Behind The Mindset Episode 4 - "How I Scale FB Ads"

What's up guys? On today's podcast, Jared talks about scaling methods on Facebook, methods that he's using right now, and the methods that he used to grow his store from $0 to $2 million in just 60 days. This video was filmed on May 2nd, 2019. There's a lot of value in this one, so stay tuned and I hope you enjoy.

What's going on guys? Jared Goetz Jared Goetz here with Brad, and today we're going to be talking about scaling your Facebook ads. And if any of you guys are in e-commerce, which I'm assuming that the majority of you guys are, you know, involved in e-commerce, right, because that's why you're on this video, or you're interested in getting started, or you're just learning before you get started, one of the key elements is figuring out how to go from spending a little bit of money and making a return on that to spending a lot of money on ads and making a similar return so that you can make more profits overall. So we're going to show you today how you can go from spending, let's just say, $100 on ads and doing $300 in sales, all the way up to how do you spend $10,000 a day in ads and do $30,000 a day in sales. You know, I've had days where I've spent $20,000 a day on ads and did $60,000 a day in sales. So that's the name of the game. You know, it's fun to make money, but it's really fun to make bigger money. So today we're going to be talking about some scaling strategies. Um, also I'm going to be showing you the exact same strategy that I used to build my store from $0 to $2 million in just 60 days. And although that was about 2 years ago, that strategy is working for us right now. So I'm going to show you guys that toward the end of this video. Stay tuned for that method. So Method number 1 is incremental scaling. What is incremental scaling? So that's basically when you take an ad set and you increase the budget by 20% per day. So if you have an ad— let's say you have 5 ad sets running. And they're all at $10, it's really simple. Next day, they go to $12. Day after that, $14.40, and so on and so forth. Now, that's not a very exciting method, but it's pretty consistent. If your ad sets are working at $10 and you want to start, you know, increasing the budget slowly, then you can incrementally scale and it works pretty consistently. Not the most exciting method.

Also super important to know with this method, Jay, before you erase that, it depends what platform you're using. If you're using Facebook and you try to do this after like day 1 or day 2 with only like a couple conversions on the ad set, it's not gonna be very consistent. You may bump— when you bump it up, you may notice a really high increase in your cost per purchase. So you wanna go ahead and make sure that it gets through the learning phase with a sufficient amount of conversions on it before you go into this method.

Yeah, important, important point to note. You want to let this run for like 5 or 6 days before you start doing this method. Great point, Brad. So next method I'm going to share with you is duplicating to a higher budget. So So what that means is, is exactly what it sounds like. So let's say you have 5 ad sets running, a 1, 2, 3, 4, to a 5, and they're running at $10 each. Now if they're performing very well, you know, if you're getting, let's just say, a 4x ROAS, For those of you who don't know, that means if you're spending $1, you're making $4 back. If you're spending $100, you're making $400 back. 4x return on ad spend. So if you're getting like a 4x or higher and you want to bump up the budgets quickly, what you do is you duplicate the ad set. So you take Ad Set 1 and then you'd also create Ad Set 1 copy, and instead of running it at $10, You can run it at, let's say, $50 or even $100. Now, take note, when you're increasing the budgets, you're going to get a lower return on ad spend. So you have to think about what is my profit margin here. You know, if you're spending $10 with a 4x ROAS, that means you're gonna make $40 in sales. If you're spending $100 with a 3x ROAS, that means you're gonna make $300 in sales. So your margin is actually going to be lower, right? If you're going from $100 to $300, you're only getting a 3x return on your ad spend. You're getting a 300% return as opposed to 400% return, but you're doing $300 in sales as opposed to $40 in sales. You're making a lot more money with the 3x ROAS.

Your net's going to be higher, your margin is going to be a little lower, but overall your net will be higher. A couple of good tips To note here, when you bump that budget up, when you dupe it and bump the budget up to a new, much higher daily budget, a couple of tips, especially if you're using Facebook, is to use a manual bid strategy to sort of like protect yourself. It's almost like insurance on an ad set. So you're either gonna use like a target cost or a bid cap to let Facebook know that you don't wanna spend more than X amount. 'Cause if you're on lowest cost conversions, Facebook may be getting you what they think is lowest cost, but it may be way higher than what you were getting at the low budget with a 4x ROAS, which can completely ruin your campaign.

