How to Generate $16 Million a Year with FB Ads with Alex Fedotoff: An EOFire Classic from 2021

0:01Boom! Shake the room, Fire Nation. JLD here and welcome to Entrepreneurs on Fire. Brought to you by the HubSpot.

0:30ads to scale products from the testing phase to$100 ,000 a day in sales. In today's foundation, we'll talk about how you can be successful in any environment, be surrounded by sharp people to succeed, focus on the fundamentals, be creative and be unique, build a business instead of just a hobby, build it and then make it sustainable to truly scale and so much more. And a big thank you for sponsoring today's episode goes to Alex and our sponsors. Success Story hosted by my friend Scott D. Clary is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. Success Story features Q &A sessions with successful business leaders, keynote presentations, and conversation on sales, marketing, business, startups, and entrepreneurship.

1:08In a recent episode, Scott brings Kate Bradley on the show, founder and CEO of Lately.ai, to discuss the best ways to use AI to create content. Listen to Success Story wherever you get your podcasts. Alex, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with. What's up, Fair Nation? So I think a lot of people disagree with that you could be successful in any environment or in any country. For example, if you run like online business, I believe that you have to be in a specific environment, be surrounded by like sharp people in order to succeed.

1:50Fire Nation, you are the average of the five people you spend the most time with, but guess what? You have control of those five. You can say, you know what? I'm going to read a book. I'm going to listen to an audio book. I'm going to listen to a podcast. It doesn't have to be people that are physically close to you. It can be, but it doesn't have to be. So remember, you are the captain of your ship. You're the master of your destiny. And as you know, let's say we're talking about how Alex generates$16 million a year with Facebook ads. And we're talking without getting banned. So let's just talk about drop shipping.

2:28I've teased a little bit of the bullet points, Alex. I've gone into a little bit about what we're going to be talking about, but how does drop shipping as a business model actually work? Explain that to us. So we are drop shipping physical products. The way it works is let's say we want to sell a physical product, but we don't have the product on hand. So we don't buy inventory, you know, upfront. We don't spend, you know, any capital. We just have the product. We have our suppliers. And let's say we want to sell the product, we start selling it. And once we are getting an order, once we are getting paid, we're just fulfilling that order directly from the supplier.

3:04So that is basically how this model works. We don't have any upfront expenditures for the for the stock, for the inventory. We're just fulfilling products directly from the suppliers. So Fire Nation, you can see why this is so appealing. I mean, there's just this opportunity where you're like, you're not having to have a manufacturing plant. You're not having to have all of this inventory. You're not having to have a warehouse. You are just able to identify the product and move forward from there. Now, Alex, what I want to move into next is the actual product selection and then the validation framework within.

3:43Can you break down how you actually choose the products that you decide to go forward with when it comes to drop shipping and then the actual validation framework that you go through to make sure it's the right product? Generally, we're trying to go after products that are already validated. We don't want to be pioneers with arrows in our backs. So we are going after the products that have been validated by other people that are doing very good numbers. So we are doing test orders, for example, on competitor stores. So we see the number of the order, let's say in Shopify, it would tell you, like, let's say order number 10 ,000.

4:19Then let's say two days after we are making another order. And let's say the number of that order is like 12 ,000. Now we know that that particular store had generated 2 ,000 orders in two days, approximately 1 ,000 orders a day. Then we see what type of products they're pushing. Let's say they're pushing the product that's like$50. So now we know they're generating approximately 1 ,000 orders per day with average value of like $50. So they're doing$50 ,000 a day in sales. Now that's good, you know, concept. So something that we can model. So what we are doing is we're looking for the differentiating point.

4:56So we're looking for maybe the new version of the product. Let's say they're selling the skincare device and we are reaching out to our suppliers and our suppliers can offer us like a new version of that same device that does exactly the same thing, but it just looks differently. Maybe everyone's selling the white device. So we would sell the black device or we would sell the purple device, we'll sell the pink device. And that would differentiate us from the competition. And we are focusing on particular niches. I think, you know, riches are niches. So we are focusing on skincare, beauty. So that's pretty much where most of our products are.

5:36Don't just copy Fire Nation, innovate. Like I do love what Alex talks about where, hey, we're not trying to get arrows in our back. We're not trying to be pioneers. You don't need to be like, you know what? This product needs to exist. And I know it doesn't exist right now, but I'm going to be the first person to make it exist because guess what? You might be wrong. So why not make sure you're right with a product that's already selling, that's already working. and then a great thing that I've seen people do in the past is where it's awesome is go in and read the reviews, especially the bad reviews of that product.

