Artificial Intelligence in Marketing with Dan Faggella

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Alright, welcome back to Bacon Wrap Business. This is your host, Brad Costanzo and I want to welcome everybody back. If you're a longtime listener, welcome all my new friends and followers to the show where you get to hear me interview some people that I think are just really interesting doing cool things. And I get the privilege of picking their brain and giving them a place platform to get their message out as well. Today is no different, but the way that this interview came around is a little bit different. So I got an email from one of my listeners who said, hey, Brad, my name's Dan and I've been a listener to your show. And you know, last week I listened to this and I'm kind of paraphrasing and I recently sold my E Comm business for, you know, over millions of million dollars after growing it to 2 million in annual sales in the past four years. It was a wild ride. It got us some great coverage and, and the skills and strategies that we had to employ to get to seven figures were super important. And I thought it might be a cool topic for your folks. And then he said his name, Dan Fagella. Is it Fagella?

Yeah. You got it, man. Great.

So you can hear my guest in the background right now. So immediately I was like, you know what, dude, I've heard of this guy before, like Dan Fagella. So I looked back through some notes of mine. I looked in Evernote where I keep everything, and I noticed that I kept an article. I Evernote saved an article written. I think it was a guest post either by Dan or about Dan from a site called Criminally Prolific, where it was just a little marketing article that was really useful. And I guess my elephant memory reminded me of that. I was like, dude, I think like your name looks familiar. I think you wrote this article. And he's like, I'll be damn, that is a good memory because that was literally like over at least a year and a half ago.

Oh no, that was like, that was. I literally think that was a three year old article now. Okay, sure. So you're like going serious elephant style.

Yeah, I can't believe, believe that. I just remembered Your name. But welcome to the show, dude.

Man, Brad. Glad to be here. And it's funny that the name rang a bell, brother. That's a pretty odd story.

Absolutely. So today's episode may be a little short because I know we've got a hard stop here. So let's talk about.

So you had an E comm business. It was in the martial arts. Is in the martial arts field, is that right?

Yeah, kind of the self defense space. Yeah, that's the one that we just sold. So selling essentially in structural material and self defense gear on the Internet, a lot of it kind of subscription based. That was the company. Yeah.

Awesome. And then you sold that. Congratulations.

Yeah.

And then what are you doing now? Because just from our previous conversation offline, it sounded like you're into some cool stuff. You mentioned AI and marketing and how they intersect and Big time.

Yeah. So the business that I grew, that E commerce business, Brad, while I was also running a media and market research kind of site in the artificial intelligence space. So I ultimately really want to get into market research and the business of sort of AI and artificial intelligence in general. And the E commerce company was just a ticket to having a location independent business where I could move from the east coast out to San Francisco and I could sell it to have my own cash so I didn't have to raise venture capital. So yeah, so I kind of did my own quote unquote raising of a seed round by selling for a million bucks for the E commerce company. And now I'm out working on market research and AI and a lot of my market research actually focuses on the applications of AI in marketing. So still very much in that world.

Yeah. So let's talk about a couple of the applications in marketing for AI and as opposed to getting into.

As opposed to getting into the market technical stuff. Well, the technical or how a company like Uber would use it or somebody who's way out of it.

Yeah.

How can the small to medium or you know, what's happening for small to medium sized businesses? What's on the landscape of how we can start to use AI and you know, effectively either now in our business or in the very near future. What are some of the exciting things that's going on there? I'm like completely curious about this.