Yep, so manual bidding with this strategy works really well, and there'll be future videos where we get into that in more specifics. So that's duplicating to a higher budget. A few more methods we're gonna show you, and I'm gonna show you the same method we used to grow the store from $0 to $2 million in 60 days, which is really exciting. So the last method that we shared with you was vertical scaling. It means you're taking ad sets and you're increasing the budgets. We're going to share with you a few horizontal scaling methods, which is basically similar budgets but more ad sets. So the first method is building more audiences simply, right? If you're selling to women 45 to 65, why don't you test, you know, men 45 to 65 or women between 20 and 40 who like knitting or something that older ladies would like. Building out more audiences allows you to scale because you're gonna spend more money. Scaling just means spending more money. Um, it also means creating more lookalike audiences. So instead of just running lookalike 1%, now you can run lookalike 1%, 2%, 3%, all the way up to 10%. Now you have 10 audiences. So instead of one audience spending $10. Now you have 10 audiences, you're spending $100. And it actually segments you into another scaling method we're going to show you in a bit. But as you do this, you're finding more winning audiences. The Facebook pixel is getting smarter because you're targeting other people. It's allowing Facebook to find more buyers. And as you get buyers, you know, Facebook's a smart— has a very smart algorithm. It takes those buyers and tells the pixel, these are the people that are buying this product. So as you're targeting more audiences your pixel's getting smarter and smarter and smarter, and you can actually target less and less people and find buyers cheaper. So that's just by creating more audiences.

And another thing that people sleep on with more audiences is just scaling out the same exact audiences that you do have in other countries. You're not gonna be able to use the lookalikes, but all your interest-based targeting, your age groups, you know, it's gonna be very similar globally. So if you're just targeting the US and crushing it in the US, move it to the UK, Australia, Canada, European countries, and that's just, that's an easy way to scale.

Now I'm going to show you a very exciting scaling method, the one that allowed us to scale from $0 to $2 million in 60 days. Maybe some of you guys have seen our other videos or case studies out there where we've done million-dollar-per-month stores or half a million dollars in a month, like crazy scaling numbers. I'm going to show you the method that we use now, so it's really exciting. And then after this, we're gonna talk about CBO, which for those of you who don't know, that's campaign budget optimization, which is what Facebook is moving towards here in the next few months. But first I'm gonna show you this. And what I call this is the Hail Mary method.

And why it works so well, just while Jared's kind of writing some stuff out here, is because usually we're testing with really small budgets. When Facebook built their platform, you know, they were looking to make it the biggest advertising platform in the world with huge brands on it using these big budgets. but we're testing using small budgets. We're kind of hacking the Facebook algorithm.

So the Hail Mary method, that's a term that I've coined that we use on our dropshipping businesses very often. Now this doesn't work all the time. This is something that when you got a unicorn product, something that's doing really well, if you want to go from spending $100 to $10,000 in a week, this is how you do it. So it's simple. Let's say you have 5 ads. 5 ad sets, right? 5 different ad sets. Now, ad set 1, 2, 3, 4, and 5, let's say they all perform well. What do you do the next day? You just simply duplicate them each 5 to 10 times. For the sake of this whiteboard, I'm gonna do 5 times because I wouldn't be able to draw enough lines if I do this for multiple days. So day 1, you have 5 ad sets running. Right? Day 2, you have— day 2, now you have 5 times 5. Now you have 25 ad sets running. And for the sake of this demonstration, we're just gonna pretend that all the ad sets are running well. In a real world, out of the 25, you may have 10 that are working well. We'll use that example. Let's say out of these 25 ad sets, 10 of them are profitable. So the next day, you take the 10 that are profitable. Let's just say 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 are profitable. You multiply those all by 5. So now, the third day, you have 50 ad sets running. So instead of spending $10 per ad set for 5 ad sets, spending $50, The next day you're spending $250. The day after that you're spending $500. So let's say $10 per ad set. You got $50 here, you got $250 here, you got $500 here. So let's say out of these 500 ad sets, 30 of them are profitable. Now you're multiplying 30 ad sets times 5. So the day after that you have 150 ad sets running. So now you're spending $1,500. Let's say out of these 150, 100 of them are working well. The day after that, you have 500 ad sets running, right? Because you're multiplying 100 ad sets times 5. Now let's say out of those 500, 300 of them work well. The day after that, you have 1,500 ad sets. If they're each spending $10, you're now spending $15,000. If you're spending $15,000 at a similar return on ad spend as you were when you're spending $10, you're now making a ton of money. I'm just gonna really quickly show you an example of what that would look like. Day 1, you have 5 ad sets, and let's say you do $20 in sales, or let's say you're doing $50 in ad spend. Let's say you're doing $200 in sales. You're making $150, right? When you come here, day 2, day 3, day 4, day 5, day 6, now you have 1,500 ad sets At $10 each, you're spending $15,000. If you held a similar ROAS on this—

even if you bumped it down to 3x from 4x.

Yeah, at 3x you're making $45,000 in sales. And if you do that over a month, you know, you have over a million dollar month. And that's how we scale so big.

