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Here’s the program. Hey there, freedom fighters! My name is Andrew Warner. I’m the founder of mixergy.com, home of the ambitious upstart. In this interview, I’m going to find out, how did a mixed martial arts fighter build a profitable business that buys ads for its clients. Chad Hamzeh is the founder of DSV2 Media, an online direct response agency. He’s also the founder of Traffic Black Book, which teaches media buying, start to finish. Chad, welcome.
Chad: Oh, pleasure to be here. Great to be here, thank you.
Andrew: Was it a little awkward, when before the interview, I asked you about your clients, that I don’t know who you are, and I don’t think that we have any friends in common?
Chad: [laughs] Yeah, it was. That’s always a good way to start the relationship, but, yeah, I understand.
Andrew: It was pretty much the first thing I said, huh?
Chad: For sure. It was, like, who are you? Who are your clients, whatever, and stuff, but it’s all good.
Andrew: And they’re not on your Web site. Why not?
Chad: What it is, is a lot of them, they want to be anonymous. A lot of these guys are in the health space, and we, actually, don’t actively take a lot of clients. That’s a big part of it, and so, you won’t see us really marketing our agency, and so we’re not out there to put our portfolio out there, and that sort of thing, so…
Andrew: OK. What you do is, you buy ads on Facebook and Google for your clients, and you optimize those ads to make sure that they’re profitable.
Chad: Yeah, you know, a big part of it is actually even outside of Facebook and Google. We do a lot of banner advertising, a lot of email traffic, and yeah, exactly, we’re all performance-based, ROI-based, and that makes our guys money, that’s for sure.
Andrew: What size revenue you doing?
Chad: Us personally, or for our clients?
Andrew: You personally as a company.
Chad: Last year, without affiliate revenue, because I started as an affiliate, so without affiliate revenue, we were about 485,000 revenue. And this year, we’re looking to about double it, so this year’s been pretty strong to start out.
Andrew: And that doesn’t include the money that you spend to buy ads for your clients, right? That’s what you keep.
Chad: That’s what I keep. Yeah, exactly.
Andrew: What size ad buys are you doing for your clients?
Chad: On April, we did, combined between two of our bigger clients, it was about 1.2 million and spend. One of them was around 950,000. Around there, so, yeah.
Andrew: And what’s the affiliate stuff that you do? I’m pretty much grilling you here in the beginning, huh?
Chad: That’s all good.
Andrew: Get it all out now. Who are you, who do you know that I know, how can I confirm all this, and what’s your revenue? I could just continue with it, but we’ll go into the story in a moment, but I want to introduce you to the audience, and also, I want to get the basics. And for me, the basics often include numbers. So, what’s the affiliate stuff?
Chad: The affiliate stuff…last year was around…in terms of revenue, we were looking at around a couple hundred thousand, 200,000. That one, not as high as margins as the ad stuff, right, maybe about 50 percent profit. I used to be primarily affiliate, and we’ve kind of tapered that down, and getting more into in-house offers, and then the agency stuff. I, this year, brought down the affiliate stuff even more, now it’s kind of run in a unique way, where it’s not like a traditional CPA or a ClickBank affiliate. Now we kind of find offers that we could run as an agency, and if they’re strong in that sort of thing, we’ll just offer to ride on a CPA with our own ad spin.
Andrew: We’re talking about ebooks and products like that, is that what you were doing on an affiliate basis?
Chad: More so on supplement offers. We’ll do joint pain stuff, and that sort of thing, yeah.
Andrew: And before all this, you were a mixed martial arts fighter?
Chad: Yeah. [laughs] It’s kind of a weird start to everything, but, yeah, that’s right. I mean, I had a day job. I worked in a Telecom, and I was a business analyst there, but, for sure.
Andrew: And then after you were done with your day job, you would go and hit people?
Chad: Yeah. That’s it. [laughs]
Andrew: I wouldn’t mind that at the end of my day job, go and hit people, I’d be so angry.
