The 10 Laws of Profitable Advertising

Most people, when they run ads, they do it to little success. And after spending £20 million on running advertising myself, I've discovered these 10 irrefutable laws that you need to know and understand if you want to unlock highly profitable advertising. So my name is Elliot and I run a digital growth agency called Botters, based over in East London. And currently in my agency we're spending about £12,000 a day across Facebook ads and Google Ads. And I've been in the advertising space for six or seven years now. So I started off working for a big agency called MSC Saatchi, where I was in their search and social team for a few years, running Facebook ads for, you know, some of the biggest businesses on the planet like Amazon, Audible, etc. And so I was there and left and started my own agency about four years ago now. And so here is everything I've learned about advertising. Now, the world of advertising will always continue to evolve, and in the digital advertising space, it's evolving very, very quickly. However, these are kind of irrefutable laws that, that will stay true and stay constant, at least I believe, for the future. Law number one, it's easy to sell what people want and very hard to sell what people don't want. Now, we have seen this ourselves through some of the various clients that we've worked with over the years. When someone has a product or a service that is genuinely, really, really good and people actually want it, then it's incredibly easy to sell it and advertise it. Now, if you have a brand new emerging product or something that actually doesn't quite solve a very specific problem that a specific type of person wants, then it becomes actually very difficult to advertise it, right? It sounds stupid, sounds simple, but it's so true and often overlooked. And so an example of this, I love eating croissants. And so part of my weekend ritual is to hunt down one of the best croissants in my local area. And I recently moved flats and sad to find a new coffee shop slash bakery to find these croissants. And they're about five, all within, you know, a half mile radius of each other. Now, four of these were never really that busy, but one was always really, really busy. And the reason it was always really, really busy was because this was a particularly good coffee shop that made the best croissants I have ever tasted. And as a result, people flopped to it over all the other coffee shops in the area. And the lesson there is sometimes having just something, a product that is so damn good that people just love it. It makes it really easy to sell. And so sometimes the best form of marketing advertising is actually just developing or working on a product so that it is so damn good that people just can't resist it. I want to share it with all their friends. I was at an event earlier this year with Perry Belcher and he gave me a great quote as well, which was are you selling what you want to sell versus what people want to buy? Because a lot of businesses are architected based around something that they want to sell rather than what the market actually want to buy. And if there's a crisscross there, advertising always going to be tough. Law number two, you must first be understood before you can persuade. Now this was hit home to me back in when I was working in the old agency and I was working on Audible, so the audiobook service. And so at Audible they spent literally hundreds of thousands of dollars on ad copy testing to discover what is the best little headline to generate the most installs of their app. And the winner time and time again was the simple phrase. You've probably seen it. Discover Audible with a free audiobook on us. Now that is a very crystal clear seven, eight words. And it outbeat all the other complex marketing company that we ever tried to do. And it is still the lesson to me that clarity is the ultimate form of persuasion. And if someone doesn't understand exactly what you're trying to offer or what this ad is about, then it doesn't matter what copywriting framework you've used, or what persuasive language and stories, etc. It's all going to go over the head. Fundamentally, they must understand the core point of what it is first. And actually we time and time again see that when we run all of our ad copy testing, most simplistic direct ad copy tends to be what works best. Law number three, pain aversion is a stronger action driver than desire. So again, we've seen this firsthand in lots of the testing that we've done. But actually focusing in on problems in ads tends to be a bigger driver than focusing in on just pure benefits. Now this is an evolutionary trait. We as humans are wired to avoid any kind of loss or pain much stronger than we are to kind of seek pleasure and desire. And so you can leverage this in your business and make sure that you are focusing in your ad copy on problem orientated stuff. Now where people go wrong with this is they either are unsure of the real problem that their thing solves or they are Unable to articulate the problem in the way that their customers think about the problem in their own heads. Because as a business, you know, you have the curse of knowledge. You're entrenched in what you do every day. And so how you, the problem, you know, you solve, you might just speak about it in a way that's actually slightly different to how your actual customers play it through in their head. And so where you hit a real winner is when you're able to clearly articulate the problem in the very specific language that a real customer would have running through their head when they encounter this problem in their life. Law number four, no one wants to buy a thing. They want to buy the transformation that the thing gets them. Now this is so true. You know, lots of people lead in their advertising, all focused on features of a product or explaining the kind of mechanism, the delivery and how their thing works. But, but actually a lot of the time people aren't interested in that. You know, people first want to understand what is the actual transformation I'm going to have from me right now where I've not used your product to me afterwards, when I've used the product, what is that transformation? How is my life different? What benefits have I gained? Or what pain has been alleved? That