How Much People Spend on Creative, AI Ads vs. Human Ads: Stop Wasting Money on Getting New Customers and the 19 Marketing Channels for 2024

0:00All right. So we're going to talk about this episode how much people spend on creative. We're going to share a couple of anecdotes. Neil's going to have some anecdotes. I'm going to share a couple of anecdotes. a month and they get about 36 creatives per month, right? They do the same with another agency, 15 ,000, another 36. Do you want to clarify what you mean by creatives? Are you talking about ad creatives, TV commercial, social media? Yeah, good question. So ad creatives, right? So whether it's UGC content or static images, these are agencies that just do creative. And so one agency charges 15 ,000, you get 36, you get six concepts and six hooks basically.

0:53So it's 36, right? And And then you go to another agency, 15 ,000 again, same exact setup. And then there's another agency charging 8 ,000. Then I talked to someone recently. He had a successful exit, but his agency, they charge a percentage of your ad spend for creative. And I'm like, do you guys manage the ads? He's like, no, no, no. We just charge you for creative. I don't know how long that's going to sustain for. But if you're spending like a million bucks a month and you're 15%, that's 150K a month. That's a lot of money. So what are you seeing with this? We're seeing people spend a lot of money on creatives.

1:27And the reason being is that's where one of the highest leverage points is within your ads. And the main reason being is AI and consultants and agencies and people who are really smart. You can only fine tune your campaign so much. What you need is people who are creative. And I don't mean creative just on the creative end, like the visual campaign. Also creative on how they're running campaigns. A great example of this is Adweek released an article. They were talking about how Merkle was using Performance Max and a lot of their customers saw declining ad performance. And when we use Performance Max, we've seen an increase in ad performance.

2:07But the main reason why is we noticed really quickly Performance Max also optimizes to a lot of junk or fake leads. So we started saying, hey, fake leads go here. Good leads go here. performance max use these good leads as a conversion point, ignore the rest. So then they started optimizing for what we wanted. And then we started even seeing better performance from our ad campaign. That's the example of a human getting creative. But when you're talking about the actual ad creatives itself, we ran an interesting test. Now, I don't know how much my agency spends ourselves on creatives because we're able to do it in-house.

2:41So we just have our own people end up doing it. But we did an interesting test with a lot of different businesses. and we looked at 28 different businesses that spent$7 ,049 ,204 over and 24 cents over the last 30 days. And what we did is we had 1 ,709 variations created by humans, right? These weren't full production type of creatives. We were just cranking them out based on concepts that we thought we would work. And then we had AI create 4 ,041 variations. And just like with any ads, you remove the bottom performing variations. You keep mixing in more variations over time. The end result was human-generated creatives outperform AI-generated creatives 68.3 % of the time.

3:26And the conversion rate also from human-generated ads were also higher. Now, keep in mind, the conversion points are different for different companies. It could be an email for some companies. It's a lead or a purchase of a product. The human-generated ads had a conversion rate of 1.54 % to goal. The AI-generated ones had a conversion rate of 1.28 % to goal. But here's where it gets interesting. We took the winning variations of the human-generated creatives, and then we had AI create variations of them. And with the new campaigns, we found that AI won 75.7 % of the time. There was also a small lift in the conversion rate to a goal from the AI and human combination versus just human.

4:12because humans were at 1.54 % and human combined with AI was at 1.61%. Moral of the story? Yes, the juice, the leverage point in ads is with the creatives. But if you use humans and AI combined, you can probably do better if you're just using humans or just using AI. You know, a couple of weeks ago, we did an episode talking about how you can't really, you can't use machine learning to predict creativity. Creativity kind of has to happen. And so actually in this case, you go human first and then you can layer on the AI. That makes a lot of sense. But I think at least for right now, you can't go completely AI.

4:49Now that being said, MidJourney version 6 looks freaking amazing. Have you seen it? I have. It looks ridiculous. It looks real, right? It's like your blog images, you're good now. You used to have to pay a lot of money for blog images. Now you're just good. Not anymore. You're good. MidJourney is really affordable. I forgot their monthly fee that we pay, but it's pennies on the dollar. It's cheap. Yeah, but there's no API that you can use right now. You know that? We just manually go in. Yeah, you have to do it manually. But speaking of which, just to wrap this one up. So for creative on our side, for UGC and static, we charge about$15 ,000.

