The REAL Reason You Can't Scale Facebook Ads
Summary
TLDRThis video script outlines a strategy for scaling Facebook ad campaigns profitably, highlighting the importance of creating a high volume of ads to find the most effective ones. The speaker, with experience investing over $50 million in ads, emphasizes the need for exceptional ad quality to reach larger audiences without losing profitability. They also stress the significance of understanding and improving customer lifetime value to afford higher customer acquisition costs, which is crucial for scaling ads effectively.
Takeaways
- 📈 The speaker emphasizes the importance of scaling Facebook ad campaigns profitably, highlighting a strategy that increased revenue from $97,000 to $357,000 with a better return on ad spend (XRS).
- 🚀 The speaker has extensive experience, having spent over $50 million on Facebook ads, generating more than $200 million in revenue, which underscores the credibility of the advice given.
- 🔍 Two common mistakes that hinder Facebook advertisers from scaling effectively are identified: lack of volume in ad creation and insufficient customer lifetime value.
- 📊 The concept of 'volume' is crucial; top advertisers create many ads (50-30+ per week) to increase the chances of finding highly effective ads that resonate with different audience segments.
- 🔑 The speaker explains that as ads are scaled to larger audiences, they must remain compelling enough to convert less responsive viewers, which requires exceptional ad quality.
- 🎯 The necessity of creating a high volume of ads is underscored by the example that to find a '1 in 100' ad that significantly boosts scalability, one might need to create and test 100 ads.
- 💡 The speaker suggests that by creating a large number of ads, advertisers will inevitably improve their skills and stumble upon highly effective ads through trial and error.
- 💰 The discussion points out the importance of understanding and increasing customer lifetime value to afford higher customer acquisition costs, which is key to scaling ads profitably.
- 📉 The script advises against focusing solely on reducing cost per acquisition, instead advocating for strategies that increase the overall value customers bring to the business.
- 📝 The speaker provides actionable advice, including a video on calculating and improving lifetime customer value, which is essential for Facebook advertisers looking to scale effectively.
Q & A
What is the significance of scaling Facebook ad campaigns profitably?
-Scaling Facebook ad campaigns profitably is crucial because it allows businesses to grow their revenue while maintaining a cost-effective customer acquisition strategy. It ensures that the cost per customer acquisition does not exceed the revenue generated by those customers, thus preserving profitability.
What are the two common mistakes that Facebook advertisers make when trying to scale their ad campaigns?
-The two common mistakes are: 1) Lack of volume, meaning not creating enough new ads to test and find the most effective ones, and 2) Not having a high enough lifetime value for their customers, which restricts the amount they can afford to spend on acquiring new customers.
Why is creating a large volume of new ads important for successful ad scaling?
-Creating a large volume of new ads is important because it increases the chances of discovering high-performing ads that can effectively reach a broader audience. It allows advertisers to learn from data, refine their approach, and ultimately find ads that can scale to higher budgets without sacrificing profitability.
How does the quality of an ad impact the ability to scale a Facebook ad campaign?
-The quality of an ad directly impacts the ability to scale because a high-quality ad can resonate with a larger and more diverse audience, allowing for increased spending without a drop in profitability. Mediocre ads may only perform well with a small, highly responsive segment, limiting the campaign's scalability.
What is the role of customer lifetime value in scaling Facebook ad campaigns?
-Customer lifetime value plays a critical role in scaling ad campaigns because it determines how much a business can afford to spend on acquiring new customers. A higher lifetime value means the business can afford a higher cost per acquisition, which in turn allows for greater scalability.
How can businesses increase their customer lifetime value to support ad scaling?
-Businesses can increase their customer lifetime value by improving customer reactivation strategies, offering products or services that encourage repeat purchases, and fostering customer loyalty through referrals and positive experiences. This allows them to afford higher acquisition costs and scale their ad campaigns more effectively.
What is the 'concentric circles' concept mentioned in the script, and how does it relate to ad scaling?
-The 'concentric circles' concept refers to the idea that as an ad campaign scales, it moves from targeting highly responsive audiences at the center to less responsive audiences in the outer circles. This concept illustrates how the quality of the ad and the audience's responsiveness affect the campaign's ability to scale profitably.
Why is it important for advertisers to know their maximum affordable cost per acquisition?
-Knowing the maximum affordable cost per acquisition is important because it sets a boundary for how much can be spent on customer acquisition while maintaining profitability. This knowledge helps in planning ad budgets and scaling strategies effectively.
How does the number of new ads created per week compare between average advertisers and the best Facebook advertisers?
