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Today, we're going to be talking about how effective Google Ads really are. So this was interesting for me because I ended up breaking down just Google Ads in general. And I'm like, all right, what's the data? How profitable is it really? What are people doing and what are click-through rates and all this kind of stuff? So let me actually share my screen so I can break down the data. In our company, NP Digital, we have some tools. We track roughly $2.1 billion USD a year in ad spend. And the average Google click-through rate right now is 3.22%. Average cost per click, $2.81. The average conversion rate, 3.49%. And on the flip side, when you look at organic visitors, SEO traffic, it's converting less than 1%, but you don't really have to spend too much money on SEO in comparison. Yes, you can do it time-wise or, you know, through people on your staff, or you may pay an agency, but in comparison to how much paid advertising costs, it is much cheaper, but the conversion rates for SEO are much lower. 68.39%, and this one shocked me, of the users know they're clicking on a paid ad. And the part that shocked me is roughly 31% and change, or 32%, however you want to look at it, they don't know that they're clicking on a paid ad. But the people that are, know that they're clicking on a paid ad, they do it because they believe that the query that they're clicking, the result that they're clicking on will provide the answer to the query they typed in. And that makes sense why they're clicking on it. The average advertiser is generating $6.26 in revenue for every dollar they spend. Now that doesn't mean that it's profitable because they may have other expenses in there, but that's just, the data that we're able to track. And to sum it all up, Google generates $224 billion a year in ad revenue. People talk a lot of crap on paid ads, but if it didn't work, they wouldn't have ended up generating anywhere near that much revenue in paid ads. Now, here's the funny thing. When you think about paid ad revenue, a lot of companies say, oh, we can't make it work. But if Google's generating that much revenue, How is it that it doesn't work? It's not that it doesn't work for you. I mean, it's not that it doesn't work, it doesn't work for you. Your competition is still spending money. And the chances are the reason it's not working for you is because your funnel, you don't have upsells, you don't have downsells, you haven't figured out how to get people back and continue to buy from you over time. You haven't figured out how to increase the lifetime value of your customer. That's the real key to make paid ads work. But check this out. I just broke down Google Ads, right? So check this out with the other social networks so you guys can compare it to Google Ads. So as you can see here, and this was from the last 30 days, at least when I put out this tweet, which, when was this? This is December 6th, 2023. So 30 days pretty much from November to December. When we were looking at the social networks, we were looking at a lot of companies' analytics. We have data to over a million sites and we were breaking down which one has the highest ROAS. But before I break down which ones has the highest ROAS, which is return on ad spend, let's first look at the revenue numbers from each social network, right? And not just other marketing channels, but only social networks. So when we're looking at the data and analytics, we were seeing that when you look at social networks, Facebook drove 32.37% of a website's revenue. YouTube was at 28.19%. LinkedIn was at 11.47%. Instagram was at 10.92%. TikTok was at 8.44%. X was at 4.41%. Snap was at 3.18%. Pinterest was at 1.02%. There were other social networks like Reddit and some really tiny ones. We ignore them because it was so insignificant. Now when we looked at which ones had the highest ROAS, which is return on ad spend, X was 6.8%, Pinterest was 5 point— I mean, not percent. X was 6.8%, Pinterest was 5.2%, Snap was 4.9%, TikTok 4.1%, YouTube 3.9%, Instagram 3.3%, Facebook 3.2%, LinkedIn 2.6%. X produced the highest ROAS. Now just because someone produced the highest ROAS doesn't mean you can get the most volume there. That's why seeing networks like Facebook and YouTube driving the most revenue volume. But what we're seeing is companies are going to start spending more time on platforms like X and Pinterest and Snap where the ROAS is amazing. It doesn't mean they're going to neglect, you know, places like, you know, YouTube, I mean YouTube or Facebook because the ROAS isn't as high because they're still getting volume. And the ideal thing to do is you leverage Google Ads, Facebook Ads, Instagram, X, all channels that are pretty much profitable. But funny enough, when I was showcasing Google first and then I did the other social platforms, Google still crushes most of these social platforms. Why? Because someone's typing in a keyword, buy affordable laptop, I want a red bike, whatever the query is that they're typing in, you can show an ad that's directly related to the search query. Which is why it's one of the best platforms out there for advertising.

