Imagine a world where customer value extends far beyond the first click. In this fascinating episode, we unravel the mystery of the customer journey, challenging the notion that ROAS and CPA are the be-all and end-all of Facebook ad performance. Charlie walks us through the concept of profitable scaling margin' and paints a vivid picture of the lifetime value of a customer, advocating for a nuanced and integrated approach to marketing. Whether you're a media buying mogul or a small business owner, this conversation is an eye-opener about the power of long-term relationships and the synergy between channels.
Ever wondered what really makes a customer click 'buy'? We're taking a deep dive into the heart of sales and marketing attribution with Charlie, debunking the myth that a single ad or interaction can take all the credit. Learn why retargeting and predictive bidding might not be the panacea they're often touted to be and why content that resonates and serves the platforms' purposes could be your golden ticket. As we dissect the intricacies of what drives a purchase, you'll also get insider tips on how smaller brands can make a big splash in a sea of marketing giants. Join us for an episode that's less about chasing metrics and more about creating meaningful connections that last.
Please connect with Trevor on social media. You can find him anywhere @thetrevorcrump
Imagine a world where customer value extends far beyond the first click. In this fascinating episode, we unravel the mystery of the customer journey, challenging the notion that ROAS and CPA are the be-all and end-all of Facebook ad performance. Charlie walks us through the concept of profitable scaling margin' and paints a vivid picture of the lifetime value of a customer, advocating for a nuanced and integrated approach to marketing. Whether you're a media buying mogul or a small business owner, this conversation is an eye-opener about the power of long-term relationships and the synergy between channels.
Ever wondered what really makes a customer click 'buy'? We're taking a deep dive into the heart of sales and marketing attribution with Charlie, debunking the myth that a single ad or interaction can take all the credit. Learn why retargeting and predictive bidding might not be the panacea they're often touted to be and why content that resonates and serves the platforms' purposes could be your golden ticket. As we dissect the intricacies of what drives a purchase, you'll also get insider tips on how smaller brands can make a big splash in a sea of marketing giants. Join us for an episode that's less about chasing metrics and more about creating meaningful connections that last.
Please connect with Trevor on social media. You can find him anywhere @thetrevorcrump
Yo, what's going on everybody? Welcome to the unstoppable marketer podcast. With me, as always, is Mark Goldheart. Mark Goldheart, my lovely co-host. What's up, brother?
Speaker 2:What's up, dude? I'm excited to be here.
Speaker 1:I always am, though you always are, and you always say that.
Speaker 2:I do.
Speaker 1:I miss your long hair.
Speaker 2:Oh, I know I was debating whether I'm going to grow it out again. It's kind of at the length, where I kind of got to commit to it now, or I just got to cut it.
Speaker 1:Okay, I haven't been to that point in 11 years 11 years. Yeah, yeah, I think I was 25 when I when it left you.
Speaker 2:When I just said like done with it. Rip Trevor's hair.
Speaker 1:Yeah, Trevor's hair. Now I just have sticklets.
Speaker 2:The sticklets.
Speaker 1:Yeah, that's what my kids call it.
Speaker 2:Looks good, my sticklets Looks good though.
Speaker 1:Yeah Well, dude, I'm excited for today's episode.
Speaker 2:Yeah, I think it's going to be a spicy one.
Speaker 1:I hope it's a spicy one.
Speaker 2:He seems like a spicy man.
Speaker 1:I would say he's a spicy man.
Speaker 2:I don't know if he likes spicy food. We'll find out though.
Speaker 1:Yeah, we'll see, careful, let me introduce him. He's just been hanging out patiently, listen, these guys are so stupid. But anyway, I want to introduce Charlie Tichner. Wait, no, I said it wrong. That's good, you said it right. I said right Tichner right. Okay, my gosh, your face, I think I said it wrong. I want to introduce Charlie Tichner.
Speaker 2:Oh, okay, I'm a professor.
