How I Spend a $5,000/month on Ads!

Hey everyone, it's Mike Andes. Welcome to the episode of the Home Service Millionaire podcast. Today we're talking about ads, getting new customers and talking about what that's going to mean for you as a business owner that's doing between 1 million and $5 million in annual revenue. So let's go ahead and jump right into it. We got five items on the docket. First one is, is Facebook still a gold mine for $1 million plus home service companies or are rising CPMs, that's cost per milli or cost per thousand impressions, killing return on investment. So here's what's funny. Since the dawn of time, marketers have said that the cost of marketing on Facebook has gone up. And since the dawn of time, people have made money on Facebook ads. And the reason that Facebook is definitely one of the more mature ad platforms, same thing with Google. And so a mature platform when it comes to marketing usually means there are very, very good guidelines in terms of the cost of acquisition, the cost of impressions. And when you have a well determined market, you have a well priced, an appropriately priced market. So you're not going to get massive arbitrages. So for example, in real estate, it's very easy to do comparable sales in the publicly stock public stock traded companies. Like those companies, it's easy to do comparisons based upon their PE ratio, price to equity or price to earnings ratio and a whole lot of other calculations. And so usually you're not having these massive discrepancies compared to like a privately held company or when it comes to real estate, a lot of people try to do things like off the market because they want to get a great deal deal. And so when it comes to Facebook ads and Google Ads, you're not going to get a customer for like $0.05, $0.10, $0.20. Way back in the day, there are people getting that kind of traffic for keywords on Google for pennies. And now that's not happening. Why? Because the mark has matured. There is now a very well determined established market in place for buyers and sellers. And people know the value of a click on Google. They know the value of a click on Facebook. So is there opportunity you? Yes. Is it going to be an absolute. We use rob people basically for customers and you're getting customers for a couple dollars. Probably not. That being said, I literally just got off a text message that I was having with someone and they sent me a screenshot of their Facebook ads and they got customers right now $9.88 per lead. Now do I think that will continue Maybe not like, especially as the offer that you're the same one keeps going on, it can get old and people, the, the cost per lead goes up. If you don't change out the creative, that, that will also go up the cost per lead. However, it's still there for the taking. And what did they do? They create a great offer and they had a great creative. Now you have to reinvent the offer. You have to reinvent the creative. You have to create multiple variations of hooks, variations of the offer itself. You have to test these things over and over if you're going to keep it fresh and if you're going to keep that customer acquisition cost and the cost per lead down. And most importantly, I think when it comes to Facebook is it's very easy to target. That's why people love it. And same thing with Google. It's easy to target who we're going after. And I think the most valuable thing you can do is give Facebook or Google a list of your customers so that it can tell what kind of customers are already buying from you. And so this is a lookalike audience. And it's very similarly named Inside Google where you're gonna upload a CSV file of all your customers. Highly recommend doing that. You're like, well, I only have a couple thousand. So by the time it strips out the emails that aren't used in Facebook or Google, maybe it's only five hundred or a thousand. Here's the thing. Facebook takes that list and says, oh, let's go show the ad to more people like this. And so if you've seen any of my ads I run for Augusta Lawn Care and for the franchise, it's because you have interacted with my content in the past. You have likely signed up for one of my courses for free. I just take that list and I put it over my mailing list of like 38,000 or 33,000 people. We put that in there and say, hey, if they're on this list, it means that they've purchased from me in the past. They've got a free course for me. If they look like this, show them the ad. And so having a lookalike audience immediately narrows your targeting dramatically. Now Advantage plus and all the things that go into the retargeting that Facebook now has built into the using AI, I just need to get point them in a general direction and then let AI do the rest of it. So I think a lot of people get very, very narrowed. Like, I gotta get a very specific customer. If you're Servicing a local market, you're likely just going to use your age, like above 40, for example, and then demographics. So like 5 mile radius or 10 mile radius around a certain address, that's likely the only targeting you need to give Facebook. And then it will figure out the type of people that are getting to convert. And this is why it's so important. If you're not running a Facebook lead form or a send message, as the CTA called action, if you're not doing those two where the output is going to your website, you want to put, make sure you put a Facebook pixel behind your thank you page when someone submits an estimate request form. So all that to say if you're like, well, I've never run Facebook ads, maybe just run the send message or submit a lead form because those stay inside the ecosystem of Facebook. But if you're gonna send them to your website to do like an instant quote form or something like that, you're definitely going to make sure that you're putting a pixel there. Not to track how many conversions to tell Facebook or tell Google, hey, this is this customer converted. And immediately it's going to use its AI to say, oh, we should show more of these ads that people like that. And so a lot of times these are some of the common pitfalls. People say Facebook ads don't work. It's like, okay, did you set up conversions? Did you give it a lookalike audience? Did