Mastering paid growth | Jonathan Becker (Thrive Digital)

27:48Yeah, because they know, they understand how many impressions they'll get and on average what the quality of impression is and how many dollars they can put behind that before it has a cliff in terms of ROI. Exactly. So, broadly, who do you think is having the most success now with the changes? And then generally, what should people know about what has changed in the past, say, year in the space of performance marketing? I'm not going to really be able to point to this company is really getting it right. And I think that you can do that, but it's like saying a friend of mine recently on Twitter tweeted this funny thing where he was like, this is the number that I used to win the lottery, said every successful founder ever trying to give advice to other founders.

28:36And so in other words, just because they won the lottery doesn't mean you're going to be successful picking the same number. To that extent, there is a bit of a playbook around modern -day performance marketing, and that includes everything from really stringent and rigorous creative testing and thinking about that correctly to understanding the subjectivity of attribution and its strengths and weaknesses, doing a lot of work around validity of these campaigns, So really just like the measurement and what not companies that Can do those things and then understand their own marketing economics in other words like quite quite basically How much can we afford to spend in acquiring a customer on any channel before That acquisition is no longer profitable so really focusing on the profitability of the bottom line and not just break net growth for instance companies that have those capabilities and and see the world that way tend to be successful in performance marketing.

29:39When you were giving your intro, you talked about how you initially started doing SEO, that's where you started and then you moved to Pay Grif. Well, how do you think about those two investments as a founder trying to decide which direction to go? What would your advice be of like spend your time here versus there if XYZ? When I'm asked a question of like, should we put money into organic search or paid search? My response is often that they're actually not mutually exclusive to one another. So it's a great idea to do both. And that backs into my strategy of diversification of channels. So don't build up exclusively in one area and create volatility within your marketing mix essentially.

30:16SEO is a wonderful, you know, marketing capability when it's built out correctly. I think the issues that you run into are cause and effect related. So one of the things that people really like about performance marketing theoretically is that we can spend a certain amount and then if we're modeling things correctly, we can essentially determine how much revenue was generated from the actions that we took. Finance teams love that, C -suite teams love that, they can build projections, they can budget around it, there's some degree of predictability around it if it's done properly. Certainly, search engine optimization is different in that the attribution can be tough.

30:57It's difficult to determine whether ultimately the actions that you took contributed to a rise in organic traffic. You have to essentially correlate that. The reason is because when you build clusters of content and it's grouped thematically and you're targeting buckets of keywords, whether they're long tail or head keywords, whatever it may be. You could publish all of that on your website. Google still has to crawl it. They run it through their analysis algorithm, which is comprised of 200 different signals of which maybe like 20 to 30 have been publicly disclosed. So it's a bit of a black box.

31:37We don't really know ultimately what ROI comes off of that unless you're very sophisticated. like probably one of your other guests eat them in terms of measurement. Whereas paid, the ROI is still a difficult problem to solve, but there was a lot more of a linear relationship as it relates to attribution. And so paid being tangible was the reason why I leaned heavily into paid and ultimately away from SEO. But I do think that if you do SEO properly, the payoffs are indisputable and it is certainly an important part of a modern modern, a modern media mix. You mentioned this earlier, I've heard this more and more recently that one of the biggest levers these days in paid growth is around creatives.

32:26It's not like tooling or like smarter data. You tell me if I'm wrong, but it's just like getting creative, getting better creatives and so I'll let you actually explain what are creatives. There's a term creatives that people I didn't really get. And then, broadly, what should people be doing to optimize the way they approach creatives? Certainly. So, when we say creative, we're referring to the assets that power typically visual programmatic or paperclip campaigns on social channels or display networks. And so literally, the Motion Graphics ad that you see on Facebook, the user -generated content that you see on TikTok, or a static ad that you might see that has a pretty picture in it or whatever.

33:09And so I think that when we talk about creative as a big lever around efficiency and optimization, the underlying conversation there is that over time our industry has been heavily automated. So a lot of the levers, so to speak, around performance have been automated by Google and Facebook over the last seven to ten years. That's because originally when you ran these campaigns you needed to have like a rocket scientist in front of them. They were so it was so complicated and there were so many different things that you could get wrong. And their solution, the channels, like the big tech company solution to this, is figuring out for you.

33:51So eventually Google wants you to say, hey, I'm Google, give me your credit card and I'll take care of everything else. Facebook and the URL to point people to and then we'll do the rest. Yeah, yeah. I don't know if that's a great idea for consumers by the way, but in the meantime, you know, there's certain things that have just been fully automated. In the context of creative, it's still one of these things that for now is not, you know, auto -generated in the world of AI and all the changes that we're seeing. Maybe that's something that will change. But for now, you know, essentially creative directors and their teams are concepting and producing different types of assets.

34:27And so there's a bunch of problems that we typically see when people come to us. So number one, performance marketing and brand marketing in a lot of organizations are two different things and the designers that occupy you know brand teams bandwidth and whatnot often Don't have a sense of how paid acquisition works and so One of the pitfalls of working with certain, you know companies or the mistake that they make is the design team will hand off like a File full of you know random assets for for paid acquisition without any sense of how the channel works. And what I mean by that is these days, we're using the analogy, the classic analogy of the funnel to organize our thinking around creative assets.

35:14So you can think about this as generating intent at the top of funnel and capturing intent at the bottom of the funnel. So when I think about an experience that I want, you know, a consumer to have on Facebook and audience targeting and creative, I think about us beginning a conversation at the top of funnel creatively with an audience, having that conversation change as we say different things and the audience that we're targeting ultimately graduates through different behaviors on our website from one to another. and then ultimately it resulting in an end to the conversation where they take an action hopefully, you know, that the brand that we're working with is looking for.

35:56And so there's a clear beginning, middle, and end to that. And one of the major pitfalls that we see is that certain brands just dump one homogenous message into, you know, all of their targeting. You see the same ad over and over again, it creates banner blindness and it's total lack of efficiency. The antidote to that is to have resources dedicated to paid and essentially iterate upon the creative assets themselves based on the data that we see coming from ad sets and campaigns in various channels. So what that means is that you have to experiment. You have to take a bit of a scientific approach, although it's a bit of an art and a bit of science, you have to try and isolate variables, maintain similar conditions across targeting and then determine which style and feature of an ad performs best at which stage of the funnel versus which audience.

