Home Blog How To Build A Happy Customer Creating Engine With Paid Traffic (by Shawn Twing)

How To Build A Happy Customer Creating Engine With Paid Traffic (by Shawn Twing)

This is a mini-course by guest expert Shawn Twing.

Shawn is a friend and business partner in a few projects — a consultancy, and a digital course for creative marketers called Ideas into Assets. Later this year we’ll be publishing The Traffic Engine.

Shawn has more than two decades of experience developing, executing, optimizing, and scaling digital marketing strategies for clients large and small, building and refining a principles-based framework to do what he does successfully and predictably, and advising and teaching others how to do the same.

He is infinitely curious, lifelong student fascinated by the mental models, strategies, and methods that reliably produce results outside the norm.

Shawn approaches every project and client relationship the same way, embodied in a simple question — if I woke up tomorrow owning your business, knowing what I know, what would I do?

I hope you enjoy this mini-course on how to build a happy customer creating engine with paid traffic. Over to Shawn.

Table of Contents

Introduction

Before we dive in to the individual lessons, let’s start with the 30,000′ view and answer three clarifying questions:

  • What is paid traffic?
  • What is a ‘traffic engine’?
  • Why should you care?

When I use the term paid traffic, I am referring to any environment / platform where money is exchanged for awareness or action. For example, Google Ads (formerly AdWords), Bing, Facebook and LinkedIn are paid advertising platforms. In exchange for money, we can reach audiences that each platform has aggregated.

Email co-registration, affiliate promotions, paid email placements, CPA networks, smaller ad networks, retargeting engines … all of these are ‘paid traffic’ because they have a pay-to-play model.

The exchange of money is critical in my definition of paid traffic. I often hear the question “why should I pay for traffic when I can get it for free?” Let me be very clear about something — there is no ‘free’ traffic — we pay for awareness and engagement with money, time, or both.

A ‘traffic engine‘ is a system for consistently, reliably, and predictably creating and growing awareness, interest, and desire for a business or other venture.

Paying for traffic with more money than time has many benefits. The major traffic platforms are accessible immediately (hours/days). Demographic, psychographic, and intent-based targeting can be very granular. Performance data can be segmented and analyzed for insights. Traffic volume/spend can be increased or decreased quickly. And user behavior can trigger specific actions to create more personalized engagement with prospects.

At the same time, paid traffic remains a “black box” for many businesses and marketing professionals. Each platform has its own best practices (and specific challenges). Wasted ad spend is rampant. Results often are unpredictable. Broadly useful training is rare. Tactics are taught at the expense of principles (and tactics change quickly).

During the next ten days I’ll share an insider’s view of what it takes to build a ‘traffic engine’, and ten powerful ideas I’ve learned over the last two decades. Along the way I’ll answer your questions so please don’t hesitate to ask.

Will it Make the Boat Go Faster?

In a world that sells easy, push-button digital marketing ‘secrets’, the truth few want to talk about is that building a business online is hard. There are seemingly limitless options for business models, strategies, tools, tactics, and platforms — yet, instead of making everything easier, we’re often left wondering what, exactly, we’re supposed to DO…

Worse, we’re busy all the time with no consistent progress to show for it.

My goal for this 10-part series on paid traffic is to cut through the clutter and give you actionable, transformative insights that you can implement immediately. However, I can’t do the push ups for you. There is no easy button, so get your cup of coffee (or tea), put your phone on mute, roll up your sleeves, and let’s dive in.

At the 2000 Sydney Olympics, Britain’s Men’s Eight rowing team did something no British team had done since 1912 — they won gold. How they did it holds a critical insight for all of us seeking to accomplish anything meaningful.

After a disappointing finish in Cologne in 1998, the British team began to ask one question for every decision they made — will it make the boat go faster? (Hat tip to Simplero founder Calvin Correli for recommending Ben Hunt-Davis’s book that tells the story.)

“Will it make the boat go faster?” — modified slightly for our purposes — may be the most powerful question you can ask to radically transform your business (and your life).

Before we get ahead of ourselves, we need to unpack a couple of related questions. What is the ‘boat’ that we’re working on, and how do we clearly define ‘faster’? If we don’t take the time to answer both questions with razor-sharp clarity we’re doomed from the start.

We could define the ‘boat’ as an offer, a funnel, a particular traffic campaign. Narrowing our focus like that is appealing, but I think it would be a mistake.

Instead, I recommend that we define our particular ‘boat’ as our business / craft / profession. This perspective forces us to hold up every decision to a simple question — will this make my business go faster?

Next, we need a very clear definition for ‘faster’. No one has answered this question better than André — the goal of any business is to produce happy customers, so ‘faster’ is our measurement for how we’re doing relative to that goal. (Read — and study — André’s article here.)

Here are two simple examples.

If I have a customer acquisition funnel that produces ten customers per day with a 20% refund rate within 30 days, I’m producing eight happy customers per day (10 / day – 20% within 30 days = 8 happy customers per day). Reducing my refund rate from 20% to 10% would make my ‘boat’ go faster because I would be creating nine happy customers per day vs. eight.

A simpler example — if that same customer acquisition funnel produces nine happy customers per day and I scale that campaign to twenty-five happy customers per day, my ‘boat’ would be going faster.

This clarity and precision is critical — the moment we let our primary goal become muddy and vague we’ve lost the profound power of Ben Hunt-Davis’s question.

Your first assignment is to get something to write with and something to write on and clearly define the boundaries of your business. (I often say that if you can’t draw your business on a napkin with a crayon you don’t understand it clearly enough.)

Here are some questions to help you get started.

What are you paid for / what do you sell? (This could be a product or a service, physical or digital. What we’re looking for is clarity about the exchange of monetary value from your customers to you. What is the thing that customers buy from you? Don’t get wound up about front end vs. back end – get it all down so it’s visible.)