Speaker 1:Oh, professor Charlie Tichner, who is the founder of Disruptor School, and also several partners and other e-commerce businesses and everything. Marketer, extraordinaire, disruptor School, you know like all about helping people find success and less stress with digital marketing. Right, that's the cat, that's the tagline right there.
Speaker 3:Yeah, more success, less stress. Let's make money. Facebook is easy. Like you should be spending the rest of your time on your business and figuring things out and enjoying life, not pushing buttons. You should make more money, not work harder. The harder you work, the less money you'll make. Like Facebook is, it is never. I've been spending millions of dollars, sometimes millions, a day, on Facebook for over a decade. I can unequivocally say it has never been this easy.
Speaker 1:And that's what's so funny about that like comment is you are hearing the exact opposite from everyone else, like no one.
Speaker 2:Yeah, yeah, yeah, describe that to us. Why is the overall sentiment that it's never been harder, but you're saying it's never been easier?
Speaker 3:Well, because I think most people don't lean into the machine. Most people define their success as the amount of credit they can take. And I think most marketers have a background. Their education comes from a model where you have to prove your value based on what you can show on a piece of paper, and there is an inherent lack of alignment when you are motivated by performance, an ad agency, their job is to get you to sign that second contract after 30 days or three months. That's their job, that's their business model. Don't get fired in 90 days After that every call is. Don't get fired on this call.
Speaker 3:If you're inside of a brand, your job, your goal, isn't to not get fired, it's to grow the business. Not been in ad agencies, supervisor, omnicom, like almost a decade ago we were seeing CBS television and Henkel with all those brands, nissan and Apple and Activision and all of that stuff. I've also been on the brand side, growing brands like 310, nutrition and MyLife and Under Outfit and famously took them from $50k a month to a million or two a week. There are skills on both sides but sadly I think the vast majority of marketers learn from other marketers that market for other people professionally. So the misalignment of incentives represents a lion's share of the people that teach. So basically, most people learn from folks that don't actually care if a brand is successful, and so those selfish motivations become the foundation of what most people think have value. And I get a lot of beef from people constantly because I say things like Roaz is. I have shirts that say like fuck Roaz.
Speaker 1:Yeah.
Speaker 3:Now that's super offensive. If you're an ad agency, the bills on attributed revenue Because it's not that I'm saying you as a person are bad, it's not that I'm saying you as a person have no value. But, psychologically speaking, your id, your ego, your super ego, right Like down, when you get down to that level, we're getting to like Maslow's hierarchy of needs. When I say the thing that you define yourself worth on your ability to do, has no value, people will take that as me saying a slight against you when instead it's an opportunity to level up what you can contribute. And I think there is a giant crevasse, a crevasse between the people that are willing to do as best they can for the bottom line of the finance department and a brand and people who are trying to define their value on how much credit for the work they can take. And the honest truth is, my job is to teach people how to be more successful and to make this easy and overwhelmingly. That looks like making Facebook look worse on piece of paper and I'm okay with that.
Speaker 2:Okay, so let's dive into that Making Facebook look worse on a piece of paper but the business does better. Sure, now I have my opinions on this, but you're our guest, so I want you to explain to our listeners what you mean by that, because our listeners are probably familiar with metrics like ROAS or ROI or even an MER whatever you want to look at right. And then the new kind of hot topic is contribution margin or profit dollars, whatever. So explain your perspective of what that means by. Sometimes it looks like Facebook is doing worse but the business is doing better. But you're not necessarily decreasing spend or capping Facebook, right? So explain that model.
Speaker 3:So there's one thing to say I'm going to get the best ROAS. There's one thing to say I'm going to get the best contribution margin. There's one thing to say that I'm going to find my success on the attributed actions from my ads. There's another thing to say Facebook is a terribly inefficient bottom of funnel engine and business models should be amplified by Facebook. The business model shouldn't be used Facebook to make money. Facebook ads don't make sales Like your website makes the sale, your customer journey. If your product is good, people come back and buy again. That's revenue. All Facebook does. It's like the billboard, it's the carnival barker. It gets you in the tent. The rest of your business is how you make money and I think one of the biggest issues is people look at well, this Facebook ad got this CPA or this cat or this contribution margin, whatever. So this is good for me. My pushback is what about every other channel? Like I saw something today where somebody put up a LinkedIn post and they were like saying this one thing and your video will kill your ROAS. And my comment was the easiest way to kill ROAS is to stop running search and stop running email because your Facebook will look terrible. Right, facebook is the front end to a customer journey but, more importantly, it's generally top or mid funnel to a purchase. That purchase is the beginning of a customer journey with your brand.
