if it's like a fitness apparel line, you could reach out to them and say, "Hey, we'd like you to recreate this photo and sell it to us. We'll send you the clothes. We really like the style." The chances of them doing that are like 100%. These people maybe don't even have followings, and they're not used to getting hit up about this kind of stuff. Especially if you've got a big brand, and they can see that it's reputable and someone's not trying to scam them. A certainty of closing that every time.

And the same thing goes for video. If you have an idea for a video, and you don't have a big budget to make the video, Craigslist. Put an ad up, say, "Hey, we need an actress or actor to come in and sell this hair product, or our T-shirts, and we want them to do this. We'll pay you $10." I'm telling you, you would be shocked the number of replies you will get with people that say, "Yeah, I'm all for it." People want the notoriety and the fame so badly that they're willing to do whatever it takes to first of all make $10, and secondly get their name out there a little bit more.

Use Craigslist. Use these free resources, and use that cheap labor that's available to you to make content that's affordable. Make sure you get the right documents signed to make sure you get this strategy approved by the brand that you're working with, and make sure that you don't pay them under the table to avoid a lot of liability here, but you can still get it done in a very cost effective way.

Before you brush this strategy off and you say, "Oh, he doesn't know what he's talking about. That won't work." Just analyze your own feed. The ads that you see that are really perfect, high quality, stock photos, do you sit and look at those closely and pause on those, or do you scroll as fast as you can to get them out of your sight as fast as possible? I'm betting it's the latter. If you can avoid that at all costs, it's the best case scenario for you to be in.

As far as text on the creative goes, that really needs to be reserved for messaging and discounts. It needs to be very brief because you're restricted to 20%. Well, specific to Facebook anyway. And you don't want the headline to repeat what's in the image. The two should play off of each other pretty well.

When you're putting text in the creative, you can ask a question really easily, or have it be an indirect ad, and then address it again in the headline in more detail, or in a different way. But you really want to make sure you don't take away from the creative, because it can be so powerful.

A good example of this is one of the most successful ads we ever ran for a bath bomb product. Now, we could've said homemade, organic, high quality bath bombs delivered to your doorstep, and that's it. But instead, we decided to leverage the beauty of a bath bomb in the bath with a creative indirect headline.

As you could see behind me, it worked really, really well. Talking about the Maldives in your bathroom gets people mind working, and they compound that with the image of a bath bomb, and it kind of gets their mind going, and suddenly they can be interested in an experience, not just organic high quality bath bombs. We want to have people's brain go somewhere that makes them feel something so that they're likely to click through and act, and you can do that really, really well with written text in the creative. But like I said, don't take away from what you're trying to balance with the creative and the headline.

Another point to be made about images is the pop of color that's so necessary to make them succeed. A good example is YouTube thumbnails. If you compare the two thumbnails here, one has a pop of color, just a simple matte color ad with opacity behind the person, and this one of the left just is a basic thumbnail. If you guess which one does better, I assure you 100% of the time the one with the pop of color is going to do better no matter what. That's just the way it is. And if you slap some text on top of the color, it'll do even better.

Now, that's just a good way of showcasing the importance of color. It doesn't have to be that extreme. You can have just a little bit of pop of color, and this is really easily applied to your products. If you own a swimsuit company and you're trying to sell your swimsuits, don't choose the black swimsuit. Choose the red one, or certainly test it at least, but as an idea of how to apply what we're talking about to your ads, be conscious of that. If a red background just like this thumbnail increases your click-through, why wouldn't you want to do that to your ads? Open Photoshop, make a couple of changes, and then put the ads up. You put so much time and money on your landing page, your product, and you skip on the most important part, which is the ad. Make it exciting, make it stand out, and put some color in there.

If a human is in the photo, you want to make sure that you test angles of the face. It can be very, very successful to have a human look straight on to the camera in a photo versus to the side, but you have to make sure that you test it, and it depends on the product. In some tests we've found that if we have a person in an ad looking directly at the camera in the ad, and then on the landing page we have them looking to the side, the time on page is much higher. For some reason they must see the same person in the landing page and say, "Ooh, they're not looking at me now. I'm going to go ahead and read this." I don't know why, but it happens because we've tested it, we know. I can't tell you which strategy is going to work better, this way or this way, but I do know that there will be a difference in the way that those ads, and if you don't test it, you could be leaving money on the table.