36:55And the results that we see are dramatically different from brand to brand, but if you're not undertaking rigorous testing in conjunction with how you are driving the iteration and design of your ads, then you will not make progress, essentially. Is there a specific example that comes to mind us? Here's like something we did that just dramatically changed the impact of a change to a creative or if you can't take a one, are there just like specific tactics that you can suggest for people to improve the way they approach creatives? Yeah, so I think from a testing point of view, let's say I was running ads on Meta, you you know, beneath the campaign level when I create a campaign, I would have the structure that my testing might take would be that I would have an audience, a single audience at the ad set level, and then I would have two nearly identical creatives within that ad set.

37:51The only thing being different across those two creative assets is a single variable. So it might be the copy, it might be an image or whatnot. That allows us to isolate a lot of variables and really test into one singular change across two creative assets. There's a lot of nuance to this. So sometimes like the ad serving algorithm, even when we set up a test structurally in that way, we'll serve one ad, you know, a different number of impressions than the other ad. In which case, we then have to say what is a leveling factor that allows us to look at these two ads equally, even though one received dramatically more impressions than the other.

38:31This becomes where it becomes subjective in terms of how you want to determine success, but a good example is looking at the click -through rate, which is essentially a ratio, or a metric like impressions until conversion, which is a leveling metric that allows us to determine even though in a scenario where two ads facing the same audience within the same campaign received different numbers of impressions, we can still measure the efficiency or effectiveness this of one add over the other using metrics like that. And so from a testing point of view, I think that this is one way that we might look at trying to assess ad performance so that we can gather learnings, send that back to a creative team and say, hey, it turns out that when this copy is used at this stage of the funnel, it converts 50 % more frequently than this other copy.

39:26So let's now take that copy, use it as our base copy, and challenge it with a different type of copy and see if we can continually iterate and refine. So that's a very practical example of how like ad creative testing might work on a channel like Meta. You asked for specific examples where we've seen like an unlock. There's two that come to mind. Several years ago, we realized that highly produced ads from brand teams. I'm not there's nothing wrong with brand teams. We work with them all the time. They do amazing work I think we're just trying to work as a singular unit as opposed to being fragmented But a lot of the brand guidelines of different companies would end up you know yielding these like highly polished Assets and when you launch those on like Instagram, you know back in the day or something like that what we found is that they would always underperform next to user -generated assets So a brand that essentially has an influencer in front of it that says, I tried this product.

40:30I love it. I'm filming this ad for my iPhone. Look, check it out. Here's the product. Here's me. I'm better off. Whatever it is that they're talking about. The unpolished iPhone, mobile phone, creative suddenly we realized massively outperformed these other channels because there was an authenticity to it. Rather than the brands themselves saying, hey, trust us, our product is great. Here's a third party, essentially, validating what is so great about these brands, basically. So I can't speak to specific clients, because I'm not allowed to talk about the work that we've done in large part. But that would be one example.

41:10And another example is we worked with a furniture company several years ago, which scaled dramatically, but they were having difficulty early on thinking through how to scale social ads. And so, you know, paid search worked really well for them. Social ads, again, they had these highly produced styled rooms, and one of the owners had their dog in the office all the time. And so, you know, they had these models, like sitting on furniture or whatever it was, and they would take these beautiful style shots of their furniture in a room. And one of the art directors was like, put the dog on the couch and let's take some photos of, you know, dogs on furniture, which made it more playful and approachable.

41:47That one change resulted in a total unlock of their performance on paid social channels. It would like double or triple the ROAS that we were seeing. So it's these minute differences that you can test into that ultimately can drive performance. That reminds me of Erbeen B. The photography team found, and actually the photography team was initially including people in the photos of listings. and that was like the hero images of listing photos. And it turns out when there's no people in the listing photo, much higher conversion and the theory basically people don't want to see other and strangers in the place they're gonna sleep.

42:27And that's not, I was not expected. It's a really great example. And so the question becomes as a company and as a brand, do you arrive at those learnings anecdotally by accident? Is it the brilliance of one person on the team that the whole brand is predicated upon in terms of performance or do you put a very rigorous structure around testing and the iteration of assets and how to determine whether something works over another thing that is a process that yields the outcomes that you're looking for. And so a lot of times with agencies, people talk to us about the obvious hard skills that we have, but the soft skills are around process that can be deploy that can actually be the difference between being highly sophisticated or unsophisticated.

43:15Internal teams do this too, but that Airbnb example is a great illustration of how if you put the right, you know, testing in place, you can yield an outcome that becomes an unlock for performance. Getting even more tactical with that idea of testing a bunch of creatives makes me think about a story from chatting with the guy from Wish, his head of growth at Wish about about how they uploaded hundreds of variations. And I think which is like the epitome of the opposite of brand highly polished ads, or it's just the most ridiculous looking products, which is banners and numbers and prices and crossouts and all kinds of stuff, just like anything that would take to get people to click.

43:54Is there a tool or process that you can point people to to help them do this testing on creatives, or is it mostly built into the existing tools now? And there's nothing worthy fancy about it. We get asked this a lot. And I think there are tools for different types of functions that we undertake in the process of running paid acquisition for different brands. But these days, most of the testing that we do is within the channels themselves. So meta ads, Google ads, I keep touching on those two specifically because they're the most advanced in my opinion. They're really powerful. And so when I, the good news here is that you don't necessarily need some exotic tool to do sophisticated creative testing, you can do it in platform and you can occupy, you can use the structure that I just kind of outlined as a starting point.

44:42You mentioned Google and Facebook. What is your take on TikTok and YouTube and maybe Snap? Just do you recommend people go there and there's a big opportunity? Do you think it's over a blown? Do you think people should just take Google and Facebook basically at this point? What's your general advice? So when I say Google and I say Facebook, I'm talking about the Google ecosystem of channels inclusive of YouTube. And when I talk about Facebook, I'm talking about Instagram and Instagram and probably eventually WhatsApp, which I think will probably launch ads later this year. With all that said, some interesting opportunities these days really exist on channels like Amazon and TikTok as well as a number of other challenger channels, I think.