you narrow the audience? Are you showing this to 18 year olds that will never buy your services? So I think if you do just a few basic things and then as a matter of creative, like once you get a great offer, a great offer can go stale on Facebook within two weeks. And what I mean stale is like that $10 cost per lead could easily go to $50 cost per lead if the creative is not updated consistently. And so it becomes a game of great find a great offer, then find a great way of creating creative and constantly split testing it to ensure that the longevity of that offer stays as long as possible. So do I think it's still a gold mine? I think it can be. I think 90% of you will probably waste money on hiring an agency when they could do it themselves. But if you have no idea what you're doing, maybe hiring agency is good because you got to have a pixel, you got to have conversion metrics, you've got to have a lookalike audience, you've got to have good targeting and you got to optimize your creative. All right, number two on the docket, we're out swinging early. Every door direct mail postcards, old school are still one of the highest margin plays when you're trying to saturate a local market. I haven't seen great results from EDDM across the board. Am I saying it's dead? No. If you have a lot of HOAs or gated communities where you can't go door knocking, you can't do door hangers, then maybe every door direct mail is what you have to resort to. And by having that barrier of no one else doing door knocking or doing door hangers, you could very well position yourself to do every door direct mail and still stand out. I just don't see it working. Like, I don't see, like just from the numbers across all locations. Augusta. Across all the locations inside a copilot, I am not seeing every door direct mail outperform door hangers or door knocking. And so if you're resorting to every door direct mail, I would probably rather run a door hanger campaign and have people that just deliver the door hangers and you do instant quotes. That's. That would be my recommendation. And when I say instant quotes, it just needs to get them to like give them a price on the instant quote. And if you're like, I'm going to lose money on it, are some customers, I might lose the money. It's fine. It's an introductory offer. My goal is to get them as a customer so I can sell them 5 other things and 5x their lifetime value. It is not to sell them the one little property clip or one mowing or the initial painting service or the initial pool service. I don't care about that. Like, that is just an introductory offer that is like table stakes to get inside the door so that I can sell them other stuff. All right, all right. That kind of leads me to this next topic, which is not on the docket, but it is a function of, I think that so many of us wait to upsell customers way too late. If someone bought something from you today, you should absolutely have a sequence inside of copilot to send them texts or emails immediately to sell them other stuff. And if you're not doing this after like your initial service, even just have your. Have your crew make a video after the first service and then send it to you. And then you start upselling other services to the customer. Literally in a matter of a few weeks inside of the field force mobile app of copilot, this will be a function where the video can actually attach inside the app. And the biggest thing I'm going to use this for, in addition to, you know, estimate videos for my estimator, in addition to that, though, is I want my crew to make a video after every initial service, attach it, and then I'm going to. Well, not me, but like the estimator is going to go through those videos and sell five other things based upon the video. Because I might not be able to sell instant, you know, using instant quote form for a property cleanup or a mulch installation, but I can get mowing. So I'm going to get them unmowing for the instant quote. And then after the first service, I'm going to have every single crew member submit a video, and that video will be watched by my office or by the estimator, and then sent all these other upsells for other offers like mult installs, like property cleanups, et cetera, et cetera. All right, third on the docket, Google Ads versus local services ads. Which one should you scale first if you only have $5,000 a month to spend? Okay, well, the bottom line on this one is if you have $5,000 a month to spend, you're gonna do both. Because the vast majority of us would never be able to spend $5,000 a month on an LSA. So local services ads, you would almost never be able to spend $5,000, depending on what market I guess you're in. But I have rarely seen people be able to spend over a thousand because this. The volume of leads aren't there. Now, if you could get a customer from LSA for 50 bucks or 40 bucks and it's a confirmed phone call that's recorded, I would probably back up the truck and dump money on it. But the problem is, even though you put your budget at $5,000 a month on LSA, you might only spend a thousand. So I think in this case, you're probably going to be able to do both. Both local services ads, I would exhaust that one first. So let's say instead of 5,000amonth, you had $1,000 a month. I would all of that on LSA before I go to Google, because again, LSA is all contained. In other words, they click the call button, it's recorded, it's all inside their system. As soon as you go to Google Ads, you better have a good converting website. You better. Your site better load fast, it better look good on inside of a mobile device, because if it doesn't and someone shows up at your website and it doesn't convert well, you're Getting all sorts of clicks and no one's converting. And so I think it's almost hilarious when I see two, three, four million dollars businesses that have been around for 20, 30 years. They're mostly built on the back. Word of mouth, awesome. But then they're wondering, okay, I want to get to 5 million. Okay, let's go look at your website. It looks like it was built in the 1990s. And it looks like Steve Jobs himself, on his way out the door, was, was making sure the SEO was. Was updated back in 2007. And so I want to make sure that if I'm going