As long as there's attention, there will be demand. And that's marketing 101. And what I would say to this also is when you think about, people talk about Performance Max, people talk about Advantage+ from Meta. These are the new kind of AI pushes from Meta and Google. I think we're going to get to a place where those are going to get a lot better. Right now, there's still a lot of human intervention that's required. I think there's always going to need to be a human in the loop to just make sure that things are working well. I think going back to Neil's point, start when he started us off, it was more so like when people complain that it doesn't work, it's because they suck. Like straight up, it's like they don't spend enough time on marketing. And there's only 2 things that matter when it comes to business. One, how are you acquiring customers? And then 2, how are you serving those customers? And most people think, oh, sometimes it's like, oh, the product's enough. No, that's not enough. You got to think about how you acquire customers too. And that's what we're talking about here. And just because AI stuff's coming out doesn't mean you could just rely on that completely, right? Like you actually have to be very thoughtful about it. And marketing should be something that's top of mind for you, for at least one of the founders of the business.

Yeah. And with this being a new year, I know we're in 2024 at this point. Another thing that Eric and I wanted to talk about is business coaches. I know we have very polarizing views on this. Eric is about business coaches. I think you pay quite a few of them or you used to.

And I'm pro-coaching. That's what I'll say.

You're pro-coaching. I'm very, Against most coaches. And here's why. When you find people online that are like, I'm a coach, they're, they're a coach because they're running Facebook ads and they've made their money by saying, I'm a coach. Dude, I met someone the other day who claims they make millions of dollars a month from coaching and it's pretty much pure profit. And they're known for having You know, a handful of Rolls-Royces and Ferraris and fancy cars like that. I'm like, what'd you do? Oh, you said you're a coach and you're charging people and you— they're going to be successful by paying you because you have flashy cars and homes and stuff that you got from just running ads and telling people you're successful. Like, what did you actually really do? And this is why I don't like most business coaches. I think most of them are shams and it's a bunch of bull. And Eric's paid coaches that have like, oh, we sold our agency to this place and all that kind of stuff. I'm like, well, Eric's bought agencies and some haven't worked out and he's learned from it. But I'm like, where's your coaches? Where did they save you? They charge you the money and most of these coaches make their money by charging you. And that's why I think it's just a bunch of bull. But if you want to pay a coach for something specific, like I'm really good at M&A and look at all these deals I've done and I will help you with just that. Great. Or I've done sales within your industry, not sales in general, because a lot of these people pitch the dream and that doesn't work for all industries like mine. Everyone's like, cool, what's the case studies and what's proof that you can actually provide us ROI with our marketing budget of $100 million a year? Using some fancy sales skills that they learned from watching some of these videos isn't going to help them close one of those deals, right? But if you want to pay someone for something very specific, like I need help with operations. I'm a terrible manager and I don't— I'm not organized and I need some systems or procedures. Or if I need help with M&A and you've done tons of M&A in similar fields or my fields and I need help from you, I think paying those kinds of people, that's fine. I think just paying general business coaches is just a waste of money because what are they going to end up teaching you? What are they an expert in? Charging you money because they're successful by charging other people on how to be a coach and how to sell the same thing to others?

So here's what I'll say. So I see, I know where Neil's coming from because Neil and I talk all the time. Neil got ripped pretty hard on that thread. And I understand why people ripped him because they also don't understand where he's coming from as well. So the premise of it basically is correct. So basically, I'll reframe it for people. This might help cover all the sides here. Coaches that are really good at marketing that show off their Lamborghinis and show off their nice lifestyle, those are not the people that you want to be working with at the end of the day. Because out the gate when you're showing that stuff, it's just like there's a misalignment. It shows that you're not humble, that's the first and foremost. And it shows that you're also shallow for thinking that people, really smart people are going to fall for that stuff. You think they're going to be impressed by your Lamborghini and your really nice lifestyle? No. They want to learn, right? So, that's really the premise of where Neil's coming from on those coaches, right?

And not just that, one of the dudes that I—

Hold on, hold on. Let me finish. I let you monologue for 5 minutes. Let me finish. Okay. Okay. So, what I would say is with the coaches that I've had in the past, the ones that have worked out well have been there, done that, right? So, the coach I work with right now is Jerry Colonna. And he's been a VC. He's worked with Fred Wilson. He's worked with You know, the CEO of Twilio, Etsy, like the guy has a lot of range. He's a father. Like he can talk about business and everything, right? And he also doesn't need the money too, right? So, he's like, he doesn't show anything off. He's a very humble guy. He's very like grounded. And he also doesn't tell me what to do for the most part. He's just asked me really good questions, right? And that shows that he's like coached up there. So, it's like, has he been there, done that? Like, yes, he's done a lot of different things. Has he like coached legit people? Yes, right? And so, to me, he's worth it. Now, to Neil's point, the agency coaches that I worked with, I didn't realize— this is my fault, by the way. Neil's absolutely right about this. I didn't realize until a couple months working with them, I was like, oh shit, they only had an exit for $2 million. What am I doing here? Because they came recommended from someone else and I didn't do my due diligence. And I realized that the things they were telling me, the questions, I was just like, dude, these guys haven't been there, done that. What am I doing? And the advice was really bad.