Where / how do your customers find you? (Organic traffic, paid traffic, word of mouth, referrals, affiliates, guest blogs, other online content, etc.)

What measurable steps happen between awareness and purchase? (What do your prospects see, hear, and do that makes them aware that you / your business exists? How do they begin to engage? Continue to engage? How do they eventually buy?)

Take the time to answer these questions thoroughly and precisely. Everything that follows over the next nine days will build on this foundation.

P.S. In its simplest form, all business is an interplay between traffic and conversion. Tomorrow I’m going to share a powerful traffic framework you can use immediately to unlock the power of any traffic platform.

Three Types of Traffic — The First Traffic Pyramid

Severaleveral years ago one of my employees wrote the following at the top of a white board in my office — “framework before work“. (Thanks Tyler.) That simple phrase has stuck with me ever since.

A framework is a way of understanding the world. For example, traffic + conversion* is a framework. It’s a useful model for distilling everything a business does into two broad categories — creating/channeling awareness (traffic) and transforming that awareness into a result (conversion).

*My good friend Jack Born expanded the traffic + conversion framework to include economics — it’s worth your time to study his model deeply. You’ll thank me later.

In my experience, taking the time to identify and validate frameworks has many benefits.

I’ll share two frameworks for paid traffic — the first in this lesson, and the second later in this series (day seven).

The Traffic Engine - Traffic Pyramid

All online traffic — paid or organic — fits into one of three (and only three) categories. I’ve spent decades thinking about this, and I haven’t found a single exception.

First, there are people searching for you. “You” could be a person (e.g., a search for andre chaperon), something you have created and named (e.g., autoresponder madness), or a business (e.g., netflix).

In general, this first type of traffic is the lowest volume and highest quality. It’s also the easiest to acquire — Google wouldn’t be Google if people didn’t find you when they search for you. Organic search drives most of this traffic — however, paid search also plays a role if your competitors bid on your branded keyword phrases.

Second, there are people searching for what you have to offer. The critical distinction in this second category is that the searches are not specific to you, but you provide a solution that matches the search.

For example, AutoResponder Madness would be a useful search result for email marketing course, but it’s not specific to any particular person or product.

This second category of traffic is high quality and often high volume. It’s often very competitive. (BTW, competitive is good. When there’s competition that means there’s money to be made.)

The third category of traffic are people who, if they knew you or what you have to offer exists, might be interested. This is the largest audience and also the lowest quality.

The critical distinction between these three types of traffic is intent. When someone searches they have active intent — they’re looking for something (often in terms of solving a problem or finding a known solution).

roofing contractor near me is a solution-focused search. how to fix a leaky roof is a problem-focused search.

The third category of traffic does not have active intent — they’re not looking. Instead, because of some combination of demographic and psychographic characteristics, they might have passive potential interest. Meaning they might like it (and buy it) when they see it, but they’re not looking.

For example, I have been a customer of GoRuck for several years. GoRuck makes special forces-grade backpacks and other gear. It never would have occurred to me to search for their products (by name or by type), and I was not actively looking to solve a problem. Instead, I stumbled on their story (awareness), found myself increasingly intrigued (interest/desire), and eventually became a repeat customer (action).

Here’s the framework, in brief:

  • Category 1: People Searching for You. (Organic search, paid search — particularly Google and Bing.) Lower volume, ultra high-quality.
  • Category 2: People Searching for What You Have to Offer. (Organic search, paid search — particularly Google and Bing. YouTube in certain circumstances.) Higher volume, varying quality depending on search terms, (usually) highly competitive.
  • Category 3: People Who, If They Knew You or What You Have to Offer Exits, Might Be Interested. (Facebook, Google Display Network, YouTube, LinkedIn, affiliate emails, etc.) Enormous potential volume, very low overall quality.

Today’s assignment — identify how you’re currently getting traffic in each of these three categories. For example:

  • Category 1: organic search.
  • Category 2: Google Ads.
  • Category 3: Facebook. YouTube.

For extra credit, identify the relative volume and quality of traffic using Google Analytics or a similar tool:

  • What percentage of your traffic is acquired from each traffic category?
  • What is the cost?
  • What is the revenue? (If you don’t have revenue data, pick another meaningful metric like lead volume.)

Up next — why “media buying” is dead (and a much better way to think about paid traffic).

Just Say No to “Media Buying” [Traffic Is Part of the Funnel]

I know it’s only the third lesson, but I need to ask you a favor. We’re friends now, right?

Let’s all agree, from this day forward, to stop using the term “media buying“. I know that’s blasphemous in some circles, but trust me, this is important.

‘Back in the day’, traffic was cheap and the whole point of paying for traffic (aka buying media) was to get prospects to a landing page. Preferably a bare-bones ‘squeeze page’ with a big promise and an opt-in (until Google pulled the plug on that model and entire businesses disappeared overnight).

Then, once someone opted in, turn on the email gauntlet and watch the dollars flow (or trickle).

Credit where credit is due — André was one of the first people to recognize the impending collapse of this model many years ago and he built his audience, and his business, on very different principles.

Traffic volume was the name of the game because clicks were cheap and 1% conversion rates worked economically. List fatigue wasn’t a significant concern because there were always more cheap clicks to buy.

No one really cared that 90% (or more) of ad spend was wasted and low — single — digit conversion rates were the norm. The whole system made money even when most of the system’s parts were conceptually broken.

Here’s the problem — the days of cheap traffic are long gone, and they’re never coming back. Those $.06 clicks are now several dollars each, and 1% conversion rates just don’t work in that environment.

Fortunately, the solution is straightforward — make traffic part of the funnel, not an afterthought.

