Thread by @dunkhippo33

Ads power the inet. (as much as people hate them) So I think they're impt to understand.

I used to run my own ad co, which I sold to another ad co. Prior to that, I worked at one of the largest ad cos (@google)

Here's a Sat crash course in ads based on being in the trenches:

1) There are basically 2 kinds of marketers / marketing budgets: performance and branding. Performance advertisers want to spend $1 and earn $1.01 nearly immediately. Brand marketers want to spend in channels that will make their co look great / hip.

2) In tough markets, brand marketing $$ are one of the first to go. But in great markets, they can be easy $$ to get and retain.

Performance marketing budgets will always stick around as long as a marketing channel is making a co $$ profitably.

3) Selling ads is relatively easy and a fast sales cycle. Marketers will try just about anything and everything. They will start with a small test budget. And if they hit their goals with it, they will pour more $$ into it.

4) The flip side is if it doesn't work, then retention is hard. It's important to understand what a marketer's goal is upfront to understand what your chances of retention are.

5a) There are many different ways to buy ads - different ad types and SKUs and also different formats of buying. The most common are CPM, CPC, and CPA/CPL.

5b) CPM is the price per 1000 impressions. So if you pay $5 CPM, that means you are paying $5 to get your ad 1000 eyeballs.

5c) The flaw in CPM is that there are good "eyeballs" and bad "eyeballs". If your banner ad is hidden on a page, then you're still getting an eyeball, but no one is really paying attention. If you are front and center, you might get great engagement.

5d) CPC is the price per click. So if you pay $5 CPC, that means you are paying $5 each time someone clicks on your ad.

5e) So unlike CPM, marketers are definitely paying for engagement even if no sales occur off the ad. However, if you are buying ads on a CPC basis, you should be careful of "ghost clicks".

5f) There are so many scripts & web crawlers on webpages these days, there are a lot of fake clicks -- clicks that are done by these bots. You want to make sure you don't get charged for those fake clicks.

5g) You'll want to reconcile the clicks that an ad network or a publisher says you are getting with your own analytics.

5h) At my startup, which was an ad network, we retroactively removed charges for ad clicks to the tune of 30-50% of all clicks because there were so many bots!

5i) CPA or CPL is cost per acquisition or cost per lead. So if you pay $5 CPL, that means you are paying $5 for an email signup. Or if it's $5 CPA, it could be $5 for every successful purchase.

5j) Marketers obviously like CPA or CPL ad buys the best, but publishers and ad networks don't because they are relying on marketers to successfully convert traffic into customers. That is out of their control.

6) At the end of the day, it doesn't matter how an ad network will try. Marketers will run test budgets on various ad campaigns and will calculate into the cost of sales.

6b) E.g. So did a $5 CPM back into a successful profitable sale? If yes, a performance marketer will do that buy all day!

7) Ad networks tend to be bid-based. Higher bids can help you a bit, but your ad must be engaging. Eg, if you are paying $1000 CPC, an ad network may be more inclined to show your ad, but if you get 0 clicks, then you won't be shown anymore.

8) So it's better to spend lots of time working on engaging ads than worrying about bid optimization.

8b) This is why you see very interesting "weight loss" ads or catchy headlines like "Guess who is spying on you?" They want you to click.

9) I often notice first time founders try to perfect their ads to look great. You don't need a designer. Or a professional copywriter. Often the best performing ads look janky.

10) But you don't have to be scammy. Just engage ppl w/ straightfwd copy and convert them on your website.

11) A lot of ppl like to split test ads. The reality is you need to be split testing like CRAZY to see dramatic improvement. Most split tests don't result in game-changing engagement. I'm not saying it's not worth doing. You need to spend a lot of time on it if you want results.

12) For publishers who aren't running bidding systems, they will often have a rate card. It could be as simple as a PDF that tells you the prices of all the ad units you can buy.

12b) The secret amongst frequent ad buyers is that these rate cards are often VERY negotiable. Often to the tune of 50% off. Like everything else, true rates are based on supply and demand.

12c) How filled is that ad slot? Do you see that it's often empty? If it is, you have a lot of negotiating power. On the flip side, if you see a newsletter is booked out for months, you don't have negotiating power there.

12d) Volume plays often lead to cheaper pricing as well. However, consumers get tired of the same advertiser, so if you take out a month of advertising on a blog, you may get great engagement in the beginning, but that will go down.

12e) If you buy in volume, I'd recommend discussing going into a blog or newsletter at various times throughout the year -- not all in the same month.

13) Ad channels are effective and then not. If you have an ad channel that is working, milk it for all that you can now, because it will stop working.

13a) It just does. I don't know why. Maybe too much competition gets attracted to a channel. And then prices go up.

13b) But don't write the channel off entirely. Try it again in 6 mo and then next year. Channels are cyclical - as other marketers vacate a channel, prices go down, so buys become good again.

14) Brand marketers tend to all flock to the "coolest" channel. (They would all love to sponsor Clubhouse now.) But by definition, if you are a performance marketer, you want to go where no one else is going to get low prices.

14) Clarification -- by no one else, I mean no other marketers. Of course you want your target audience to be there. :)

15) Try underutilized ad channels. Like direct mail. Or cross promotions with other companies. Or ad channels that are no longer interesting to ppl.

16) Currently, a lot of ppl are finding success w/ FB ads. Incl B2B companies. I would milk that for all its worth now. But, the next channels I'd probably try are YouTube ads. And I think direct mail in this lockdown environment might be really interesting.

17) Emails ads, of course, are near and dear to my heart, and they perform VERY well. Try approaching newsletter publishers who are not running ads - then you have no competition.

18) A lot of mktg budgets are getting slashed now, so NOW is the time to experiment with ad channels while prices are cheaper if you have the cash.

That's about all I have to say on ads themselves for now. But a LOT more learnings on ads + conversion methods for another day...