No, it's definitely a cool topic. So the fact of the matter is at present I'll give you the current landscape and in two or three years a lot of this is going to kind of heat up and shuffle forward in a big way. But I'll Give you kind of the current lay of the land landscape. AI and marketing is a little bit now more medium sized businesses than it is small. Like I said, I think in the next couple years that's going to shift a little bit the companies. So artificial intelligence just in a quick summation here Brad, generally machine learning as it's called is sort of the approach to artificial intelligence that's become rather popular and allowed for a lot of interesting developments. I have an article kind of defining that term which I'm happy to sing along. I don't want to bore people here but basically these systems have to be trained on a lot of data. So in order to basically the job of AI in general, Brad, if I was going to sum up where does AI make a difference in general? This is going to be optimization problems. So optimization problems or sometimes we could say like clustering problems. Clustering would be like finding related groups of buyers that have similar behaviors and buy similar products and upsells and behave in similar ways that you find in your data that maybe humans would never be able to pick out. But machines could say hey, this is a definitive group that's kind of more clustering. Most of what we see in AI and marketing now is more about optimization. So what do I mean by this? What is the pricing that we're running for a specific ad? Which of the 80 versions of this ad do we display to which of these 80 sub segments we're running it to in real time? So at 7:30 this version cuts off because this sub subgroup doesn't buy anything after 7:30, yada yada. This ability to calibrate and optimize Brad, is not based on the machine being smart in and of itself. It's based on the machine drinking in the historical information of your marketing activity. Now generally the more data, the more information, the more volume that we have of behaviors, clicks, spend, transactions, upsells, customer lifetime value, all that the better. We can train these machines to micro calibrate advertising campaigns, email copy, PPC ads or whatever the case may be to whatever those different sub segments are. So right now the folks who benefit, who will benefit from AI the most are going to be people who drive a tremendous volume of generally kind of lower mid ticket sales. So I'll give you an example Brad. If you run a company, let's say it's a big consulting firm and you close 10 deals a year and your 10 deals are all $10 million deals, so you do like 100 million in top line every year with this consulting business that's a very poor candidate in general Brad for low hanging fruit applications of AI and marketing today. Reason being a lot of your conversations are going to be on the phone. A lot of your activities are going to be mailing people cards. Right. This is like you're kind of politicking and networking and doing all these kind of non digital things to get your conversions and your number of conversions is very low. It's 10, sure you do $100 million but it's exceedingly low. People who will do a lot better and the people who are clearly leading the field are like your Amazons of the world. You know, however many, what is you know 2000 transactions a second or something stupid like that, they're selling such high volume and even if we step down from Amazon, you know we've looked at applications that let's say the Wall Street Journal. So the Wall Street Journal has so many subscribers that they're able to through getting so many transactions coming through so many ads leading and so many pages leading and so many transactions. It's a low enough ticket where they have a huge transaction volume and this allows them to calibrate their ads. So if you sell a very few number of things but they're very expensive. Machine learning and marketing is less likely in the near term to be useful.

And needs the data. Yeah. And it's gonna have the data and it's, you know it makes me think of there was a software I was using recently.

Called newstar. Are you familiar with newstar?

Yeah, talk to me.

So nustar N E U S T.

Okay.

Yes, yes, yes I'm familiar. Yep. Cool.

So the big data company and was using them to analyze, analyze like exactly like you said. I put the data in of.

A couple of my clients, buyers, non buyers, refunders like buyers versus prospects and just overlaying all of that and now what it's doing is it's going in and it's giving me a lot of different data points on them. So it's, it's saying that there's 170 data points and here's how they overlay. So it's giving me information and I wouldn't say it's using AI. This is a big data play only.

Data enrichment is what that's generally called. Exactly. This definitely helps to feed into AI though third party data is becoming more popular because of AI so it's definitely related.

Right. And I had to use my intelligence to figure it out and go okay well how do I, how do I make heads or tails of all this raw data, it gives me some good overview like okay I know that 60% of the people in here make over 100,000 a year and are of this age range but then it doesn't like it would have been tremendously useful if there was something I could feed it in and now it can give me actual usable, actionable data based on those insights. And I think Is that what you're saying? That's what's going on, that's how to really leverage AI.