Instead of creating an offer, building a funnel, and then “going to the traffic store” (Ryan Deiss’s description of paid traffic), think about where you’ll get traffic before creating the offer and the funnel, and plan accordingly.

For example, if someone is standing in their rain-soaked living room searching for roof repair near me, I think it’s safe to say they don’t want to opt-in for a “Five Ways to Save Money on Your Next Roofing Project” lead magnet. Instead, mention 24-hour emergency service and include a phone number in the (search) ad!

Conversely, if you’re selling a $297/month subscription on Facebook to people who aren’t actively looking for what you have to offer, be prepared to entertain, educate, and inform in ways that are interesting and credible to your audience (most likely over days/weeks/months).

[I’m going to share some ideas to do this effectively on day five.]

There’s one very important caveat to mention. There are many successful businesses that continue to use the media buying model (offer first, bolt on traffic later). I’ve seen Facebook, Google, and other accounts spending enormous sums of money using this model and yes, it continues to work for some businesses.

However, the writing is on the wall, and if you spend enough time inside these businesses you’ll hear the fear and concern. (And, occasionally, panic.)

Google and Facebook have made the strategic decision that they can thrive financially without relying on businesses that make over the top claims or have sketchy, aggressive business models. That’s the new reality and, as a Facebook rep told me quite recently, “yes…we’re looking much more closely at certain verticals…”

Take my advice — do the harder thing now and start incorporating the source and intent of your prospects as integral parts of your offers/funnels. That will make everything easier later (and produce much better results in the short-term too).

Now, let’s talk about your homework.

Pick one offer you’re running or planning to run (or a client’s offer if you’re a freelancer or agency), and make three lists.

List #1 is all of the reasons someone might benefit from your offer. Be very specific, and ask (and answer) “why” several times for every item on the list. Write out each answer (yes, you’ll have a long list), and then put an asterisk next to the top 5-7 when you’re finished.

List #2 is harder — believe me, it’s worth it. Make a list of all the reasons why someone might not want to engage with your offer (not your product/service — the offer itself). For example, if you require an opt-in for a 45-minute webinar, your list would include reasons like “prospects don’t want to give their email address”, “prospects don’t want to sit through a 45-minute webinar”, and “prospects don’t want to watch a webinar on their mobile phone”.

List #3 is even harder (remember — we’re friends — you can trust me). Make a list of all the ways in which someone could sabotage / undermine the value your product/service provides. For example, if I were making this list for my agency business, I would include the following:

  • “Second guessing decisions because of something they read/heard online”;
  • “Focusing on methods instead of results”;
  • “Micro–managing the process”; and
  • “Relying on opinions instead of data for decision–making”.

You’re going to use these three lists to write an ad so take this work seriously!

Tomorrow I’m going to tell you a secret that’s probably undermining your work, and show you how to inoculate yourself against it. Until then … do your homework!

Quality, Then Quantity [At First, Do Less, Better — “Scaling” Is Not the Answer]

There’s an old saying — complicate for profit, simplify for results. Meaning, if you want to sell something, make it seem super-complicated. Focus on all the moving parts, all the “what ifs?”, future-pace some worst-case scenarios, and convince everyone that only you know how to avoid the deadly quicksand.

However, if you want to achieve something, strip all of that away and focus on the few things that matter.

I call this 5/95 thinking.

In my experience, insiders know that there are a critical few factors that really matter (in any endeavor) — the 5% — and those critical few are responsible for the overwhelming share of results — the 95%. (Don’t worry about the actual math — it’s irrelevant. What matters is the underlying idea.)

We have covered some 5/95 thinking already. Near the top of that list is understanding active intent vs. passive potential interest. Do that right and everything is easier.

Another 5/95 idea for paid traffic is to focus on quality first, quantity (a distant) second.

For example, here’s one of the most common mistakes I see. I call it the “throw a bunch of ideas as the wall to see what sticks” method.

For paid search, it usually looks like 1-3 not so great ads, 50-100 keyword phrases, and a random budget (which is always too low).

What happens? The budget is spent in hours to support so many keywords, which means there’s no opportunity to see a strong signal within the noise. The low-quality keywords are mixed in with the high-quality keywords, but that’s not obvious in the reporting because all are served equally and none can get real traction. The ad copy isn’t specific to any particular set of keywords so conversion is low. Cash is wasted and, weeks/months later the conclusion is “paid search didn’t work for my business.”

My reply — “the way you did paid search didn’t work for your business.”

Here’s an alternative. Identify one (and only one) very specific keyword phrase that’s perfect for your business. If you sell red widgets online and offer free shipping, start with “buy red widgets online free shipping”. (For all the Google Ads geeks out there, it should be +buy +red +widgets +online +free +shipping.)

Then write one (and only one) really great ad that speaks to someone who wants to buy red widgets online with free shipping. Take the time to speak to his/her needs.

Spend your entire daily budget on that one search term. Study your results daily. If that phrase/ad doesn’t work, then you know where to focus. If you can’t make it work, then yes, paid search didn’t work for your business. And, let’s be honest, if you can’t make a perfect search phrase work with a well-written ad, there are probably bigger problems to solve.

The “see what sticks” mentality isn’t limited to search. I see it on Facebook all the time too. Identify an audience, throw together a few ads (usually with curiosity and a big promise), and then wonder why results are terrible. Cue the “Facebook doesn’t work for my business” refrain.

Here’s an alternative. Write one really good ad. Imagine your ideal prospect sitting in front of you:

  • What keeps her up at night?
  • What problem does she have that you’re uniquely qualified to solve?
  • What does she want most that you know how to help her achieve?