Chad: Well, I would try not to get hit, too.
Andrew: What’s your technique?
Chad: I started out primarily as a wrestler, doing a lot of ground impound stuff, and I developed more standup striking skills in the past two years. I’m pretty well-rounded, at this point.
Andrew: Ground impound. That means you take the person down to the ground when you hit them.
Chad: [laughs] Yeah, it’s pretty self-explanatory.
Andrew: I always wondered if I’d be able to, if push came to shove, would I be able to hit someone in the face. Would you…do you hesitate for a minute? I don’t know that I can.
Chad: I think you’re kind of an aggressive guy, you could probably do it.
Andrew: You think so? My questions are aggressive, because they’re fist, arm , very aggressive.
Chad: [laughs] No, I mean….
Andrew: Would you hesitate for a minute? Would you go, oh, this is about to land on somebody’s face.
Chad: No, it becomes normal after a while, as odd as that sounds. And you’re training with guys that expect you to do it, too, and it’s either them or me, so you pretty much have to deal with it.
Andrew: And did you, before you started this business, go to Thailand?
Chad: Yeah. Before I started this, I didn’t…Four years ago I didn’t do anything online, and I was in my business analyst job, and I was just kind of burnt out, and I’d been training and fighting, and I told my wife, I said, you know, I’d like to see what I could do training full time, let’s just take off to Thailand. She actually agreed, because she fights herself, and we took off. That’s what we did, and we were there mid-2008 to about mid-2009.
Andrew: OK. And how would you spend your days when you …would it be just all training?
Chad: Pretty much. It would be anywhere from three to six hours a day of training, and at the time, I also took some Web design jobs on the side. I’d do, like, one job that paid me 5K; that’d last months, because Thailand’s so cheap. That’s what we would do, but otherwise, just fighting.
Andrew: How long were you doing that?
Chad: Which part?
Andrew: The fighting part.
Chad: Oh, in Thailand. We were there, like I said, mid-2008 to mid- 2009, I’d say about ten months of it was consistent hard training. We came back because my dad got sick, so that was kind of…it cut the trip short for the most part.
Andrew: And I heard, actually, from the pre-interview that you did with Jeremy Weiss, that you ended up in a little bit of debt from that, but it was worth it.
Chad: Yeah, we were, about 20,000, just above 20K in debt, but it was one of those life experiences that…I look back, and it was probably foolish, but I don’t regret it at all.
Andrew: Oh no, I would hate to have this passion, and not fulfill it, not spend some time doing it.
Chad: Yeah, you know…I just had to. I was on that treadmill, in terms of the job, and it just wasn’t what I wanted to do, I was just basically waiting for the end of the day so I could go train and that sort of stuff, so, yeah, I just had to do it, it was just one of those things, for sure. You know, absolutely.
Andrew: If I could pound people in the face, I would want to do that all day, also.
Chad: Yeah, well [laughs] You can train it up, man, we can hook up.
Andrew: No we can’t, because I would cry if you hit me. All right, so you come back and, then that kind of leads you into this business. How do you get started with Pay Per Click, and with online advertising?
Chad: OK. Real quick, it’s around February ’09, I get an email that my dad’s sick, and so, he actually went out to Malaysia, and that’s where he found out, so we went out and saw him. He went back to Canada, he ended up having stomach cancer, and it was one of those things where I had about a two month window where I’m, like, oh my God, I’m going back home, and I definitely don’t want to go in the cubicle, but I got 20-some-K in debt, a baby on the way, and a mortgage, when I got back home. But, I really didn’t want to go back into the cubicle, so I was that guy who just Googled how to make money online and how to do this, and reading forums, and getting misdirected, and stuff. But I just did a lot of reading, and eventually, I just kind of stumbled upon Pay Per Click marketing, right?