These things are coming down the line. Yes. And again right, right now a lot of it is very high touch. So we've done a lot of great interviews on this stuff to discuss. Hey, what does it look like when a big company like let's say Harley Davidson or let's say Wall Street Journal, what does it look like when a big company like that leverages AI in their marketing efforts? And at present Brad, a lot of these applications really do involve some degree of in house data science muscle and some degree of you know, out of house data science muscle from these marketing companies whether it be Optimove or Fedora or a lot of the other people that are applying these kind of technologies to kind of the retailer or commerce space. So it is still like back in the old days Brad this is before I ever got into marketing a software like you know, email marketing like now we have AWeber and Mailchimp and Infusionsoft and all this back in the day let's say I don't know, 15 years ago or something maybe 17 years ago email marketing software automation would have been very much only in the purview of wizards. In other words you would have to know how to route things through IPs you would have to code what automations happen, there'd be no drag and drop, you'd be writing all this stuff yourself. Very, very complex. Now that software has had a lot of time to bounce off of users faces and have a lot of feedback and a lot of competition and now we have beautiful user interfaces that are very intuitive. We, we are not, we are not yet there Brad, with AI and in fact AI will have a bit of a harder time getting there but the companies who are likely to see it first are going to be high volume, mostly digital touch meaning primarily E commerce companies at least in the near term media and E commerce. We did a big piece of market research interviewing over 50 executives who are running companies related to applying AI and marketing and we asked them what industries are you targeting? Media and E commerce were by and large jacked up through the roof for like across the board for these 50 companies. Those places are going to be the places where the vendors are hitting because that's where the vendors know that AI can actually make a difference. So if you're in, if you run a Huffington Post equivalent, you know, big, big media site, or you run a very high volume consumer products business on the Internet, you're most likely to see this stuff first.

Nice. So are there some tools right now that are out there for the small to mid sized business that they can start to dabble in this world and get familiar?

There's, you know. Well, I actually this is kind of counterintuitive, Brad, what I'm about to say, but although I am, you know, in the AI space and talk to a ton of vendors and very excited about the space, I'm not one to say, hey, we should do it now because it's gonna be hot soon. In other words, I'm not like a fanboy of AI. I'm interested in AI for the same reason, Brad, you probably are, is that eventually it will help you with your business goals. It'll help you pay your employees and grow and reach and achieve your aims. Right now in the small business space, the act of dabbling can be done with different technologies. I forget the name of the business now, but there are companies that even on a lower volume are applying artificial intelligence to split testing and optimizing email, which is legitimate and real. I don't know the companies very well myself and for some reason the one that should be top of mind is not right now. IBM Watson is very much usable for small businesses where people could do sentiment analysis of their emails or their sales pages. So they could say, hey, are my highest converting sales pages have a certain emotional tonality to them? Do they have a certain kind of voice to them that I need to replicate if I want to continue to make sales. These are things that small business owners could do today without needing the kinds of massive volume of the Wall street journal or of Amazon.com.

However, I would say the difference that this stuff will make will be less in the dabbling. I think people who are interested can do that. I think it'll really be once a lot of the mid tier businesses are ubiquitously using this technology. Like I mean not Amazon, not Wall Street Journal, something a little bit smaller once other commerce sites and media sites at large who are maybe doing 50, $100 million, not a billion dollars. Once that kind of level of business starts adopting this stuff for pay per click, for copywriting, for Email. I think really only then, Brad, will the technology, the stuff that I think will really make a difference. Only then will that stuff have a clean enough user interface, a cheap enough price point, and an easy enough way to leverage it. Meaning you don't need three PhDs sitting in an office paid full time. Only then will we achieve kind of those thresholds where more or less any small business should and could be using it. I think within five years there will be ubiquitous tools where even if you started your business yesterday, you should be using AI. We are not there yet for small business, so people can tinker, Brad. But I'm here to tell your audience, when the companies who are making 10 times more than you, not 200 times more than you, 10 times more than you are ubiquitously using AI, then it's probably the right time to pay the most attention, right?

Yeah, that makes a lot of sense.

And it's going to be really interesting to see where this market goes and the tools that come on board. And you know, I don't even know if this is considered AI, but a buddy of mine literally just launched a new product for email analytics called autoresponderanalytics.com headline is game changing Market intelligence and analytics for your emails. And.

It'S exactly like this. It's taking all of the data from everything and it's giving you really intuitive insights on.

How to utilize your email more effectively. Right. Like you said, it's like you got all this data, but unless you're going to, you know, export an Excel spreadsheet and go through it on your own, what, what can you do with it? So I don't know if you've heard of that autoresponder analytics.

