Why You Can't Scale Your Ad Spend Past $100K/mo

In today's video, we're gonna be talking about how you can scale your high-ticket business with ads without all of your ads breaking. This is typically for people doing already $100K a month in their high-ticket business. And over the past couple years, we've spent almost $5 million on ads for our own business to help us scale to 8 figures. And so the lessons I'm gonna be going through today in this video is gonna be around how to actually scale your ad account so you can keep a qualified cost per booked call within KPI without everything breaking. And so if you've tried to scale your account before and everything breaks, This is typically why. So let's jump over to the iPad, let's get into it. So the first thing is there's what we call a ceiling. So there's always a ceiling within your ad account. And so when you start to scale your spend past the ceiling, everything breaks, and you typically run into the point of diminishing returns, meaning the more you spend does not equal the more you get out. And so if you're doing $100K a month, you likely only have 1 to 2 winners in your account, meaning ad winners, meaning ads that worked for you, right? And every time you try to push the spend up, your CPA drifts up and you start blaming the auction, you blame the Meta platform, you blame all of these things, but you don't really understand why it's happening. And so you try to tweak bids, you try to tweak audiences, when in reality those are the 2 levers that matter the least. And so here's what actually happens. Every single one of your ads has a half-life, meaning that it has an expiration date. And so depending on how big your audience is, that's the other thing that can really affect this. And so number 2 is we need to look at what your TAM is. So meaning, what is your total addressable market? So for instance, let's say you're doing $100K a month in a local home service market, like you're trying to scale past a certain point and you're targeting home service companies in Connecticut or in a, like, one local state, right? In that instance, your pool of people is only so big to where if you see your cost per call where it's normally at $200 a call, if you try to push spend and then it automatically goes to $500 a call, That typically means that you just need to widen the TAM. And so in this instance, you either need to widen the TAM or double the amount of creatives that you're putting out every single week. 'Cause a lot of times I see accounts where they have 1 to 2 ads and they're just running those ads into the ground, and then they're refreshing them maybe every couple of months. And so there's 2 options here. You either widen your TAM, meaning instead of home service companies in Connecticut, you go home service companies in the United States. Mm-hmm. That will extend the life of these winning ads. Or you say, okay, I wanna stay in Connecticut. I'm gonna double my output of amount of ads, right? And so I'll double my creative output. Now, I don't love doubling the creative output simply because if you're putting out 1 to 2 new ads every single week and you're still running into this ceiling where you just can't spend anymore, then typically that means you have to open up the TAM because you're gonna reach a point of diminishing returns with the creative output as well and doubling the creative output, when in reality you just need to open up your TAM to a larger market. And You need to get more people. And if there's anything I've learned after spending $5 million on ads, TAM is the biggest factor to how cheap your lead cost is. How many, how many people are in that TAM? If you're, if you're targeting a super, super small TAM, then your lead cost is going to be a lot more expensive than if you were targeting a huge B2C market, right? So if you're going after a small amount of B2B companies, your lead cost is going to be more than if you just did, uh, like a large B2C company. And typically that works because you're charging a lot more money. And so you can justify the unit economics on that. But if you're going B2C, you're typically making up for it in just sheer volume of people coming in, and you're typically charging a lower ticket amount of money. And so you wanna look at how many ads am I actually making, and if I double my creative output, will that get me more, will that lower my cost per call? And then number 2, I need to look at my TAM and say, okay, how big is this TAM? Am I reaching a point where I just can't scale further because my TAM is so small depending on how much I've spent? Now, if you're spending $20 a day or $30 a day, your TAM is not the problem. It's just that you're not spending enough, right? But if you've spent a decent amount of money over a decent amount of time and you still are running into this wall where you can't break it, it might be TAM. Number 3, creative is targeting. What does this mean? It means if somebody's gonna buy something from you, there's a bunch of reasons why they buy, right? This is a pie chart here. It's a bad pie chart, but you get it. So for instance, if I'm selling a water bottle like a Yeti, What are all the reasons somebody buys? Well, maybe it's people buy because they wanna go camping with it, right? Maybe people buy because they wanna keep their hot coffee. Maybe people buy because they want to drink a lot of water and they sit at their desk all day. Maybe people buy because they travel a lot and they wanna have a, you know, something to put all their water in. Like, there's all these reasons why somebody buys. And so the creative, there's different subsets of pockets of people that would buy for different reasons. So if you're only running ads that talk about camping, then obviously you're only gonna reach a market of people who want camping supplies. If you're only having ads that target people who want hot coffee, then again, you're only gonna reach this sliver of the market. You need to make ads that talk about every single reason why somebody would buy from you and have enough diversity. This is what creative diversity actually means, is you have to have enough diversity inside of your ad account to basically explain all the reasons why somebody would buy from you and then have ads for each one of those reasons. So another reason your cost per call is, uh, or you're reaching a ceiling is because you're only targeting one of these slivers, right? And so you have to make sure that you have enough coverage on each reason why somebody would buy from you. And if you don't, that's typically why your cost is going up so much. Number 4 is you have to actually understand what is your hit rate. So meaning if I launch 10 ads, how many of those are actually going to be winners? Because you're never going to have all of them become winners. And so if I launch 10 ads, a good hit rate is typically like 30 to 40%. And so if I launch 10 ads, I should realistically have 3 to 4 ads that win, and then I can scale those ads specifically. And so if you're only launching 10 ads every 2 months, and then you ride the crap out of these 4 to— 3 to 4 ads, and then you never refresh it, well then no wonder why your cost per call is going up, is because you're not constantly launching new ads. And so I'd suggest at least launching 10 ads a week, because then I can find 3 to 4 winning ads a week, and then I put those in a bucket, right? So this is my winning bucket. And then I launch another 10 ads next week, and then I find another 3 to 4. So now I'm up to 6 to 8 winning ads, right? And then I just keep stacking these winning ads, putting them off to the side, having them run, and then I test another 10 ads. And I keep doing that so I'm forced to continuously find new winners in the account, right? This can also reduce your cost per call. And then finally, one of the other things I love to do is cost caps. So I wouldn't do this when you're testing, but when you're finding these winning ads, I would try to basically set a cost cap at what I'm willing to pay for that call. So then I'm telling Facebook, hey, I only want a $200 cost per call. Here are my 6 winning ads. Spend money on days when you can get me a $200 cost per call, and then don't spend my money when you can't get me that. And so I found this is a really, really amazing way for controlling the unit economics and making sure that the economics work for you inside the account. And so these are the 5 things that I look at. There are more things that we do as well. But I would be looking at number 1, if you're hitting a ceiling, do you have enough creative that you're putting out every single week? Number 2, what is your TAM? Are you targeting a small TAM? Is the TAM the problem? Have I spent enough money to where like even no matter how much more creative I test, I'm just not getting a lower cost per call? That's a TAM issue. Number 3, do I have enough creative targeting to where I'm targeting different reasons why somebody would buy, or am I only targeting one of those reasons and that's why I'm running into the ceiling? Number 4, what is my hit rate? So do I actually understand how many ads I'm launching and then how many of those actually win? And then number 5 is cost caps. So hopefully this helps, but this is what I'd look at when I'm scaling an account or when I'm trying to scale my ads. And these are the 5 things I look at. So hopefully this is helpful. If you wanna learn more about how we can help you do this and work with our team one-on-one so we can just do this for your high-ticket business, click the link below, schedule a call with our team. Happy to see if we can help. And, uh, see you in the next video.