5:17It's kind of the same thing. How do you guys charge for creative? Just so people get a better sense for how the market is. I don't know. Okay. All right. I really don't know. Most of our clients are paying us for a whole slew of services like SEO paid ads for free. Right? You know, like if you're managing a ton of ad spend, right? You're just like, oh, we'll just give you creative for free. Like that's an angle. It depends, but for some of our clients, we'll do full-blown TV-quality Super Bowl-quality ads. Well, that's a whole other thing. That could be six figures plus seven figures. Yeah, but we can't not charge.

5:49We have creatives that we have examples of that we've done with Jennifer Lopez. You can't do that for free for people. I think the UGC stuff, the static stuff, is in a completely different class versus the Jennifer Lopez Super Bowl type of stuff. You're paying a lot of money for those. Okay, next one on you. So next one on me, funny enough, I just discussed a creative thing. Here, when we're talking about creatives and ads, you know, Eric and I have this philosophy of don't spend all your money on ads and to acquire customers. It's so funny, but marketers have this issue where they keep optimizing on, hey, let me get more customers.

6:30Let me get more traffic. That's all great, but why not spend the money to keep the customers? How can you keep making money from your existing customers? If you look at Amazon, their money isn't generated from new customers. It's from you continually going back and continually buying over and over again. Google generates their money from you continually using Google search and clicking on the ads. Facebook generates their money from you continually logging into Facebook and using it. If you look at the biggest companies out there, they make their money from not acquiring customers. They make their money from keeping customers.

7:02Marketers need to shift their mindset, especially in this time and age where ads are so expensive in 2024, you're not going to make your marketing campaigns profitable if you just focus on the acquisition. You have to focus on the back end more than the front end. That's where the money's at, not the front end. That's a good one. Do you remember the old Agora saying? Yeah. The difference between a seven-figure company, eight-figure company, nine-figure? It's the back end. And then it's really how much money you're willing to spend on a customer. but that's a different thing than what you're saying.

7:32No, but it's the same thing, right? But you got it right in which, you know, Agora used to break down their info product company. $4 billion or a billion? I think it was over a billion in revenue. I don't know if they're still over a billion, but at one point they were over a billion in revenue. And they used to say the difference between a seven-figure company, eight-figure company, and a nine-figure company is the seven-figure company spends money on ads and right then and there they wanted to be profitable. The eight-figure company will spend money on ads and be willing to break even. And they make their money by people over time coming back and buying more.

8:06The nine figure company is willing to spend money on ads and lose money, but they figured out how to keep getting people to come back and purchase and spend more with them over time. So they know the lifetime value of their customer, which is very important. And they optimize for that instead of ad spend on the front end. Do you know on Amazon, you can pull your LTV? You can look at your historical all time spend. Dude, how do you do that? So go to your Amazon. You can export a CSV later. I did this 10 years ago. Even 10 years ago. Oh, this is a lot of work. I had to export a CSV? It's going to take you like five minutes.

8:39But I did it, right? 10 years ago. Maybe even a little longer than that. So I was like 25 years old or so. Even at 25 years old, I think I'd spent about$30 ,000 on Amazon. Something like that, right? And it's not like I had a lot of money. Dude, you have to do it per year because you can only see 2024 and then 2023. I didn't do it per year. There should be an export all. But anyway, point is. There's archive orders, but that's it. I'm telling you, you have to do it per year. Mine goes back to 2009. I don't know. My memory is also bad, so maybe I did just take all of them and then just add them together.

9:08Or they could have had it back then, and then they realized people are spending too much and they're realizing it, so they took that away. Yeah, maybe they made it a lot harder because they know that decreases LTV, right? But the point is, the example we gave years and years ago on this one was Microsoft. Their customer LTV is so high, and they have so many cross-sells and up-sells. They are okay. if it takes years and years for you to get in. They'll have you use Microsoft Teams. If you buy an Xbox, for example, you're in their world. If you still use Skype right now, you're in their world. What else do they have?

9:38They closed the Activision deal too, right? What else do they have? They own 49 % of open AI. What else? Open AI, servers. Azure. Azure, chat GPT. Word, everyone uses Outlook. Everyone uses Outlook, yeah. PowerPoint. we can't run our lives without Microsoft I love Apple I'm going to try to be one of the first ones in line to buy the Vision Pro Are you in line? Oh I signed up for their wait list or not wait list the notification list from their website and even and right when I get the email because I check my email quite often the moment I get my email and I also put in some of the people that work for me like assistant and stuff so then when one of us get the email you know my assistant's told you go buy the Vision Pro the moment you get the announcement Are you buying them one too?

