Before we decide where we’re going and how we’re going to get there, we first need to orient to where we are. This module is a broad, transparent overview of the current reality of digital marketing, with a focus on how particular elements of that reality affect paid advertising.
This would be an easy module to skip. Don’t. Taking the time to understand what’s true will have positive downstream effects on everything you do. And this knowledge and understanding will help you avoid potential problems.
One of the life principles I live by is that subjective utility is more important than objective reality. I don’t care if something is capital T Truth — I care if it’s useful. I mention that because you may legitimately take issue with, and find exceptions to, every single position I take in this module (and beyond). Your experience — and conclusions — may be different than mine.
Rather than spend time debating canonical truth, let’s agree to step back and ask ourselves — is this useful?
If you accept this view of reality outlined in module 1, and the principles that follow logically (discussed in module 2), I am confident your results with paid advertising will be better.
I also want to be transparent about my approach to this module because it speaks to an issue that concerns me deeply. Let me explain.
Several years ago, against my better judgment, I attended a digital marketing conference (that will remain unnamed). I was there with a referral partner, and lunch and evenings were devoted to speaking with clients (and prospective clients). However, I made the mistake of sitting in on a few sessions during the conference too, and I was stunned.
Not by what was being said — by what was not being said.
At no point did anyone tell the hundreds of people in attendance the behind the scenes reality of what they were learning. The fundamental truths about the economics of that approach to digital marketing were never discussed.
Instead, every attendee was told a story that just wasn’t real, and couldn’t be real. Which meant that the success they were being promised would never come true the way it had been described.
That doesn’t mean the method doesn’t work. In my experience, it often does. But, it doesn’t work the way it’s portrayed in the sales pitch, which means most people will buy, try, and fail, because no one told them the truth about what to expect.
I mention this story because I know that I’m overly sensitive to this problem, and I go out of my way (perhaps to a fault), to establish ground rules that are an accurate reflection of reality that everyone can understand.
The distinctly American term for this is ‘inside baseball‘. This is the knowledge that people inside a domain know is true and important, and people outside that domain generally don’t.
The Traffic Engine is my attempt to share the ‘inside baseball’ of paid advertising, telling you the truths that matter that insiders know.
With that as context, let’s discuss the current reality of digital marketing and paid advertising, and focus on the most important information we can use to create high-leverage principles (to be discussed in Module 2).
Fundamental Reality #1: There Is No ‘Right Way’
There’s a phrase used often in the martial arts which says that there’s more than one way up the mountain. I’ve been a black belt in Taekwondo since 1987, and I’ve spent many decades training. However, I don’t believe Taekwondo is better or worse than any other martial art — it’s one path up the mountain.
Judo, Aikido, Brazilian JuiJitsu, Karate, Kung Fu, Muay Thai and other martial arts practitioners are traveling up the same mountain. Each path is right for the individual. And, continuing that metaphor, everyone arrives at the same place at the top of the mountain.
Professionally, I’ve seen many different approaches to digital marketing, and I’ve seen nearly all of them work in some examples, and nearly all of them fail in others. I’ve also seen the same method work once, then fail miserably a second time it was used by the same client with the same offer.
You may have tried Product Launch Formula (PLF), Russell Brunson’s “perfect webinar”, Todd Brown’s E5, Digital Marketer’s “splinter offer” to “core offer”, and André’s Sphere of Influence / AutoResponder Madness approaches, perhaps with wildly different results.
Or, you may have been afraid to try anything for fear of making the wrong choice.
In my experience, there is no causal relationship between the method you choose and the outcomes you get. The method is just a mechanism, and finding the method that best suits how you work and how you want to show up in the world is far more important than matching a method to a desired outcome.
For example, I love to teach, but I do not like to sell. I also love to write. These factors combine to make SOI and ARM feel natural to me, and I’m far more likely to do the work that needs to be done when it feels easier and more authentic. (Park on a downhill slope is another life principle I live by.)
One of my goals for you in this program is to be method-agnostic. I want your knowledge and understanding to be independent of specific business / funnel models. That’s when you’ll have real power. I want you to see the underlying models, but think independently from them.
Fundamental Reality #1A — You Do Have To Know How The Method You Choose Works And How To Measure Results
There is an important corollary to Fundamental Reality #1. The path you choose doesn’t necessarily matter, but you need to pick a path, know how it works, and know how to measure results.
For example, if you decide that Sphere of Influence is your preferred approach for customer acquisition, you need to understand the structure of your front end (ad to multi-page pre-sell site), and know that the initial goal of your MPPS is to generate leads (but the primary goal is to generate customers).
You also need to know that first to second page conversion (i.e., the number of people who see the first page and click through to the second) is a very important qualitative indicator.