is what you have to market and sell. You then need to justify that transformation with the features and the mechanism of, rather than leading with it on the front end. So a good example of this, one of our clients, they sell conservatory roofs. And I can tell you not many people want to buy a conservatory roof for 12, 13 grand. But what people do want to buy is a conservatory that is no longer too hot in summer or too cold in winter. Cuz the old roof did a crap job of insulating it. And now they want to buy a space back in their home which previously was unusable, so that they can have happy memories, enjoy looking out the window in summer, enjoy, enjoy cuddling up there in winter with their family and making all those kind of memories. So that's what we focus on and that's what gets results rather than the speck of the conservatory roof and how high tech it all is. Law number five. So no amount of good ads can fix a broken business model. And so we speak to literally hundreds of businesses every year and we work with a very, very small percentage of them. And the reason is we have very strict criteria for what works for us as a business in order to deliver results through paid advertising. Most business models are okay, but a lot of business models do not work when it comes to ads. And that's because when it comes to ads, it's simply a numbers game. It's all about understanding the economics behind your business and then using ads to manipulate them in your favor. So what I mean by that is if you have a product that you sell for a low price and people only buy it once, for example, your lifetime value of that customer is going to be super small. When you have a really small lifetime value, it's very hard to spend money profitably on advertising to generate customers at scale. So where you win with advertising is you focus on having your the biggest lifetime value possible so that you're able to spend so much more to acquire a customer and then still be profitable. So this is all about looking at the real economic engine behind your business, which is your cost require a customer and your lifetime value in the ratio between the two, and getting it to a place where you can afford to spend significant chunks of money to acquire those customers, knowing that it's going to be massively profitable for the business. If that ratio just doesn't work or it's too tight, the cost of advertising just excludes you from the game and you just can't be in it. And so some businesses, it's not a problem in the ads, it's just a problem with the business model. Law number six, if you can't scale, it's simply because your ads are not good enough. Now this is so true. And so a lot of businesses, they run some ads and they have some success and then they try and turn that budget up, and all of a sudden their cost to acquire customer just explodes. And you know, you hear a lot of businesses talk about how they've saturated the market, and in truth, that's highly, highly unlikely. Obviously it depends on the market, but generally it's very unlikely. You've completely saturated the market. What you have simply done is you have exhausted the pool of customers in, in your market that are ready to buy right now. And so you might be familiar with the buyer's pyramid. It shows that 3% of any given market are ready to buy right now, immediately. Then there's a big chunk of 60% that are either completely unaware that they have this problem and therefore not looking for the product, or they're maybe just aware that they've got this problem and they're beginning to, you know, dip their toes into the market. Either way, they're in that kind of consideration phase and they're not immediately looking to buy. And what happens with businesses is they capture that 3%, try and scale. But as you scale, you now have to show your ads to that big percent, and all of a sudden they're less intent and your ads do not convert them at the same rate. And so in order to scale properly, it actually comes back to having better ads that not only convert the people who are in the market looking to buy right now and who already understand your stuff, but the big proportion of the market who aren't directly ready right now, who don't understand your stuff just yet. And they're required different styles of ads and also different quality, because those other people are going to be a lot harder to convert. And so this is where you need to focus on building that relationship, explaining your value proposition very clearly and doing it in a way that builds trust in your ability to deliver that transformation at the relevant price that you price your product for. So that's where the challenge is. So scalability ultimately comes down to the quality of the ads and how you're able to convert people who are more and less ready to buy. Law number seven, this is effective advertising builds a positive relationship at high speed, whereas ineffective advertising builds no relationship or the wrong relationship. And so what I mean by this is, if you think about advertising, all we are doing is we take an ad, some words, some images, some videos, and we show it in front of someone's face, and we then hope that they pay attention to it and build some kind of relationship with us, understanding what we're talking about in our ad, hopefully clicking through to a landing page and so on and so forth. And ads work really well when they build a relationship at high speed. And so what I mean by this is the ad does the job of introducing who you are, introducing the problem that your thing solves, then explaining the transformation the person is going to get if they use your thing, and then justifying how it does that through features, mechanisms, etc. And then hitting them with an enticing offer to actually take the next step. And once they've done that next step, hopefully we built a suitable amount of trust for them to feel confident that we can deliver on all of that. And thus we get the sale or the lead. And so there's quite a lot that needs to happen, from just seeing an ad to that taking place. And so really good ads are able to take that whole journey and condense it into, you know, a matter of a few seconds and build that relationship very quickly. Ineffective advertising, it misses the mark on that kind of stuff. And so it either