And that just made sense to me, from an analytical stand-point. Being an analyst before, it was just one of those things where, I’m paying for traffic here, I’m trying to convert it so I can look at numbers and see what happens, so it was really out of, like, I just need to make some money when I get back, and I don’t want to go back to the job. I like that freedom I had for ten months. It’s probably different than a lot of guys who are on here, where they had this idea of a business. I went into it accidentally, so that was the beginning.
Andrew: Desperation, and that’s what led you to this idea.
Andrew: What was the best source for understanding the online ad buying process?
Chad: I started with a forum called PPC Coach that was really popular back then. A lot of guys started there. I was just in there reading. I didn’t take much action to start with. There was one guy named Carl [sp] Fiorentino, a really good media buyer. He had a success story in there, and that thread itself had a lot of tips in it. So that’s where I started getting a lot of tips on what to do and that sort of thing. Pretty much all day I would read, then be like,”OK, I can apply this and try this out.”
Andrew: I see. I’m on the site right now. Is it still as strong as it used to be? It’s $49.99 a month, is it worth it?
Chad: Well, back then! I haven’t seen it in a long time, [laughs] so it’s hard for me to say. Back then, it generated a lot of revenue for me, indirectly.
Andrew: After you understood it, did you start buying ads and running affiliate offers against them, or did you immediately start to create your program where you were teaching it?
Chad: I didn’t start teaching right away. I was watching Carl’s success thread, and he was kind of in the muscle building market. He was talking about Google Display Network as his traffic source. So I started learning that and launching campaigns. My first month, I launched probably 130 campaigns in 30 days. I just kept grinding and launching those campaigns.
Andrew: Campaigns for what?
Chad: Different things. Some of them would be info products like ClickBank stuff. Some of them would be lead generation, like forms and insurance offers.
Andrew: You’d just find any affiliate programs on ClickBank or any other affiliate platform and just run offers for them?
Chad: Yeah, I didn’t have a groove back then of what I did well or anything, because I didn’t do anything really well! [laughs]
Andrew: Wasn’t it expensive? I know that when Eric Ries first came on Mixergy, he talked about buying Pay Per Click ads as a way of testing your ideas. Back then, it was pretty inexpensive. The second time he came on, I pushed him a little bit about it and we both realized it is very expensive to buy ads because it is so competitive. If you are going to buy Google ads as an experimental platform, it is really tough. It is going to cost you some cash. Wasn’t it tough for you to buy ads for all of these random offers when you didn’t really know what you were doing?
Chad: Yes. I had that credit card, so I went a little bit in debt. But I was really careful about how I did it. A tip that I got right away, and I still follow it, is I don’t necessarily look for cheap traffic, I look for converting traffic. I tend not to play in traffic sources where there is a lot of heavy optimization needed. I will always bid high and budget low. I will bid higher for the higher quality pools of traffic instead of bidding low and budgeting low and ending up with the remnant traffic.
Andrew: If you bid high, it takes a long time to get enough traffic to figure out if the percentages make sense, right?
Chad: Not so much the percentages. It just takes a while because you are maxing your budgets earlier on. But at the same time, at least the traffic quality that you are accessing is a higher impression order. Without getting too technical, that tends to be what happens when you bid higher. You get a higher quality ad impression on a site.
That is the way I have always played it, and it works really well. Again, Carl had mentioned that in his success thread. I thought, “Screw it, it works for him, I’ll do it!” [laughs]
Andrew: And how well did it work for you in the first couple of months?
Chad: Those 130 campaigns, some were profitable, some were break even. The big turnaround was that I kept seeing this one ad on Facebook for a muscle building offer. I didn’t know how to use Facebook, but I knew how to use Google Display Network. I just took Carl’s methodology and promote this offer. It had been running for a while, so why not?
Within about 59 days or so, it grossed 92 thousand dollars. That was my first big campaign. September 8th was the exact day that [laughs] I had my first thousand dollar day and it started working really well. After that, [??] net was probably 80 percent profit. After that I started to click on how to do this.