Speaker 3:Too many marketers look at their success and failure as the ability to acquire that first transaction. They're salespeople. I like to make the analogy. That's like being a hunter you live and die by your ability to kill more calories than you exude in a daily basis. Right, if it takes you 5,000 calories to kill something, but it's six thousand calories to eat, you don't die today, right. But if you're a farmer, you can feed a thousand people for the same amount of calories. And if you can grow like one ear of corn might be able to enough, you know, have a meal or whatever. But if you take three of those seeds, put it in the ground, in 90 days you can have two to four pounds of fruit. It becomes fractional banking and you can grow geometrically.
Speaker 3:If you start to look at your sales, as e-commerce is lead generation, that first sale isn't actually the value of the customer. The value of the customers can you get the best transactions, can you acquire the profitable customer journeys where you understand the cash flow and the value of that customer. If I know, for instance, it costs me say it costs me $40 between COGS and CPA to make a sale, and let's say it's 50 bucks, and let's say the AOV on that transaction is roughly $80. Now you might say, hey, great, it's cost me 50 to make 80, that's phenomenal. And somebody else might come well, I can actually get that down to 40, I can get that down to 35 by promoting other offers. But what if I know that that 50 average blended CPA across the entire customer journey actually translates to, say, two and a half transactions? Now let's say that first trend. So that means that in all I'm paying maybe 125 bucks and the AOV is 80, it's that customer is basically worth 200. So I'm basically paying $125 in CPA and COGS to acquire $200 in revenue. And that's a blended CPA across all transactions, across all channels. What if it's actually $90 on the first sale on Facebook? So I lose $10. But I know over the next $35 of investment I'm gonna make two more transactions that are worth it. Now let's say I also know that customer buys roughly every 90 days. Well, maybe I have to break even until day 90. And then on day 91, let's say, 10% of customers buy again. Well, my CPA drops by 10% overnight and another 90 days my CPA drops again. So I can tap into that fractional banking.
Speaker 3:The point is, media buyers are defining their successes. Can I drive a lead at less cost than the lead is worth, even if it's e-commerce? Because that first sale is nothing more than a lead to a customer journey with additional transactions? And so ultimately, there's this misalignment of objectives and when you see thought leaders putting in these ideas of any sale I can make below this number is good if it's on Facebook, and then they set up these constraints to make sure that you just get that thing.
Speaker 3:The most popular constraint these days is cost caps, and look, I'm not against cost caps. The cost cap bro culture is quite literally taking a blueprint. That I did in a case study six years ago in the Facebook Disruptor Group with brands like Purple and Smile, direct Club and 310 Nutrition. Like their entire business model is the icing on the cupcake of an entire five course meal, and I wrote the entire playbook six years ago. The problem is when you're only focusing on profit margin per transaction and you're not taking into account future cash flow or volume. The media buyer looks good and good and good. They look better and better until the business goes out of, until the company goes out of business.
Speaker 1:Well, yeah, until they're not growing right.
Speaker 3:Yeah, exactly A lot of these times the companies suffer the more they try to make their least valuable, their least profitable channel more profitable. At the end of the day, if I know, like my Google search and my email are phenomenally profitable, and then I look at my Facebook to say how much my profit margin per transaction of all blended cost, am I willing to invest and acquiring more volume for my profitable channels? What is that profitable margin with which I can scale my business, as I may call profitable scaling margin? I know exactly how much percentage I can increase my investment if I lose every penny of it and still make money. And even if my Facebook looks bad.
