Definitive Proof That Cost Caps Work At Scale (With Taylor Lagace)
Nov 18, 2024
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Taylor Lagace, Co-CEO of Kinship, shares insights on e-commerce growth strategies, particularly around Meta Ads. He delves into the power of cost caps in maximizing ad spend efficiency, supported by a remarkable case study. The conversation highlights user-generated content's impact on brand growth and emphasizes strategic influencer partnerships for better outreach. Lagace also discusses ad performance measurement and operational cost management for bootstrapped companies, making it clear that creative approaches are essential for scaling success.
The agency's manual bidding strategies, particularly cost caps and bid caps, are designed to optimize ad spending effectively for DTC brands.
Maximizing underutilized creative assets, like user-generated content from influencers, significantly boosts campaign performance and return on ad spend.
Transitioning to cost control systems improves performance while allowing automated budget adjustments that capitalize on peak advertising opportunities.
Deep dives
Understanding Manual Bidding Strategies
The discussion highlights the agency's exclusive reliance on manual bidding strategies, with a focus on cost controls like cost caps and bid caps. The agency reports spending nearly 100% of its clients' budgets on these strategies, as they believe that such a model provides better outcomes compared to automated options. They emphasize the distinction between targeting lower-cost conversions with bid caps and aiming for higher-value customers through target Return on Ad Spend (ROAS) campaigns. This nuanced approach allows them to optimize ad spending more effectively and capitalize on incremental revenue opportunities.
Client Portfolio and Big Spenders
The agency primarily serves direct-to-consumer (DTC) brands, especially within the health and wellness sector. They have clients who spend substantial amounts on advertising, with reports of individual clients allocating $400,000 in a single weekend on cost caps. This level of investment underscores the agency's capability to manage significant budgets efficiently, specifically for brands generating at least $20 million in revenue. The discussion reinforces that manual bidding strategies can be viable not just for small businesses but also for larger accounts that can effectively funnel substantial ad spend into these frameworks.
Creative Asset Optimization
A critical point raised is the effective utilization of unused creative assets, such as user-generated content (UGC) obtained from influencer partnerships. The agency showcases a case where a client with 1,500 pieces of unused creative material significantly benefited from integrating this content into their campaigns. This approach resulted in increased ad spend by 200-300%, demonstrating that harnessing underutilized assets can lead to improved campaign performance. The agency insists that maximizing the potential of available creative is essential to optimizing ad campaigns and achieving better return metrics.
Measuring Success with Cost Controls
The agency articulates that switching clients to cost control systems typically leads to either maintaining or increasing their ad spend while also improving performance metrics. They stress that initial performance might remain stable as campaigns are optimized, but creative volume and refinement will drive enhanced outcomes over time. The importance of setting inflated budgets within cost controls allows for automatic spend adjustments, thereby maximizing advertising potential on high-demand days. This method mitigates human error in budget management and ensures that clients take full advantage of peak opportunity periods.
Integration of Influencer Marketing Strategies
The conversation reveals that while influencing seeding remains a core element of their service, the agency evolved into a full-service e-commerce growth agency that actively manages ad accounts. They employ influencer marketing to create diverse and high-volume creative assets that feed directly into ad campaigns. Despite initial perceptions of influencer seeding as a standalone tactic, it has become integral to enhancing overall ad performance while creating a reliable content pipeline. This shift emphasizes the dual benefit of using influencers not just for brand exposure but as a foundational element of scalable creative production.
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ABOUT MY GUEST
Taylor Lagace is the Co-Founder and Co-CEO at Kynship, a full service growth marketing agency.
Follow Andrew On X: @andrewjfaris
Email: podcast@ajfgrowth.com
Work with Andrew: https://ajfgrowth.com
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