Andrew: One offer that was doing so well on Facebook is what you took to Google, and the reason you knew it was doing well was because you kept seeing it over and over again. You figured if they are buying it all the time that means that it is doing well. Chad: Yes, that is what I assumed. I had seen other guys on the forum talking about how that is a way you can kind of spy on stuff. So I thought, “Let’s give it a shot.” It was funny, because I was about to close my laptop that day, thinking, “Oh, this probably wouldn’t work.” Then I said, “You know what? Screw it, let’s just give it a shot and see.” I’ve had a couple of campaigns like that earlier on where I almost shut the laptop down for the day but figured let’s set up one more. See how it works out.
Andrew: How much money is this? I know that you said 80%, but what are we talking about, dollars and cents?
Chad: The profit was, I think, around $45,000.
Chad: Yeah. So it was $92,000 in spend, and I think it was around 45 grand in profit.
Andrew: Wow. Unreal. And so for a guy…
Chad: Yeah it was pretty crazy.
Andrew: …who especially was $20,000 in debt this was a big turnaround for you.
Chad: Yeah I got out of debt with that one campaign. It was pretty sweet.
Andrew: And then you found others using the same methodology?
Chad: Yeah the other campaigns? Yeah, I still kept doing more spying. Nowadays I actually do a lot of spying. I use Adbeat. You guys had Mike Colella on. I found more campaigns just with that spying, but it was more just, what I learned a lot from that was how to optimize the traffic down. So, the offer and stuff, yeah that was from the thing that I was spying on, but it was more just how to set up the campaigns in Google and then optimize down and everything. I got to see it in live practice when you’re running a lot of volume like 10,000 clicks a day…
Andrew: What kind of tweaks…
Chad: on some days.
Andrew: …would you make on the back end that had big impact?
Chad: The first one was getting all my ad spin towards the ad groups and towards the ads that were profitable. I mean that sounds basic, but in the beginning what was happening was I wasn’t seeing an even flow of impressions. Some ads weren’t getting or anything like that. So when I started hacking those and being really aggressive with those ads or those ad groups that wouldn’t get any impressions or clicks at all, then all my ad spin was committed to where it was getting traffic. Then it just came down to, you know, stripping away the ones that weren’t profitable and getting all that ad spin. And it would be a tipping point, you know. It would be kind of humming along and then when you did that final round of optimization that’s when it would blow up.
Chad: It would just happen almost overnight at that point.
Andrew: Do you have one tip that you learned from back then that, if Mike Colella is listening to this interview with all of his experience buying ads, he might go, “Yeah, that’s pretty clever?”
Chad: That’s a good one. You know, the bid high budget low thing was one thing a lot of guys weren’t doing too much of, and I know that’s not a massive tip but it actually helps quite a bit. Because what I learned was basically Google, Facebook, all these guys, all these traffic sources they’re a business obviously, and they want to make the highest ECPM. So they want to make the most money out of showing your ads. A lot of guys were touting, “Get your click thru rate high, get your click thru rate high.” Whereas Carl and some other guys were like, what I learned from them was, yeah you can get your click thru rate high and that helps, or you can just bid a lot to start but budget, you know, for your wallet. And then you’ll start giving them that higher ECPM and you can work backwards to the click thru rate that you need. That really helped me a lot.
Andrew: The spying thing is interesting. Mike Colella, before he ever did the interview, called me up one time out of the blue. Not out of the blue. I guess we knew each other from Mixergy. He said…
Andrew: …”Let me show you what I’ve been doing.” And what he was essentially doing is spying on ads that were running a lot on other sites. I think at that point he already had automated it so that he could…
Andrew: …get a report back on which affiliate offers were being run often…
Andrew: …how they were being promoted, and then he could figure out which of those he wanted to promote himself and…
Andrew: …basically learn from the way that others were promoting them.