to do Google Ads or Facebook ads or any sort of ads, I drive traffic to the website. I want to make sure the website is. All my money is spent there first. I'd rather you spend $500 at home service Web design, of course, or any other service for SEO and web design. I'd rather spend that first than spending $5,000 a month on driving traffic to a storefront that stinks. If you sell bad sandwiches, that is. The service is bad. You shouldn't drive ads to your product. If your storefront is crummy and falling apart and super dirty, you probably shouldn't go get someone to put a banner out on the road telling everyone to show up. Cause they're gonna get scared away. And running ads on Facebook or on Google and telling people to show up to your website is like having a little person out holding a sign telling everyone to turn in to your sub shop. They show up, they pull up, and everything's decrepit and falling apart. And so you're not going to get people to walk in the door. You're not going to get people to convert. And so in my opinion, if you're spending $5,000, if your budget is $5,000 a month, your website better be dialed in. Okay? And so we've built over a thousand of these at Home Service web design and long care Web design. Are you tired of paying Google and Facebook a whole bunch of money and not really seeing any leads? If you want a custom website built for you in the next six weeks, go check out HomeService web design.com in, like, Augusta. We have 200 locations. We run all our sites, and it is the number one place I'd be spending my money. And yes, I have a shoe in this game and I have a horse in the race because we have the web design firm. But it is amazing to me that people are willing to put up with a 0.25% I saw this yesterday. 1 in 400 people that showed up their site converted. If you could just get to 1 out of 100, which is like not even great. If you just 1 out of 100 to convert instead of 1 out of 400, you would 4x4x400%? Well, I guess 300%. 300%. The amount of leads that you would get to your business if you just improve the conversion. So it's like, do you want to triple your ad spend or you just want to fix your website? Usually it costs a whole lot less to fix your website and fix the conversion side of things. All right, fourth on the docket for the day. The risk of being platform dependent. What happens if meta banned your account or Google Titans LSA requirements overnight? Yeah, you don't need to be risk dependent on one platform. If you can figure out Google, you can figure out Facebook. If you can figure out those platforms, you can figure out local services. And so I would only ever go 100% in terms of marketing spend on one platform if there's a specific offer that's just absolutely printing money and it's a huge outlier. And so if you have, let's call it $5,000 a month budget, I would probably be allocating like $1,000 to LSA, probably 2,000 to Google and 2,000 to Facebook. If you were spending all of it online, assuming you're not doing door hangers or some other like guerrilla marketing, like yard signs for example, work great for something like Christmas lights, snowplowing. There's other services like it's. Please, it's service specific. But for me personally, when it comes like lawn care specifically, if I'm looking online, I am probably spending it somewhere in the neighborhood of that distribution. Oh, you're gonna run $2,000 on Facebook against one ad? No, I'm gonna run five different ads with five different creatives on each and five different hooks on each of those. That's gonna be 125 different ad variations. And so I would also say that if I had. If all of a sudden a Facebook ad starts printing like I was talking with the owners of Augusta for $9.88 a lead on Facebook and I had a limited budget. I'm gonna move all of my money to that. Now, if you increase your budget, you're. You're also usually going to increase to some extent. There's a diminishing return when it comes to pouring more money on an ad campaign. But I can guarantee you you're not getting good leads. Assuming these are good leads for $9.88 anywhere else on the planet. So even if this goes up to 12 or 13 or 14 or $15 per lead if you pour more money on it, I'm okay with that because I can't get customers for 15 anywhere else. And so I'm always optimizing for customer acquisition costs. That's the only thing I really care about. And if I'm having a huge discrepancy between customer acquisition costs from different platforms, I am going to divert more of my budget towards the thing with the lower customer acquisition cost. But I am usually going to stay sharp in the other areas. I'm not just like turn off my Google Ads. I want to keep running ads for five or ten dollars a day just to make sure I stay relevant in my area. Do it against my own keyword like Augusta lawn care. If they search that, I want to show up on the very top. Okay, great, you could do that. It will almost always convert at a really good ratio because people are for your page. So just run ads on all platforms if you have this kind of budget now, if you have a budget like a few hundred dollars a month, don't be running ads just for the sake of keeping them on and just playing with them. But if you're going to have a $5,000 a month budget, I would start playing with every platform and I would maybe diversify at least 20% even on a really good offer that's printing money like this one that I was just talking about. I would still, I would still allocate a thousand out of my 5000 towards Google, LSA, anything else so I can keep testing. Because if this one did shut me down, I need something to turn to and so I'm a big fan, especially recurring revenue to play the hot hand. If you're more one time projects, you need to be more diversified with your spend in my opinion. Because if one goes down, you can immediately shut your business down. If you have recurring revenue, it gives you a little more flexibility to move over to another platform to take some time to figure out the offer, figure out what you're doing wrong, figure out the targeting and readjust. If you have one time product projects, I would probably say don't ever spend more than instead of 80% like I just mentioned, I'd probably never spend more than 50 