45:25Snap, I'll talk a little bit less about because I think, you know, really, there's just fewer and fewer people potentially using Snap. There's no knock on Snap. I use Snap. I like it a lot. But at the same time, most individuals organizations tend to want to place ads where there's a lot of views and engagement. And so, and the king of this right now is definitely TikTok. And so, TikTok faces its own set of challenges. And arguably, there is as much an opportunity there as a barrier at the moment. I love TikTok. I'm a consumer of content on TikTok, not a producer of content on TikTok. their ads platform kind of reminds me of where Facebook ads was like six, seven years ago.

46:10It's not super sophisticated and attribution is not great yet. But you can get cheap CPCs because there's just fewer, you know, organizations advertising there. Fewer companies have figured out how to make that work. At same thing with Amazon, Amazon is a bit of a bespoke channel like it doesn't work for a B2B SaaS company, it's more specific to D2C, I would say. But essentially, those channels are wonderful. They're not at the point yet where they're ubiquitous. Every single advertiser that has ever worked with us, I think, in the last 10 years, is for sure on Google. Everybody does that, and then the question is, what else can I invest money in with the expectation of profitability?

46:52And so talk and an Amazon and even if I want to break out YouTube, they tend to be a little bit more specific and they definitely work but not for everybody yet. And so the question becomes like, will TikTok become as prominent as like a social ads platform like meta ads? And we just don't know yet. What we see working very nicely on TikTok by the way are these like founder led brands where the founder is the ambassador and they're doing those handheld videos with their iPhone. They're talking about the merits of the products that they make. They're talking about the problems that they solve. They are great at cultivating a following.

47:31Their content is highly engaging. Those types of organizations crush it. Also companies that got really good at partnering with influencers. We haven't talked about partner marketing that much, but affiliate marketing companies got into this early and then influencer marketing networks are all over this. but essentially having these third parties be an ambassador for your brand in an authentic way, partnering with them, having them generate the content and that's the nature of the partnership. Stuff like that seems to work quite well. Awesome. I love those simple points of just like what is likely to work on TikTok.

48:09Just broadly, would you say TikTok advertising today is underrated, overrated, or just right? If you are e -commerce based, if your wholesale retail based, anything direct to consumer, you have to investigate TikTok and try and figure out whether there's a way of promoting your products there. It's a massive, highly engaged audience with somewhat specific demographics. It's a very exciting opportunity. Other brands need to pay attention to this and figure out what their entry point is going to be. And just because the innovation hasn't happened for B2B SaaS yet on TikTok doesn't mean it won't.

48:50TikTok wants that to happen. And so the question becomes how. And so someone will unlock that and they'll make a billion dollars because of it. But I wouldn't recommend that channel to everybody yet. And like at Thrive, for instance, we don't have a huge amount of people coming to us yet saying, Hey, I'm spending $750 ,000 a month on TikTok, can you help me? Type thing. The other problem with TikTok is that it's extraordinarily creative asset dependent and heavy. And so you are launching new assets several times per week. It is hard for creative teams and brands to produce that much content. It takes a machine and that's expensive.

49:35And so that all factors into the cost of not only just the ad dollars, but the creative, of resourcing and investment that's required to power that. So it can be done in a more nimble manner if you're spending less, but you can't really get to like a million dollars a month on TikTok without having like a huge amount of creative being pushed to that channel. Awesome. It's really good advice. I went to talk about AI soon because I imagine I could help with some of these things, but you mentioned B2B SaaS and I wanted to ask, I imagine Google is the primary channel for B2B SaaS and if not, or if it is where else do you find there is value in spending money to drive growth for B2B SaaS, which channels and networks?

50:20So I'm agnostic here in terms of like where people should be spending money. I see this world in terms of impressions and clicks and does that conform to the marketing economics of a project that needs to be achieved in order for it to grow. So it's less about where to place your money and how to think about the placement of those funds. And so the common mistake that we see as people build out a funnel, so to speak, for B2B lead gen projects or B2C lead gen projects is they'll be overly reliant on the first of a sequence of metrics that ultimately yields a sale. So typically it's something like cost per lead, marketing qualified lead, sales accepted to lead.

51:03There might be a couple more metrics there and then eventually like a sale occurs. And so the thinking is that, okay, for sales to occur, I need more leads at the top of the funnel. The more leads I have, you know, the more marketing qualified leads I'll get, the more sales accepted leads I'll get. And ultimately, the more opportunities there will be and the more revenue will generate. And so if I think about this world of lead generation on performance marketing platforms as a function of cost per lead in that sense that I just described. Then the tendency is always to want to drive down the cost per lead thinking that that's the efficiency I can get more cheaper leads and that will yield more revenue.

51:45When in fact, it turns out that if you flip that conversation on its head and say not all opportunities and sales are equal. And instead of focusing upfront on a cost per lead, I now wanna focus on what is a high value customer. So the cost per lead is actually higher, but the ROI of targeting those people is also higher. And so to get the higher quality leads, it's not a function of CPL. And so that is a very common pitfall that we see when people come to us. The antidote to this, It's interesting, so Thrive developed an ETL tool and extract transfer load tool called Thrive Stack. It's not commercially available, but if you wanted a commercially available version of this, you can use something called Supermetrics.

52:34Basically, Supermetrics is a data connector. There's a world of different data connectors out there, but it allows you to pipe via an API, revenue data from your CRM into a third -party database that can then be joined with data from the channel itself. You can build tables within a database and normalize them together in a matter where you can start to determine the relationship between, again, the audience that particular cohort of opportunities came from and whether a sufficient degree of revenue was derived from those opportunities. And then you can build upon that what is known as a lead scoring model, which allows you to bid in real time on the audiences that have a higher likelihood to convert to high revenue generating customers.