Andrew: And then he built Adbeat to enable anyone to do it.
Chad: For sure. Yeah.
Andrew: You were doing that on Facebook where you can’t really automate it, can you? You can’t scrape beyond your own account so how are you spying?
Chad: Well I was spying just under my profile, so I saw, I was a young male so I saw stuff that was catering to that. I kind of could relate to it so I was like I’m going to run that offer. I mean, nowadays you can’t automate it. There are some things out there that are against Facebook’s terms of service.
Andrew: Like what? What would I use to automate?
Chad: I think there’s one, so lots of ads, is one that’s really popular.
Chad: I think it’s lotsoads.com. I could be wrong. And social ad ninja, I think, is another one. But lotsoads is probably the strongest database that you’ll find out there right now.
Chad: It’s, you know, it’s just like that, very similar to Adbeat in the respect where you can see how long ads have been running, and which ones, and all that sort of stuff. But, yeah, Mike obviously automated it into Adbeat. Adbeat is something I use probably three to four times a week for sure.
Andrew: Can somebody in the comments maybe put a link up to lotsoads. I’ve been looking lotsoads.com doesn’t seem to be it. We’ll find out in a moment. Yeah, that’s not it, but maybe someone in the audience will be able to do it. I like when the comments help out.
Andrew: Alright. So, then what do you do next? Now that you’ve got this thing that is going to keep you out of the cubicles and is going to allow you to do the work that you care about and you’re getting curious about it. What do you do next?
Chad: Alright. So I kept running campaigns. Again, I would have I would say 20 percent of them profitable and the rest not, but I learned how to kill the losers pretty quick. So I just kept launching work in a lot of hours every day. And 2011 in the info products base, a lot of people were – I just see this on Facebook, but a lot of courses were coming out that were very much push button riches and blah, blah and all of this stuff on ClickBank. They kind of ruined the ClickBank landscape doing that. I was looking at it, and I was thinking, “There’s no course really out there that shows how to do pay traffic, a legit way, like a way at a Philly market would think and drill them on and on, that sort of stuff.
So I took in one as some weird kind of mission to build this course. If I knew the work involved in creating a brain dump like that, I don’t know looking back if I would have done it. And so I spent some time building the original Traffic Black Book course.
Andrew: Before you were even doing your agency, were you buying ads for other people?
Chad: Yeah. Exactly. We really didn’t start the agency work until early 2012.
Andrew: What is the appeal of teaching this stuff? I mean, frankly, you don’t want more competitors. You don’t want distraction from your ad buys, so you’re doing this because there is an upside worth all the work and worth the fact that there might be some competitors and worth all the criticism that’s going to be up on Warrior forums. So what’s the upside that made you want to get into it?
Chad: You know, I’m not lying when I say originally it was just because there weren’t a lot. There was a lot of ripping off going on, I thought. I hate to be the guy that sounds all noble and stuff like that, but that’s what it was originally. There’s not a lot of courses out there that really teach this. There’s a couple forums, and you’ve got to dig really deep on the info. And the competitive thing, at the time I didn’t really think of it, to be honest with you. I was really naive back then, and as I was building it all and that sort of stuff, these same thoughts went in my head once I saw how much work it was. I released it, and it hardly sold any at first, and I was like, man, that was a waste of time. It was like 100 hours or whatever it took to build it. Eventually, it went on to be successful, but, yeah, I had those exact same thoughts.
The competition aspect is one of those things where nowadays if I do teach I don’t do as much teaching these days. But if I do, there is a lot of traffic. I know just how much traffic there is out there right now. I know not everyone will take action on it, unfortunately, but I know how much traffic is out there. No one is going to buy all of it, like I have access to traffic sources that no one else really knows of. Maybe, a handful of people.
Andrew: What kind of sources?
