Wall Street pushes out rate-cut expectations, sees risk they don’t start until March 2025, Attribution is somewhat unknowable, Meta advertisers claim sales are down and costs are up due to glitchy automated system, and more

0:00Neil and I have an agency owners group called the Agency Owners Association all you have to do just go to marketing school dot I Once again, it's marketingschool.io slash agency to learn more. And now back to the show. Did you see the Powell report today from the Fed? No. Wall Street pushes out rate cut expectations, sees risks that they don't start cutting until March 2025. Inflation is not going down enough. So no boost for the election. No boost for the election. But typically the Fed doesn't want to cut right during the election because they don't want to have favoritism towards one candidate or another.

0:39Typically what they would try to do is cut it quite a bit before or after the election. The cuts would have favored Biden this year, but no more cuts. So I don't, it's not certain, but it's looking like there's a good chance that there may not be any rate cuts this year because they just can't get inflation down. If you were to bet, I would bet that probably no cuts this year. I don't know if there's going to be no cuts, but if there are cuts, I think they're going to be very little cuts. And it's not going to make that big of an impact in the housing market or the debt markets. Because let's say, hypothetically, SOFR right now is trading at 5.5.

1:14So let's say if you got bank debt, you're at 3 plus SOFR, you're at 8.5. They cut it by 0.25. Maybe they do two rate cuts and 0.25 again. So what, your interest rate goes from 8.5 to 8%. Your mortgage goes from 7.5. I don't know what the rates are today. Yeah, it's still expensive. I don't see the interest rate markets. I'm not an economist, and I'm not telling you guys to make any financial decisions. Yeah, based on this. But I don't really see rates being somewhat decent until either later in 2025 or 2026. You know what happens? Typically when they cut, that's the pivot, right? Yeah. That's when the recession happens after that.

1:54And so if you look at the graphs, every time a cut happens, that's when the recession happens afterwards. I think we've faced a lot of the hurt and I think there's more hurt to be had I think when they start cutting rates yes, the recession could be had because at that point, the data is backwards it's not like today we're in a recession it was we were in a recession and there were some points in the last few years where based on their definition in theory, we're supposed to be in a definition they just kept revising it and they're going to go back in time and they're going to revise it again and it's like, oh yeah, we are in a recession It was just like, remember when Obama was in office and I'm not trying to get political here.

2:32I'm not saying he did anything, but whoever was in charge of this, and I bet you it wasn't him, but it was someone they ended up saying, Oh, look at unemployment. But they changed the definition of what is considered unemployed. And after a while, if you stopped trying to get a job and you're unemployed, they would remove you from the pool of being considered quote unquote unemployed. And it's both sides that are doing this, the left and the right, you know, they're both responsible for these changing of definitions. It all comes down to what? The story they tell. And it's all marketing at the end of the day.

3:02It's the story you tell. Yeah, because one could say, oh, we don't like the Democrats, but at the same time, Fed Powell is a Republican. There's a good story here, by the way. I'm going to share this from Jesse Pooji. Am I pronouncing that right? You're Indian. P-U-J-J-I? Pooji? I have no idea. All right. So Jesse says this on Twitter. So he says, I thought I wasted$75 million on Uber ads, but it led me to a marketing breakthrough. So it's 2014 and Uber hired my company to manage its ad spend. Their goal, get new drivers. My team spends$75 million for them and earns a healthy commission. I'm proud.

3:37In fact, every time I get into an Uber, I ask the driver, how do you hear about this new thing? I expect them to say, I saw a great ad. Nope. They were like, I heard about it from my cousin or I heard about it from my mom. I'm bummed. Seems like my ads aren't working. My firm will lose Uber as a client. Then I start asking, how did you sign up to Uber? They're like, it came up on Facebook and I signed up. My breakthrough realization, attribution is somewhat unknowable. Now I tell founders with less than$25 million in revenue to stop stressing it. Which is kind of what we've been talking about for a while.

4:10It's like, you can't try to know everything because you're going to stress yourself out. Dude, you can't control everything either, right? It's just easier to just continually do whatever you have to do and then just go from there. Yeah, track, but don't stress over it. That's all. I don't know about you, but sometimes there's clients that think you can track. It's as if they think it's 2010 marketing where you can track and you can see all the keyword data in Google Analytics. Now it's just all gone to crap. It really has. But it's getting worse with cookie deprecation and everything that they're doing.

