We recently sat down with Rony Hay from Klout Consulting to have an in-depth conversation about paid ads on Facebook and Google.
Rony is a PPC expert and the CEO of Klout Consulting, which is a paid ad agency that has helped dozens of DTC brands see more conversions and increased sales from paid ads.
During the interview, we discussed:
- Strategies for remarketing vs. prospecting
- The different types of bidding strategies for Facebook Ads
- How to make a creative that goes viral
- The future of paid ads in 2021
So let's dive into what we learned from Rony, an expect in paid ads for Facebook and Google!
About Klout Consulting?
Rony described Klout Consulting as more than just a paid ad agency, they are a commerce growth partner. They help their clients with both paid ads and email marketing.
On the paid ad side of things, Klout aims to help DTC brands increase their overhead rate and revenue, while email marketing is designed to keep brands on top of mind with their prospects.
Klout mostly works with DTC brands and has had its biggest success with beauty supplement brands and apparel brands.
For full transparency, Rony did mention that Klout hasn't quite cracked the code on consumer electronics, but that is not to stay that they won't shortly.
What Type of Paid Ads Does Klout Specialize in?
Klout's specialty is Facebook Ads (Facebook and Instagram) as well as Google Ads. Around 80%-90% of their spend is on Facebook Ads because Facebook provides a bigger pool of potential leads.
The Klout team is small but powerful and is made of up paid ad experts who all have to experience managing big-name brands with massive ad spend per month.
As of now, Rony said that Klout is managing around $500,000 per month in ad spend across all of their clients.
And, that number is rising and they continue scaling up!
For the email marketing service Klout provides, they focus on setting up core flows, which include:
- Cart Management
- Welcome Series
- Weekly Broadcast Emails
Rony mentioned that while paid ads help new prospects discover a brand, email helps for nurturing and cross-selling to drive more sales, get feedback, and directly communicate with prospects without having to pay.
What Type of Brands Work with Klout Consulting?
Klout typically works with brands that are established, have been in business for a few years, and are converting and profitable.
Here is what Klout looks for in a partnership with a brand:
- The brand has been in business for at least 2-3 years - they have gone through ups and downs and are in a stable position
- Smaller teams that work closely with the founder(s)
- Proven traction - at least 10K in revenue per month, anything less than that signals the brand is still figuring out its messaging, offers, and funnel
- A brand that wants an active partnership - collaboration and working together to achieve the same goal
Klout has found that the brands that perform best are intimate with their audience and their products. These brands have fine-tuned their product, messaging, and know who they are serving and what their needs are.
What's the Difference Between Facebook and Google Ads?
Rony said that there are a few difference between the approach to paid ads when it comes to Facebook and Google:
- Google is more intent-based - Most people are searching for a specific product or solution for what they need
- Facebook is more passive - The ad space is essentially a mall, meaning prospects aren't looking for you but they will come across your content as they are engaging with friends and accounts they enjoy on social media
Rony said that Facebook Ads offer scalability for traffic, more revenue opportunities, and have a bigger pool of potential customers.
What Does It Take to Run a Successful Facebook Ad Campaign?
At Klout, the team starts with two different structures for running ad campaigns:
- Prospecting - Targeting potential customers that haven't heard of your brand yet
- Remarketing - Focusing on people that are familiar with your product and have interacted with your brand and products before (on social media or website)
After breaking the strategy into these two core groups, the next step is to start planning creatives.
Creatives are the format of the ad, and the goal is to make a creative so captivating that it goes viral. You want to make content that gets a lot of shares and engagement.
Once your creative goes viral, you will be able to scale up and start seeing increased revenue from the ad spend.
What Is Prospecting?
Prospecting is the process of creating an ad campaign for new, potential customers that have never heard of your brand before.
The Klout team has found most of their success with interest-based targeting, which they do by looking up different interests or cohorts on Facebook.
Here's an example, if Klout wanted to target new prospects for a golf product, they would lookup:
- Tiger Woods - for a broad niche
- Research other professional niche golfers
- Research different people, companies, competition, and products
Interest-based targeting is a great place to start if your brand doesn't have any previous customer data or you have never done paid ads before.
What Are the Most Common Mistakes Brands Make when Prospecting?
There are two common ads that Rony and the Klout team have seen brands make when prospecting:
- Putting lookalikes and interest base segments in the same campaign - it's better to segment each group and Klout has found that properly segmenting yields the most profitable results
- Not knowing when to kill an ad set - if you don't kill an ad set at the right time, you will end up bleeding more money and lose the chance to see a large ROI on what you spent in paying for the ads
What Does Remarketing Entail?