Speaker 3:But I've improved my volume of sales on Google by 20%, I mean I'm getting 15% more email addresses. My email open rate goes up. My organic direct improves because also tracking is complete nonsense. Yeah, then really, me trying to get a 3x ROAS on Facebook means I'm getting one fifth of the volume on email and search. The better Facebook looks, the worse the business will do To an extent, right and it's not saying do you say Facebook?
Speaker 2:is useless.
Speaker 3:Yeah, how dare you? The concept that you could say this ad made this sale is obtuse, and I don't mean this to be derogatory, but I think the most appropriate word for it would be ignorant. There's no way you can say this ad is the reason that sale happened, like I bought a pair of shoes. Is it because I saw an ad? Sure, but also, why did I see that ad? So I used to run New Balance, not like I was in the CEO, but I ran all the media right.
Speaker 3:We did studies with Facebook, the auction and delivery team in the measurement teams and two thirds of our first impression was to somebody that had abandoned cart within the last seven days at Nike and Soconi and Adidas and Reebok and generally the reason you're seeing, say, the end of January, the reason you're starting to see sneaker ads, is because Facebook, for the last 15 years, has seen your buying behavior, both on Facebook and with your credit card and where your phone has been physically that, more or less at the end of winter, beginning of spring, every two, three years, you buy trainers and you've been searching for these items and you've been landing on pages that have the metadata of all these individual items.
Speaker 3:So if I know what your behavior is gonna be, because you've shown it to me for over a decade odds are the ads that you would like to see, that are of value to you, so that you stay on the platform for longer, which is ultimately Facebook's business model is going to be showing you products that you're interested in buying, so that it doesn't just look like spam.
Speaker 2:So, with broad targeting alone, and as a former junkie, you know about needing a product for longer.
Speaker 3:Absolutely.
Speaker 2:I mean, I have like 11 years clean now, but like yeah, Like I mean, which also, by the way, that's amazing oh thank you I appreciate that Absolutely.
Speaker 3:So my point to all of this is the customer journey. To make a transaction, People say, oh, I have a long consideration period. It's like 10 days, my attribution window won't work. It's 15 years, Like you didn't buy shoes because you saw an ad. You've been wearing shoes for 30, some odd 40, some odd years.
Speaker 3:The point is the algebra of the trillions of touchpoints that get you to want to make a sale today is fundamental and different for every single person. And the touchpoints that even have with your own ads in your own ad account are individual to a point where you cannot project any future behavior based on any past data. I cannot say this ad is the reason you made a sale. All I can say is when it's the fifth Girl Scout that knocks on your door today that says if you buy candy I'll leave you alone, Eventually you buy it. And that girl that's the fifth one she's not the best salesperson, Right? It's like when you buy a car, that guy that sells you undercoding for like $500 that you're signing the contract. He's not the best salesperson, but he's making $500 at 20, 30, 40 times a day.
Speaker 1:I mean, it's the same concept of like a game winning shot in a basketball game. How many times does somebody who's not the best player on the team, who made the most shots, make the game winning shot? But all the focus is on that person?
Speaker 3:But there's also like 46 and a half minutes, 47 and a half minutes of other gameplay, right, like really, the play that won the game was 12 minutes in on some defensive bout, right, you can't put the credit on the thing that puts you, you know, or a football analogy the thing that crosses the goal line. That's not the reason you got there, it's a piece. So the point of attribution as like, who can take credit for what is complete nonsense. I mean you build your value off of. I can take credit for more sales at the end of the funnel. I mean that's Cridio's business model and they almost went out of business because basically everybody's like retargeting is not a legitimate form of incremental lift and more or less that's basically what cost-caps are doing for 90% of folks that use them, when they use them as their sole campaign type. And there are a couple of other brands where they're able to get by because basically they're just Amazon stores that went on to Shopify and they're just hitting the total addressable market. But that's the exception to the rule.