4:43It's just like, you'll just be in less control. But data analytics, I believe, is even more important than ever because of this. Yes, I agree. But you can't rely on it. It can't be the end all, be all. No, but you can start doing more brand recall studies, different type of attributions. And it's funny, this is bad to say, but I kind of like this because - It forces you to be a good marketer. Yes, exactly. Go ahead, you go, you go. Yeah, one more thing. Did you see the article that came out about Meta? No. All right, so - I saw that on Twitter, this stuff. Yeah, so according to an article on Search in the Land, Small business in particular have traditionally been relying on Meta to reach their target audience thanks to the efficiency of its AI-powered targeting technology.

5:27However, many advertisers claim that the social media giant's dependable advertising system is currently experiencing significant issues, prompting some to relocate their budgets to rival platforms. in essence if i had to sum it down metas advertisers are claiming sales are down and costs are up due to glitchy automated system their technology their ai and you know what they're saying is they're still getting conversions but they're spending way more for the conversions which is making meta the advertisers the advertisers are complaining yeah there's so there's a lot of people on twitter in the last couple weeks they're just being attributions just way off a lot of people that have ad agencies are complaining about it um and so they're just like but nobody's offered a solution.

6:09They're just kind of all taking it. And you know what? This kind of actually benefits the platform because you know who has amazing attribution? Facebook and Google. They're actually trying to keep people in there for attribution. They're just saying that the attribution came from them because there's a lack of data. So whatever they can attribute to the conversion, they're going to say it is them. Have you seen how Burger King leveraged McDonald's? No. Okay, so here's a little story. So did you know that most Burger Kings are built near McDonald's? Yes, I knew that. Okay. So, and why do you think that is?

6:47Because they already know in that market that there is. They've done the research already. So it's kind of piggybacking on their research, right? So I think this was done in Brazil. There's a company called Rappi, the delivery service. Okay, so you would know. So here's what Burger King did. basically anytime someone ordered a Big Mac, basically they partnered with Rappi. So anyone that orders a Big Mac, send them Burger King. Oh, anybody that orders fries, send them a Burger King burger, like a Whopper, right? And so, well, why does that work really well? Because at the end of the day, Burger King is Burger King, right?

7:24So they might say McDonald's gives the best fries, but who is the Burger King? And so that promotion did so well. And then eventually McDonald's was like, what is this? They say Rappi shut it down and they shut down the campaign. That's slick. They must have got paid a good amount of money from Burger King for that. That is a slick campaign. You know Burger King is owned by the brothers. 3G? 3Q. 3Q capital I think. I don't know but it's a Latin American. Brazilian. And although I think they live in Sweden or Switzerland or something like that. They're rich. They also owned Heinz at one point. right yeah have you read the book about them no it's called the 3q way it's a good book yeah yeah the guy seems like george something burger they have tim hortons burger king just all on all these chains i'm like google auto completed burger king own online or order online uh restaurant brands international is the owner which i think is dude i don't know i just know eventually a long time ago got bought out by the Latin America or Brazilian company.

8:35Yeah. I mean, that's another example of people doing a lot of M &A and they just focused on one area. Le Mans is a co-founder of Brazilian investment firm 3G Capital. Spot on. 3G. They own brands like Burger King, Anheuser-Busch, and Heinz. George Paulo Le Mans. There you go. That was a guy. I saw this one. Have you seen the explosion of$3.75 an hour virtual employees? No. Okay. So have you seen the Instagram or the real estate? So this is stuff I watch on Instagram. So when you walk into a hotel, there's a big screen and there's someone with a headset welcoming you in. Have you seen that? Or when you try to go order at Burger King or something and there's someone greeting you, there's no longer$15 to$20 an hour,$25 an hour.

9:28because you've done a minimum wage. It's not a hologram. It's a real person from the Philippines taking your order or doing customer service because the minimum wage has got so high. In New York, it's like$20, right? It's like, okay, I'll just hire someone. And these people that are customer support agents, they actually work four or five different jobs at once because sometimes they're just security for someone walking in or greeting someone. So imagine if you're someone from the Philippines or Pakistan or something, you can make$20 an hour or something, which is a lot of money. that's a great way to you know solve your problem when wages are going up and you got to figure out how to make things profitable hey if there's a will there's a way people will solve problems yep so another thing that i want to talk about is um you know it's just like companies are now selecting i don't know if you saw this with john deere but companies are now selecting individuals to be their brand on social media.