-The best Facebook advertisers create 50, 20, or even 30 or more new ads per week, whereas average advertisers might create only a few new ads per month or wait until results drop off to create new ads. This difference in volume contributes to the ability to find highly effective ads for scaling.
What is the law of numbers mentioned in the script, and how does it apply to ad creation?
-The law of numbers suggests that the more attempts or opportunities there are, the higher the likelihood of success. In the context of ad creation, by producing a large number of ads, advertisers increase their chances of stumbling upon a highly effective ad that can significantly improve campaign performance.
Outlines
📈 Scaling Facebook Ad Campaigns for Profit
The speaker shares a personal strategy that significantly increased a client's revenue from $97,000 to $357,000 with a better return on ad spend (XRS). They discuss their extensive experience, having spent over $50 million on Facebook ads, and highlight two common mistakes advertisers make when trying to scale. The first mistake is not creating enough new ads, which leads to a lack of volume. Top advertisers create many ads weekly, and the speaker emphasizes the importance of creating numerous ads to find the ones that resonate with different audience segments. The process involves testing, learning, and refining to eventually discover highly effective ads that can scale the campaign profitably.
💡 The Importance of Volume and Lifetime Customer Value
The speaker continues by explaining that to become exceptional at creating ads, one must go through the process of creating a large volume of ads. They share examples of clients who have seen significant improvements in their ad performance after implementing the speaker's strategies. The second common mistake is not having a high enough lifetime value for customers, which restricts the amount an advertiser can afford to spend on acquiring new customers. The speaker suggests that understanding and improving customer lifetime value is crucial for scaling Facebook ad campaigns profitably. They offer a resource to learn how to calculate and enhance lifetime customer value.
🔢 Calculating and Improving Customer Lifetime Value
The final paragraph focuses on the importance of knowing and improving the lifetime value of customers. The speaker provides a video resource that teaches how to calculate the lifetime value per customer and what one can afford to spend on acquiring a new customer. They stress that understanding this metric is essential for Facebook advertisers and can greatly impact the ability to scale campaigns effectively.
Mindmap
Keywords
💡Facebook Ad Campaigns
💡XRS (Return on Ad Spend)
💡Volume
💡Ad Quality
💡Lifetime Customer Value
💡Cost Per Acquisition
💡Scaling Profitably
💡Customer Reactivation
💡Concentric Circles
💡Back End
Highlights
The speaker shares a strategy that scaled a client's Facebook ad campaign from $97,000 to $357,000 in revenue.
The speaker has spent over $50 million on Facebook ads, generating over $200 million in revenue.
Facebook advertisers often struggle to scale profitably due to two common mistakes.
Lack of volume in ad creation is a significant reason for difficulty in scaling.
High-performing advertisers create 50-30 or more new ads per week.
The importance of creating a high volume of ads to find the most effective ones.
Meta prioritizes showing ads to the most responsive audience first.
As ad spend increases, the audience's responsiveness decreases, requiring better ads to maintain profitability.
The necessity of testing and learning from a large number of ads to improve ad quality.
An example is given where creating 10 new ads leads to finding one that can scale to $100 a day.
To significantly scale beyond $100 a day, an advertiser might need a 'one in a hundred' ad.
The 'law of numbers' suggests that creating a large number of ads increases the chance of finding highly effective ones.
The speaker emphasizes that creating a 'one in a thousand' ad requires going through the process of making a thousand ads.
The speaker shares client success stories, including a 2-week improvement from a 0.7 to an 8.03 return on ad spend.
Another client sold out all 35,000 raffle tickets in two days after implementing the speaker's strategies.
The second reason advertisers struggle to scale is due to low customer lifetime value.
The ability to pay more to acquire a new customer is directly linked to the customer's lifetime value.
The speaker discusses the importance of knowing and improving the lifetime value of customers for scaling ads.
A video is mentioned that teaches how to calculate and improve lifetime customer value.
