Maximizing ROI in Digital Advertising | John Chan

David: Hello and welcome to Simpli.fi TV, the web series and podcast for agencies, brands, marketers, and media buyers. I'm David McBee. Our guest today is John Chan, CEO and co-founder of 2X Growth Agency. John is renowned for his expertise in web, UX design, and digital marketing. Born in Hong Kong and raised in Vancouver, John dropped out of university at the age of 19 to start his own web design consultancy. Since then, he has worked for several prestigious companies, including UBC and Basecamp before co-founding 2X Growth Agency. The agency specializes in helping e-commerce and D2C brands grow and scale with paid ads and ad creative development. Under John's leadership, 2x, growth agency, has managed over $6 million of ad spend and helped generate $30 million in revenue for their clients. John, welcome to Simpli.fi TV. John: Thank you so much for having me, David. David: I'm so excited to have you here. John, dropping out of school at 19, managing $6 million in ad spend. That's all very impressive. So, I want to ask, do you have some insights into how you effectively manage those big ad budgets for maximum ROI? John: For sure. I think, ironically, sometimes managing larger budgets is in some ways easier to managing smaller accounts, and that was one of the first lessons we learned as we got into the media buying world. Because when we first started, we're tiptoeing into managing smaller brands only to find that in a programmatic world, budgets generally means that you have more data to work with, and with data you can make better and more informed decisions. The other thing is that when I think about growing different brands or when I work with new founders and different business owners, a large part of what I ask of it is what are the individual strengths of the core business and what are things that are already working. So, when you generally have a business that have an established budget, it's because there's data and history that's already been proven. So, it's kind of like looking at a slice of history and seeing back what has already worked. So, taking a company or taking a brand that's already done hundreds of thousands or billions of dollars in sales and growing that in multiples is generally sometimes easier than working with a fresh start with a fresh brand. David: That actually reminds me, someone asked me, "How long do I need to run this campaign before I know if it's working or not?" My answer to that was it kind of doesn't depend on length of the campaign as much as it depends on number of ad impressions. So, if you've got a very small number of impressions a month, you might need to run it for three or four months before you get enough data. Whereas if you have a million impressions in the first two weeks, that's a lot of impressions and you can already start making some adjustments. Do you agree? John: I would say largely yes. It's very tricky, especially with app platforms nowadays where it's a black box when you're running an ad campaign and it's using machine learning to find out what are the different demographics, excuse me, or whether its creatives are working or it's time of day or devices or ad inventory. There's a lot of variables that are at play. So, sometimes you even find that when you're running an ad account or running an ad campaign and things aren't working in a particular period, it's not that the campaign didn't work, it's understanding that there are variables at play that you need to make adjustments, or sometimes it's even not the set of combinations that you're running at all. You just sometimes need a reset because machine learning can sometimes have early indicators that are leading the campaign astray. So, if you had a few early sales that were a random sampling of a particular demographic or a particular audience set and it was going down a particular path in optimization and it was just the wrong path, sometimes it's actually not the system's fault. You just have to reset it, but it's hard to see or hard to diagnose. So, I would say that machine learning is great, AI powered systems are great, AI platforms are great, but sometimes it could lead your platforms astray. It really comes down to, "It depends," which is often not a great answer for how to navigate a situation. David: All right. So, how do you catch it? How do you know if the AI or the machine learning has taken it down the wrong path? John: It's a good question because it's not always obvious. I think one example that I can think of is that one of the brands that we audited earlier this year, they're doing $40 million. It's a large brand and they're selling in a category where one of their shopping campaigns have 3000 SKUs. Because the system was trying to focus on a few set of SKUs, you'll notice that all the spend went towards just a few set of colors or a few sizes, even though that wasn't necessarily the most optimal scenario. So, in a scenario where you could see that, then you could manually intervene and say, "You know what? Let me restructure the campaign or break up your shopping feed so that you could delegate and allocate budget towards a few specific areas." But in the absence of being able to see that, it's really hard to diagnose. So, oftentimes, when you think about how do you set up to see what your optimizations are doing, it's looking at the breakdowns that are available to you. On some platforms, their segments have that naturally built in. Other times, you have to manually structure that, whether if it's your ad groups on a shopping campaign or on a Google ad campaigns or setting up your ad account structure on Meta where you have the specific interests are built to audience sense, or ad sense, built in so that you have the adjustments that are available to you. We think a lot about structure as a way of the levers that you're setting yourself up for. David: That is great advice. It's very clear that you have a solid understanding of running marketing campaigns for e-commerce and D2C. Do you have any top tips or strategies that you recommend for those kinds of companies? John: Yeah, I think the thing that we see more often than not is when media buyers and brand owners follow specific practices because they're best practices. I think what separates good media buyers from mediocre ones are understanding that, or actually this is not just media buying but any field really, is that when you follow best practices, it's the baseline for what you should set and it's how you expect things to work, but it's knowing how to break the rules when things don't