6:05Just like Alex was saying with like the different colors and different unique things you can do, you can learn gold from that. You can be like, wow, this is what everybody's complaining about with this product, with this service. So guess what? I'm going to create it that just has this little tweak, this little modification and then boom, now you've come out with the product that everybody's been complaining about but you have the solution too. And maybe it's just one or two more tiny things that's easy to add on like a color or a knickknack or whatever it might be. Then all of a sudden you've got the same product that other people have that are selling really well.

6:39Plus you've solved one more tiny little problem, especially in a niche, like Alex said, where there's not this like massive competition and saturation. And now you're going to stand out quick. So you can't Alex just rely on that though. And one thing that you've done incredibly well is funnels and you really understand conversion principles so you can make sure what you're doing is a profitable venture. Break this down for us. Talk to us about funnel and conversion principles to make this project profitable. Over time, we have accumulated certain like funnel templates. And so by funnel template, I mean the certain conversion structure.

7:18So our conversion structure typically starts with pre-lender, right? This is kind of like the advertorial format for the product that we are selling where we might tell the story, we might tell people more information about the problem that they're experiencing and why all other solutions haven't worked for them. Because people at any given point, they're looking for shiny objects, right? Like, and, you know, let's say, you know, last year they launched the iPhone, everyone was buying them. Like this year they'll launch, you know, the same iPhone. They just improve a few things in them and people will buy it again.

7:52So we are looking to tell people more information about that product, kind of like pre-frame them. And so that's the first step in the funnel. The second step is either the order form. So if price point of the product, let's say$50 or less, we just lead them straight to the order form. If product price is over$100, typically$100 to$200, then we have another pre-sale page. So we built even more value. We give people even more information about the product. We kind of like built even more anticipation about the product. We show like, for example, before and after results. We show some other things that would kind of like help people make that decision.

8:34Then after that, we have the order form. So on the order form, we typically have also like a lot of social proof. We have the order bomb so we can increase the average order value, which helps a lot with the profitability. and after that we have the series of upsells and downsells so typically we would have like three upsells the first upsell is typically the same product just at a discounted price so people can take advantage of the good price on the offer the second upsell would be something that's relevant something that would be complementary for the product and the third upsell would be also something that is would help people to achieve the goal so if that's like for example skincare product then the second upsell could be like a like a gel or a cream that people can use with that skincare gadget the third product would be as well like certain like collagen you know like something that would be complementary and helpful for people to achieve that goal so this way we're structuring our funnel in a way where on on one side it converts because because it has to convert, especially if you're going after cold traffic.

9:46And on the other side, we're looking for all of the possible ways to maximize the average short value because that will predicate the scalability of the offer. Because if your average short value is not high enough, if you're not generating enough from each order, then it will make it really difficult for you to scale, especially to big numbers. What would be like an example of a downsell? Downsell could be something that gives like even bigger discount. So let's say we sell the product, let's say the first upsell could be like 40 % and people say no to that. So we give them even bigger discount, like 50 or 60 % just to, you know, we make like just a little bit of money on that.

10:26Like we don't make a lot, but we still get something right. And it gets in the same package. So we didn't have a lot of the extra like shipping costs. and the other variation of the down sale could be also something cheaper that people could take advantage of. Fire Nation funnels allow you to create nurture campaigns as well because you're getting people into your database and guess what? People aren't always ready to buy right now, but if they grow to know, like, and trust you over time because you're nurturing them with value around that product, around that service, you can build trust over time and then they will go to you when they're ready because they will trust you because you've been nurturing them and you've been continuously there in front of them.

11:06And then of course, those upsells and downsells, I mean, those really help you even increase ad spend, which is huge. And then also complimentary products. Like think about, well, if somebody buys A, they're also gonna want B and C. That's why Amazon does so well. When you put something in your cart, they're like, people who bought this also bought X and Y and Z. And you're like, oh yeah, that actually makes sense. I kind of need X, Y, and Z. So think about complimentary products. And Fire Nation, we are going to move into paid traffic. We're going to talk about issues with the ads right now. That's Facebook ads.

11:40And of course, we're going to talk about systemizing to scale, to leverage what you're doing when we get back from thanking our sponsors. You know your customers want fast, personalized support, but how do you find a customer service solution that actually delivers? Most solutions leave reps struggling to stay productive and customers frustrated by the lack of support. But with the new AI-powered Service Hub from HubSpot, you've now got a better way to do service and success. Service Hub helps you fly through the service queues and lighten the load on your reps with AI-powered self-service chat and knowledge-based articles.

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12:47So Alex, we're back and we wanna talk about using paid traffic to scale. You know, before the break, we talked about how upsells and downsells can really help you increase your ad spend because you're making more for every sale that you're making. But how specifically are you using paid traffic to really scale today? 100%. And I think paid traffic at the end of the day is probably like my main expertise. And I don't do like a lot of different traffic platforms. So what I see a lot of entrepreneurs do is that they try to do too many traffic platforms at the same time. They try to figure out Facebook, they try to figure out Google, they try to figure out native advertising.