Transcripts
I'm about to share with you the exact
strategy that I use to scale this
client's Facebook ad campaigns from
$97,000 in Revenue at a 1.4 XRS all the
way up to
$357,000 in Revenue at a 3.7 XRS which
completely changed the trajectory of
this business and this wasn't just a
onetime thing I've personally spent more
than $50 million on Facebook ads for
clients and generated more than $200
million in revenue and you don't get to
those sorts of numbers without knowing
how to scale Facebook ad campaigns the
right way but the thing is most Facebook
advertisers are still falling into two
super common mistakes which I'm going to
show you in this video and one of them
is really easy to avoid you just have to
know what to look for okay so one of the
reasons why Facebook advertisers really
struggle to scale I should quickly
Define that when I'm talking about
struggling to scale I'm talking about
struggling to scale profitably obviously
anyone can just whack the budget up but
what we want to do is be able to scale
in a way where it still makes sense for
our business we're not acquiring
customers at too high a cost for it to
be profitable um for our business right
so that's what I mean when I say
struggling to scale and and the first
reason I want to talk about here is
volume or what I should more
specifically say lack of volume and
here's what I mean by that right so I
speak to Facebook Instagram advertisers
all the time and one of the questions I
will very often ask people is how many
new ads are you creating and often
they'll say something like I create two
new ads three new ads a month four new
ads a month something like that or
perhaps they don't have a specific
schedule they just wait until the
results drop off and then they go oh
okay I need to make some more ads then
that's their approach to new ad creation
now here's the thing thing the best
Facebook advertisers in the world create
50 20 30 or more new ads per week and
that might sound extreme and obviously
depending on your budget if you're
operating with a much smaller budget
then that doesn't make sense that would
be Overkill but the principle Remains
the Same they absolutely are going after
volume of new ad creation and here's why
you probably can't scale because your ad
isn't good enough to convince people to
convert whether that's purchase become a
lead whatever unless they are hyper
responsive so really into whatever it is
you have to offer when your ad works and
is profitable to a small segment of your
audience so you're not spending very
much meta is really good at finding out
the best possible prospects and it's
going to put your ads in front of those
people first as you spend more and spend
more you go from the people that are
absolutely super Keen love everything to
do with that industry buy every ad that
pops up to people that are still pretty
good prospects but slightly less keen
and then you scale further and you go
from then to people that are slightly
less Keen again and slightly less Keen
again and and it goes on and on and on
so if your ad is a mediocre ad perhaps
it's good enough to get those hyper
responsives right at the center of that
Circle to convert but as you go out into
those other tiers it probably isn't good
enough now the only way to create
exceptional ads and get really really
good at creating ads for your specific
business and your specific audience is
to get the Reps
in is to create tons of them put them
live see the data learn analyze rinse
and repeat so let me give you an example
to hopefully make this a little bit
easier to understand and sort of and
sort of clarify um the thought process
around this so let's say you've got a
new campaign and you've launched 10 new
ads now obviously one of those 10 ads is
going to perform best that's probably
going to get the majority of the budget
whether you manually force that or
whether meta does that um for you and
with that ad you found that you can
scale up to about $100 a day but you
can't really go any higher if you do
your profitability starts to drop and
you end up paying too much to a Car
customer basically you are using a one
in 10 ad to get you to $100 a day now if
you want to scale significant past that
let's say you want to go up to $1,000 a
day you might need a one in 100 AD the
quality of the ad needs to go from a one
in 10 ad to a onein 100 AD now the only
way to discover to to stumble across a
onein 100 AD and that's usually the way
it works by the ways you're testing a
bunch of stuff and you don't necessarily
expect it to work amazingly well and you
sort of stumble across something that
that works really well for your specific
business and your specific audience well
anyway the only way to get that one in1
100 ad is to create 100 ads and create
All Those ads that don't work and you
learn lessons and you refine your
approach and you get to the point where
you have a one one one in 100 AD and
then maybe that allows you to scale up
to that ,000 a day mark But if you then
want to go to the next level and you go
right $ th000 a day is great but our
business would be completely transformed
we go to a whole another level if we
could spend $10,000 a day maybe to do
that you need a one in 1,000 ad because
I can absolutely assure you if you go
ahead and create a thousand ads and put
proper time and effort into creating
those one of those is going to deliver
incredible results just the law of
numbers you're going to do it
accidentally even if even if nothing
else I mean of course you want to try
and help the process along and and take
a look at what you've done and and allow
that to inform the direction you take
going forward but just accidentally
you're going to stumble across a concept
something new that works really well and
it's just going to to perform much much
better and that one in 1,000 ad might
literally have a four or five times
better row ass than that one in 100 AD
which can completely obviously change
your campaign completely change Facebook
advertising and completely change your
business if you can get that ad that is
that good one in 1,000 ads are really
good but again the only way to get a one
in 1,000 ad is to actually go through
the process of making a th000 ads which
might take a lot of effort and a lot of
time and everyone wants shortcuts right