53:24And so the magic there, we talked a little bit about rates of return and instant gratification in the performance marketing world. Lead generation inherently is a slow gratification process. And so the problem is that if my pipeline is full of opportunities that yield revenue in two months, six months, sometimes 12 months, how do I determine how heavily to bid on different, you know, leads today in order to predictively have an outcome where I'm maximizing revenue and a lead scoring model basically solves for that. Today's episode is brought to you by Miro, an online collaborative whiteboard that's designed specifically for teams like yours.

54:06I have a quick request. Head on over to myMiroboard at miro .com slash Lenny. And let me know which guests you'd want me to have on this year. I've already gotten a bunch of great suggestions which you'll see when you go there, so just keep it coming. And while you're on the Miroboard, I encourage you to play around with the tool. It's a great shared space to capture ideas, get feedback, and collaborate with your colleagues on anything that you're working on. For example, with Miro, you can plan out next quarters entire product strategy. You can start by brainstorming using sticky notes, library actions, voting tool, even an estimation app to scope out your team's prints.

54:41Then your whole distributed team can come together around wireframes, dry ideas with the pen tool, and then put full mocks right into the Miro board. And with one of Miro's ready -made templates, you can go from discovery and research to product roadmaps to customer journey flows to final mocks, all the Miro. Head on over to miro .com slash leddy to leave your suggestions. That's m -i -r -o .com slash leddy. You talked about attribution and I thought this would be a great time to get into that. So the way I think about this is like oftentimes the biggest challenge in driving growth isn't like the actual work you do to drive growth.

55:18It's measuring what impact your work is having and understanding where dollars are spent effectively. And things are changing heavily in attribution land with privacy shifts and ETT and iOS for 14 .5 .1 or maybe whatever the version was, they came up, they changed everything. And so my question is, what changed is one, in terms of being able to do attribution? Maybe even explain what attribution means for folks, there's like, what the hell are you even talking about? And then finally, just what do you recommend? People do now to do attribution well, and in this new environment. Yeah, it's a really, really great and pertinent question in the industry.

55:59And it has a lot of focus on it now, but attribution has always been a conversation that's been very important. So just to kick things off, attribution essentially is how we determine the relationship between what we did and what happened. In the context of performance marketing, this means what ads did we serve, what campaigns did we launch, and generally what was the revenue ultimately that was derived from these campaigns. And so there's a funny quote that I love. As someone named John Wannemaker in 1919 said, I know, I bet I'm gonna guess what it is. Do you want to guess? It's half my marketing dollars are wasted.

56:40I just don't know which half. Exactly. I love the youth. I love the you knew that. He said this in 1919, you know, the world was a very different place there, but oddly enough, we still have these types of problems today. It's because the world of what I did and what happened because of what I did is very complicated. There's so many variables, some of which we know and then some of which we don't know that we don't know type thing. And so attribution, as it stands in our industry, is still an incredibly subjective art and somewhat of a science. It doesn't mean that it's impossible and it doesn't mean that there aren't varying degrees of sophistication as it relates to attribution.

57:21But but we're still in a place where we have to understand the business and its goals and then start to work on an attribution model. An attribution model is probably something that is never solved, but I'll give you a couple of examples. So number one, around attribution, it's important to determine whether an organization, a company, a client is focused on profitability or growth. whether I use one attribution lens or another, we'll drive those outcomes. And so these days, for a number of different reasons, we saw, you mentioned iOS 14 .5, in addition to third -party cookie deprecation and whatnot, there's no one way necessarily of approaching attribution.

58:05The most classic and commonly held version of attribution used to be a cookie -based form of attribution called last -click attribution, meeting that the last quick click in the sequence of clicks that yielded a conversion would be attributed with all the revenue from that conversion. Other models in a cookie -based world involved first touch attribution, so it's actually the first click. So like I launch an ad, it's in an audience that doesn't know about my service or my brand. And so the first click that I get should be given all the credit for that sale. And then there's multi -touch attribution, which can take several different forms, but essentially is saying it's not one way or the other of the two first versus last click options, it's somewhere in between.

58:51So I'm going to create a weighted attribution model where the first touch gets so much of the credit and the last touch gets so much of the credit. This is very subjective. As you can see, I am essentially looking at my business model, determining what my goals are, and then I'm backing out into an attribution methodology that I think adheres to both the economics of my business and the capabilities of these platforms. And again, we live in a world where a single brand might do, you know, television advertising, they might buy media in magazines, they might buy billboards, they might get impressions from Facebook, they might do paid search.

59:29And so there's a big, you know, argument over how to ultimately model this. So there was something called an IDFA that Apple allowed advertisers to use. And essentially what that was, It literally means ID for advertisers. And it allowed Facebook, Google, and other advertisers snap TikTok, whoever was essentially selling ads that were predicated on being displayed on a Apple mobile device or a desktop device. It allowed the advertiser to provide attribution metrics and certain types of customer match metrics in their own platforms. And so when when Apple ultimately you know launches its privacy changes, I believe in like mid 2021 overnight it allows users to say I will I don't want to share that information I'm not going to share my IDFA anymore or yes, I do want to you know share my IDFA and so What you see as a result of that is less of the core data that Facebook in particular would have required to make attribution more airtight and ultimately validate its advertising.

1:00:43And so because we can no longer, you know, validate attribution on Facebook as seamlessly, we're in a situation where we're not sure any longer which, which audiences to target. And we're not sure how to run all of our creative testing. And ultimately we can't even determine, you know, the degree of revenue that's coming from particular campaigns that we've launched and whatnot. And so it created quite a stir in the world of attribution, which is obviously like this core discussion, too, is it working or not? People want to answer John Wanamaker's question, but the modern methodology now is through a number of different approaches to validation.

1:01:25So the cookie -based attribution, which had been probably the most popular version of attribution in the 2010s, really up to this point, is now one of the ways that we would look at this, but we would also include things like various forms of statistical modeling, customer surveys, population surveys, there's a number of different ways kind of to the same place here. Statistical modeling, by the way, one thing that's very popular these days, which is I think was originally created in the 1950s, is a form of statistical modeling called medium -ix modeling. It's essentially regression analysis, process.