The first thing you will need to do when creating ads for remarketing is to segment your groups. The way you communicate with each segment will be different, and Rony said that Klout is a bit extreme with their segmentation, but that it has produced powerful results.
They will look at two different segments; on-platform and off-platform:
- On platform - Potential customers that have engaged with your page, clicked on your ads, or engaged with your video content for at least 3 seconds
- Off platform - Specifically refers to website visitors, so anyone who has added to their cart, initiate checkout, and visited your website
Remarketing assets are creatives, and what Klout will do is take the prospecting creatives that are working well and change up the messaging to fit each segment.
Another valuable creative that works for retargeting ads is UGC. Klout will get UGC by incentivizing customers with a small discount or gift card if they send UGC after completing a new purchase.
Or, of course, Rony said you can always use CrewFire to generate more UGC to use in your paid ad campaigns!
What Goes Into Good Ad Creative?
Rony said it is hard to generalize because every brand has a unique way that they communicate with their audience and the types of ads their audiences respond best to.
But, there are a few key components that will make for any good ad creative.
Every new ad campaign will need to start with three formats:
- Single image
- Multi-product carousel
- Interactive video - can be an actual video from the brand of a GIF
GIFs tend to perform well in the paid ad space. Brands will need to test which format works best for their audience. Once they know the best format, then the brand will need to test different variations of that format.
One important note: You only want to test one variable at a time, so a good rule of thumb is to use the same copy when testing your formats. After you find the best format for your brand, you can begin to test the copy to find what will resonate best with your audience.
Lastly, once you find a combination of format and copy that works best for your brand, you can then start to scale up.
How Long Does the Paid Ad Testing Process Last?
Rony said that the testing process will depend on the budget.
In general, the learning phase is between 3-7 days, so you will be able to know within a week if an ad has been successful or if you need to scratch it and move on to the next creative.
The testing period also depends on the brand's budget:
- With a more modest budget, you can let it go for about 3 days, which gives the ad enough time to stabilize and enter the warming phase on Facebook
- With a higher spending budget, it might be worth wild to check the ad once a day (since you will be bleeding a lot more money) so you can find and fix things that aren't converting as well
What Does It Mean for an Ad Campaign to Break?
It's simple, if it breaks, you lose money.
Here is an example Rony gave of what it would look like if an ad campaign broke:
- You have a campaign performing at a $20 cost per purchase and use a $40 CPGL (cost of goods landed)
- You're making $40 profit per sale and then that spikes to $60 cost per purchase
- You're losing money and their campaign is broken so it's time to move on to the next one
What Are the Different Bidding Strategies on Facebook?
- Lowest Cost - This is the default, it tells Facebook to complete the conversion objective at the lowest cost possible. Facebook will drive purchases at the lowest cost rate.
- Bid Cap - You set a bid, for example, $40, and Facebook will never go out of its way to pay more than $40 for that purchase, it reaches that point and can't make that conversion, the campaign will stop spending.
- Cost Cap - The cost cap will go over your bid sometimes, as it tries to average out between purchases.
What Are some Trends in Paid Ads in 2021?
Before, when brands segmented their audience into groups, they could segment people that visited their website in the last three days, then between 4-7 days, and then 7-30 days.
But due to the new models being put in place, and, for example, the iOS4 update, data will be more scarce. Data will be stored for only 7 days max, so brands that are using paid ads will have to use different modeling formulas to predict conversions.
So far, there hasn't been a drop in performance and most paid ad specialists have been able to adapt.
Some other trends that have emerged include:
- Giving more leverage and power to social media platforms and their algorithm since data is becoming more scarce
- Focus on creatives is more important than ever- email creative needs to be at the front of your strategy as well
- People are becoming more ad fatigued, so messaging needs to connect and understand them - winning brands understand their audience then create great products
Klout Success Stories
Klout has helped several DTC brands see increased revenue and conversions from paid ads. You can check out some of their success stories from the Klout Blog.
Rony shared a recent success story about Bonanza Boots:
- Bonanza Boots started working with Klout in January of 2021 and were doing $30k a month in paid ad revenue
- The team had the goal of tripling their revenue from ads - it was an aggressive goal but the Klout team is close to hitting it!
- They hit $81-$82k last month and on track to hit the $100k goal at the end of the month
Rony said that they achieved this goal by following the exact process listed above - they tested a bunch of creatives to see which ones went viral and then scaled it.
Where Can Someone Learn More About Paid Ads?
- The Klout Website - you will find recent success stories
- Klout also has a course, learn more by emailing Rony - firstname.lastname@example.org
- Sugatan.io - an agency that Klout looks up to
- Common Thread Collective on YouTube