no one wants to put in that time and
effort to create a thousand ads over the
next year or 18 months to to find that
one that's going to you know perform
exceptionally well you will find others
that perform better than what you've
currently got along the way as well it's
not like you put in all that work and
then get all the reward at the end you
will have incremental gain as as you go
but to be perfectly honest often it just
takes exceptional volume to get
exceptionally good at creating ads I
cannot tell you how many ads I've
personally been involved in created our
agency we've worked with thousands of
clients all over the world all different
budgets created on average probably
dozens of ads for every single client
you just get so many reps in you can't
help but get good at it if you do an off
of it come wa a sec take a look at this
so this is in my menure program right
and the results on WIS Channel and Tara
said this in 2 weeks of joining my Ros
went from 0.7 to
8.03 and I've only implemented maybe 30%
of the feedback that's going to me so
far which is that's just incredible
that's awesome so Zoe up here she joined
the mener program with
35,000 raffle tickets was thinking she
wasn't going to sell them um and she end
up selling out completely with 2 days to
spare and we've got loads of others in
here we've got tons of people just
sharing information around how they've
done well great results they've got if
you're interested you can click on the
button beneath this video that'll go
through to a page on our website you
could book in a free no obligation call
with one of my team members to find out
more information hopefully we get to
work together hopefully you join and
you'll be sharing fantastic results like
Tara and Zoe have done just here now the
other reason why Facebook advertisers
really struggle to scale Facebook ads
profitably and you may have both by the
way sometimes you have one or the other
sometimes you have both of these reasons
um is because they simply don't make
enough money from their customers their
lifetime value isn't high enough and
what that means is that you can't afford
to pay pay enough to acquire a new
customer now when I'm having a serious
conversation with someone who is serious
about scaling their their Facebook and
Instagram ads and wants to take it from
where they are now to 10x or more where
they want to go one of the first things
I'll ask them is how much more can you
afford to pay to acquire a customer than
what you're currently paying okay so let
me give you an example right let's let's
take an e-commerce business and let's
say that that e-commerce business is
currently generating purchases for $20
each that's what they're costing if I
talking to that business owner and they
say you know we could we currently
paying $20 to acquire a new customer $20
cost per purchase but we we could pay
$25 okay we can scale a bit you're
certainly not going to turn next that
budget you might be able to double it
may maybe if we've got that sort of
wiggle room but if that same business
owner tells me oh no we can pay $40 or
even better $50 to a Kiron Customer
because we've got great customer
reactivation our products are amazing so
people buy again and they refer their
friends so we can afford to pay a lot
more that is a complete Game Changer
that is sort of business where I'm going
absolutely weaken scale we might be able
to spend 10 X 20x the difference in a
$25 cost per purchase limit versus a $40
cost per purchase limit is massive the
$40 cost per purchase limit you might
cap out at 10 times the budget um the
the $25 Max cost per purchase business
is at um simply because remember the
concentric circles you're going out to
larger and larger audiences and as you
go as you advertise to more people you
put in your ad are slightly less clean
and slightly less clean and slightly L
clean you can tap into that many more
people because you can put ads in front
of people that aren't hyperresponsive
because if a lower percentage of them
convert you can pay a higher cost per
purchase that's effectively what that is
it still works for your business now
most Facebook advertisers don't even
really know what they can afford to pay
to acquire a customer right they haven't
been through that exercise and worked it
out and and that's a problem you really
should know that information I totally
get it like I've been there most
business owners are there uh most
Facebook advertisers don't know this
sort of stuff but you absolutely should
take the time to to do it and then
Within that the advertisers that do know
that number or even the advertisers
don't know that number hardly any of
them actually spend any time trying to
improve their lifetime customer value
they're not trying to increase how much
a customer is worth their business
they're instead much more focused on how
do I just get the the cost per result
down how do I how do I shave a couple of
dollars off my cost per purchase how do
I shave $5 off off my cost per lead
that's not the right way to go about it
the pros the experts the people that get
the best POS results they focus on the
back end they go how do we massively
increase how much customers work to
allow us to pay much more to acquire our
customer and make our Facebook
advertising much easier and allow us to
scale remember how I talked about that
business that's currently at $20 cost
per purchase if it can only go to 25 it
can scale a bit if it can go to $40 cost
per purchase it can scale massively the
only way you can afford to go to $40
cost per purchase is if you get much
more out of your customers you get them
to be worth a lot more there's a number
of uh techniques to do that but that is
so important and that's why the the pros
focus on the back end fortunately I've
recorded a video that shows you EX L how
to calculate your lifetime value per
customer and what you can afford to
acquire a customer and I share it all in
this video here it's one of the most
important things for you to know as a
Facebook Advertiser so I show you how to
calculate it I also show you how to
improve your lifetime customer value
which we've already talked about is
super super important so make sure you
stick around to the end of the video for
that information
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