Conversely, if you follow Russell Brunson’s teaching and copy his free + shipping book offer template (with bump offer and upsell), you need to understand that the ad and the free + shipping offer all are designed to sell the higher-priced upsell (that’s where the profit is made).
You also need to know how to calculate economic performance from beginning to end, understanding how each component affects totals, and where the levers are to get better results.
Although the intent of each approach is the same (i.e., to generate customers), it’s critical that you know how your particular customer acquisition machine accomplishes that so it can be evaluated properly (and paid traffic results can be calculated accurately).
The mistake I see most often is that this critical step is overlooked, which turns everything into a black box. On one side is traffic, on the other side are sales, and in the middle is a question mark. Something happens, but you’re not quite sure what that something is…
I’ve heard myself say more times than I can count that if you can’t draw the structure of your business with a crayon and a piece of paper you don’t understand your business. I mean that.
Once you can literally see how your business functions structurally, and associate the appropriate metrics to each part, everything becomes easier and more effective. Don’t overlook this critical step.
Fundamental Reality #2 — Results Are Not Guaranteed, So We Need To Think In Probabilities, Not Absolutes
Once we understand that there’s no single method or ‘secret strategy’ that works all the time, we realize that the best approach we can take is to look for ways to stack the deck in our favor.
To do that, we need to stop thinking in absolute terms (“will this work?”), and start thinking probabilistically (“is this more or less likely to help me achieve my goal?”).
For example, in the upcoming Audience and Offer Masterclass, you’ll go through the exact process I use to create offers using the same methodologies and tools that I use. Will that guarantee that your offer (or mine) is successful?
Absolutely not.
However, each element of that approach increases the likelihood of success, and those gains compound. We could skip that class entirely, spend a day writing an offer, creating a funnel, choosing an audience, and throwing together an ad — and that might work. No one can say with 100% certainty that it wouldn’t.
But, if I had to choose between that ad hoc approach, or going through the steps in the Audience and Offer Masterclass step by step, I’m willing to bet that my probability of success is much higher if I follow the latter and not the former.
So much of what you’ll be learning in The Traffic Engine is how to stack probabilities in your favor.
I’m tempted to write that I wish there were a secret formula that always works, but upon reflection, that would be terrible. We’d lose out on all the nuance and excitement that makes this creative work so exciting and satisfying.
If there is a secret it’s this — the work is the reward. Yes, the results are the scorecard that lets us know if we’re moving in the right direction. In my opinion, money is a neutral indicator of value. But, if there’s one idea that I have internalized over the last 25+ years that has made all of the difference, it’s recognizing that all of my power, all of my enjoyment, and all of the meaning in my professional life is in the day to day execution of the work itself.
Fundamental Reality #3 — Marketing Has Evolved
Broadly speaking, there are two different approaches to marketing — brand and direct response. I like Dean Jackson’s explanation of the difference: brand marketing gives people a reason to buy, and direct response marketing gives people an opportunity to buy.
Modern digital marketing is heavily influenced by direct response marketing, and when we’re paying for traffic, that model is (in my opinion), the most effective — with a few exceptions.
I do not want to assume participants in this course are experts in direct response marketing principles, however, so let me explain a few of those principles I think are critical to using paid traffic effectively.
First, we pay for traffic to get a specific, measurable result, and the most common result we want is a sale. Even if we’re using paid traffic to get leads, and even if we nurture those leads over days / weeks, we are acquiring leads with the intention of turning some percentage of them into customers at some point in the future.
Second, the three metrics that matter most in direct response marketing are cost to acquire a customer, average order value, and lifetime value. To be effective marketers, we have to know these numbers as they apply specifically to our individual businesses.
Third, profit is made primarily in the back end of a business. I explained the difference between front and and back end in Module 0, and it’s critically important to understand the difference and construct your offers and business models accordingly.
The central insight of modern direct response marketing is that we sell something to gain customers with no expectation of making a profit on that sale, with profit following that initial sale when other offers are made over time.
An extension of this insight is that treating customers well is the right thing to do for purely financial reasons because happy customers will buy more, buy more consistently, and buy for longer periods of time than unhappy customers.
The following excerpt from The Traffic Engine manifesto speaks to the importance of treating customers well over time.
In October 2019 I had an opportunity to sit across from legendary marketer Dean Jackson at a speakers’ dinner prior to Kevin Rogers’ Copy Chief Live.
Dean explained to me that he had analyzed many of his clients’ businesses and found that all of them had something in common. When sales were calculated over time, 15% of sales occurred in the first ninety days after acquiring the lead, and the remaining 85% of sales followed over eighteen months.
“Think about that”, he said. “There’s 4x the revenue opportunity after ninety days.”
The implications of that analysis are staggering. Marketing is a long game and a clear understanding of the financial incentives tells us that we should be over-investing in long-term relationships with our prospects. That investment begins with where and how we acquire our audience.