or 60% on one channel because if something does happen I don't want completely wiping out my lead flow and I would need to figure out at all times at least two. But if you have Recurring revenue is a huge safety and I would be more inclined to spend up to 80% of my ad budget towards one channel. All right, last question on the docket. Should you bring ad management in house, hiring, marketing manager, or let an agent agency run your Facebook, Google LSA campaigns? Okay, so typically most ad campaign mat, ad managers, et cetera are going to basically double your lead, your, your lead cost by doubling like whatever you spend on ads, they usually cost that on top of it. So you spend $500 a month on ads, usually paying about $500 to get someone to manage it. On average, okay, you're spending $3,000 a month. You're usually spend another $3,000 on having it managed. All right. The reason that they this is a very easy way of doing it is because as you increase ad spend, usually running more campaigns, more creative, you're adjusting and tweaking things more often. So usually a marketing company will say hey, there's a flat fee of X. And then we're taking some percentage of the marketing spend like 10, 20, 30%, whatever it might be, and usually averages out to somewhere between 30 and 50% of what you spend on ads. You're going to spend on actually just having someone manage the campaign. So until that number becomes the cost of a full time person, it's probably better to use an agency. That being said, I think that the vast majority of people, if they spent one solid week in the off season just reading and digesting and learning and educating themselves, taking online courses about these platforms, they could get it to about 80 to 90% of someone that would do this full time. Because if you did those first five things I mentioned, I think it was in docket number one, the first question of the docket, what was it? We gotta track conversions. So having a pixel, having a tracking code for Google and Facebook and if you just do the basics of like retargeting using your scraped list to input as a lookalike, audience, using demographics like don't mark 18 year olds if you're going after homeowners. Like if you do those basics, you'll probably get 80 to 90%. And what I mean by that is if someone else's customer acquisition cost is 50, you might be able to get 60. And so if you do that, it makes it where you have to spend a lot of money per month to actually make sense of hiring someone full time. Because the reason I'm against a full time hire also is mostly your off season when all of a sudden you're getting leads for instead of $10 or $20, it comes 50 or 100, you still kind of feel obligated to spend it because you got a full time marketing manager. And so if you're gonna spend on a really good marketing manager $10,000 a month to get them, and that's what a good one's gonna cost you. I mean like someone has 10, 15 years experience, you're like, well, I don't really need to. I just need someone to like run the campaigns and stuff like that. Okay, well then that's like basically minimum wage. And what do you think they their level of skills against yours? The same. And so just because someone can pick up a phone or they know their way around Facebook or they're like techie because they're your niece or your nephew does not mean they're going to be a great marketing manager. That is what you call someone like, like an intern, but someone who actually knows media buying and how to allocate your budget is going to cost you $10,000 a month, which means you probably need to have a 20,000amonth budget. Minimum. Minimum. And I would go further to say that if you're only getting a 20 or 30 or 40% bump on your marketing ad spend, like they, they better really know their stuff because they would optimize so much to be able to cut your customer acquisition cost in half to make sense of it. So I think until you hit probably $5 million literally in revenue, it probably doesn't make it sense to bring it in house. But I would say that the vast majority of people could get of the way of an agency if they just spent a week really diving deep following some YouTube tutorials and then creating creative for two to three hours every single week and then cutting those up. Does it have to be professional? No. Maybe you don't get the captions, maybe you don't get the beautiful cuts, maybe you don't get any B roll. But if you just make the creative every single week into 5, 10 different videos, 5, 10 different pictures, and then keep it fresh and switch out the offers that you're making every week, you could probably get 80, 90% of the way to what an agency would cost. And if you systematize it, you could probably get someone that is lower skill, that is only 20 or 30 bucks an hour to be able to run the campaigns for you. Most people will not put in the work required to be able to get to that level of efficacy. And you only need 80, 90%. You're never going to beat someone that is every single day, tweaking it, making it better and doing thousands of campaigns across a whole bunch of different businesses and industries and areas. They know this really, really good. But if I can get 95% of the way there's which is I from what we do. Like we don't have an in house media buyer and I've used them before and I've used them in agencies, multiple of them, and I know what we can get it for and it's like 95% of the way there and it's through just learning, educating myself, getting courses, running split tests and figuring out what works and what doesn't. And you get really good at it pretty quick. So I think most of us could honestly run it ourselves. And you start hitting about 5 million in annual revenue. Maybe, maybe, maybe you can make sense of that extra 10, 20, 30% juice that you get from the customer acquisition cost in terms of bringing that in house. If you enjoyed this, I need to know about it. Tell me on Instagram. Tell me in the comments below if you like this podcast, this is built for the larger operator. I'm not talking about your first five customers or anything like that. If you like this sort of content for the larger $1 million plus home service business, tell me about it. Love you all and we'll see you next time.