1:02:00And it is trying to determine the causal relationship between again what you did and what the effect was on revenue. That's very topical in the industry these days. If you're looking for a tool kind of off the shelf that can help with this, recast, is something that I see people using. But a lot of organizations build these highly customized bespoke models that ultimately feed the algorithm inside of an MMM model in a customized What is it, or is there a recommendation of just like, hey, if you're doing, you're trying to do attribution today, here's like what you should do. Is there like a clear do this kind of piece of advice or is it super personalized depending on what you're trying to do?

1:02:41The advice is that there's no single source of truth. Anyone who claims that they are a single source of truth, whether it's an individual, you know, a model that they've created or a tool that they've created is not being accurate. I believe that the approach that works to attribution is that it's an ongoing investigation and it never stops. And essentially what you're doing is looking for evidence that validates the outcome of your performance marketing campaigns one way or the other. There have been plenty of incredibly sophisticated attribution models that we've helped build and invalidated with like MMM or other types of tools that have indicated that the campaigns do not work.

1:03:26So I will repeat that. We, a very sophisticated organization, have stood up campaigns that we measure and ultimately determine do not work. And that is an important finding in terms of an organization's determination of whether they want to continually invest, take budget out of these channels or invest into other areas. Yes. Awesome. You mentioned a company called ReCast. I don't think you knew this, but I'm actually an investor. And so obviously a big fan. So check it out. I don't know what the site is. ReCast .com maybe I think if you Google ReCast Attribution, we'll also have a link in the show notes.

1:04:01But you're working with the clover clients right now and it's in the chat like they're approached. Yeah, they're basically they're building the model as a SaaS tool to your attribution in a really clever way. Amazing. Okay. Just a couple more questions. One is around AI. one is the around agencies and just how to start down this road. How has AI in any way impacted the work you're doing today or the work of paid growth for rents marketing? And then what do you think this will go in the next few years? Interestingly, and I think I alluded to this earlier, but our industry has been influenced by AI for over a decade.

1:04:35So Google, Facebook, other, even Microsoft, these are some of the organizations that historically have been at the bleeding edge of artificial intelligence. and their goal was always to automate as much as possible within these platforms. And so the effect ultimately that we've seen from a human capital point of view is displacement. So we're actually, we have more people now that we've ever had, but the nature of the work that they do is more strategic. It's more about modeling validation, asking the right questions, being focused around creative levers, like some of the things that we've talked about, And less so the trench work of implementation and bid modifiers at the keyword level on Google search and some of the really hardcore manual analysis we had to do.

1:05:19So I think if we are the canary in the coal mine for other industries, what will be interesting is I assume that if you work in an architecture office that you'll be doing less of the drafting and it's been a change that's occurred in those offices, but you'll be doing less of the drafting and more of this strategic problem solving around what kind of building is necessary for the client in this scenario type thing. And so on a practical level though, some of these conversational AI models are very interesting for us in that when I think about creative testing, for instance, we can have chat GPT come up with all kinds of variants of copy that we would not have necessarily thought of.

1:06:01It can do a lot of drafting of things like RFP responses, so we can feed chat GPT 100 previous RFP responses that we've done and have it spit out new responses to net new questions in a net new RFP. And it's 80 % good and still requires 10 hours of work to massage to the point where we can send it off to a client. But that replaces like a week of work with five or six people, you know, that it would have previously taken and that's already happening today You're saying that's happening now literally right now Take thing all of all of what I just said and you know, we're there's a lot of different ways that we are beginning to Use AI to do more with less basically.

1:06:47So that's kind of how I see it influencing not just our industry but other people's businesses as well That's amazing. So just to repeat what you said, your team now, because of chat GPT, is able to spend more time higher level and leverage specifically chat GPT to do this kind of, in RFP's are basically proposals. People are asking you to pitch to work with them. Is that? Yeah. Okay. Yeah. Some of these like AI -driven organizations that allow you to like type in a prompt and it spits out an image. On our creative group, we can come up with mockups in literally 1 % of the time that it took. So you no longer have to draw the initial mockups for art.

1:07:31Suddenly, what might have taken one person a week of work on a campaign takes an afternoon type thing. And so you still have to understand what questions to ask of the AI and be capable of iterating, but these rough drafts that you might show, like the artwork of, you know, to a client to say, like, do we like this more, do we like this more? That's like AI generated. It's really interesting. What's the tool your team uses for that as a mid -journey or dolly or something else? It's dolly and it's mid -journey. So you got it. Got it. And so what you use it for is you're thinking about a concept and you just come up with a mock coming up with a prompt to kind of pitch, but this could be.

1:08:11Yeah, the interesting thing there is that these concepts often live inside of someone's head and we do this thing as humans will reverberally discuss it. And I try and put the image in my mind's eye, in your mind's eye, which is an inherently inefficient process and actually hurts our ability to be creative leaders. Someone might just see it slightly differently than you do. Now that person theoretically can use Dolly to output what is inside their head and they can refine that easily through subsequent prompts in Dolly or mid -Journey or whatever it may be. And then just say, do you like this?

1:08:43This is my idea. And so in a way, it's helped humans connect more easily in that context than we were capable of doing before. And then in the context of like pitching a client on ideas, we are capable of generating more ideas faster and iterating upon them live. So I can, you know, have a Zoom call with you. I can present my screen. And if you don't like the output of, you know, Dolly that I just prompted, I can reprompt based on your feedback in real time. There's the sentiment that AI is going to take away the fun stuff of jobs, like maybe being creative and coming up with a new concept and photography, like, you know, setting up a whole photo shoot, whatever.

1:09:29Yeah. Do you find that your team is excited about uploading this to Dolly? Or they just like, I damn it, this is what I love. and I'm just sitting around and docks, writing prompts. I am not an incredible artist, but now I can take those thoughts in my mind and output them just as well as like someone who's pretty skilled in artwork. So in a sense, I'm excited because this technology democratizes the ability to do this across everyone. Anyone who can think a thought can generate an image on an AI image generator. How many scribes do you know? Zero. I believe zero. Because we invented something called the printing press and the printing press You know took over what was a cottage industry for very specific individuals that allowed them to control the flow of information Yet today it's not like we have fewer Riders or creative thinkers.