Speaker 2:Okay, here's my theory. I want to run by you because I've been running this for a while now. Right, because everyone wants to talk about consideration periods, like you were just talking about. So I agree with a lot of your premise here, because you know, a brand might say, hey, I need to do X, y and Z, because how many customers said our consideration time is like three months or seven days or whatever? The consideration time might be right. And I think brands need to think about the pain point period, not the consideration period.
Speaker 2:It doesn't matter how long somebody's considering a product. It matters if you actually can present to them the solution to whatever their pain is in the right moment. Yeah, it doesn't matter if Nike presented something 10 months ago to somebody, right, it matters if in the moment they saw LeBron James shoes or whatever it was that motivated them in the moment to say, okay, there it is. You know, yes, there's a ton of compounding factors here in somebody's decision, but does it really help a brand to try to unravel that algebra, like you're saying, or does it just help a brand to say, hey, like when I run these ads and I trust and lean into the algorithm to place them in front of people who are experiencing that pain point, based off of their search behavior, instagram behavior, whatever it might be. Then I can see the biggest lift in new customer acquisition.
Speaker 3:Yeah, I totally agree. I mean, I'll say this I think people fundamentally misunderstand what Facebook does in their business model. I think they look at Facebook ads and I've seen a lot of. There's one guy and again I'll try to not take shots today I'm trying to be a good guy. We'll see how long it lasts, here's resolution right. But there's a really popular guy that has his own set of courses and agencies and stuff and he closed one agency and opened up a new one last year and he's a DR copywriter, dr marketing. All this stuff make the sale happen.
Speaker 3:The problem is, when you do basically hard sales and you focus on predictive bidding models, you're only going after the folks where that's going to be most efficient, which means that your CPMs are going to go way up and you're effectively going to reach a smaller group of people far more often that are already in the funnel to potentially want to make the purchase. And to your point about that pain point, it's not about getting the ad that makes the sale. It's about having the ad that gets shown to somebody when they're in market. And the way that you can make sure that you are shown to the most people that are of the most value is make content that people want to see, and so if you can produce content that gets shown to people based on their quality of user experience, when you align your business model with that of your business partners, you're going to see success. And I think one of the things that people don't understand is, like you know, they say the average person swipes basically the height of the Eiffel Tower on a daily basis. The ads at the top of the feed, above the fold, are cheaper than the ads below the fold, but the ad that you see 15 minutes into a doom scroll on the toilet on Instagram significantly more expensive than the thing you see right when you open up. Why is that? Because the content that makes you want to stay for 15 minutes is content that the platforms want to show to more people, and the way they do that is they charge you lower CPMs.
Speaker 3:Basically, if your content is a liability to their business model, that is shown as higher frequencies with higher CPMs, and if your frequencies are over in general, 1.0 to 1.1, 1.15 on a daily basis. If you're looking at frequency over a week, that's basically complete nonsense metric, but on a daily basis, that means you're more or less top of funnel, 15% max of your impressions are retargeting people that day. If it's 0.15 to 0.2, 0.25, you're in more or less mid funnel. That means 25% of your ad spend is going to people seeing that individual ad more than once today. They're being retargeted today. If it's over that, that means Facebook would rather show your ad to 40%, 50%, 60%, 70% of the same people over and over again instead of showing it to different people. At the end of the day, there are places for different types of advertising, but if you want to grow your business and amplify your business model, it's very difficult to do that by only showing ads to a very limited, select group of individuals where the vast majority of them have already made the decision to say no and pay a much higher fee to reach that much smaller group of people far more often.
Speaker 3:If your business model is to create harm to Facebook users and disrespect their business model, stop your ad analysis business model. Then the only justification you have is well, my business only works by taking credit for getting a sale efficiently according to an attribution model that we've agreed upon. At the end of the day, I've worked at brands, very large businesses. I've worked with a lot of folks that have done all sorts of stuff. I've had former folks that I've worked with got the rinkor massive operations. I've seen $100,000 a month SaaS products to figure out a multi-touch attribution for years. Every single time the endgame is the attribution model that makes every VP of marketing keep their job. That's it. What you really have to do is say what is this platform's business objective? Facebook's business objective overwhelmingly so is to amplify your business model. Now there are a couple of exceptions, and I'll give credit where to do Cody Plofger of Jones Road. He can run cost caps all day because his mom is Bobby Brown. She is the Tom Brady of makeup. Anytime she goes on the internet it goes viral.