builds no relationship because it's not attention grabbing and no one pays any attention or it builds a wrong relationship. Because if you are articulating your business and your ads poorly or incorrectly, then some people can misinterpret it, it can not be very attractive. It could be way worse than your competitors. And all of a sudden you're paying to show this to people and build this relationship with them that they're not interested, or it's not very good, or it's confusing. And that actually can accumulate over time because it can compound as almost like negative word of mouth because all of a sudden if your ad's not doing a good job, then it's doing a bad job and you're still paying to push that out there. So effective advertising is on top of it and it builds that positive relationship. Law number eight, the more marketing you run, the more money you will make. Now this is broadly true and the reason is that every single impression from every different type of advertising that you run compounds over time. Now, the challenge of advertising is not all of it is directly measurable. You know, we are performance based marketers, data driven marketers. So we love to be able to see that. We've spent, you know, £1 and we've generated 3, 4, 5, £10 back. But unfortunately it's not all quite as clear cut. And the typical user journey isn't seeing Adam buy normally it's see an ad, see another ad, browse the website, download a guide, speak to someone, and there could be 50, 100, 300 touch points across a six to 12 month period before that person buys. And it's actually very hard to measure that super, super accurately. And so as a general rule of thumb as a business, you know, marketing is the lifeblood of a business. Because people don't know about your stuff, they're not going to be able to buy it. And so the more you let people know about your stuff, even if you don't directly track it as having a positive impact on sales, all of those little impressions do add up. And if you were able to completely see the customer journey from all of your prospects to sales, I think you'd be mind blown at just how scattered and fragmented it is and how there's dozens if not hundreds of touch points before they actually became a customer. And so if you're running just only on one channel and if you're spending very little and you're wondering why volumes of people aren't knocking at your door, and that is the reason why, and so I encourage you to run as much Marketing as possible. Law number nine is that brand is the ultimate marketing hack. And so I've really changed my tune on this because I was a die hard performance based marketer, but I've definitely had to eat my hat on this, so to speak, over the last few years because I now really understand the power of brand. I don't know why it took me so long, but you know, it's the reason why if we all of a sudden had to run some ads for some trainers and we slap a Nike logo on it, those trainers are going to sell ridiculously quick and ridiculously easy because of the brand that Nike has and the associations people have made with it. Now if we were to take the same trainers without a Nike logo and brand it as a brand new company, it's going to sell significantly less. I mean, significantly less. And the reason is there's no brand association with this new brand. And therefore no one has any positive associations of the quality or the clout or the coolness or whatever you call it with that particular company. And thus it becomes very difficult to sell it. And so one of the biggest hacks you can do, really, and I call it because everyone's looking for tactical hacks to improve their advertising, but very few exist. But actually having a big brand or leveraging someone else's brand to rub off and associate with your brand is like the ultimate hack. And this is what we see with influencers. You know, if you get an influencer who's got a humongous audience and a positive brand that's relevant to your business and you partner with them, then you get that brand association and by default you get a huge influx of sales. Influencers are the one of the only ways in which, you know, overnight you could totally transform a business. Because just having the right person post about something with the right brand association, it can just explode a business. It's why we have, you know, the Rock or Kylie Jenner, they all have these billion dollar businesses. Conor McGregor as well, because they just create a brand that's tied to their brand and because their brand association rubs off onto this new products, whatever, people buy it. Ridiculous volumes. So the ultimate hack is either getting that brand association from someone else into your business or investing in building your own brand over time, which can be much slower but definitely worthwhile. Rule number 10, this is volume negates luck. And this is so true because everyone always asks me, what's the secret to success with advertising? And like there is no secret. The secret is test loads of stuff. There's a direct correlation between the volume of things that you test and the level of results that you get. And so what we do as a business is we create a testing pipeline that enables us to test hundreds and hundreds of different ads very, very quickly. Because we know if we test, you know, 500 ads, we're going to find five that are just unbelievable and kill us. And that's what we do. And so the reality is, any business out there can have one of these one in 1,000 ads that completely changes their business and delivers them fantastic customers at a really low price. But in order to get that, they just have to test a thousand ads. And most businesses don't test a thousand ads in their life, let alone in a month. And actually increasing that volume, it negates the look that you might have of just creating 10 ads and one of them being amazing. And where we can negate look where possible, that's what we like to do. So those are just a few of the irrefutable laws of advertising that I've learned so far in my career. What did you think? Drop a, like, drop a comment? Subscribe to the channel for more videos like this, and there's plenty more of these that we'll be sharing in future. But otherwise, I hope you enjoyed it. Thanks so much. Really appreciate you taking the time out of your day to watch this.