13:25And all of these platforms like requires the time and effort to figure out and to really like master. So I've been specializing in Facebook ads. That's why, you know, we kind of like evolve and adapt to each stage of Facebook. Right now, Facebook is, you know, like since last like IS update, it's gotten like even more challenging for a lot of advertisers. So Facebook is banning, you know, accounts sometimes for no reason. So what you need to survive and to do really well, like on Facebook right now, is to have the system, to have the infrastructure of the ad accounts, to have the infrastructure of business managers, to have the infrastructure of pages in case you want to advertise for multiple pages.

14:10So even in case something happens with your main ad account, you don't want to put your business and make your business vulnerable. So what I mean by that is, for example, if you have one ad account, one profile, and you do everything by the policy, but then there could be like a random ban and you can have your ad account shut down. And then let's say if that's your main advertising channel, that's how you're generating customers, that's how you're getting customers to come back to your business, then your business becomes very vulnerable. So that is like one of the things that would help you to make your business more sustainable and more consistent is just to develop that infrastructure of the ad accounts, of the business managers, of the sometimes even different profiles.

14:59Because sometimes Facebook would flag your personal profile for advertising for no reason. And then you're not able to advertise effectively or you're not able to advertise at all. So what you have the opportunity to do is to even buy the profiles if you need to, and then advertise from totally different profiles, but still maintain, you know, that advertising channel and still being able to generate sales. So one thing that I know a lot of people who kind of have their finger on the pulse when it comes to ads in general is that, you know, there's been some issues with Facebook ads recently. And, you know, there's kind of this like undertone battle with these different companies like Apple, who's like allowing people to now not let themselves be tracked and doing all these things.

15:42So how are you specifically dealing with these Facebook ad issues? What can Fire Nation learn from your strategies? You should use the conversion API copy. So if you just Google it, I mean, everything is on the internet and a lot of people overcomplicate it. So you just would Google like how to do the copy. This conversion API, there are like instructions on the internet. Pretty much you can do it like in 10, 30 minutes. You can have it all set up and that will solve majority of your tracking issues. You could also on top of that, use the Google Analytics tracking. so you would have the UTM sources and parameters so you can you can see which ad is delivering what results what is the most profitable campaign for you what is the most targeting the targeting options that work the best for you so you kind of like add extra layers of that targeting at the end of the day what we have noticed since iOS update is that the importance of having that like good funnel, having good, understanding your numbers really, like understanding the conversion rate, how much each click on ever generates you.

16:53So even if it's not recording 100 % accurately, because it will never record 100 % accurately, there is like attribution. There are some people that see your ad, for example, they go to Google and they search for your brand that they buy from Google, right? So there are many like attribution issues that arise, especially as you scale. and if you use multiple channels. But if you focus on fundamentals, like having a strong funnel, making sure that you are maximizing the average short value, making sure that the creative that you're using on Facebook is strong and is different from competitors. Because again, like everyone has access to Facebook, right?

17:31But somehow some people making, you know, very good sales, like revenue numbers, profit wise from Facebook and some people simply cannot figure it out. So you want to be in that segment of people who just kind of put that extra effort in. And for example, if you're selling coaching products, information products, then that would come a lot to the angles to the ad copy. You want to be different. You want to provide something to the ads that other people don't. If you just copy other people's ads and just make very slight changes, that might not work. You want to be a bit more creative on that side to differentiate.

18:11And then on the other side, having like a strong funnel to actually convert that traffic and have high enough average value so you can afford to scale. So Fire Nation, I really hope you're understanding that Alex is a Facebook ad strategist. I mean, as he shared earlier in the interview, this is something that like is really his area of expertise. Like this is something that he really became great at. And if you're going to do something like this and you know that your main traffic source, your main lead generator is actually going to be ads in all likelihood because maybe you're not going to be building this big organic following, then this is an area that's become your area of expertise as well.

18:49Now, one thing that I really admire about you, Alex, that you've done is you've been able to systemize your business. You've been able to create tools and automation so that you can both scale and leverage. Because you're not always, Fire Nation, going to be making a huge profit margin on every single sale. But if you can make a couple bucks on tens of thousands of sales, now you're making real money because you're scaling, you're leveraging. So talk to us about your systemization. Talk to us about how you've been able to use that to scale. How do you remove yourself from making decisions? For example, for our line of business, the way it works is, so initially I was advertising Facebook.

19:36I was managing all of the ads myself. At this point, I don't manage any of the ads myself. our media buyers are managing the ads and they are given all of their resources to manage those ads successfully so for example they have access to all of the ad accounts they have access to our video editors they have access to the creators who can send them for example fresh content to to test with facebook ads so they have access to all of the moving parts that kind of like influence the profitability of the ads. And they have access also to the technical teams. Let's say they want to make some changes to the funnel to make the funnel more efficient and more profitable.