This strategy can be applied to many different products and services. If you're selling a hair product, you don't know if a redhead, brunette, or blonde is going to perform best, but one of them will perform better than the others. Maybe it's a redhead. You won't know until you test it, and I highly recommend creating ads like this because it's going to give you a variety and help you understand what works best for you.

Once you know what works, you can go create it at scale. If it's blonde hair, blue eyes, all right. Now I go reach out to people from Instagram or hire photographers, and I create a whole bunch of variations of messaging that I like and imaging that I like, both high and low quality, right. Once you have all those images, you put them up and something's going to start really working for you.

When you're actually making the ads, you have to remember that you're not required to have one ad within the main image. Especially with landscape for Facebook for example, it's very, very difficult sometimes to find the right perfect ad and have it fit just right. So break it up into three or four. We've tested it hundreds of times, and it usually ends up doing a lot better. You get to get more messaging with photo, but it does have more of an amateurish feel, so you have to make sure it aligns with the brand strategy and goals.

But overall, it's a good thing to test for your brand because a lot of people don't do this, and it stands out so well in your feed. Most of the ads you'll see have one main image ... unless it's a video ad ... have one main image that they leverage off of with their headline. But that doesn't have to be the way that you do it. You can create two ads split side by side, or three or four. Even stretching the ad sometimes can turn out really beneficial.

If you have a hand, and you stretch it a little more so it definitely doesn't look like it's supposed to be that way, that's going to look different. Different gets attention, attention gets click-throughs, and that's the goal. So we'll stretch an image a little bit so it looks abnormal, and people might stop and say, "That's abnormal. I'll click on that." And that's a goal right there, right? We want to get people to our page, and engaging with our audience.

Again, that's not going to work for every brand. You have to make sure that the brand's okay with these kind of tests, but we've done it for brands that are all right with it, and it ends up working really well a lot of the time. But we don't know that kind of thing if we don't test. That's why you have to create variations. Try and think of things outside the box that you haven't seen before, other people aren't doing. That's the kind of stuff that gets attention, gets your brand some momentum, gets you shares, and really has people remember the brand and come back to it, because they're doing something different.

If you're having a bit of writer's block or creative block at all, go to websites like WhatRunsWhere. Look at what your competitors are running. Find out the messaging that they've got. Find out maybe what you think they're targeting by the type of ads they are. If it looks like they're targeting college-age sorority girls, go ahead and run ads like that. Start your strategy based on what other people are doing.

There's a phrase that we kind of live by: pioneers get slaughtered, and settlers prosper. So just settle. Find something that you know is working, create your own content, but have that angle be where you start. And remember, you're always testing new angles, so it's okay. You're going to move out of that after a while anyway.

Using websites like that is not a solution either. It's just a starting point, something to help you get going. Certainly if you're going to create advertisements very successfully, you need to have something unique, as we've talked about, but if you have no idea where to start and you're not a very creative person, that can be a good place to get you going.

Let's talk a little bit about video ads. In your first second to two seconds of video ads, you have to make sure that you grab attention right away. You don't have time to waste. People are scrolling so quickly, and if they see a video, they might not even be interested at all at pausing, so you want to make sure you get attention right away in that first second. And it needs to be fast. You need to rotate a picture, have a graphic that slides in and out, change some text really fast and get that attention.

Typically we'll make a normal ad, and then we'll have the first second be very different from that ad. By way of example, if I was making an ad for a flameless candle company, I might start it with a video like this, with a woman on her birthday blowing out the candles, and she lights her fake eyelashes on fire. Very, very attention grabbing, and then boom, hit them with the ad afterwards.

Now, this is just an example of the type of ad that I like to run with video because it gets organic, native attention, and people immediately stop scrolling to watch what's happening, and then bam, you hit them with the ad. But it's on topic. It is on brand, so it makes sense to people, and they're not taken away from what they're actually looking at. There is a reason that the flames in one match up with the flames in the other, and it can get people talking. It can get people sharing, and it can get people engaging.

When you're done creating the ad, take a step back. Take a day off, take a day away from it. Come back to it, watch it with fresh eyes, and ask yourself, "Would I stop scrolling and watch this ad?" If the answer's yes, put that ad up, and it's going to do well. If the answer is no, it's probably not in the right tone for your brand, and it's probably not done as well as it could be, so don't put it up, and try again.

