Guest Alex, an expert in making profitable ads, shares personal experience and insights on targeting the right audience, crafting effective ad copy, and achieving efficient monetization. He discusses creating ads for a six-week challenge, using mascots and scenes in ads, understanding target audience and motivating action, making ads more efficient and specific, running paid ads effectively, and the importance of efficiency over creativity in advertising.
Paid ads are the primary source of income for the author, emphasizing the importance of targeting the right audience and crafting effective ad copy.
Scaling paid ads involves tracking ROI, identifying winning ads, and eventually creating highly profitable ads.
Measuring ad efficiency requires comparing the lifetime gross profit to the cost to acquire customers ratio and focusing on improving the business model and optimizing ads.
Deep dives
The Power of Ads in Generating Revenue
The podcast episode discusses the author's personal experience with running ads and highlights its significance in generating substantial revenue. The author emphasizes that despite organic content contributing to their personal branding, ads have been the primary source of income throughout their career. They provide insights into creating effective ads, including structuring ads, writing copy, call-outs, getting attention, and contrasting the message. The author shares how they made a profitable ad by targeting a specific audience, using a simple ad format, and focusing on the value offered. They also explain the concept of paid ads, highlighting the guaranteed reach they provide. The episode concludes by emphasizing the importance of finding the right platform, targeting the ideal audience, crafting effective ads, and getting permission to contact potential customers.
The Phases of Scaling Paid Ads
This podcast episode delves into the three stages of scaling paid ads. The first phase focuses on tracking the return on investment (ROI) accurately by setting up effective tracking mechanisms. The second phase, referred to as the 'lose money' phase, explains that it is normal to initially invest more in ads than the return earned. However, it is crucial to identify winning ads among the losing ones and double down on them. The episode emphasizes the importance of identifying a profitable advertising model, which leads to the third phase called the 'print money' phase. In this phase, ads become highly profitable, allowing for increased spending to acquire more customers and scale the business. The importance of cash flow management and ensuring that cost-to-acquire customers is lower than the lifetime gross profit is also highlighted.
Measuring Ad Efficiency and Improving Performance
This podcast episode provides insights into measuring ad efficiency by comparing the lifetime gross profit (LTGP) to the cost to acquire customers (CACK) ratio. The episode explains that an LTGP to CACK ratio greater than three to one indicates profitable advertising. Moreover, it highlights the significance of distinguishing sales problems from advertising problems. The episode advises focusing on improving business models to increase the LTGP while optimizing ads to decrease the CACK. It also emphasizes the importance of cash flow and introduces the concept of client-finance acquisition, where the goal is to collect enough cash from customers in the first 30 days to reinvest in acquiring more customers. The episode concludes by encouraging individuals to overcome their tech-related apprehensions and start running paid ads.
The Role of Creativity in Paid Ads
This podcast episode highlights that the return on investment (ROI) is more important than creativity in paid ads. The author explains that focusing on efficiency is key to success in advertising. They share that some of the best paid ads can be derived from free content that performs well. The episode encourages utilizing user-generated content, such as customer testimonials and reviews, and emphasizes the value of simplicity and clarity in ads. It also emphasizes the significance of identifying sales problems versus advertising problems and advises individuals to focus on their business models and the profitability of their offers. The episode concludes by urging listeners to take action and run paid ads, even if they lack technical expertise or have reservations about it.
The Importance of Testing and Scaling Ads
This podcast episode stresses the importance of testing and scaling ads. The author encourages individuals to overcome fear and resistance and take action by placing ads. The episode provides a step-by-step guide on how to set up, track, and measure the performance of ads. It emphasizes the significance of testing different versions of ads, using various call-outs, value elements, and calls-to-action, to find winning combinations. The episode also highlights the importance of aligning ads with the customer's journey, optimizing landing pages, and finding the right balance between profitability and scalability. The author shares their personal experiences and success stories to inspire and motivate listeners to start and scale their ad campaigns.
“If you want to become a great entrepreneur, you have to learn about them.” In this episode, Alex (@AlexHormozi) discusses his expertise in making profitable ads and shares his personal experience and insights on targeting the right audience, crafting effective ad copy, and achieving efficient monetization. Listen to learn from his experience and avoid the mistakes he made, with a focus on how to create ads that generate leads and drive profit.
Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned on his path from $100M to $1B in net worth.