20:15So they just share it with technical team and technical team gets it done. So they have leverage to all of the things. So I don't have to be bottlenecked in that process. So I think that's one of the major things that would help a lot of entrepreneurs is giving your team all of the resources So they can actually do whatever they need to do. And I see, for example, even with this podcast, John, like you, you've done like, you know, all of the information is so streamlined. You know, I've received all of these instructions. Like your team is so well trained. Like I've received all the instructions.

20:51I know exactly when to log in. I know exactly what to do. And so this is exactly how you want to structure your business. So then you don't have to be the bottleneck in making all of the small decisions. It takes a lot of trust. It's not easy for entrepreneurs, especially, you know, we are like control freaks sometimes. But that's one of the things that needs to be done. And another thing is that's more kind of like on the systems is every process that we do, we document. And every person on the team is creating their own processes, right? Like they're creating the processes and those processes are being updated over time.

21:28So then other team members can follow those processes. And the people that we are looking to bring on our team, especially like the first hires that we brought in, and I think that would be applicable to any business. You wanted those people to grow as leaders of their own teams. Let's say for our business, we have the customer support team. We have tremendous people on that side of business. And those people have grown into leaders. So they can now, like they have trained other people. They provided people that work kind of like underneath them. all of the resources so those people can function as well.

22:05So I don't have to spend my time training those new people that are coming on board because they do that. And the same is happening with our media buyers. So our senior media buyers are training junior media buyers. And this is how you build this setup. So Fire Nation, we are not as entrepreneurs creating a job that we need to just sit down and do every single day until we quote unquote retire. We are creating a business And a business has systems, has tools, has automation. Just like Alex shared, yes, he had to go through a lot of systems that I've created for my team over the past 10 years in 3 ,000 episodes because of the experience that I've acquired over that time.

22:47So that's when we logged on to Skype today, boom, I asked him a couple of quick questions. We did this, we did that. And then we were into the interview. And as you can hear, it's been a value packed interview, very flawless because of the the systems that we have in place. And just like Alex has been able to scale and leverage his business, you know, to$16 million a year with Facebook ads, because of systems because of automation. So really be thinking about, hey, am I the mission critical person for this actual task? If not, how do I potentially automate it or outsource it to somebody on my team?

23:27Now, Now, obviously, this is one of the things that I will never personally outsource as long as I'm the host of Entrepreneurs on Fire is actually interviewing the guests. But almost everything else that I do in my business, I can automate. I can outsource and I can make that happen. So, Alex, we talked about a lot of awesome stuff today. Give us one key takeaway from this audio masterclass that you really want to make sure that we walk away with. You want to think about like all of the ways where you can get screwed with your business. So what I mean by that is, for example, you know, the same as with ad accounts, how like my business can be impacted by the ad accounts, you know, being shut down.

24:10So you create and add more accounts to your business, how you can do that. The same thing with, you know, business managers or with other moving parts in your business. how for example uh if you have like one key person that works with you if their job is not like streamlined if you don't have like all of the sop so then other people can follow then uh you need to have that so pretty much building the business instead of just the hobby so making like a lot of money by itself as you said it's not an answer right like i mean you can make a lot of money but also you can just burn yourself to the ground because you're just working too much and everything just hangs on you being, you know, and doing everything.

24:55So you want to build it in a way where it's sustainable and can run without you because those businesses that can truly scale. So Alex, I love that recap. And I want to know how Fire Nation can find out more about you. So give us a great way to connect with you. Any final call to action you have, let us know and then we'll say goodbye. I have a YouTube channel. I put a lot of tutorials about Facebook ads, about e-commerce, about dropshipping, because that's what I'm passionate about. So it's Alex Fadatov on YouTube. We have also the like there's a website, Alex Fadatov dot com that you can go to.

25:33And another website, if you run e-commerce business and if you want to grow that business, you want to be in the environment in the community of top e-commerce entrepreneurs. We have seven, eight figure e-commerce entrepreneurs, dropshippers in our community. If you want to scale your business just in the right community, as we talked at the beginning, you asked me like what was the most important thing that I think a lot of people kind of like have a mixed conception about. I think it's community and the environment. And as you said, it's like you're the average of five people you spend the most time with.

26:05So we have one of the best communities. I mean, obviously I'm prejudiced about that, but it's ecommercescalingsecrets.com and just go there and we have all of the resources. And also we have, if you go to ecommercescalingsecrets.com for slash fire, we have this special gift for you guys on the funnels that we have used to scale our funnels. You can just copy it. It's click funnels. So you can copy our funnels and you can scale your own products. Fire Nation, I said at the beginning, Alex said it right there at the end, because you are the average of the five people you spend the most time with.