Speaker 3:Facebook isn't the tip of the spear for the acquisition of attention. It's a mid or bottom funnel platform to monetize that attention that was earned in another place. Ash from Obvi, love him. They're in Walmart If you're not in one. There's a tip of the spear for a market share that Facebook doesn't have to do. So they're more effective at being able to leverage different tools, because we know that forcing ads on the people, forcing bad impressions and bad user experiences, raises your cost.
Speaker 3:That's where the concept of ad fatigue comes because, basically, facebook's like we ran out of people. You've pissed off so many people with this thing we're just going to stop serving it. You get priced out of the market so they bring in new things. Brands that intrinsically have the ability to just pump out a ton of creative generally brands with very strong in recent years core and affiliate and influencer and TikTok marketing can outpace that depreciation by just launching more and more new content. But then you're completely avoiding Facebook's unfair advantage. Facebook's single biggest unfair advantage in the marketplace not is that it has the biggest user base, but it is the single smartest machine learning algorithm to condition human behavior that we've ever seen on the face of the planet.
Speaker 3:If you're changing your ads constantly, you're rejecting the single greatest power of the tool and instead trying to leverage it in the way that you would search or Amazon and, to be fair, search Amazon like their business model is. You go to the website, you look for what you're trying to find, you get it first thing and you're off in half a second, like a perfect Google session is less than one second long. If you can do that, you're getting all the delivery in the world. If people saw your ad and left Facebook within half a second every single time. You'd never be able to advertise again. So there's a misalignment of strategies and ultimately I think I've said that a few times, so maybe I'll stop trying to use that, but I'll end on this on this point, on this like high rate as a whatever, it is the soliloquy A lot of the folks that are thought leaders now learned.
Speaker 3:In 2016, 2015, 2017, facebook made a shift from being random distribution. Facebook was a dumb version of Google display Until around 2017, 2018, when they introduced advanced matching, the Power 5, broad targeting, and I was lucky enough to be part of the Disruptor Group and really define a lot of the best practices for CBO and cost caps and dynamic creative and all of that stuff that came in Like I was on the front end of those teams. There were other people that worked on other things, but those are the three things that I really got into and the point of that is those folks learned from people who rose to places of prominence and success by being very good at CPC platforms and their strategies, even to this day, are CPC based, their inventory and demand based platforms, based metrics, like we've seen. You know, zack Stock put out this thing of like. I care about CPC and it was this huge thing. Well, that's basically an email right or a search metric, but if you care about CTR, that's an email or search metric. Conversion rate, that's an email or search metric that has nothing to do with how Facebook works. And so, because they learned in an environment that no longer exists and they rose to a place of prominence, to the point where they're no longer executing their ability to understand what's happening with hands on keyboard.
Speaker 3:If you stopped really running your own ads in 2018 and you didn't need to be successful at it, or maybe 2019, 2020 and you weren't taught the shift, then you're still looking at Facebook like it's a dumb version of Google Display from 2014.
Speaker 3:Yeah, and then you're teaching everybody else behind you to do that. And if you do that and also have a business model of underpaying and overworking employees that you poorly trained, with predatory contracts, you can be successful. Because, ultimately, these high ticket agencies the 20, 30, 40, 50 thousand dollar a month agencies and we all know who they are why do you hire that agency? What is their business model? You are hiring them for what you? Because you fit this perfect Venn diagram of two things First, you are successful enough to be able to afford it and second, you are not big enough to have taken it in house. And the hit rate of having that brand be successful is pretty high, and for you to be the person on the team when that success occurs is great. The problem is so many of them define their own value and there they say I'm successful because look what I did with X and X brand.