work. So, taking a company or a campaign from not working to working or a campaign that's working to excelling really boils down to knowing what rules to break and what rules to not break. So, for a company or a campaign that's at scale, it's usually understanding, knowing how to break apart and restructuring a campaign. As an example, most campaign structures typically start with a three set or four set of campaigns, let's say, in Meta. But at what point do you transition from taking a campaign and then breaking it out into multiple ones? That really boils down to understanding your SKU mix and your hero products and thinking through how do you strategize your first order versus your secondary and third orders and whether if it's actually media buying that should be leading that conversation, or do you have a second or third channel that follows up with it. So, knowing your SKU mix and knowing how your different channels and the different levers that are available to your business interplay with how do you scale your business, it's a very situational thing, but it's a question that you can't really follow best practices for and you have to ask in each scenario that shows up. David: It sounds a little more like an art than a science. How do you teach that, right? John: It's a bit of both, right? I think that's why, if you look at media buying agencies or if you look at consultants, there's a time and place for them because they have visibility across different platforms. When you're a brand owner, it's hard not to be pigeonholed into that one scenario. So, even if you're just asking for different advice or different opinions and see what other people are seeing across the markets, it helps you think in ways that you might not would've thought about just because you don't have those patterns available to you. With ad platforms changing that quickly or when markets and environments start changing very quickly, it's always hard to know am I setting up things in the most optimal way and has the market shifted or has techniques shifted. That's always going to be a challenge for brand owners. David: Yeah. All right. Let's shift the gears a little bit and let's just talk about this evolving landscape of digital marketing and all the trends that are going on. What do you foresee as important to agencies in the next few years? John: Yeah, that's a good question because I think, generally in my own career, whether it's media buying or something else, I always try to focus on the skillsets that don't change. Because if you follow trends... Trends are important, and keeping up to date with the landscape is very important, but in terms of training and also both from running it and operating your own business and also from training your staff, it's important to separate what skillsets or things that change over time, that becomes obsolete as environments change. For example, AI tools are coming out and it's changing the status quo for how do you develop and train junior and intermediate staff versus learning skills that are rooted in psychology and behavior or skillsets that don't really change. So, if you think about learning and understanding, developing skills around direct response marketing, that hasn't gone out of vogue since the last however many years and decades. So, those are skillsets that are important to continue to keep up. That way, when you're training staff and understanding your business, it's the work change, the markets change, but you don't develop skills that are obsolete or train staff that becomes obsolete. I'll give one other example here. So, one of the things that we started doing in the last year was that, rather than training or media buyers and creative strategist on design skills or even copywriting skills, we develop and teach them frameworks to identify that if you have AI tools generate the first pass, how do you evaluate and critique which ones do you select and which ones do you develop. So, it's developing the taste for determining how to make improvements rather than how do you go from starting from scratch or net zero because that's largely going to go away or it becomes more progressively less important as time progresses. David: That's amazing stuff. Thank you so much. Before I let you go, I do want to ask you my favorite question, which is do you have a podcast or a book that you feel has been instrumental in your success? John: For sure. I think there's a few things that I would suggest from a podcast perspective. Recently, I've been really enjoying the Operators podcast, where it's basically a bunch of DDC operators, eight-figure brands, nine-figure brands that are basically talking about what's changed in environment and how they're approaching upcoming campaigns. That kind of information is super relevant because, like we talked about, as environments change, they're usually at the forefront because their stakes are much higher. So, seeing that kind of expose on a podcast is super helpful. From a book or concept that I've been studying, something that was really instrumental to me as a marketer come from Design World, which was jobs to be done. At least, I was trained in that environment. This comes from the gentleman at the Re-Wired group, Bob Moesta, and it was about understanding the customer's journey. It's a different approach to thinking about how do you think about your customers and the way that they shop, where traditionally you think about demographics and psychographics, and they shift the narrative around what are the selection process, whether it fits into product category or not, of the switching decisions that people make, whether for consumer products or software products or what drives them to go seek out product solutions in the first place. So, that was also very instrumental to me, when I think about angle development or marketing techniques. David: Those both sound like valuable tools for any agency owner. Thank you. What is the best way for viewers to learn more about you? John: For sure. So, you can find me on Twitter. I'm @jtcchan, or you can find us on 2x.agency, and just reach out. I'd love to chat and learn more about your businesses. Yeah. David: Thank you, John, for being my guest on Simpli.fi TV. John: Thanks for having me. This is a really fun chat. David: And thank you guys for watching. Simpli.fi TV is sponsored by Simpli.fi, helping you to maximize relevance and multiply results with our industry-leading media buying and workflow solutions. For more information, visit Simpli.fi. Thanks for joining us today. I'm David McBee. Be awesome, and we'll see you next time.