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12:43Yeah, I don't care. So it is expensive, but I'll do it. I love my assistant. Nonetheless, I still use Microsoft products on my Apple laptop. I don't want Google Docs. I want Word. I don't like using Outlook. I prefer Gmail. Actually, funny enough, I do use Microsoft too. I use Teams a lot. You use Teams? Yeah, a lot of corporations are on Outlook. Funny enough, my corporation's on Outlook, but I still use Gmail. I'm one of the only people that have a Gmail. I don't have a corporate email address though. You got to switch to superhuman, man. I don't like superhuman. I love it. I used to hate it.

13:17And then Yaniv kept saying, our mutual friend, and then he bought me one, right? I was like, okay, fine. I'll use it. And now I just use it everywhere. Dude, I paid for superhuman. They walked me through it onboarding and they're like, look, do this, do these shortcuts. And I was like - Oh yeah, you're too lazy to do that. You won't do it. No, I looked at it. I'm like, this doesn't really save me that much time. My email is already really well optimized. Oh, I believe that. Yeah. I used to get so many emails. I spent so much time in my inbox. I figured out how to optimize my emails. It depends on the person.

13:45Yeah. Anyway, let's see. Are you done with yours? Yeah. So my bad. I didn't realize you did two in a row. Okay, here's one we can work on wrapping. So I have this, it's an attached excerpt from a book called Traction, which is by one of the authors is the founder of DuckDuckGo, Gabriel Weinberg, and then Justin Marius, who I believe he's worked in growth quite a bit. So these are the 19 possible marketing and distribution channels. We're not going to necessarily agree with all these. This is more so for us to react. I'm going to list them really quickly. And then we're going to just kind of work towards wrapping here.

14:19So number one, Neil, is targeting blogs. Okay. Number two is publicity. So like PR. Three is unconventional PR involves doing something exceptional like publicity stunts. Four is search engine marketing. Fifth is social and display ads. Six is offline ads. Seven is search engine optimization. Eight is content marketing. Nine is email marketing. 10 is engineering as marketing. I recommend you rewind this part so you can listen to all of them again. 11 is viral marketing. 12 is business development. 13 is sales. 14 is affiliate programs. 15 is existing platforms. 16 is trade shows. 17 is offline events.

14:5718 is speaking engagements. 19 is community building. Let's just pick the top three here because this is a lot. Dude, there's so many, I can't even keep track. But I have a better question for you. Do you actually even use traction still in your organization? These are different books. So Traction, they're both called Traction. This Traction book is for growth. Traction EOS is the EOS operating system. Yeah, yeah. I thought you were talking about Traction EOS. I was like, oh, I never knew that they broke their marketing channels. They're just giving like 19 possible marketing channels here. And at the end of the day, I'm just like, man, it's just wherever your audience is hanging out.

15:30Dude, it's just omni-channel. You just take the same piece of content, same piece of marketing, and you push it out everywhere. Like it's not rocket science. The real leverage is in the creatives. And when we're saying creatives, we're not just talking about ads. It's about the creativity in the marketing. So for example, one strategy I use to get a lot of leads from my ad agency, NP Digital, was we gave away tools like Ubersuggest for 90 plus percent of it for free to get tons of leads. And then we sell marketing services to it. Or another creative strategy, and Eric's talked about this one a lot, is M &A.

16:02He's bought agencies. I bought other tools and just replicate my Ubersuggest strategy. I found that's the kind of stuff that produces a higher ROI versus just doing the same old stuff that everyone else is talking about and doing. Yeah, I think what happens here, and I don't think they're doing anything wrong. I'm more so just saying, hey, these are the 19 channels. Just because you see 19 doesn't mean you should do all 19. Figure out the ones that are actually working. Usually you only need to max out on one first, and maybe you can start to expand afterwards. And by the way, if your audience is hanging out on Reddit, in a subreddit, and it's a rabid fan base, then absolutely go there, right?

16:33There's a lot of different things that you can do here. there's no like one size fits all type of strategy and by the way everything that's hot right now like we're talking about tiktok we're talking about a lot of shorts and things like that like it might not be hot in a year or two so um for you you just need to have your boots on the ground and just keep keep on top of it so that is it for today please don't forget to rate re-subscribe hit us on youtube as well on the youtubes and we'll see you tomorrow