1:10:22They're just using different tools to arrive at the same place You could say the same thing of the Loub There used to be people who would stitch your t -shirt together or your sweater together and none of those people have worked anymore there's still people who need, I suppose. But your, you know, your clothes are made in factories through with machines and the quality of the clothing is arguably a lot better than it was. I may be wrong about that point, but you can make more of it and more sophisticated clothing. There's no question that AI is going to displace and replace certain industries of people, certain roles.

1:10:53I'm not going to pretend like I know whether that's a good or bad thing. And I'm also not a poster child for AI. I am really just using the technology that's available to us to run our business the best way we can. We haven't let anybody go yet because of these efficiencies. The people who used to do the artwork are the ones using these tools. And I think they're excited that they're more productive. Is there going to be nuance around that? Of course, are some people going to be sad about the changes? Yes, I think human nature is that people generally don't like change. But I think over time we've seen change has been a productive and Positive thing for society not a negative thing Awesome.

1:11:36Yeah, so it sounds like the team is is excited generally. That's yeah, that's a good sign And that's what I find generally I think some people will be really upset if most people be like amazing And I never wanted to do this part this generation of people will be upset and then there will be a subsequent generation that never knew anything different You know, so the way we think about this is the you know people growing up these days have always had the internet Whereas you and I probably remember a time before the internet existed AI is a platform like the internet and Just as when the internet was launched you couldn't conceive of Amazon calm or You know all these wonderful or social networks or whatever it was the permutations of what AI will become even in the current like GPT -4 context or dolly context or whatever it may be.

1:12:24We don't know what people are going to create with this. And so it's difficult for the generation that knew what life was like beforehand, before iPhone, before Internet, before AI, but there will be people who know nothing but this eventually and to them, you know, it'll just be normal. And so we're all just replaced by AI and then it's AI running ads to get other AI tools to buy stuff from us from each other and they were just sitting around watching Netflix. And that'll be great. There's always this question when you're starting to invest in paid growth, performance marketing up, should we work in agency, should we work in house, should we hire someone junior to figure it out, should we hire someone senior?

1:13:03What's your general advice for say an early stage start up when it makes sense to work with an agency versus bringing someone in house? So we need people in house to do our jobs properly. So agencies are not mutually exclusive to personal in -house. If we don't have a point of contact, for instance, at an earlier stage company and it were supposed to report to the CEO, CEOs tend to be very busy people. And we often just can't get the information and approvals that we need to be successful. So if you think that growth marketing is an opportunity and that performance marketing is a subset of growth marketing that you want to focus on, the reality is you're going can need expertise and you probably should start in -house and then hire an agency.

1:13:49Again, there's different stages of companies and different examples of what makes sense at different stages and the nature of the work that we do at different stages changes. Very, very late stage, we're kind of doing a lot of this sophisticated production work. We're implementing sophisticated testing. We're working on attribution. We're building beautiful reporting. But in a sense, We're maintaining this machine that already exists. Earlier stage, we're doing a lot more of net new experimentation, trying to discover what is working and what sequence of audience targeting versus creative asset display.

1:14:26We'll work what channel mix works and all of that. So, a lot of times, the body of work that's required to nail that and the inputs to literally out front, what questions to be asking, isn't something that a small in -house team possesses and so they will work with an agency to scale faster to get where they're going quicker, to bring in more resources, you know, quickly basically. And then later stage, sometimes it's a permutation of the same thing or, you know, we're really just managing a whole bunch of different capabilities that they have because it's very complicated and difficult to staff.

1:15:05That is really interesting. So it's not like agency versus in -house full -time person. and it's unique both is what you're finding. I don't think we have any projects that we're working on where there's not like a professional marketing person as our POC. And generally the people that we report to have a background in what we do, whether they ended up doing something different, and now they're like a VP or a director level and not directly managing channels themselves, is one thing or another, but yeah, I mean, we work with people that have in house expertise all day long. I see. So sometimes it could just be a generalist marketing person that becomes is your point of contact, that don't have to be experienced in paper.

1:15:41There's one more thing. So as agency is we're constantly solving people's problems in the market. And as a result of that, I have a fairly large team of 130 people that think about performance marketing all day long. It's the first thing we think about when we have our working coffee, and it's the last thing we think about as we're like leaving the office kind of thing. We have very sophisticated and built out capabilities as well as all kinds of software and processes and capabilities, I guess, that we've created that most in -house teams just don't have because they're smaller or newer or someone might be really sophisticated, but they don't have the resources to implement it and stuff.

1:16:21And so in the same way that a really sophisticated organization might go to Boston Consulting Group or McKinsey to say, hey, like we did this, but you do more of this all day long and we need advice on how to be more efficient. people come to thrive saying, hey, we're top of our game, we have really strong people, you know, they absolutely know what they're doing, which is always in the case, by the way. But we're looking for extra, you know, sophistication and additional capabilities that are very difficult to create in an in -house organization. It's why we worked in for 10 years. It was tough to replace us.

1:16:58Yeah, that's quite the retention. Ten years, ten years going. Imagine the net dollar retention has gone up to. When you're looking to hire someone full time to drive the paid growth channel and or work with an agency, what do you recommend people look for specifically, especially things maybe they're not likely to think about when they're hiring someone that people often miss? Yes. So there's a couple of competencies that I think are very important. I found that, so I was like, I've nerd as a child if you can't tell, I don't know. Super nerdy geeky kid. I would like take apart my parents' computers, I try and rebuild them.

1:17:41I was fooling around with bulletin boards before websites existed, stuff like that. And then I became a web developer. And as I transitioned into a performance marketing role, I realized that being technical and having technical aptitudes was extraordinarily helpful in terms of being on the front line of what we are doing in solving problems. So if you're making your first hire, you probably want them to have the ingenuity and capability to solve a lot of the problems that you're going to run into within the context of tracking attribution, data visualization, and then campaign management. So number one, do they have a technical background?

1:18:19That can be multidisciplinary at Thrive. We have someone who is a nuclear physicist that left that discipline and became a performance marketer. We have people who have left mathematics and become performance marketers, people who left finance, full stack engineering, all kinds of stuff. Those are technical fields where people tend to be good at math and good at problem solving. And so that's like a strong piece of evidence that they might have a strong aptitude for performance marketing and managing this. Another thing is just, you know, literally do they have experience in this discipline? So like, have they managed on any level, you know, meta ads, Google ads, TikTok, Amazon, some of the things we talked about?