If you're having influencers create ads for you, make sure that you let them do what they do. You need to pick the right influencers. If a lifestyle influencer is the right type of influencer, or a travel influencer, or a photography influencer, make sure that you choose an influencer that makes ads the way that you want your ads made, and let them take care of it. These people are weaving a story in their feed. Especially with stories in IGTV coming out, as an example, they can't come out of nowhere with some random ad that doesn't really seem organic to their followers. It's going to fall flat, it's not going to tie in to their theme, and it's not going to perform well. So let them do what they do.

Now I'm not saying you let influencers run wild. You have to give them the restrictions that are so necessary. "Only promote my product. Post on this day. Hashtag these things. Link this out in your bio and stories, et cetera." But you need to let them have their own creative process, and that's when you're going to see the real good results.

And when you make the deal with them, make sure that you buy extra photos of them, or have them provide you photos of the product without them. Try and negotiate the best deal you can there because you can take photos, which you, hopefully if you've done the contract right, now own, and put them up as ads too. And guess what, you've got that amateurish style, self-shot feel you've been looking for. It's a great way to double dip on influencers, and we highly recommend it.

By the way, we just wrote an article about how to spot a fake influencer before you lock a deal in with them. Are they buying followers and likes? We're going to share you all the top tips to find that information out. And we're not alone. It's really important to scrub your influencers because a lot of different brands out there have gotten burned really bad. In fact, a lot of agencies now, including us, are taking on interns and employees full-time just to scrub influencers to make sure that they are legitimate. It's more important than ever because influencers are here to stay, and it needs to be a part of your marketing strategy. So make sure you spend your money wisely. Check that article out. It's going to be in an email that follows this. Check that article out. It's going to be in the link below.

The best example I've seen of influencer marketing was done right here. This influencer has carpet in her bathroom, and as you can imagine, many people have something to say about that. In the post, she's reading hateful comments about her carpet, and then says in the end that she's washing away the haters with the soap that she's promoting.

That's the reason that you hire an influencer, and if they pigeonholed her and directed her on how to make the content, her audience would not have engaged with that. But instead, the brand let her do her thing, and she leveraged a long term part of her story, being the carpet in her bathroom and all the hate that she gets on it, to reflect positively on the brand. And that is the real power of influencer marketing because it becomes so organic to their feed and gets people engaged just like it's not an ad. And if you choose the right influencers and you let them do what they do, you can have these kind of ads too.

Ads do not have to be as straightforward and obvious as trying to sell a wall scent plug-in product and showing an image of a person with a nose for a head. It can be, but you really want to try and create something that's a little more creative, something that's got some depth to it, and people can actually engage with and not scroll past. Ultimately you want to create something different, have it be on brand, and get the right message across.

If the goal is to have leads or sales on a landing page and the ad doesn't really perform that well, that's okay too because it's just the beginning of their customer journey. It might take five touch points for them to actually take that action depending on the offer. And even if it doesn't get the conversion that you're looking for, the CPA, CPL, whatever it might be, the first time, that's okay too because now you've got them pixeled, and you can re-market them as well with a different ad, with a new idea, that might speak to that person or that targeted audience a little bit more effectively. So all is not lost, especially in today's world. It's not like television and magazines. You get to track everything, and you get to re-approach these people too.

When you talk about targeting your ads and what analytical and metrics and detailed information is important, you have to focus on learning your customer avatar, as it's called. You need to know if it's a 35-year-old male that likes to mountain bike, microbrew beers, and enjoys baseball. Those are the kind of things that you really have got to start figuring out about your audience so you know how to target this messaging, and perhaps have a good idea of what these people might like to see. You can learn all this information with the different types of ad campaigns that you run, but only if you really start doing targeted ad campaigns.

So now we have a good strategy for our ads, and it's time to start looking at what information is really relevant when you're analyzing which ads need to stay, and which ads need to go, and what metrics people really should be looking at. What is the important information that CFOs would want to know, business owners really want to know? It's much more complicated than but looking at the cost of clicks, or the click-through.

If we have six different platforms, there's tools that you can use called ETLs, which essentially take all the data and aggregate it so you can look at it in a clean way. I'm not going to talk about that right now. There's business analysis tools that you can use as well like statistical modeling that find the most relevant information of all the data that you have, bringing it to the forefront, making decisions a little bit more easy. That's not really what we're going to be looking at either. Much, much more complicated. That would require its own webinar probably.