Write to her — from the heart. Speak to those felt needs, make it clear you understand the problem(s) and desire(s) deeply, and that you have a solution. If that solution isn’t right for everyone, be honest about that. If there are hurdles (like opt-ins and webinars), mention that too. Treat your prospects like good friends.

Some of the best performing Facebook ads I’ve ever seen (from the perspective of generating customers) have been written by business owners with no formal Facebook or copywriting training. How is that possible? Because the copy was authentic, showed deep knowledge of and empathy for the prospect, and demonstrated credibility and authority. Contrary to popular marketing “best practices”, sometimes it’s the steak, not the sizzle, that sells.

You’re going to learn how to write an ad like that — one that has the potential to transform your business — next.

Finally, let’s agree for now to forget about “scaling”. What that usually means is pouring money into a campaign at the first signs of mediocre performance, and I don’t think any of us want to be in the business of adding mediocrity to the world.

Instead, let’s do one thing exceptionally well — just one — and celebrate that success before moving on to the next thing we can do exceptionally well. Before you know it, we’re going to be doing many things exceptionally well (which sounds a lot like scaling intelligently to me).

Make sure you’ve completed your homework through today. You’re going to need those ingredients for tomorrow.

Ads Should Provide Standalone Value — Especially Facebook

You’re going to write a long-form Facebook ad in this lesson. Why Facebook? I’m glad you asked.

Writing a long-form Facebook ad (650 – 1,000 words) is an opportunity to completely transform how you think about paid traffic. That amount of copy will force you to make a few positive decisions.

First, it will require a deep dive into the value you can offer, who will benefit most from that value, and, perhaps most importantly, who won’t. If that sounds familiar it’s because those are the questions from lessons three’s homework.

Second, a long-form Facebook ad has enough content that it’s part of the offer funnel. Thinking about an ad as part of the funnel has many positive downstream effects — particularly cohesion / congruence in your messaging.

Third, long-form ads pre-qualify prospects which dramatically increases the quality of visitors. Higher-quality visitors means better conversion rates, lower refund rates, and longer stick rates — everything we want in happy-customer-generating machine.

Fourth, long-form ads can be repurposed. I’ve seen many Facebook ads turned into advertorials that drive high-quality traffic from the Google Display Network, and some Facebook ads turned into the first page of a Sphere of Influence-style funnel.

Before we write an ad, let’s talk about some quicksand to avoid. Facebook is not particularly transparent with their policies, but there are two things to avoid completely:

  1. The first is making a promise with a time frame. For example, lose 10lbs in six weeks, or create a six-figure business in three months.
  2. Claim + timeframe is a guaranteed ticket to ad disapproval. It’s also possible Facebook’s AI uses numbers to trigger a human review. An ad rep recently told me “no digits” in ad copy (meaning no numbers — at all — to avoid an algorithmic disapproval).

  3. Second, avoid using the words you and your in ad copy. Facebook doesn’t like specific, direct language that calls out an individual. Again, I suspect you / your is triggered at the AI level so be careful with this in general.

Tone is important to think about as well. From an advertising perspective, Facebook is a social selling environment (with social being the overwhelming part of that equation and selling a distance second place). If you were to post something on Facebook to your friends, that language would be different than copy you might write for an ad. And that can be a problem. Good ads need to feel like they’re social first and that’s the tone we’ll use.

One more thing before we dive in — the first two lines of your Facebook ad will dramatically affect performance. I’ve seen enormous differences in performance testing variations of those first two lines. My recommendation (from experience and a recent conversation with a Facebook rep) — start by asking a question. (No, that should not be something like “Anyone else want to lose 10 lbs in six weeks?”…)

I don’t like templates (and I don’t use them in my agency). The guidelines I’m going to give you below are simply that — guidelines. They’re there to get you thinking, but they’re not set in stone. It’s far more important that you find your unique voice.

Before we begin, you’re going to want to have the three lists you created on lesson three for reference.

Start with the list of 5-7 benefits your product or service provides and choose the one that you think is most important to your prospects. What gain does that provide and/or problem does that solve? Don’t rush this — really think about it.

For example (fear) — “Ever woke up in the middle of the night wondering about this week’s payroll?” (That’s a classic fear of small business owners.) Or (greed) “Are their secrets Wall Street traders know that main street American investors don’t?” (That’s a very common perception among individual investors.)

The question is an opportunity to connect — viscerally — with your ideal prospect. You want to ask the question that they’re asking themselves over and over again. It’s very difficult to get this right on the first try, but don’t let that stop you. (It’s also easy to test variations later.)

Now you have your ideal prospect’s attention. Instead of writing an ad, I want you to imagine the following scenario. You’re on a plane sitting next to someone who you have just realized is your ideal prospect. They have seen the question you formulated a moment ago, and they mention that they have been asking themselves that exact question for years.

What would you say? You’d probably start by making it clear that you’ve thought about the question professionally for a long time to so you could make that connection, establish credibility and demonstrate authority.

Imagine, for example, you and I were sitting next to each other on a plane and I wrote down the following question:

“Ever wondered how to create a steady stream of customers using Google Ads and Facebook advertising?”

I wouldn’t beat you over the head with credentials, but when I realized you were interested I might say something like “I’ve been thinking about this question a lot too. I’ve run a digital marketing agency for twenty one years, worked with more than 165 clients, and managed tens of millions of dollars in ad spend and I can share a few ideas I’ve found valuable.”

I wouldn’t list all the awards I’ve won, name-drop all of my high-profile clients, or recite a testimonial from an authority.

(My father used to describe the former as commanding respect, and the latter as demanding it. In my experience, commanding respect is far better. At the same time, don’t be unnecessarily humble. One of my good friends occasionally reminds me that “it’s not bragging if you can do it”.)