10:24What do you mean? So John Deere, which is a tractor company, they selected what they call a chief tractor officer. So now all the TikToks will be from this person who now works from John Deere. So think about influencers. They're creating their, or you know how people say corporations are like faceless brands? Yeah. Corporations are now starting to hire faces and be like, your job is to just create our TikTok content and you'll be the face of John Deere or Pepsi or whatever it may be. And that's the face that they use. And then they'll do the same for Instagram, Facebook, et cetera. So now they have a face of the company.

11:00People are like, oh yeah, that's John Deere. So let's think about this. So if you're the company, if I'm the company I'm doing that, I'm trying to figure out how I can de-risk myself. Because we've seen this in the past where, for example, HubSpot did these podcasts with people and then the employee would leave, right? So what happens if the employee leaves? There has to be some type of, hey, whatever content you make for the next couple of years or whatever. Like, how do you protect your downside? That's the question. They're probably just paying really well. This message is brought to you by Leveling Up Founders.

11:28And Leveling Up Founders is an invite-only event for founders. It happens once a year, usually during August. And past attendees include people such as Ali Abdaal, Cody Sanchez, Neil Patel, Vanessa Lau, and the list goes on and on. And ultimately, it comes down to the quality of the group with the people. We try to keep the group high caliber. That's why it's invite-only. So if you are a founder at the top of your game, you can go to levelingup.com slash founders to learn more about it. And then you can apply. And we'll see you on the other side. Think about, okay, let's just say if you get paid$300 ,000 a year, it would be hard for someone to make that kind of income doing anything.

12:07That's a lot of money. I had a conversation with someone recently. This person is up in line to become global CEO of this one company. They have like 4 ,000 employees or something. and they don't want to do it. And so they might get paid all the money in the world. They might get all the accolades. But when I was talking to them, I was like, what is it? It's like, I need to have my own thing. I need freedom. Yeah, but some people don't mind working for a corporation. And let's say hypothetically, you get 300 grand a year. Yeah. A lot of people stick it out. And John Deere, I'm looking at their net income for 2023, $10.17 billion.

12:40But what if they decide I want freedom? What happens? John Deere is shit out of luck. You can create a new person. you can spend a ton of ad dollars to recuperate the brand or you can ai it or you can yeah you can ai the person and spoof them with their privileges be like here's another half a million bucks or a million dollars um but or you can go to that original guy who's like i want my freedom to be like here's a raise you now make a half a million dollars a year like i don't care about the money anymore what if they want to become a monk like you know but what the scenario you're giving is unrealistic.

13:14There's always outliers. There's always outliers. No, I'm just trying to figure out you have to de-risk against the outliers, right? Not really because look, there's always things that you can't control. But if you're John Deere, what percentage of revenue is going to come from TikTok in the first place? Who knows? Very little. Realistically. Who knows how this stuff compounds like down the road? Probably not very big. It's B2B play. They're selling to farms and people like that, and there's not tons of options. John Deere really is one of the biggest players for - Would you say their numbers were again?

13:44They do$60 billion in revenue and$10 billion in net income. Okay. That's Ford's future as well. People talk about Ford the stock. They're saying that they'll make more money going into farming and some of these other categories than just selling cars to consumers. I think this is a good idea. I think more and more people are going to do it. You've seen it too. We're just getting more and more inquiries for influencer marketing because people know they can't just rely on the traditional channel. So de-risk or not, you know, that was more of just a fun conversation. But chief tractor officer, CTO, I like it.

14:16Yeah, CTO. Yeah. And the job is to go create TikTok content. And I'm assuming it'll eventually be Instagram and all the social networks. But again, when you're a company of that size and something doesn't go the way you want, this sounds bad, but it's true. Money does solve a lot of problems. Not all problems, but money does solve a lot of problems. If you've ever built a website, you know how tough it can be to keep a strong design while ensuring site performance is fast. That's where Framer comes in, and it totally changes the game. Framer is the design-first, no-code website builder that lets anyone ship a production-ready site in minutes.