I want to talk about specific marketing technologies like Google analytics, or Facebook reporting, and I want to talk about how those can relate to your CAC, which is customer acquisition cost, or LTV, the lifetime value of a customer. Trying to figure out what metrics like that, aside from just CPC, you can really look at to decide if your overall strategy is working for the customer journey. Because that's what's really most important, not just the first click. Two out of 100 people might take action on your first visit to a website, so it's really all about that third, sixth, eighth click, and what that customer journey looks like, and what metrics are important to making good decisions.

Because if I have an ad that performs really well early on, or at least gets me cheap traffic, it might not really be the best for a customer in their journey. They might convert after six or seven touches as opposed to two or three with a different ad that starts. How do you look at those metrics? How do you decide which ones are good and bad, and how do you make decisions?

So let's go. The term in marketing is KPI, key performance indicator. But really what you want to look at is the overall number or volume of sales that are coming in. The second would be how quickly people convert, if you can accelerate their conversion process, like I said earlier, getting people from six initial clicks to buy down to two or three. And then ultimately if you can decrease the price sensitivity with good ads, good quality branding, and good communication, that's really the right strategy you want to be focused on. And the metrics that you want to use to do that are really important.

As I mentioned before, you really need a good amount of data. You need a good amount of data to be able to analyze that kind of thing. You can not just put one ad up on Google, or one ad up on Facebook, spend $1,000, and get data. That's not enough. You're only testing one angle at that product. You need to test several angles, and you certainly don't want to optimize for one angle when you're running your campaign. If I have a split test on the website and only one ad running, that's not enough information to give me a good idea of what many customers would find compelling about the offer.

So make sure you have multiple ads. It's absolutely necessary that you're testing your product at multiple different angles, and you're able to aggregate that information when you're making split test decisions on the landing page. But landing page optimization is a different webinar for sure. Especially the way that Google's algorithm and Facebook's algorithm works right now, you might not start really well on a specific ad, but it could end up being the best ad in the end. You just have to let it run, and you need variations in there so you can find out which angles are working the best.

Once you have that information, you really have power, but typically it's going to start really bad with Google because you have to buy all these keywords. You have to buy all this data and find out which ones don't work. So it's not wasted money when you have keywords that don't convert; it's just the way you have to buy the information. That's why if there's anything I would do in an audit, it would just be to look at what keywords have been used, which ones have not converted, what are they paying for those keywords, and how to optimize them from there. But I can't do that if you don't have enough keywords, if you don't have enough ads, if you're not playing enough angles. There's not enough information to make educated decisions. So make sure you put a lot of ads up and get a lot of data.

If you're a product owner, or brand owner, or marketing agency, they're looking at ads very differently. A brand owner's going to look at net profit because they don't really care about how your ROI is on your ads, and an agency is probably going to look at it more towards "hey, we got you 80% ROI on your ads." That's really not the right mindset to have if you're working with a brand, and if you are a brand, you're looking at the right information if you're looking at net. Net profit is after all expenses, and that's really a very important metric.

Using gross profit is beneficial when you're talking about performance of ads. It can make you look like you're doing your job as a marketer, but no one really cares about that compared to net. Because if I can't make net profit on my ads, I'm not going to make it long term in business. So the real focus is net. Now, you can re-market and bring in customers multiple times, and now we're talking about lifetime value, but ultimately at its core, you need to be looking at net profit on ads, not gross.

So if you are working for a client, make sure you find out their product cost best you can. Make sure you understand where their head's at in terms of scale. Make sure you find out what their goals are. So if you're working with a brand or you're a brand owner, try and focus on net and look at the numbers because just because you're making good return on ad spend, it doesn't mean that you're actually making money. You could still be losing money, and what's the point of looking at metrics that could potentially be losing you money?

Coming from a DR background, which is direct response, I have at always top of mind that you're making money as opposed to breaking even or losing money. Because investing in customers and customer reviews is important, but that doesn't have to be done at scale. Make sure you have your numbers right, make sure you understand where you need to be to have profit at net, true net profit, and work from there. Even if it's very, very difficult to get there, those are the kind of goals you need to set with people that you're working with, or products that you're selling yourself.

From there, you have to figure out the lifetime value. How long are customers staying with my company? If it's a subscription box that delivers socks to your door every month, or if it's some sort of SAS software product that you can buy and pay for every month, how long are people on? Generally maybe nine months, let's say. The lifetime value of that customer is much higher, and once you know your lifetime value, it changes the course and trajectory of your ad spend big time.