Once I established my credibility / authority, my first priority would be to tell you a few things that are critically important about the question I asked initially that made the connection (creating a stream of steady customers on Google Ads and Facebook). I wouldn’t get into the weeds, but I would share what I think are the 3-5 most important things you would want to know.

Then, I would show you where the quicksand is by explaining the most important reasons this might not be a good fit. For example, if you’re not interested in paying for traffic, your customers aren’t easily accessible online, you don’t have a web presence, etc.

Remember that this has to be genuine. I see this done wrong a lot where objections are set up specifically to further the sale. For example — “But, if you’re not interested in making a ton of money effortlessly on the beach and don’t have enough garage space for all of the exotic cars you can buy, then this isn’t for you…” Give me a break.

Finally, you need to give someone instructions about what they need to do next, and be very clear about what they will need to do when they take that action. Let’s assume that you sell by live webinars every Thursday at 8:00 p.m. ET, and someone needs to opt-in with a valid email address to watch that webinar. Instead of waiting until the landing page to reveal that, include it in the ad copy.

Why? Because some people don’t watch webinars, they aren’t available at 8:00 p.m. ET Thursdays, and / or they don’t like to share their email address. By being clear right up front about what happens next, the people who won’t take action don’t click through (which keeps your data cleaner and is better for everyone).

Again, I don’t like templates, but this should be the outline to get you started.

Ask a powerful question that is deeply important to your ideal prospect.

Quickly (and with appropriate humility) explain your experience and expertise relative to that question.

Share your top 3-5 insights without getting deep in the weeds. Remember the person you’re talking to doesn’t know what you know, so use clear, conversational language.

Then, be honest about any factors that would disqualify someone from benefiting from whatever you have to offer.

Finally, tell them what to do next and what will be involved. Don’t justify or sugarcoat anything — if someone needs to watch a 90-minute webinar to understand your offer, tell them that.

My advice — use the three lists you created in lesson three for reference, and record yourself going through this outline like you’re having a real conversation. Even better, record the actual conversation with a prospect, transcribe it, and then edit lightly.

Every ‘unicorn’ ad I’ve ever seen — the ads with ridiculously great performance — all have used some version of the outline above.

Now it’s time for you to get to work…(you have the whole weekend).

Day 6 — Know Your Numbers

It’s easy to be overwhelmed with data. Each paid traffic platform has its own reporting, third-party tools like Google Analytics add more options and complexity, and various attribution models add to the confusion.

With all of this data available, it’s easy to focus on the wrong things. I see this all the time. Instead of focusing on business management metrics, people focus on account management metrics like cost per click, click-through rate, cost per thousand impressions (CPM), etc.

In my experience, the critical detail that is lost is that account management metrics are important only within the context of business management metrics. Let me explain.

One word of warning — this will seem difficult at first. Stick with it. Understanding and internalizing this framework is critical for success with paid traffic.

We only need to know three numbers to manage an online business intelligently:

  1. CPA,
  2. AOV,
  3. and LTV.

If you understand these three numbers you understand the economics of your business. Let’s look at each individually and then put them into context with examples.

CPA is cost per acquisition. This is what it costs to acquire a (paying) customer.

AOV is average order value. This is the average spent when someone becomes a customer (i.e., the first sale).

LTV is lifetime value. This is the average amount purchased by a customer over the lifetime of the relationship (or some predetermined time frame that is appropriate to your business).

Let’s look at some examples to provide some context.

Example #1 — paid ad directly to a low-cost offer ($47) with an order bump (+$20) and one upsell (+$97).

CPA would be the amount spent on paid ads to generate a sale. Let’s assume it costs $1 per landing page view of our sales page, and we convert 1.5% of landing page views to sales. $100 in ad spend would lead to 1.5 sales. Our cost to acquire a customer would be $67 ($100 / 1.5 = $67).

We don’t know if $67 is good or bad financially until we calculate AOV. Using the same example as above, let’s assume that 25% of buyers choose the bump offer, and 10% of buyers choose the upsell. AOV for 100 customers would be 100 x $47 ($4,700) + 25 x $20 ($500) + $97 x 10 ($970) = $6,170 / 100 = $61.70.

Now we have two pieces of the puzzle. It costs us $67 to acquire a customer, and we recoup $61.70 with the first sale. That means we’re losing $5.30 every time we acquire a customer. At first glance that seems bad financially — however, we won’t really know until we calculate lifetime value.

Let’s assume that we have three back-end offers that we sell over time by email. Those offers are $297 each and, on average, 15% of our customers purchase one of those offers within a year. LTV would be 100 x .15 x 297 = $4,455 / 100 = $44.50.

Now we can calculate the financial health of our business. We spend $67 to acquire a customer (CPA) who spends $61.70 immediately (AOV), and an additional $44.50 within a year (LTV). If we were to acquire 1,000 customers in a year, we would spend $67,000 to acquire those customers, recoup $61,700 in initial (front end) sales, and then generate $44,500 in sales over the year. Our gross profit would be $61,700 + $44,500 – $67,000 = $39,280. “Losing” $5.30 on the front end doesn’t look so bad when we see all of the numbers.

For context, break even CPA vs. AOV is the Holy Grail of direct response marketing because that allows businesses to acquire customers for free. However, it’s very common for established direct response businesses to “go negative”, meaning paying more to acquire a customer than is initially offset by the first order, because they know the lifetime value of their customers and can make those decisions intelligently.

This example is not meant to suggest that paid traffic only works if it leads immediately to a sale, however. Let’s look at another example, this time with lead generation on the front end instead of a sale.