1:19:05Do they have an appreciation for some of the inputs that we discussed today that ultimately make for, create the conditions for success within a performance marketing environment. So do they understand the role of creative, do they understand the role of proper attribution and are they capable of understanding the mechanics of your business, and so on and so forth. So I would say just fundamentally those are some of the areas that, you know, when we are interviewing, we're looking for, as an agency to, we are looking for or the ability to work with people and be excellent at client services. And so one of the questions we might ask, I actually borrowed a Jeff Bezos question from early stage Amazon where I asked people, without much warning in an interview, I'll ask them whether it's okay to do a bit of a thought experiment together and whether they are comfortable asking a logic or responding to a logic question.

1:19:59And I'll ask the question of how many windows are there in New York City? And so there's two things that I look for Or in this scenario, one is, can they think on their feet? So I'm not actually looking for the correct answer. It's a pretty difficult question to solve. But like number one, do you realize that windows are not just building windows and windows are also in cars and trucks and stuff like that? So there's more than one type of window. And then can you just do the arithmetic of saying like, you know, there's so many buildings per hectare or square mile or whatever it is and you know, it's division and multiplication type stuff.

1:20:32But also from a client services point of view, I'm trying to see whether in a scenario where I've asked them something that they obviously probably weren't prepared for that is a strange thing to ask and probably makes them feel a little bit uncomfortable how they react in that situation. So do they remain composed or do they lose their composure to get frustrated or even angry that I asked them something that's pretty weird to ask? Their reaction there is often a good leading indicator of whether or not in a client scenario working with our clients they can, you know, compose themselves in a difficult situation.

1:21:10Very tactically, what could the level of experience do you recommend people look for in their first performance marketing hire, like year two, four or five years longer? I've seen people who have like 10 years of experience in the industry not be that great, and then I've seen people who have like one year of experience be absolutely phenomenal. So I would say that like again, like you know, the years of service under their belt is one clue or piece of evidence to their potential aptitude. But really, you know, you want someone who can clearly demonstrate to you that they can and confidently run the channels, I suppose.

1:21:53If what you're asking is like literally like at the level where someone is like managing, paper click and programmatic media buying, then you wanna make sure that they can just do that. And I would say it's less about like the years of experience. A lot of times people only wanna do those types of jobs for a couple years before they're like, hey, what's your plan for me? Like I'm tired of running ads and building campaigns. I wanna manage the people who do that now. And so, you know, the people who tend to really do that are often somewhat earlier on in their careers. And so that's just a reality that we see.

1:22:25One more very technical question. What do you recommend the title for this Role B growth marketer, some else? I've seen so many different names for this. So I think again, if the intention is to grow out a growth marketing capability, which again is not exclusive to performance marketing, then you're looking for a manager role of growth marketing manager. I've seen paid acquisition specialists for people who just manage channels. I've seen paid acquisition manager, performance marketing manager, media planner and buyer. I've seen all kinds of different roles. But when we are launching a new role these days, there's such wonderful tools like everything from Glassdoor to LinkedIn to PayScale, where you can essentially just look at what other people are calling it, and borrow from their role descriptions.

1:23:15and then create your own role description and then determine what role is meaningful in the context of your own organization. Awesome. Last question, we started with the story of how you landed Uber. And I know you also have an interesting story which I haven't heard of how you landed in Snapchat. Snapchat as a client. So maybe tell that story. It's a fun story and I think it's about ultimately confidence and knowing your craft. And so I believe it was like 2015 or 2016, we were essentially contacted to participate in an RFP down in Los Angeles and RFPs are difficult processes and essentially, you know a department of a company is saying we we want performance marketing and Here all the questions that we're going to ask you and exercises you need to complete in order to vet you as to whether you're the right partner or not and And so sometimes RFPs are incredibly thoughtful and they run by people who have either done a lot of RFPs in the context of what we do or they know specifically, you know, what the outcome is.

1:24:20And then in other cases, they're very like experienced marketing departments with senior people and an approach that they may take is like every stakeholder within that department gets to submit one or two questions, you know, to a long list of questions and the, you know, the respondents have to like respond to all of this. And so the RFP process for SNAP was somewhat complex and they asked a range of different questions. And we find ourselves in LA at a hotel the night before it's two o 'clock in the morning. My business partner and I and another team member that we had brought down are sweating.

1:24:59And we're like, how are we going to build a presentation out of this? like they're asking so many well -meaning but difficult questions that are ziggin and zagging and like, you know, in a pitch situation, you want to tell a story. It's important. And that story has to have a beginning, middle, and end. And it was just difficult. And yet here we were and we had worked with like all these really cool organizations. And I was very confident that we and you precisely what we were doing. And I kind of had this Eureka moment where I was like, here's what we're gonna do. It was Brent McCartor, my business partner, and I kind of arrived at this together, but we're kind of like, here's what we're gonna do.

1:25:43We're gonna have a completely unique take on how to respond to this, and we're gonna build a deck that's bespoke around X, Y, and Z. And so we worked till six in the morning. I think we get a couple hours of sleep and then by like 10 o 'clock, we're sitting in their offices. And essentially, the pitch is something like this. I stand there in front of about 20 different executives from their organization, and I say, you have thoughtfully curated an RFP for us to respond to today. And you have asked us to respond to about 20 to 30 different questions. With the utmost respect, I am not going to answer any of your questions today.

1:26:20I am standing here because you are looking for a marketing partner and you need expertise in this area. And instead of telling you the answers to the questions that you asked, I'm gonna tell you what I think you need to do to get where you want to go. And if you agree with me and my logic and what I talked to you about here today, then you should hire us. And if you do not agree with my logic and you think that we're out to lunch, then you should not hire us. Everybody, you could hear a pin drop in the room. My own team, I think, was a little bit surprised. We had a whole bunch of technical difficulties that day, like someone who was supposed to zoom in, like couldn't make it.

