Behind The Mindset Episode 7 - "CBO v.s HMM"

What's going on guys? On today's podcast, we're gonna be breaking down two scaling methods that you need to be taking advantage of in 2019: the CBO method, campaign budget optimization, as well as the Hail Mary strategy. Like I said, take advantage of these, they're extremely useful and very powerful. So sit back, relax, and enjoy this episode of Behind the Mindset.

These methods alone have brought in over 7 figures in sales. So with that being said, take notes and enjoy this amazing value. First off, we'll look at campaign budget optimization.

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'll 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 that's 5 ad sets. The number of ads is kind of irrelevant at this point. You know, you wanna 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, you know, 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 a 2 or 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 is going to go up, but your margin will take a little bit of a hit, but overall you'll make more money. So you never really want to 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 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 is 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, you check.

Maybe two of them are working, right? Now you want to 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. Now let's check out the Hail Mary method. The volume makes you more profit overall. So, Here's how the method works. We have here 4 different campaigns. Our campaign structure is we always have one for PPE and then a different campaign for each product that we're testing. So let's go ahead and just say product number 2 is this right here. We're selling it for $20, our cost of goods are $5, breakeven CPA is $15, target CPA is $7. Now imagine we've already tested, we've already optimized, and we're ready to scale. This is how we do it. So here's different ad sets. So we have 5 ad sets. Remember, here our target CPA for killing or scaling is $7. So if the CPA is $15, if it's between 15— let's go over here— if it's between $7 and $15, the rule is gonna be you leave it alone. Don't touch. If it's greater than $15, kill, and if it's under 7, dupe. So these are simple rules. I'm going to show you how you can scale really quickly like this. So for the first row, I'll get in a little more depth. Let's say that ad set number 1 is CPA of $20. Ad set number 2, let's say, is $12. Ad set number 3, we got a $4 CPA. Ad set number 4, we have a $6 CPA. And ad set number 5, we have a $7 CPA. So out of here, based on our rules, The top one is more than $15, so we kill it. The second one is between $7 and $15, so we don't touch it. And the bottom 3 are actually either $7 or lower, so we're gonna scale those ones. So ad set number 2 comes over here. We don't touch it. This is the next day. So this is day 1, this is gonna be day 2. So day 2, we leave this one going. And then for ad set number 3, we're gonna duplicate it 5 times. Same thing for ad set number 4. And for ad set number 5. Alright, so this is day 1. We killed ad set number 1, we kept ad set number 2, and we duplicated 3, 4, and 5. Now, since we duplicated each of these 3 times, that means that we have a total of 15 ad sets now the next day, right? Actually 16 because we have ad set number 2 as well. So this is day 1, this is day 2. So what's gonna happen in day 3? So let's use the example here that each of these ad sets are spending $10, $10 per ad set. That means day 1 we spent $10, $20, $30, $40, $50. So D1, $50 in spend. Now, day 2, we have 16 ad sets at $10 each. Now, day 2, we're spending $160 while maintaining a similar ROAS. And it gets really exciting going on day 3, 4, 5, 6, and so on. And this whiteboard's not gonna be able to contain it. I would need a whiteboard the size of my entire living room to be able to show you, you know, at scale, but I'm going to just draw it the best I can. So day 3, let's assume that 3 out of 5 ad sets all perform under $7 and 2 out of 5 don't. So we'll kill 2, scale 3, kill 2, scale 3, kill 2, scale 3. So that means that we got 5 here, 5 ad sets 5 here, 5 here, 5, 5, and 5, and then 5, 5, and 5. So now we got 5, 10, 15, 20, 25, 30, 35, 40, 45 ad sets all spending $10 each. That means by D3, day 3, equals $450 in spend, right? And these are all under $7 in cost per acquisition. Now let's go ahead and see day 4. Hypothetically, if all of these ad sets performed well, how many ad sets would we have to duplicate? Well, this would turn into 25. They would all turn into $25. Then 3 times $25, 3 times $25. So we have 75, 150, 225 ad sets now on day number 4. 220— 225 ad sets at $10 each is is $2,250 on day number 4. Now we went from day number 1 spending $50 to day number 4 spending $2,250 with a similar ROAS because they're all performing at under $7 per purchase. Day 5, it gets even crazier. And again, if I was to get in real detail and use the actual examples and draw this all out, we would need a gigantic whiteboard, much bigger than this one. But day 5, let's assume all the ad sets performed again and we want to scale, which has happened at some points, you know. Sometimes like almost all them perform, we just keep duplicating like crazy. We would have here $125 plus $125 plus $125. And again here and here, we'd have 3 times $125, 3 times $125, and And so that's 375 ad sets per year. So that's 375 times 3, which is over 1,000 ad sets. Let's just say we have 1,000 that are performing well. Now, day 5, we're spending $10,000 profitably. And if you're in dropshipping and you want to make money, You have to be in the mindset of how can I spend the most money that I can possibly send— spend profitably. In this situation, it took us 5 days to get to spending $10,000 while maintaining a good ROAS. Thank you for tuning in, and I'll see you in the next video.

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.