Speaker 2:Like, and what you're advocating for is the value that needs to be defined, is the growth and success of the brand. Right and yeah how that value is defined is Not just revenue, but total growth and profit, which isn't all, always efficiency Right. Like you know better efficiency at lower revenue, but you can have more profit dollars at higher revenue, but it might look like bad ad performance.
Speaker 3:I would say that's one of the success definitions. I think, more over than anything, that definition of success changes for every brand. To be completely fair, some are top line, some are bottom line, some are growth. There's a million different business models. Your job as a marketer is you are an investment bank and your boss is the finance department. If you're not aligned with their needs, then you ultimately sit at odds with the success of the business. And I've dealt with businesses where, like they can't scale. So their reason for marketing is market share, inventory management, efficiencies, like they're just at a spot. That's not an option for them, right? Maybe it's handmade goods, like I can only make a hundred of these things, whatever it happens to be, and their definition of success can be wildly different than a brand that's like an information product that's infinitely scale. Like a SaaS company that's infinitely scalable. Yeah right.
Speaker 3:So the problem is, I see these dramatic displays of hyperbole where the most popular businesses are the ones that can say they were attached to a rising star and then take credit for that growth. Like if I'm an investment banker and I make a contract with a celebrity chef and then two, three months before we go nuclear, I hire somebody to handle my Facebook ads because I'm too busy. Two years later, you're not the reason we got there, you're just an employee on the team. Yes, you helped, but it's not because of you, and I think these people wear that success as a badge of honor about their value. Like when I talk about under outfit, I don't say I'm the reason that they go from 50 to 2 million.
Speaker 3:Felix is a gangster. What 310 nutrition? I say I was there, I was part of the team that got them from 3,000 a day to 50,000 a day, from 15 million a year to 100 million. Like, I was the person in charge of growth, but I am a member of that team, I'm a called on that wheel and one of the biggest hacks to that was we took Facebook row as from 2, 1, 1, 1, 2, 0.8, because we looked at the cash flow analysis and understood how to actually amplify the business model instead of an ego based media buying metric that has nothing to do with the bank account, because at the end of the day, row as is attributed revenue divided by ad spend.
Speaker 3:But the sale today isn't just because of the ad spend today. That ad they got a sale today. I mean it might have been a week long, let's say it's a five day consideration period. It might have been 20 touch points of ads and if you stop spending money today, you'll still see sales occur. So, like there's no way to say the spend today is because of this thing and the revenue today off that. Like it is a inaccurate metric divided by a number that has nothing, that is not 100% causational. That's MER, that's row as, and that's why I say fuck that. And if that's the way you define your value, then you are clearly misaligned with the objectives of your business partner.
Speaker 1:Charlie dude, one thing I you know you've mentioned this a while back, but you continue to talk about it without mentioning it again and one of those things is you know, row as is revenue divided by spend, attributed spend, whatever you want to write, or attributed revenue, right, it's. I spent a dollar. When did did I make that dollar back and how much more did I make back? But one of the things that you've you said at the very beginning was like well, what about the next sale and the next sale and what is the? What about the journey? You know, and that's really where the the true story starts to unravel about what you're doing here.
Speaker 1:Talk to us about how you know some of the brands that are listening, some of the people who are going to be listening to this podcast. There's plenty of people who are massive brands, right, we hear from a hundred million, a hundred million dollar brands all the time. Hey, we listen to your podcast. I like it, right. But we also hear from people who are at this, like people who can't afford analysts to figure lifetime value and those things out. Right, they're they're more of those, like you know, warriors on their keyboard who are doing everything from finance to, you know, media buying, to everything in between. Talk to me about, like, what are some things that brands can do today to better understand what their lifetime value is and what that?
Speaker 3:journey looks like. You know, I get this a lot when people join Disruptor School and it's one of the common like onboarding questions I have for like the MBA program. So I get this all the time from people spending, people doing a quarter million and people doing I had a brand join a brand that's in Target, joined like last week, like I mean so, like I get it across the board like you're talking about. Yeah, data points are only as valuable as they are actionable, so let's find the simplest, best version of an actionable insight. People say, well, I don't have the capability of understanding the LTV. All right, total right. I'd actually go further, not to cut you off.