If I know that my lifetime value is $110, and the cost to customer is only $35 to start, I get to pay $50, $60, $80 in my ad spend because I know the lifetime value is still net positive. And once you start looking at it from that mindset, you start to really scale and really increase your user base. Obviously you have to have the money to be able to float all that expense and wait to recoup net profit on that, but there's a direct relationship between lifetime value, net profit, ROI basically, and churn.

So if you're churn changes, which is the dropoff or cancellation of subscriptions, you really have got a problem, and you need to get more better traffic into your product. Because there's such a big difference between cashflow and profit when you're modeling ad buys like this in a long term mindset, it's very, very important that you monitor the difference between cashflow and profit over time, and that's the relationship between ROI and churn. How much money are you spending versus what are you recouping, and the lifetime value of customers every month? Has your churn stayed consistent? Has it risen? Has it dropped?

And as that happens, you have to look at what changes were made a few months ago. If churn goes from six months to five, you made a change to something five months ago in the way that you acquire customers maybe, or you changed the email path over the last month. There's a lot of stuff to look at that can be a part of that decision making process, but you have to keep that top of mind, and you have to be focused on quality of traffic related to the cost.

Those metrics are paramount to successfully running a product and having a business and working with clients because if you're successfully cashflowing good amounts of money every month, that doesn't mean that you're profitable. You might be paying too much for your leads, or you might not be taking care of them and the churn is too high. But since you have new product coming in with good ROI, you think that you're profitable, but based on your calculations of what you can spend for ads, you're spending too much because the churn's not eight months, it's five.

These are the kind of conversations that you need to have with the CFO or decision maker. You have to run for yourself, hire a bookkeeper to do them for you, very easily. Just make sure you know the information, and then you can make decisions about how to run your traffic and how much to spend and when to scale and what's working and what isn't. And like I said, not all these metrics that I'm talking about are going to be easily readable in Facebook reports, but if you talk about this kind of stuff with the product owners, or talking to product owners, let's say you are one, it's going to be appreciated how to learn the relationship between ad spend and the overall profitability of the company.

Because really, marketing, even if it's outsourced, is not really outsourced. There's still a very big of the company. Marketing is the sales. Salesmen serve growth, they don't cause it. Marketing causes growth, and if you have a direct relationship with the companies you're working with or running between the marketing department, what's going on with the spend and goals, and the actual profitability, net profit churn of the company customers, you're going to do a lot better.

Different acronyms that are thrown around a lot in the industry, CPM, CPC, CPA, CAC, what are the difference? CPM is cost per thousand. If you're buying 1,000 impressions, this is what it cost. CPC is just your cost per click on an ad. CPA is your cost per acquisition, or a action, as it were. And the CAC is customer acquisition cost.

We like to look at our CAC, not the CPA really, not the CPC, not the CPM. I mean, it depends on how you're buying traffic. If you're buying it on a CPM, you want to make sure you're not paying too too much. But really, it depends on the performance of the ad over time, and that journey that you take them down, and how you're sending emails, and how you're re-marketing. All those relationships correlate directly to the first ad they ever saw and how they were introduced to people.

The differences between CPA and CAC is very big. A lot of people look at CPA as their cost per acquisition, but it's not really. It's just acquiring the customers' something, like a trial, or a lead. Some people might call it a CPL, but it's really just a CPA. It's cost per acquisition. What information are you acquiring from them?

The customer acquisition cost is paying customers. If it takes four touch points for me to get a customer that pays me money, not just some trial customer that bought on prepaid card and isn't going to re-bill or wants to just sample the SAS product and isn't going to use it. That's not a good metric to go buy, man. You have to look at your CAC. What is it costing me to get customers, and what do I have to pay? How many touch points are there? What tools am I using to get them? Am I using email also? Am I using re-marketing dollars? That's my true customer acquisition cost.

Don't really focus on your CPA. It's an important metric when buying traffic. It's going to tell you how good the traffic is maybe, but long term, it might be a different strategy early on with a more expensive CPA that's more above board, more upfront, more bland even, who knows, literal, that gets a more expensive CPA, but that customer acquisition cost might be a lot lower because you were so upfront early, in the back end you didn't have to spend as much money.

