The Weekly Sharpener #133

👋 Hey fam!

I'm really excited to share this 👊 Wednesday roundup with you!

Another Add Creative is out and you're in for 🤌 content. Excited for you to spend some time learning from Phoenix Ha (CEO of AdBeacon) who joins us and talks about business building, mindset, and overcoming obstacles.

We also dive into what it means to have a healthy business and how you can reverse engineer your process to understand whether you can offer discounts, etc.

We learn a few things from our experts about new ad styles and CRO fundamentals. Excited for you to check it out.

Hope your ads are scaling and LTV is 📈!

Cheers,

Chase

Starting using Pencil to Create winning ads 10x faster with AI.

Special Tip:

Yes, increasing your creative testing will cause an incremental shift in CVR.

No, it won’t take your business from 8- to 9-figures.

Marketing is just the amplification of the brand, not the construction of it.

Courtesy of Sarah Levinger

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🎙Add Creative

Come hang with Phoenix Ha and learn about company building, personal assessment, and breaking through barriers.

I was ready to run through a wall after this one, I hope you enjoy it!

 Spotify 🎧

Content That Matters 🐐

Why it matters: This embed looks terrible - we know but the content is magnificent.

TLDR:

2 scenarios

Let's look at a hypothetical e-commerce business:
• $100 gross retail price
• 50% pre-marketing margin (post opex, cogs, etc)
• 25% ACOS (so a 25% net margin)
• 100k visitors per month
• 2% conversion rate
• 2k orders = $200k gross revenue or $50k net margin

The brand might want to improve its below-average conversion rate, boosting overall revenue. So they put out a discount offer, 20%.

Here's how it looks now:
• $100 gross retail - $20 discount = $80 offer price
• They were making $50 gross margin per, but now only $30
• ACOS stays at 25% of gross
• 100k visitors still
• Conversion rate bumps to 2.4% (a great increase!)
• 2.4k orders = $240k gross or ONLY $12k net margin

That net is calculated = [$80 (price) - $50 (costs) - $25 (acos)] x 2400 orders, so only $5 net per unit vs $25.

Why do I bring this up in a newsletter about creative?

Well, if you don’t make money you can’t spend money on ads! So it benefits the entire ecosystem (you mainly) to have a healthy, thriving business.

There are two schools of thought which are outlined in the LinkedIn post + the scenario above.

A) Better Margins & Fewer Customers

B) More customers & fewer Margins

This all depends:

• on how you are capitalized as a business - can you float CAC?

• what is your repeat rate?/how quickly will they repeat? (Aka what is your payback period)

• Sub-question: What kind of AOV do you expect with said discount? Above 150?

• Do you need a higher purchase velocity? (If discounts do that - re-examine your offer + your LP’s)

• Will those customers you have acquired via sales turn into good customers over their lifecycle? (if there is one after the first discounted purchase)

• Can your brand withstand severe discounting?

There are loads more questions but let’s start there.

Take your time…

Have you answered them yet?

Good. You know:

• The quality of your discounted vs. non-discounted customer

• How quickly do they purchase

• What is their payback period is

• What is their expected repeat rate is

• Do you have enough cash on hand to do this?

Okay…now with this you can make projection. (Here’s a great online course on forecasting).

What do you see?

• Will the ads you’re running bring you great customers?

• Will your LP’s convert them fast enough

• Will your offer make sure you don’t need discounts

• Will you have made sure you have enough contribution margin in each person to survive/thrive as a business.

What I am saying is - to focus on reverse engineering this so you can then have FUN with your ads and creative strategy, because if you forget this, no amount of great creative in the world will save your business.

Expert Strategy + Learnings

Some amazing learnings from thought leaders in DTC.

Dylan's CRO Tips 🙌

Sticky ATC buttons can be effective, but make sure they don't block important info.

They also take up ~15% of screenspace if they're fully sticky ATC buttons, so make sure to be careful when analyzing them. Not good or bad, they perform differently on every site.

For more 🔥 follow Dylan Ander.

Rahul's Paid Media Learnings 🤘

Test negative hooks in your next ad iteration. Tell the audience why you don't like the product and then follow it up by providing reasons on why it's so great.

Seems quite sarcastic, but provides a humorous take to the ad and keeps viewers engaged.

Follow Rahul and reach out to Reach Digital to work with him 🧠

Worth Your Time 🤌

From our Library 📚

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Our Preferred Tech Partners 👏

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• Social Snowball - frictionless affiliate programs for your customers and creators

• Triple Whale - attribution - need I say more

• Air - keeping all of your assets organized is a pain. Air makes it delightful.

• Creative OS - if you love making ads on Figma, you'll love this.

• Insense - your one-stop shop for sourcing and working with creators.

Fav Newsie's

• Nice Ads 

• Acquire Weekly

• Your Content Should Sell

• The Performers

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