Speaker 2:I just want to make this point Insights should be actionable, yeah.
Speaker 3:Otherwise it's ego.
Speaker 2:Otherwise it's just data, data points, yeah.
Speaker 1:Yeah, and that makes you feel good that you got them. Yeah, exactly.
Speaker 2:And a lot of people like to talk about insights, but it's like if you can't do anything about it, who cares? Oh, man Does it matter, like that's just data points, but anyways, I just have to throw that out.
Speaker 3:I just had to put together for like Activision, to justify like the $17 million I wasted on Canvas ads and like the level of insight around, like this video performed to X-Wat. It's just these wonderful wall-strikes, tapestries that like hang in murals and cathedrals of absolute bullshit. That was my job. That was my job. So, anyway, lifetime value Simplest way to figure that out Total revenue divided by total customers. Cool, I know the LTV of my customer. Say, well, I want to know it all in this product. Okay, cool, everybody that bought that product as their first transaction. Total revenue of all those customers added up divided by how many customers you have. Awesome, done.
Speaker 3:You want to know what your purchase cadence is? Great, go into your store. See everybody that's a repeat purchase. Then get the time when they made their first purchase. Then go on to YouTube and figure out how to do a VLOOKUP table. Figure it out in like 10 minutes Copy, paste the instructions and literally just look at the average time difference between the transactions. Done. You don't need more complicated answers than that. Yeah, like, what is my allowable cost per acquisition? Well, what is my COGS and how much profit do I need to make in a month?
Speaker 1:And basically, what is my overhead? Yeah, what's my fixed?
Speaker 3:costs. Right, yeah, so it's basically what are my fixed costs and then what is my projected volume by, like, overall cost of goods, and then the gap is basically whatever that number is. That's the difference I can afford. Volume that number divided by the volume, like that, gives me my allowable CPA. Yeah, done, and then I can add an ad spend and that number goes up. But these are very, very simple metrics that I think people in our space make complicated because either A they don't understand them well enough to explain it in five seconds and, b their objective is not to make it easy.
Speaker 3:Well, that's why I'm all about more success and less stress, because it doesn't need to be more complicated.
Speaker 1:I was going to say and C. We've become so advanced in technology that there's so many pieces of tech that can do all that for you that don't oftentimes actually do that for you.
Speaker 3:Yeah, I mean, if you follow the Excel lady on TikTok or have YouTube, you can solve 95% of these problems. That being said, part of all of this is so that you can enjoy life and that you can contribute and make the world better. I think my goal is to make people happy and provide opportunity for them and their families and provide opportunities for other people, and part of that in my own life is last year pulled in a million bucks personally and had a daughter, and apparently right now my wife needs to leave the house and I got to go watch little Charlie five. So that is an awkward transition of my way of basically saying I really appreciate this time. Guys, I got to go take care of family and that's what this is all about, and I love the socks and both of you guys.
Speaker 2:My son will be so excited and with that I've got to go.
Speaker 3:Thank you so much, but this is what it's all for. And you could all say, hey, we built for all sorts of things, but like my daughter needs me and I'm going to go take care of it, so I'll see you later.
Speaker 1:Love it, dude. We appreciate it, man Well. Thank you so much and we'll chat with you later, bro.
Speaker 3:All right man. Thank you, I really do appreciate it. Family duties See you later Family first bro hey, we got.
Speaker 2:We got some things to talk about with you over DMs later, though that sounds good, very aligned with what you were saying, I like it.
Speaker 1:I got to go See you brother Later. Dude, thank you so much for listening to the unstoppable marketer podcast. Please go rate and subscribe the podcast, whether it's good or bad. We want to hear from you because we always want to make this podcast better. If you want to get in touch with me or give me any direct feedback, please go, follow me and get in touch with me. I am at the Trevor Crump on both Instagram and Tik Tok. Thank you, and we will see you next week.