So in my opinion, the most important is the customer acquisition cost. When you're working with affiliates or marketing agencies, they might have a real big focus on their CPA and their gross profit, but those are not real metrics. It's what you do with the information that you gather, and how much are you paying for it related to what it needs to be? I'm telling you, the best metric to use related to what it needs to be. I'm telling you, the best metic to use if you have a dynamic advertising strategy, which you should, is your customer acquisition cost. Again, that's not a metric you're going to be able to just look into Facebook and find. You have to do the numbers yourself. It depends on what platforms. If you're using Google and Snapchat, you need to decide how much you're paying on those and how many touchpoints you're getting all that great information.

You can relate customer acquisition cost to lifetime value very well. Once I know my true customer acquisition cost, and the paths that I'm going down to get people to be customers, paying customers, then I can determine what their lifetime value is once they're with me. If it takes me four touchpoints to get a customer and then they're on for eight months, now I've got some math I can do, and I get to turn my budget up on a lot of the different acquisition paths because I know that the customers are really good or really bad, I've got to turn the budget down. You can find that relationship once you know the lifetime value.

It always boggles my mind how many companies do not know their lifetime value of customers. It's so mind-blowing. If your customers are going to pay you 200 dollars over the course of a year on eight transactions, how do you not know that? How do you not know that you can go spend 50, 80 more dollars on advertising to acquire customers because you know that when you get customers on average, they spend 200 dollars a year. You should be looking at your lifetime value as the absolute most important metric that you could possibly have. Not even talking about ad spend.

Just the lifetime values where all ... That is the top of the pyramid. If you don't know that information, I would definitely consider after this video is over doing the calculations of "What is my lifetime value?" Open Google. "How do I determine the lifetime value?" Again, lifetime value is not something you're really going to be able to find in Facebook reporting. Even Google analytics won't really be able to tell you that to the exact degree that you want it to.

Once you have your lifetime value, once you have your CAC, then you can really start looking at your cost per visitor and your revenue per visitor, and that's the metric that really is helpful when you're buying traffic. If I know that every visitor revs two dollars, I get to take my bids up. It's just a much easier way to break down the information.

When you're buying traffic at scale or working with agencies at scale, it'll help simplify the process for them because oftentimes, depending on the agency, there's going to be newer buyers that need simple metrics to look at. You've got to get a handle on your numbers, you've got a handle on your traffic and figure out how much revenue is coming in per how much cost is coming in per ... and then make decisions on that.

Now moving onto a little bit more abstract metric, one that's very difficult to quantify is value per visit. That is essentially somebody going to your store, buying, perhaps, but then also sharing it on social, sending it to a friend and emailing somebody else. A lot of people like to run coupons or rebates in this type of situation to track it, but ultimately if you have somebody that buys a product and then shares it on Facebook, you have brand lift, and you might actually get conversions from that.

A lot of the time what we do in this situation, if we see something happen, we will assign a metric to that social share or the value basically that's been put out into the world by somebody else, and then upload it to a reporting platform so that there is a tangible number associated with it. A lot of performance marketing is tied around income in, income out, so we have to have some sort of metric and value that we assign to a customer visit like this.

We typically assign a value, which is typically agreed upon with the brand, or assigned by us if it's an internal product, and then we upload that to our reporting so we know, "Wow, there was a really big value per visit this month. Perhaps it was X product, or perhaps it was the strategy that we did for marketing like this, or we can determine and kind of reverse engineer what it is that maybe helped us get that value per visit up, but that metic is really fun to work with because if you're getting really high engagement in a social community or really great feedback someone else, you can assign value to this reaction and pump more money in that direction, which essentially is going to only increase your value per visit.

Again, a very unique metric that's very difficult to quantify and probably not something you were expecting to see in this video, but I'm telling you, it's one of the most valuable things you can look at. Thanks for watching this webinar. We love advertising. Obviously, I could talk about this all day long. I love the metics and data I get to look at all day. I love the creative side of making really good ads and the joy of having ads succeed, strategies that are dynamic across many channels succeed because we set up the infrastructure, the architecture of this whole strategy.

I've shared a little bit about that with you today, given you hopefully some good tips and you've got something out of this video.

About the Author

I am Bobby Dietz, an entrepreneur, content creator, and advertising professional. I am the Co-founder of ATTN Digital Marketing Agency and have entrepreneurial experience operating businesses in nutrition, cosmetics, automotive and travel. Follow me on LinkedIn for daily advertising tactics, business vlogs, book reviews, and more.

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