Let’s assume we have an Sphere of Influence inspired multi-page-presell-site that leads to an opt-in. After that opt-in there’s a seven-day email soap opera sequence leading to a $295 offer, followed by a year of (mostly weekly) emails that include three other $495 offers. For simplicity’s sake, let’s say that our cost per lead is $5, we convert 5% of leads for the first offer, and an additional 5% buy at least one of the other three offers within a year. Finally, we invested $20,000 in paid traffic for lead generation.

With those few numbers we can calculate the financial health of the business. Let’s take a look.

If our cost per lead is $5, spending $20,000 acquired 4,000 leads.

Five percent of those 4,000 leads (200) purchased the initial $295 offer, generating $59,000 in sales.

Over the rest of the year, another five per cent (200) purchased a $495 offer, generating $99,000 in sales.

To calculate CPA we need to know that it cost $20,000 to acquire 4,000 leads and five percent of those leads (200) became buyers after seven days. $20,000 / 200 = $100 CPA.

Calculating AOV is simple because there’s only one $295 offer (no bumps, no upsells), so AOV is $295. The same is true for LTV (one offer, $495).

Is this business financially healthy? It spent $100 each to acquire 200 customers who purchased $59,000 initially and $99,000 during the following year. Or, in simpler terms, this business spent $20,000 to generate $158,000 yielding a gross profit of $138,000. (I’d like to own this business all day long…)

I know what many of you are thinking — your business doesn’t fit this model perfectly. That’s OK — what matters is the conceptual framework:

  • How much do you spend to create awareness of your business?
  • How many customers / clients do you get in that same time frame?
  • How much does each customer / client spend initially?
  • On average, how much does a customer / client spend over the course of a year or more (whatever is appropriate to your business)?

If you have those numbers you can calculate the financial health of your business (from a customer acquisition perspective) reasonably accurately.

Don’t get caught up in decimal place precision unless you have data for a lot of customers over a long period of time. Instead, look at these three numbers as guidelines to establish the right direction.

The goal is to provide so much value that your AOV and LTV are so high that CPA becomes effectively irrelevant. The moment you can pay more to acquire customers than your competitors everything changes.

Today’s topic is dense and challenging — make sure to ask your questions in the comments below.

The Traffic Funnel [The Second Pyramid]

In lesson two we talked about the first traffic pyramid. Today we’re going to discuss the second. This is another framework that, once you understand it, will pay dividends forever.

The first traffic pyramid showed the intent of the prospect. The second shows the intent of our marketing efforts.

From top to bottom the second pyramid is awareness, engagement, and conversion.

The Traffic Engine - Traffic Funnel

Awareness is the point of initial contact, when you transition from unknown to known (but not well-known) for a prospect. I want to be clear that awareness is not necessarily first contact — it could be a series of touch points over time that, taken together, make you and the promise(s) you’re making to your audience visible to a prospect.

Engagement is when we want the prospect to do something to take a step toward us — comment on something, opt-in for gated content, attend a webinar, etc.

And conversion is when we’re focused on making a sale.

This model works for all traffic. However, it’s very important to understand the goals for each part of the pyramid when we’re paying for traffic. Let’s look at some examples.

Awareness — top of the funnel. This is a place to share content that demonstrates authority (and empathy). Video and text both work. Image ads work too (they’re harder to get right in my experience). The value is in the content itself — it’s meant to be consumed and shared.

If you’re using video, what matters is consumption:

  • What percentage of people watch 50% or more? 95%?
  • How frequently is the content shared?
  • What do people say in the comments?
  • What questions do they ask? (Pro tip — use the questions to link to other content, or to develop additional content.)

If you’re using text, I recommend including as much value as possible in the ad itself. Don’t force a click-through to more information unless there’s a compelling reason to do so. Demonstrate your understanding of a topic, pick a novel perspective, take a stand that’s appealing to a motivated minority of your prospects. Be memorable and share-worthy. Likes and other reactions, sharing, and commenting are useful indicators.

One thing to be aware of in a social environment like Facebook — despite your best efforts you’re going to attract some jackasses in every market. That’s just the reality. Don’t let it get under your skin. Let people’s comments reveal who they are — that has nothing to do with who you are (unless the comments are accurate!) I like Todd Herman’s approach — his team creates a poster every month with the top negative comments from his Facebook ads so everyone can laugh at it. My approach — use the delete key with enthusiasm.

Engagement — middle of the funnel — overwhelmingly is lead generation. It’s entirely possible to skip the top of the funnel altogether, and rising advertising costs often make this a necessity. Most paid traffic campaigns start with the middle of the funnel. It’s an effective way to test if something is interesting enough to cause action.

The typical middle of the funnel campaign is a big, specific promise fulfilled by a lead magnet, or a multi-day series of emails. Webinars also are middle of the funnel campaigns (with elements of conversion too when selling is involved).

This seems like a great place to mention why I like André’s Sphere of Influence approach so much. It’s the best method I’ve ever found for combining top and middle of the funnel together in a way that creates the impact of both while keeping costs low.

My favorite method is to use long form Facebook copy as a pre-screening page one of an SOI funnel, continue the journey through the multi-page pre-sell site, and then convert to leads (or sales) from that first touch point. That is a lot of heavy lifting for one campaign and I haven’t found anything that does it better than Sphere of Influence.

Conversion — bottom of the funnel — are campaigns that are designed to lead immediately to a sale. These can be campaigns designed to go from A – Z in one step (a typical customer acquisition campaign). Or, in my experience, a more effective way to convert with paid traffic is to use behaviorally-based retargeting to make offers at the appropriate time in the customer journey and with the appropriate messaging. (“Buy now” 24/7/365 is not necessarily the appropriate message…)

Structuring effective conversion campaigns is dependent on your business and your approach to traffic (paid or otherwise). Tomorrow we’ll talk about this in more detail when we borrow Stephen Covey’s idea from The Seven Habits of Highly Effective People and we “begin with the end in mind”.

