Welcome to The Traffic Engine. I am grateful, and honored, that you’re here.
I’m going to jump right in with an idea from Switch by Dan and Chip Heath. The subtitle of that book is “How to Change Things When Change is Hard”, and it’s an excellent compilation of well-researched strategies for making positive change.
Switch introduces a concept called a “destination postcard” — a “vivid picture from the near-term future that shows what could be possible.”
Module 0 is my attempt at creating a destination postcard for The Traffic Engine. I want you to see what you can create in our next eight weeks together (and beyond).
There are two broad paths you might take and I want to address both.
Before I do that, however, I want to define a critically important term that I’ll be using a lot in this training — offer.
An offer is the marketing expression of a product or service at a specific point in time. It is not the product or service itself.
For example, The Traffic Engine is a product. The discounted price and live interaction with me for the first cohort for a specific period of time (April 1 — 7, 2020) was an offer.
When The Traffic Engine is released again in the future, it’ll be the same product (with some revisions, of course), but the offer will be different. The price will change, interaction with me will change, etc.
One product can turn into any number of offers. Think about the differences between The Traffic Engine delivered online, the way you’re participating now, vs. delivered in person during a small-group intensive ‘boot camp’ style event.
Those are two completely different offers with very different requirements (and very different price points). However, the product itself — my externalized thoughts delivered in a way that can be learned by others — is the same.
Let’s use an offline example to further explore the idea. One of my favorite restaurants has a “burger night” on Tuesdays. Any other day of the week burgers are $12, but on Tuesdays that same burger is $6. Same product, different offer.
Why? Tuesdays are the slowest day of the week for that restaurant. The low-priced offer is an attempt to get more customers in the door. Margins in the restaurant business are slim, and I’m guessing the $6 burger is break even to acquire a customer. The profit is made on the beers, appetizers, and desserts.
This is an important concept to understand. Your products and services are not your offers, but your offers depend on your products and services (or experience and skills you would like to turn into products or services).
Another important idea to understand is that the overwhelming majority of offers fail. If you spend much time in direct response circles, you’ll learn that approximately 80% of all offers fail.
Again — the offers fail, not necessarily the products those offers represent.
Don’t be discouraged if your initial attempts fail too. That’s all part of the process. We’ll discuss ways to test offers in advance with minimal investment of time, energy, and dollars, and other ways to stack the deck in your favor.
OK, now that we understand what I mean when I use the term offer, let’s talk about the two different paths you might be on in The Traffic Engine, and what each path will look like in the near future if you do the work.
I say “if” because I can’t do the push ups for you, and part of the destination postcard involves you imagining yourself rolling up your sleeves and doing the work. Trust me, it’ll be worth it.
Path #1 assumes you already have a customer-generating offer (meaning people have paid you money for a product or service you provide, or an affiliate offer you promote). You might be getting traffic from organic sources, word of mouth, affiliates, referrals, etc.
You may be buying traffic already too.
If you’re on this first path, and you do the work, by the end of eight weeks you will have at least one highly-focused Google Ads search campaign sending high-quality traffic to your offer, and you will be calculating cost-per-acquisition (CPA) and average order value (AOV) for that campaign accurately.
You also will have at least one paid Facebook advertising campaign sending traffic to your offer, and you’ll be calculating CPA and AOV for that as well.
In addition to these two prospecting campaigns, you will also have a behaviorally-based retargeting strategy for both the Google Display Network and Facebook. You will use qualitative factors like time on site to eliminate low-quality traffic, and focus your retargeting ad spend on recapturing value from your prospecting campaigns.
Think of these retargeting campaigns as automated follow up. For example, if someone sees your sales page for longer than 30 seconds but does not become a customer, s/he might see ads for a lead magnet. That person may not have been ready to buy when you were ready to sell, but s/he may be interested in becoming part of your tribe.
That’s just one example — there are seemingly infinite ways to use retargeting well. Rather than make it complicated, we’re going to identify the highest value follow up (retargeting) campaigns to create for different types of businesses and make sure you’ve done the obvious before thinking about anything esoteric.
This is the minimum I would expect you to have created by the end of the first eight weeks. The sky is the limit for what’s possible beyond that.
One last thought about this first path through The Traffic Engine. I include lead generation in this first path as well, even if those leads are not being monetized immediately. Even though lead generation doesn’t generate money initially, prospects are paying with their attention and that’s an important consideration.
The challenge with lead generation is that we only see one side of the financial equation (cost to acquire a lead — CPL). We don’t know the rate at which those leads will convert to customers — or if they will at all — until we’ve made an offer.
Regardless — lead generation is an important part of digital marketing and I want to make sure we discuss that in detail.
For those people on this first path, after the initial eight weeks, I expect that you will return to modules three through seven and continue to add prospecting campaigns to scale traffic intelligently, always keeping an eye on CPA and AOV. Adding and optimizing campaigns, and tracking the metrics that matter, will become second nature to you over time.
More importantly, you are learning how to do this work, and how to think about the principles and strategies behind the work you’re doing. Those are skills you’ll take with you and improve, day by day, as you build new and better traffic engines for your business.
There’s another path as well. Path #2 is for students who have an idea to validate before creating an offer, or want to test new ideas for an existing product or service before committing to creating a new offer.