I am not suggesting that treating people well is purely a financial decision. My opinion is that treating people well is the default position for any business. However, I do think it’s important to acknowledge that doing the right thing from an ethical perspective also is the right thing to do from a financial perspective. Everyone wins.
I want to acknowledge a caveat here in the spirit of transparency. You can sell a core offer with paid traffic in any number of price points depending on your business model. I know people who sell $497, $997, $1,497, $1,997 offers and beyond with cold traffic. I also have a friend who sells an $18,000 program by webinar to cold traffic. It can be done.
However, going back to our conversation about probabilities, we have to ask ourselves if direct to high-priced offer is the best method for making a sale. It may be, and you may have the offer and skills to do that. If not, there are other methods to sell high-priced offers with paid traffic.
Direct response marketing does have some significant issues, however. It is often (accurately) associated with over-the-top claims and ridiculous promises, high-pressure tactics, and ethically questionable persuasion techniques.
There’s also a natural progression of claims and promises within markets. The first product makes a claim and a promise, then the next product makes a bigger claim and bigger promise, and on and on it goes. What starts with ‘six weeks to six-pack abs’ leads, invariably, to ‘six-minute abs’ (with 6-second abs on the near horizon).
In my experience, this leads to an inescapable problem with a pure direct response model where claims eventually become so over the top that audiences stop responding. I’ve worked with clients in well-established markets where this is a significant issue. Buyers have been trained to buy with huge, unrealistic promises, and at some point the weight of those claims falls apart like a house of cards.
Or the U.S. Federal Trade Commission (FTC) gets involved. I know of several companies that have been investigated by the FTC, and at least one where the owners were told, in no uncertain terms, that they could no longer sell to novice markets in any niche. Poof! A multi-million-dollar business gone, overnight.
My approach in The Traffic Engine is to take what’s good from direct response principles, and leave behind the aspects that could create problems for our short and long term objectives.
Fundamental Reality #3A — E-Commerce Is Different Enough That We Need To Think About It Separately
Now that I’ve mentioned a variety of business models, funnel structures, and marketing approaches, it’s also important to recognize that e-commerce is subject to variations of these ideas.
Let me start by defining e-commerce so we’re all clear what I mean.
In the simplest terms, I think of e-commerce as a catalog of options instead of a single option. The path to purchase is usually non-linear vs. linear. Distractions are built in to the process (in general), instead of being meticulously removed in a direct response model.
A fundamental difference in the experience of e-commerce is that there are inherently many options vs. a single (initial) option. This is not always true, but it’s broadly true and it works well enough for our collective understanding.
Let’s looks at an example.
Earlier this year I purchased a travel bag from Away. I was looking for a specific item (a carry on bag), but my experience of buying from them exposed me to many items and many options. They have two sizes of carry on bags, options for built in batteries for charging devices, and an option for a front pocket.
It’s also important to note that their Facebook ad that caught my attention was about the company and products in general, not the specific product I was looking for. What caught my attention was the fact that they have a lifetime guarantee on their wheels (often a problem with rolling bags).
After I became aware and interested and clicked on the ad, it was my responsibility to identify exactly what I was looking for from many options. My buying path was non-linear. I browsed my way through their products until I found exactly the right one, instead of being guided through a linear process from ad to product to purchase.
I also purchased a second, entirely unrelated item (a mid-size bag for my wife). Their advertising was effective because it introduced me to the brand itself, highlighted a critical component of their value proposition that was meaningful to me, yet never lost sight of the fact that they attracted me to their site to make a purchase.
The most important distinction with paid advertising and e-commerce is recognizing that the goal is to get a sale, not just to ‘build brand awareness’ (which is, perhaps, the most expensive marketing phrase ever spoken).
The path to a sale may be slightly different than in other models (e.g., awareness on the front end followed by product-focused retargeting based on user behavior). But the intention is the same.
The terminology and metrics are different too. In a product-focused e-commerce model, profitability on each sale is important. (That’s less true for continuity / subscription models, however.) Away didn’t advertise to sell me a bag to get a customer so they could sell me more bags in the future. They sold me a bag to make money on that specific sale. That is a critical distinction.
When we get into implementation (modules 3-7) the differences will become more pronounced. For now, it’s important to keep e-commerce as its own path because it’s different enough from other business models that our thinking needs to be more nuanced to accommodate those differences.
Fundamental Reality #4 — Google And Facebook’s Advertising Platforms Are Increasingly Challenging To Use
Google and Facebook are the two big players in paid traffic, reaching an estimated 90% or more of Internet users globally.
We may wish we could avoid both platforms altogether, but the reality is we need to be able to use both effectively to get the most out of paid traffic opportunities.
That’s the good news. Let’s talk about the bad news.