1:26:56And so I have to like add a little part of the pitch that I wasn't prepared for. Like lots of zig and zags, they thank us for RFP response, lots of handshakes and smiling faces, but we don't know whether we're gonna land the client or not. And then about two hours later, I was driving to San Francisco with a friend, immediately like leave LA for SF because I had a bunch of fall on meetings. things. And I get a phone call and they were like, we love your approach. Congratulations, you're hired. And so, you know, these days, I think Snap is still a really interesting organization. But at the time, they were kind of bringing the future of a social platform or what a social platform could be in the same way that we think about TikTok right now.

1:27:41TikTok, you know, wasn't on the scene yet. And Facebook was very worried about Snap. And And there was tons of engagement on SNAP. So this was like, the it client of the day and it felt amazing. And essentially, the lesson was that you have to trust yourself and understand your strengths and weaknesses and in situations where someone is well -meaning but may not understand what they need, be brave and tell them what they need rather than just conforming to what they're asking for because sometimes inadvertently that leads you down the wrong path. And so we took a big risk and it had a wonderful payoff.

1:28:22And we have in addition to this story, you know, we had a wonderful relationship with them for a couple of years. I love that story. I love how dramatic are your new customers, your way of acquiring customers and the new. I imagine not all of them are this dramatic. Not all of them are this dramatic, but there have been some pretty dramatic ones. And I think part of running a business and running an agency has been the curation and experience around all these fun and crazy stories that have accumulated as we run this really interesting services business. Awesome. Well with that we reached our very exciting lightning round.

1:28:59I've got six questions for you. Are you ready for lightning? Ready. Let's do it. Okay, great. You're very excited. Okay, first question. What are two or three books that you've recommended most to other people? So as a marketer story worthy by Matthew Dix is a wonderful book. He is like a world -class storyteller. I don't know if you know him. And he wrote this book about how to structure and think about the art of storytelling. And every marketer should read story were the it was a huge contributor to how I think about you know what we do it thrive. As an entrepreneur I love startup stories. So shoe dog which is the startup story of Nike.

1:29:41It's basically you know Phil Knight talking about all the ups and downs and it's it's crazy like Nike shouldn't be a company at this you know based on all the turmoil and challenges that they overcame and so you know fascinating read about taking risk and doing what you think is right and ultimately succeeding and building Nike. And then a book by Nick built in called American Kingpin, which is the story of the startup of the Silk Road, which was like this dark web marketplace for some pretty bad stuff. But it is half tech story, you know, startup story and half gangster kind of kingpin story.

1:30:23It honestly should be a Hollywood movie. It reads like a Hollywood thriller. So awesome, great book. Favorite recent movie or TV show? I don't know how recent it is, but I love the big short. Just love it. Not recent at all, but it's still great. It's still great. And the reason why I like it is because someone found truth in the data they were analyzing and then capitalized on it, which is really an out -of -log for what we do in performance marketing. And then recently, I have fallen in love with white Lotus. Yes. For no particular reason, it's just raw entertainment. What's something you've changed in the way that you all operate that's been relatively minor in terms of how hard it was to change, but that had a tremendous impact on your ability to execute as a team or a company?

1:31:07The tools that we use in performance marketing change constantly. So the channels themselves change and therefore what problems exist and what, you know, SaaS companies or different types of platforms offer as solutions to problems change. And so I don't think it's one thing necessarily. This might be a bit of a roundabout answer here, but I mentioned that change itself earlier is something that humans seem to not love. Whereas in our industry, and I don't think we're alone here, but there's a culture of change. And so a welcoming of change aptitude around change implementing, you know, having a playful mindset with new technology and tools rather than being upset about the fact that AI exists or third party cookies are being deprecated or iOS 14 removed IDFA and trying to be creative around those types of solutions has been like a constant for us.

1:32:01So it's not, I'm kind of side stepping the question a little bit, but it is the cultural willingness to adapt that I think has been a strong suit for us as a company. Speaking of tools, final question, what is your favorite most underrated tool for performance marketing work. It's Thrive Stack, so it's a tool that we built in house that allows us to pipe third -party data and customer, anonymized customer level data into a database, and then ultimately visualize it in a format like Data Studio, Google Data Studio, which I think now is called Looker Studio. That has been a profoundly powerful platform from which we're capable of delivering insights that are built upon the data as opposed to just regurgitated data, if that makes sense.

1:32:49We have not released this, this technology yet. It's basically a tool we use in -house with our clients. But to a certain extent, I mentioned Supermetrics, which is another ETL, and has some of the same capabilities, but isn't quite as powerful. Amazing. Jonathan, this is by far the deepest I've ever gone into the world of paid growth. I really appreciate you making time and sharing all of your wisdom with us. Two final questions, working folks find you online if they wanna learn more, we chat us some questions maybe, and how can listeners be useful to you? Thank you for having me again, by the way, this was a lot of fun.

1:33:26So I'm available through Thrive. So Thrivedigital .com, you can contact us through our site by accessing the contact form. Personally, I'm on LinkedIn under my name, Jonathan Becker, or Twitter, JZ Becker. And then, you know, things that would be interesting from the audience, always looking for feedback in terms of whether people agree or disagree, you know, with thoughts and feelings that we have about what we do. And obviously, always looking for amazing people, you know, ultimately to join our team at Thrive. So if you're a practitioner of growth marketing or performance marketing and you're looking for a top place, you know, to spend some time with love to talk to you.

1:34:04And also, I suppose if you need some help, you know, making this stuff work within the context of your own organization. We'd love to be at your service. Awesome. And what is the URL again? Thrivedigital .com. Sweet. And yes, her feedback. Be careful what you wish for. We get some hilarious YouTube comments. We'll see. We'll see what comes in on this one. Sounds good. Jonathan, thank you so much for being here. Pleasure. Thanks, Lenny. Thanks for having me. Bye, everyone. Thank you so much for listening. If you found this valuable, you can subscribe to the show on Apple Podcasts Spotify or your favorite podcast app.

1:34:39Also, please consider giving us a rating or a leaving review, as that really helps other listeners find the podcast. You can find all past episodes or learn more about the show at Lenny'sPodcast .com. See you in the next episode!