I haven't. It sounds like a business intelligence or analytics application. And by the way, Brad, I should be really clear, there is a ton of awesome, you know, drive your business forward stuff that just involves take your data, make it visual, make it understandable, make decisions off it that doesn't even have to involve machine learning or AI, and it can be tremendously valuable. So I think small business owners who can get more familiar with using data in ways that are more accessible to them, that is to say, dashboarding, organizing and cleaning your data so you can understand and notice patterns. If you're in the habit of leveraging and using your data to make smart decisions in a way that's accessible, meaning business intelligence analytics, kind of like what you talked about, you will probably have many of the requisite skills you'll need once artificial intelligence becomes pretty Much. Ubiquitous for paid ads, ubiquitous for copywriting, ubiquitous for email. You'll at least have your ducks in a row, Brad. And by that I mean, mean you'll understand how to leverage data to make business decisions. And if you have none of that, making the full jump to AI, man, that's going to be hard.

Yeah, no, that's absolutely true. So I know you've got to go here in a minute. Is there anything else you're working on that's exciting or that you would like to share with the audience?

Yeah, I mean, I think in terms of this topic, I'm super. I mean I come from the marketing world, as you know. I'm super fascinated with the applications of AI marketing in general.

The research that I was just talking about with those 50 execs, I think in terms of if there's anything that we've done that might be useful for your audience, it's what are the industries that AI is going to make a big difference in and what are the applications that are going to drive the most profit for companies across sectors? And that big research report on tech emergence I think would be a pretty cool one for that. So that might be something worth sharing. I think overall in terms of the topic that we're riffing on now, that's probably a big one. Yes.

So Dan, where can people follow you more and get in touch with you?

Yeah, hold on, let me, let me. I'll let this. Sorry to make you edit this, Brad. I got this garcharned fire engine out here, man. That's like the one downside of moving smack into the middle of like I can throw rocks and like hit Uber headquarters from where I live. But then again, like homeless people fight outside my window at 3 in the morning. So there's like pros and cons of being in San Francisco, but you can decide if you want to cut that part out or not actually. But anyway, yeah, fire trucks. Yeah, people want to, want to reach me for sure. I mean, I think.

The studies that I mentioned, I'll make sure. Just pop you an email, Brad. I think those would be super relevant. Techemergence.com just the way it sounds. Techemergence1Word.com is the market research firm. So people want to see interviews of AI execs and of companies that are leveraging these technologies. In terms of case studies, tech emergence would be the place to go. I'll link you to the other stuff and then otherwise the best place to find me is just Twitter. Just anfagella. If you let me know that you heard me on Brad's show. Definitely be happy to hear that and always happy to field questions. So anfagella on Twitter is probably the place to be.

Fantastic. Well, Dan, man, it's a pleasure to meet you. Such a random experience. But see, guys, that's what happens when you send me an email to bradakenratbusiness.com and I look forward to catching up with you offline and getting to know more about you and sharing some stories, etc. Etc. For everybody else out there, I hope you've really enjoyed this episode of the show. Please subscribe. If you aren't, go check out the website@baconratbusiness.com and send me an email to askbradakenrapbusiness.com if you think there's anything that you'd like to hear about. Speaking of that getting in contact with me, I'm also very interested in talking to any business owners who are potentially looking or wondering if they can exit their company. I've got some reasons behind this. So if you've got a business, ideally it's E Com, but it does not have to be. And you are thinking, I wonder if I could ever get out of this business. I not only have some potential buyers that I'm working with for you, I might even be interested in chatting with you about this myself. So I thought I'd just bring that up. I know that Dan and I were talking about this prior to getting on the phone.

Yes, indeed.

Yeah, you know, so don't hesitate to shoot that over to me. It's like, brad, what you thinking@askbradakenratbusiness.com Dan, I'll let you get back to your day, brother. But I appreciate you being on the show and I appreciate everybody listening.

Glad to be here, man.

Yeah. Till next time, keep on listening to bacon wrap business.