Google and Facebook have made the decision that their financial success does not depend on working with advertisers who violate the letter or the spirit of their rules. There are entire business models and verticals that both platforms have decided they can live without financially, and they’ve purged those advertisers’ accounts (often aggressively).
A pure direct response business model — particularly if it’s not 100% transparent to the prospect / customer — is increasingly problematic on both platforms. Bold claims and big promises — even if they’re 100% legitimate and backed with mountains of evidence — will cause problems (particularly on Facebook).
You can have a landing page with 100+ testimonials of real customers with results verified by a forensic accountant (seriously), and still have problems if those results are not typical for all of your customers. And the reality is the typical result for most programs is that 90% of participants don’t do the work and don’t get a result.
That doesn’t make for a very compelling testimonial.
While I understand the intent — and know why both platforms have had to crack down on unscrupulous advertisers — it’s still maddening from an advertiser’s perspective.
And, in true marketing fashion, I’ll say wait…that’s not all…
Google’s rules, for the most part, are published, clear, and closely followed. If you violate those rules your days advertising with Google are numbered. They will discover violations reasonably quickly, and if the violations were intentional and egregious, your account will get shut down.
There is some nuance with Google’s interpretation of the rules and, if you get into trouble with the nuances, in my experience those problems are fixable. (My intention with The Traffic Engine is to avoid problems altogether — we’ll talk about the specifics for that with Google Ads in modules 3-4).
Facebook, however, appears to have written rules, unwritten rules, and inconsistent application of both sets of rules depending on the advertiser (or agency).
Facebook also often has a draconian reaction to violations, shutting down advertising accounts (and Business Manager accounts) for seemingly innocuous violations with little, or often no, warning.
And it appears that problems advertising on Facebook are associated with the individual, so any bad behavior follows the person, not a specific ad account.
Facebook also relies on artificial intelligence (AI) initially. At the ad level, that’s primarily keyword-scanning (e.g., using “you” and “your” in your ads is too direct, according to Facebook, and that seems to trigger the AI ad review algorithm consistently. Numbers are problematic too, according to a recent conversation I had with a Facebook rep who recommended “no digits” in ad copy).
I’ve had my agency’s entire Business Manager account shut down several times, for days , programmatically (reinstated each time, after human review, with an explanation that the shutdown was in error). That means, for several days I had no access to my clients’ advertising accounts and no guarantee that access would be restored. You can imagine how much fun that was.
Finally, recourse with Facebook’s policy team is spotty, at best. I know advertisers who have made innocuous mistakes, appealed, and had accounts reinstated in hours. And I also know others who made equally innocuous mistakes, appealed, and have been effectively banned from the platform.
Facebook, in short, is challenging, and needs to be approached with care. We’ll discuss how to do that beginning in module five.
One final note about Facebook (and, Google, to a much lesser extent) — just because you see another advertiser doing something, don’t assume it’s OK for you to do the same thing.
For example, financial publisher The Motley Fool has been running ads for months (possibly years) promoting a newsletter about investing in marijuana stocks. Many of those ads have images of marijuana plants, which is a clear violation of Facebook’s written advertising policies. I know someone in the same market who assumed he could use images of marijuana plants too, and within days his accounts were shut down and he was banned from the platform. His appeal — “but The Motley Fool is doing it…” — fell on deaf ears.
The knee-jerk explanation I hear often is that advertisers with big budgets have their own set of rules, but that’s not entirely true. I have worked with multi-billion-dollar clients who have been banned by both platforms. The reality seems to be more problematic — Facebook’s ‘rules’ are guidelines that are applied inconsistently.
We’re going to avoid these problems by understanding what the platforms want, and creating strategies that focus on giving them exactly that (which is different for Google and Facebook). Preventing problems is far better than trying to solve them.
This is another situation where everyone can win. If we give the platforms what they want we will, by extension, give the platforms’ users what they want which will create better results for us as advertisers too. Win-win-win.
Fundamental Reality #4A — We Need Multiple Sources Of Customers
Relying on a single source of traffic is inherently fragile. If you’ve ever dealt with advertising account problems you know how terrible it feels to have all of your traffic (and all of your income) turned off for any period of time.
Equally important, Google and Facebook represent audiences with significantly different intent. Google (search) is active intent, often focused on finding solutions to problems or looking for known opportunities.
Facebook represents passive potential interest — enormous audiences where a small minority of members (5-7% is a safe bet) might be interested in what you have to offer at any given time.
Creating campaigns on both platforms, and specific to each platform, distributes your risk which increases the durability of your business.
Your individual results will vary from one platform to the next (and within each platform). And you may find that one platform is easier to use than the other for your business. Do not use either as an excuse to rely on a single source of traffic. We’re going to build campaigns on both platforms and I encourage you to scale campaigns on both platforms as well.