For those students, I suggest using the keyword and audience research insights from modules three and four, setting up a Google Ads account, but not creating a search campaign (yet). There may be exceptions to this suggestion and I’ll make those clear.
Instead, modules five and six, and the Facebook Offer and Messaging Testing Framework masterclass, will explain how to test offer ideas using long-copy Facebook ads.
That framework will show you how to identify the ideas that resonate most with audiences, eliminate the ideas that don’t, and point the way toward future success.
Students on this path will validate an idea (or ideas) first, use that information to create an offer, and then setup Google Ads and Facebook prospecting campaigns, followed by Google and Facebook retargeting campaigns.
Timing for this second group will depend on the results from testing. A clear, positive signal early would speed up the process. However, don’t rush through this part. Use the opportunity to gather these powerful insights and that investment of time, energy, and dollars will pay dividends later.
These two paths are not mutually exclusive. Your situation may benefit from sending traffic to an existing offer while also testing ideas for a new offer or project. Consider my descriptions of these two paths to be two ends of a spectrum of options, with your individual needs somewhere in between.
I will be creating an offer along the way too, and I want to do that in a way that is most useful and instructive for you. I explained my approach in one of the emails for The Traffic Engine. Those of you who signed up early may have missed that, so I’m including it here so you’ll know how I will be creating and testing my offer (or offers).
OK, let’s move on and discuss a high-level overview of what we’ll be doing and why.
At a fundamental level, we will be monetizing attention. We will be spending money to attract the right people into our worlds with the intention of generating more money than we spent on that initial investment.
Depending on our business model, that might mean breaking even on initial sales and making our money on the back end over time, or trying to be profitable on the front end.
“Front end” and “back end” are two terms I need to define clearly as well. The front end of your business is whatever you sell that turns a prospect into a customer.
For example, a $97, 90-minute masterclass about one particular part of the value you offer your customers could be a front end product.
The critical thing to understand about front end offers is that they convert prospects into customers (usually are at a lower price point).
Back end offers are what you sell after someone has become a customer. That could be a sophisticated value ladder of offers, or simple a more expensive core offer.
A very common online example is a $97 front end offer that leads to a $497 offer (which may lead to a $1,997 offer eventually). The price points and specifics don’t matter. What matters for our purposes is that front end offers acquire customers — hopefully at break even or slightly better — and back end offers generate the business’s profits (usually over time).
Now that we have a basic understanding of front end vs. back end offers, let’s talk about a “break even” front end or “going negative”.
Breaking even on the front end means that the cost to acquire a customer (CPA) is approximately the same as the money a customer spends in his or her first interaction (average order value, AOV).
For example: if it costs me $100 to acquire a customer, and I sell a $100 front end product, I would be operating at break even (which means I’m getting customers for free).
For typical entrepreneurs this sounds crazy. What kind of business spends $100 to acquire a customer who then only spends $100? There’s no profit so how can this be a business? Profit on the front end is a very rare luxury — if you can make that work then wake up every day thanking your lucky stars.
Acquiring customers at break even is the Holy Grail of marketing. When you do that you’re getting customers for free, and those customers will continue to buy from you over time as long as you continue to create valuable offers (and treat your audience well).
“Going negative” means spending more to acquire a customer than the money made in my first sale. For example, if I spend $120 to acquire a customer, and I sell a $100 product, it’s costing me $20 to acquire a customer. The assumption in this example is that I continue to sell over time and make my profit on back end sales.
For example: if I own a supplement company and it costs me $75 to acquire a customer, that customer buys a $50 two-month trial of my best-selling product, subscribes for auto-delivery of that product for $50/month, and the average customer subscribes for six months, “going negative” actually was profitable.
How? Let’s look at the numbers. $75 CPA — $50 AOV for the first sale means I’m -$25 to acquire a customer. However, on average, customers spend an additional $300 ($50/month x six months = lifetime value — LTV).
My gross revenue per customer would be + $275.
Here’s the formula: AOV ($50) — CPA ($75) + LTV ($300) = $275.
(Don’t worry about understanding the metrics yet. We will talk about those repeatedly throughout The Traffic Engine and you’ll internalize their importance over time.)
And yes, I know that if you sell a $50 supplement there are costs to produce that product, to run your business, etc. For now, let’s focus on the overall ideas and then refine the specific applications at the appropriate time.
Something to keep in mind — it is highly unlikely that we’ll be profitable immediately. I know the world is full of ’10x traffic secrets’ and other bold claims, but the reality is that the economics of paid traffic can be difficult, especially at first.
Knowing that, we’re going to develop the discipline of iterating our way to profitability one step at a time. You will have a significant head start because The Traffic Engine is built on timeless principles which have been translated into costly mistakes to avoid, and high value activities to implement.
I’ve spent tens of thousands of hours learning what works and what doesn’t, and we’re going to focus on those few things that matter most.
The Traffic Engine methodology is designed to give you a significant advantages over trial and error, and show you how to create and then build upon success systematically.
We covered a lot of ground in this pre-training module. Now you know the road ahead and what you can expect to create during the next eight weeks and beyond.
I’m glad to have you here, and I am so excited to see what you create.