Your homework for today is to look through the content you have, or a short list of content you could create, and assign that content either to top or middle of the funnel.

Questions? Use the comments below.

Work Backwards

“Where do I start?”

I hear that question a lot — for good reason. Even if I’m just barely scratching the surface of what’s possible with paid traffic in this ten-part series, the work to be done can seem overwhelming.

Fortunately, there’s an easy way to know what to do next.

If you’re already getting a decent amount of traffic to your web presence (website, offer funnel, lead gen front end, online store, etc.), then the place to start is with retargeting.

Simple, behaviourally-based retargeting is an effective way to recapture potential value from existing traffic. To know where to start, work backwards from the point of conversion.

Here are two examples — one simple, one more complex.

Imagine a blog post with high-quality content that has an opt-in offer with a lead magnet embedded in the content. “Click here to get free report X that’ll change your life forever.” Let’s assume that blog post get 100 visitors per day, and 5% opt-in for that life-changing lead magnet.

The immediate thought is that the opportunity for retargeting is in the 95% who didn’t opt-in, but I would disagree. Rather than retarget the 95% of site visitors who didn’t opt-in (most likely with a slicker version of the same lead magnet), I would add a qualitative filter. To qualify for retargeting, someone needs to stay on the page longer than ten seconds, and not opt-in. That’ll reduce the size of the audience by half — at least — which also means reducing your cost to retarget by half — at least — while simultaneously increasing the quality of the audience you’re retargeting.

Next, I would offer a lead magnet that’s congruent with the page the prospect visited, but not the same lead magnet someone already said no to. (Remember, people vote with their behavior and they already voted no.)

Instead, I would ask myself what problem the person who read that article was trying to solve, or experience that person wanted to have, and then craft a lead magnet about that.

What’s important in this example is that I’m focusing on an existing, high-quality pool of prospects who have demonstrated with their behavior that they’re more likely to engage than a random prospect ‘off the street’ (or newsfeed).

Now let’s look at a more complex example that’ll better illustrate what I mean by work backwards.

Imagine you own a ski resort with a website where guests can book their rooms online, and you have a reservations department where guests can book by phone.

A typical buyer’s journey might look like this:

  • see an ad that promotes seasonal special offers
  • send traffic to a special offers page on the website
  • link special offers to the online reservations system
  • choose dates, room type, and other preferences
  • pay online
  • see a confirmation / receipt page.

If you own a typical resort, you will convert somewhere between four and six percent of site visitors to buyers online, meaning for every hundred prospects who clicked on the ad, 4-6 will pay online (and approximately the same number will book by phone depending on the property / demographic).

The typical way to boost sales is to add more people to the top of the funnel, sending more traffic to the special offers page on the website. That’s simple, and at first glance, it’s perfectly reasonable.

What if, instead, we worked backwards. We know there’s some percentage of people who see the option to pay online but don’t. I think we can agree that it’s reasonable to expect a person who has made it all the way to the checkout page is more engaged than a prospect who has clicked on an ad.

So that’s where we’d start. We would try to get inside the head of those prospects and ask what’s preventing them from moving forward.

  • Is our checkout page wonky?
  • Is any of the text confusing?
  • Perhaps they’re just not comfortable buying online and would rather talk with someone instead?

To test this idea, I would retarget prospects who have seen the checkout page and not purchased with an ad showing a photo of a friendly-looking reservations agent with the resort’s toll-free 800 number prominent and easy to read.

(Pro tip: to test my hypothesis, I would make that a unique 800 number and use a tracking service like CallRail to track those reclaimed conversions.)

Once that was setup, I would move one level up. And then another level. And another level. All in reverse order.

My belief, consistently proven campaign after campaign, year after year, is that the deeper someone gets into the buyer’s journey, the more valuable that person is to your business. And if I have $100/day to spend on paid traffic, I want to make sure I’m spending that on the highest quality prospects first!

Your homework is to map your buyer’s journey from start to finish (step by step), and then identify the last step before a person becomes a customer (or a lead if that’s more appropriate). That’s where you’ll start.

Ask yourself:

  • What is she thinking at this point?
  • What are her concerns?
  • Potential objections?
  • What could you offer to reinforce your credibility and demonstrate your empathy
  • How could you make her decision to move forward easier?

For extra credit, repeat this exercise for 1-2 more steps in your process. Remember, the closer you are to the point of conversion the higher potential value a prospect has to your business. Respect that, and spend your ad dollars accordingly.

Leverage Your Strengths / Match Your Content

Today’s topic answers a question I hear a lot — what about video? Or, another variation, should I use video ads or text ads?

There’s no right answer from a performance perspective. In some circumstances video performs better. In others, text produces better results. To further complicate matters, sometimes the answer is both.

If there’s not a consistent winner from a performance perspective, how should you decide? The answer is actually very simple — what do you (or your client) do best?

To illustrate what I mean, I’ll use two friends as examples. One might sound familiar to you. (I have not changed the names to protect their identity.)

Let’s call friend #1 André, and friend #2 Greg:

André is an introvert — you’ll rarely see him on camera or on the stage at events. He’s also a world-class writer, among the best in his field. He has spent decades refining his craft and continues to improve that craft day after day.

Greg is an extrovert. Sharp-dressed, well-spoken and super-smart, Greg can’t help but light up a room when he’s on camera. He also has spent decades refining his craft, and he has invested tens of thousands of hours becoming world-class in front of and behind a camera.

With that short background about André and Greg, let’s ask the question again — text ads or video?

André’s ads should be text, Greg’s should be video. Is it really that simple? Most of the time, yes it is.

However, let’s add another layer of complexity as food for thought.