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16:29Sign up for your$1 per month trial and start selling today at Shopify.com slash marketing school. Go to Shopify.com slash marketing school. Shopify.com slash marketing school. Money. What did someone call money? Money's like energy. It's like a very high. It's like money's energy to get you to give you the ability to do things. so I had a great meeting with one of my buddies who comes into town every month or so his name's Christian he runs a company called Cascadia it's like an investment banking company they help with mergers and acquisitions at companies and we were talking about M &A and we were talking about Platinum Equity which is here in Beverly Hills the founder of Platinum Equity also owns the Detroit Pistons he's done really well he lives in Beverly Park one of the massive houses down there And when you, we were talking about companies and growth and we're talking about debt.

17:27It's so funny when your company's small, a lot of times it's harder to grow because you don't have tons of options. It's tough to raise funding. It's tough to hire employees and grow faster. But once you have enough revenue and more importantly, enough EBITDA or net income, it's really easy to get debt and capital and just continually grow because money solves a lot of problems. it's a good way to put it here's one more thing let's solve one more problem here this is from this is a tweet from Keywordian and he starts off with want to survive every Google update study this brand this is what Google is rewarding right now note that this company this website survived all Google's recent updates including the September HCU, the helpful content update it not only survived, traffic has exploded and if you look at it, yeah, it has exploded I saw that tweet.

18:23You saw? Okay. So CJ Eats Recipes is extremely well diversified. CJ has a real brand that people specifically seek out. 1.1 million followers on TikTok, 976K on Instagram, 123K on Pinterest, 16K on YouTube. His website is a business, not a low effort side hustle. And even if we ignore his social following and just look at the site, he's doing everything right. Recipes have original photos, very authentic, human written content, tons of comments. Google loves UGC, a shop link in the header. If you're thinking, yeah, he's only on easy mode with a social following of 2 million, that's exactly my point.

19:00Google loves real brands that people love. There are, of course, plenty of brandless sites that survive recent updates, but they are the exception. Most sites I've seen that are thriving during this March update have a decent social media following. You don't need 2 million followers. Plenty of thriving sites have social followings of less than 100K. Grow an audience and you'll never worry about Google updates again. And we've talked about this since the beginning of this podcast. You can't just put all your eggs into one basket. You have to think about once you nail one channel, think about expanding into other channels, right?

19:32I consider M &A a channel too. We were just talking about M &A a second ago and leveraging debt. It's like once you nail one, you start to open up the possibilities. The map becomes wider to you, the aperture, and then you can attack more things, right? And that's what this guy's doing over here. He's diversified himself, so he's not at the whim of any Google update. And so I don't know about you, Neil. I don't really freak out over Google updates. But we do have mutual friends that sometimes freak out over these updates. Yes, we do. Well, here's another interesting thing. Because of all their social, and I bet you this has helped, you can see it here.

20:07Their Google Trends has just really taken off. Oh, wow. Over what period of time? This is pretty much forever, but it looks like they've taken off in last year or two. Yeah, last few years, two years. And they really started exploding. Did you look at the website? Yeah, I saw the website. I didn't even look at it. It's just a recipe site, but done well. Yeah, that's the key thing. Because back in the day, when we first started doing SEO, I don't know about you, but I told you, I had a site called howtogetridofpimples.net and then Portal 2 walked through. I had these sites, and they're just purely for affiliate.

20:42It was really thin content. and it's 2024 now. Google can catch stuff pretty easily. So just work on building a business instead of trying to game the algorithm and you'll do fine. And build a brand. Branding is really important. People take that for granted. Yep. So cool. That's it for today's episode. We appreciate you guys listening in for an hour and 20-ish, 30 minutes. We hope you guys like the long form content that we've been doing. Let us know what you think, by the way, in the comments. Do you like this? Like we're testing this right now still. Yeah, instead of making these shorter form episodes, just doing one really long form one a week.

21:20Yeah, that's another experiment we're running. We're trying to, we might chop this into different, like still five episodes. But that is it for today. Please don't forget to rate, view, and subscribe. Go to marketingschool.io slash agency if you want to join the Agency Owners Association. That's a group Neil and I have to help agency owners grow. And yeah, we'll catch you later.