Yeah.

And I'm just like, at that point, I think it was 3, 4 months in, I was like, hey guys, like, I'm out. Like, thank you, but I'm out. So there's nuances to it. Go ahead, Neil.

But you pay a coach, he asks you questions. How's that coaching? That sounds like more like therapy.

A good coach. So a good coach, most of the time they're guiding you. They're not supposed to tell you what to do, right? A mentor or an advisor, they'll tell you what to do because that's like advice. But to me, I've learned over the years. I used to think a coach is supposed to tell you what to do, but like this type of coach, like a business coach, executive coach, I'm looking for someone that asks me the right questions to get me to think through things.

So they're just helping you retrain how you think.

Yeah, in some cases you'll be like, "Dude, what the fuck? Stop being an idiot." Like that will happen as well.

Sometimes they'll just tell me like, "Dude, you're being stupid." So yeah, because I think of like a business coach like a basketball coach, right? They'll tell you what to do. They help you.

They show you drills. It's just different definitions. And that's what you got called out on, right? On one of them is like different definitions. But I think like the premise. I think the premise of what you're saying is right. I just think most people don't— they haven't— most people aren't going to like dive into it, you know?

My funniest was I was on stage, Eric was speaking about the Lamborghini. Someone told me how they have 5 Rolls-Royces, but they don't own a home. And they're like, buying a home is a waste of money. I'm like, buying 5 Rolls-Royces is a waste of money. You could have bought a home. Your Rolls-Royces are going to depreciate over time. I'm like, what are you talking about?

You know?

And I'm not saying buying a home is a good investment. For some people, Like Eric and I, we would make more money by renting a home and taking the capital and just investing it back in our businesses. Yeah, putting it back in our businesses. But that's not everyone. A lot of people have made their net worth and their money in life, you know, by just buying a house. Like our parents' generation, a lot of them are millionaires because they bought a home back in the day for pennies on the dollar. They didn't have to do any investing. They paid it off and it's now worth millions of dollars. In places like California or New York or wherever it may be. But the problem I have with most coaches, you know, like even the one you're talking about and that you use, he's probably great. You know, I don't know why he would go from being a VC and getting the 2 and 20 to being a coach, you know?

So I asked him this. I called— I didn't call him out, but I asked him this. I was like, so why? Because he's made his money already. And like the coaching thing, he's like, I don't— look, I don't need to do it. I just have a lot of fun doing that. And here's the thing, the coaching business as a whole, it does $13, $14 million a year. He doesn't need to be one of the coaches, but he's one of the coaches even though he's one of the co-founders. He just enjoys it and I can tell he likes doing it. He's not money-driven.

But then, if he's not money-driven, then why charge for coaching and why build a team? Why not just do it himself and just help people?

Well, because he believes that like still, like if you're going to do something, the best way is still for profit.

Yeah, I'm with that.

There you go.

At that point, might as well just be a VC and then make the money.

That's the— Well, VCs don't typically— VCs on your board, they're like, they might tell you what to do, but they're not like, they're not, it's not a coaching role. It's a little different because for example, he coaches the Twilio, the Etsy guys, right? Like they have their board, they have their VCs as well, but they still, they still want a guy like him.

He coaches like Jack Dorsey specifically.

Yeah. I mean, you think back to Bill Campbell, like, sorry.

Twilio is not Jack Dorsey. I forgot who Twilio is.

Jeff Lawson.

There you go. Jeff Lawson.

Yeah.

So, he pretty much coaches Jeff Lawson and the—

Correct. And it's a lot of— I mean, you and I both know, like everyone here, like entrepreneurship's a lot of ups and downs, right? And there's a lot of stuff that you have to fight through. So, it just depends. But I think what we're really saying here at the end of the day with coaches is like, you want to work with humble, hungry, smart coaches and You want to work with people that have been there, done that. And look, if someone's like a 20-year-old life coach, like what are they coaching you on? So—

There probably are 20-year-old life coaches. But no, and then even if they're in your space, it doesn't mean they're successful. Eric gave a prime example of the agency people. What do people know who really sold their agency for a few million dollars? If they were really good, they would've helped Eric May avoid a lot of the mistakes. It's like, what, Eric's built a bigger agency than them and they're coaching him on how to actually make his agency bigger when they've never done it?

Yep. Doesn't make sense. Anyway, so take that for what it is. That's it for today's episode. Please don't forget to rate, review, and subscribe. Check out this next video over here and we'll see you tomorrow.