André’s products are overwhelmingly text, and he has used his mastery of the written word to communicate with his tribe for years. When you’re in André’s world you’re reading (and marveling at his elegant visuals).

Greg’s products are overwhelmingly video, and he has used his mastery of that visual medium to communicate with his tribe for years. When you’re in Greg’s world you’re watching video.

One more layer of complexity to further the thought experiment.

What if André and Greg aren’t responsible for their paid advertising? What if they have a team or an agency responsible for that? I don’t think it matters. André’s superpower is writing. Greg’s is video. Everything is easier, and more likely to succeed, when each is in his preferred sandbox.

I know what you’re thinking — that example is too extreme. I chose two masters of their crafts which skews the results. That’s true, but it proves the underlying point I’m making which is that we need to know, and then leverage, our strengths with paid media.

Now it’s your turn. Are you more comfortable explaining what you do / what you sell in writing or by speaking? If you’re not sure, it’s easy enough to experiment. Take 10 minutes and write an email to a friend explaining an offer you’re making or an offer you’re considering. (Go ahead, I’ll wait.)

How did that feel? Easy? Hard? Did the words flow or was there a lot of effort?

Now, the same experiment, except this time you need to use a phone or Skype/Zoom. No notes — just explain to your friend an offer you’re making or an offer you’re considering.

Which was easier? Which did you enjoy more? Was one more effective than others? When you used email, were you imagining your friend’s questions and anticipating your answers? Did you ever think, “this would be so much easier if I could just explain it quickly…” Or did you love the precision of the written word, the ability to edit and say exactly what you were thinking?

There’s no right answer — there’s only your answer (which is the right answer for you…)

What if you’re really not sure. That’s OK — that’s my challenge too. I love the precision of the written word, and I love the craft of writing. At the same time, I’ve had the most professional impact on stage, in front of small groups, and in recorded conversations. It is infinitely easier for me to produce video / audio. However, I usually feel compelled to ‘polish’ that thinking with time for reflection and the precision of the written word. For me the answer is both / and (and that may be your answer too).

One last exercise for today. Look back on your life and create a brief mental highlight reel when you were at your best. Don’t limit that to your professional life — think broadly:

  • Did you talk your way into your first job?
  • Write love letters to attract your spouse?
  • Are you the person people call on to give a great speech or tell a great joke?
  • Does the thought of being on stage light you up (or make you want to run and hide)?
  • Do you journal? How do you understand what you’re thinking (talking out loud with a friend or writing to expose your thoughts)?

Take some time to go deep on this exercise. It’s independently valuable for any content creator, and particularly valuable if you’re considering video vs text for paid advertising.

Give the Platforms What They Want

Each advertising platform wants to give its users value specific to their needs and desires, that’s congruent with users’ expectations of the platform.

Let’s look at two examples — Google search and Facebook.

Google exists primarily to match questions to relevant answers. We use Google when we have a question and don’t know the answer. (My daughter turned eighteen recently, and I wish I had $1 for every question she asked me that Google answered for both of us.)

To give Google what it wants, we need to make sure that our answers are appearing for the most appropriate questions, and that we’re creating a positive experience for the questioner.

For example, one of the reasons Google opposes thin-content squeeze pages is that they put a barrier between a question (search) and an answer. Requiring someone to opt-in to get the answer undermines Google’s reason for existing (even if that answer is world-class, well-researched, and beautifully designed).

Specificity also is important with Google search. So important that Google is not a straight cost-based advertising auction. Instead, Google assesses a quality score that affects where your ad ranks and your cost to advertise. It’s entirely possible to be in the first advertising position while paying significantly less per click than advertisers in positions two and three. Many factors contribute to quality score — if you look at those factors from a 30,000′ perspective you’ll see that they’re all about relevance and user experience.

When choosing keyword phrases for Google (and Bing) search, ask yourself “is my [business, offer, product, service] highly relevant for this search?” If the answer is “not really”, or “I’m not sure”, reconsider advertising for that phrase. (At least until you’ve exhausted every search phrase where you can say yes definitively.)

Facebook, on the other hand, is a social platform that was not designed originally for marketing or commerce. When you advertise on Facebook, your ads are appearing in news feeds with posts from friends and family, specific interests you’re following, and ads based on those interests and behavior.

Facebook is designed primarily to entertain.

To advertise effectively on Facebook, think in terms of edu-tainment. Create ads that are interesting to your audience, perhaps with a perspective they haven’t considered yet. Avoid the quicksand of overly direct language with big promises. Current events can be a timely angle (if that fits with your offer/business).

My favorite approach to Facebook ads are those that change perspectives. Demonstrating a new way to think about something prospects are already thinking about, or providing expert insight / commentary are effective options.

The single most important question I ask when reviewing ad copy is “how likely is it that someone will want to share this ad?” (Pro tip: create ads that make your prospects look smart / informed when they share those ads with others.)

Your homework for today has two parts. First, identify 2-3 questions you’re well-qualified to answer (professionally). Or, a slightly different way to think about it, what are the 2-3 perfect questions you wished prospects would ask you? These questions should be the starting point of an effective paid search campaign. You may have to rephrase them to better match how prospects search — that’s OK. What matters is that you’re thinking in terms of questions and answers because that’s how search works.

Second, take the Facebook ad you wrote on day five and look at it through the lens of edu-tainment and shareable value.

  • Is it interesting to read? Conversational?
  • Have you clearly articulated a few insights that aren’t common, conventional wisdom for people interested in your expertise?
  • Is your ad intriguing — does it capture the reader’s interest?
  • Is it authentic?
  • Is there an “ah ha” moment in it where the reader is shown a different perspective?

Pick 1-3 of these questions and frame your ad copy from those perspectives.

—Shawn Twing
Shawn Twing