Yeah, that's how we've scaled all the— recently all the really big stores that we've— that that we've done have been scaled using this method. Like I said, using those micro budgets and scaling to thousands and thousands of ad sets in the ad account. But the really important thing to know here is that it's important to optimize before you start scaling. A lot of the times people get excited, and it's understandable that you just want to start spending more because you're getting a really good return. But like Jared said, the ROAS is going to go down inevitably once you start spending more money. That's something that happens on every single platform for digital marketing. So you really want to optimize before you start spending more money, verify which creatives are working the best, which— with which thumbnails, which audiences, and which budgets are working the best to get you the most amount of return.

Yeah, because when you're scaling to this many different ad sets, if you haven't optimized 100%, you know, if you're not using the best creative, you're going to be missing out on tens of thousands of dollars a day. Yeah, so you want to definitely make sure that you optimize first. Now, that's the Hail Mary method. And also, guys, when you have questions, comment below. We're going to answer as many as we could. I'm going to hand this one off to Brad. He's going to talk about CBO and the surfing method that we learned from our good friend Tim Byrd. If some of you guys know them, we, we learned a method from him, surfing CBO campaigns, campaign budget optimization, which is what Facebook's moving to. Brad, if you wanna display how this works.

Yeah. So, real quick, campaign budget optimization is basically, as we know, the Facebook platform, you can, until very recently, you've only been able to control your budget at the ad set level. What CBO is basically, in the easiest way possible that I could explain it, is now you can control that budget at the campaign level. So instead of picking which ad sets to control on the daily budget, You know, let's say you're just gonna throw $100 at this campaign for the day and Facebook is going to decide where they can spend it or where they will spend it, which is gonna make your campaign much more stable and perform much better in theory as Facebook collects more data on your campaign. Let's see here.

So just to reiterate what Brad was saying, basically instead of setting budgets at the ad set level, you're setting it at the campaign level, and Facebook's AI, they decide how much to spend on each ad set based on performance. Now, there's a specific method we use for scaling with this type of method, and Brad's gonna show you here.

So I'm just gonna keep this as simple as possible for this example. So you have one campaign, let's say it has 5 ad sets. The number of ads is kind of irrelevant at this point. You know, you want to test creatives before you're putting everything into a CBO campaign. This is more of like an optimizing and scaling strategy all in one. But basically, since you can control your campaign budget now and you don't need to control your budget at the ad set level, let's say we start this with $100. As the day goes on, as these ad sets start to perform, let's say Ad Set 1, Ad Set 2, and Ad Set 3 get a few purchases in the beginning of the day. They're doing really well, but 4 and 5 are not performing so well, right? So let's say we wake up, it's 8 AM, and these ad sets here aren't performing very well. We're gonna kill these ad sets, which naturally will start to scale these ad sets because you're still, you're not changing this budget from $100. So these ad sets are gonna naturally start to spend more, and what you can do is if you wanna spend more money, if they're performing really well, they have 2 or 3 3x ROAS, we could actually do what's called surfing, which would be to bump your daily budget up on your campaign throughout the day. And you'll see your return go down a little bit, but again, in the other example, just like that one, your net profit's gonna go up, but your margin will take a little bit of a hit, but overall you'll make more money. So you never really wanna go more than 100% on a scaling, on a surfing, method, but we can bump this up to, let's say, $200 at 8 AM. If they're still performing well around 12 PM, we can bump it up again to $400. If it's still performing well in the afternoon, and you wanna constantly keep it— this is a very hands-on strategy, you wanna constantly keep an eye on these ad sets. Let's say 2 doesn't start performing so well at like 4 PM. Now, your best performing ad sets are pretty much performing really well still and they're getting fed a lot of ad spend. And you can bump this up even to $800 around 4 PM if they're performing really well. Now your best ad sets are receiving all of the spend, and so you're as profitable as you possibly could be.

So just to reiterate, beginning of the day, you kill what's not working. You bump up the budget if the other ones are working well. Now all of this budget's going to the ones that are working. Around noon, or it's still in the early in the day, you look again, see what's working.

Every few hours.

Maybe two of them are working, right? Now you wanna bump that budget up to $400. Now that $400 is only being dispersed to 2 ad sets. Now you look again at, let's say, 4 PM, and one of the ad sets is working well. Now if you bump that up to $800, all that money is going to the ad set that is working well, so by the end of the day, you should be profitable sending all the money to the ad set that's been performing well. And that's a new method that we've been testing and it's been working really well, guys.

What's up guys? Hope you enjoyed the podcast. We really enjoy bringing value to you consistently. We're going to be doing a lot of these, so make sure to keep up to date with Jared on his socials, @jaredgoetz on Instagram. Go check him out. We'll be posting when these new podcasts are dropping there. If you did get any value from this podcast, please do us a favor and share this with everybody that you think would receive just as much value from it, and we'll see you on the next one.