Chad: What kind? Email and banner traffic. I’m not going to say which ones they are for obvious reasons, but I mentioned it on the pre-interview. I had a couple of traffic sources. They let me run 95 grand in traffic recently and with no pre-pay or anything like that. When I asked them after we paid them the first time, why did you do that? They’re just like, I know who you are. I trust you, which was pretty crazy to me. There is a relationship aspect to it as well.
Andrew: Yeah. I see it down in the notes. There’s a lot of the word secret here in the notes. I have two secret traffic sources. They ran 90K in sales the first ten days and then 140K before they requested payment. You asked them why they ran with no credit or contract. They said they know who you are and we trust you.
Chad: That could be, “I know where to find you.” [laughs] But, yeah, that’s exactly what happened. So there’s a relationship aspect to it.
Andrew: I also see in the notes that this, I guess it was a course that you were teaching, or was it a book that you originally created?
Chad: The original Traffic Black Book. It was a video course.
Andrew: A video course.
Chad: That’s right.
Andrew: It ended up doing well. You’re telling me here that it was a struggle at first, that you were regretting putting in all of the hours. What happened that turned things around for you?
Chad: You know, I just became buddy-buddy with a couple of guys that had good names, like in indie, the IM industry on the marketing side. So guys like Keith Baxter was one. He mailed it out, and it did pretty well for him. He did a webinar, and it was just some networking I did. My copywriter, who did the second version of it. He knew some guys, and so eventually it ended up selling about 4,000 copies, the first one did.
Andrew: Because all these buddies were going to promote it to the list that they had access to?
Chad: Yeah. Exactly. What ended up happening after enough people started promoting it, was it started getting organic sales. So that 4,000 copies wasn’t like it happened in a week, like some big IM launch or something. It’s spread out over time. That’s from when I launched it in early 2011 to when we pulled it, which was about a month ago.
Andrew: I want to continue with the business, but let’s talk privately here.
Chad: OK. [laughs]
Andrew: What did you do on a personal level? What did you do now that you suddenly had money? You went from being the guy who had nothing, who was going to go into debt for his passion, to suddenly having enough cash. What did you do?
Chad: Money is kind of addictive in a way [laughs] when you didn’t have any before. I made some mistakes early on. I would do some media buys to try to scale stuff that was working. I’d lose 7-8K in two weeks. I did some dumb things like that.
I’d seen ups and downs from my CPA experience. I would set aside extra money, roll money back into my campaigns, and just try to start scaling. I was having fun with it. I didn’t really get back to my training.
On a personal level, there was a lot of struggling with my dad. He was living with us at the time. My parents had separated, so he was living with us. I was kind of helping to take care of him as I was doing all of this.
Andrew: Were there any ways that you were able to take care of your dad better now that you had money?
Chad: Well, up here in Canada, the healthcare is the healthcare. But in terms of supplements and stuff, I would try to help him out. Obviously, the time was the big thing. I would do certain medical procedures for him. If I had to help him or drive him to the hospital at midday to get checked out. In that respect it was good. But during that time, I was still working about 13 to 15 hours a day. That was one regret I had when he passed. I just missed a lot during those last couple of months. At the time, I didn’t know how to outsource. I didn’t have anyone doing support on the current project. Now in addition to campaigns, I have support. The day after he passed, I was answering emails. What is that?
Andrew: That is painful, and it is a big realization for you. What is the realization that you had from that?
Chad: I can’t be the business itself. It has to be able to run without me to an extent. I’ve done that now. At this point, I don’t work 14 or 15 hours a day. I’ll usually work six to eight. The work still gets done. The results more than anything are getting done. Going into 2013, I was working around 40 hours a week. I made a goal in November that by January of this year I would increase my profits by about 20 percent, but drop my hours down to 30.
Andrew: So how do you do that? How do you go from being a guy who is so over worked that you can’t take time to absorb your dad’s passing, to now being able to go six to eight hour work days and have the space to think about what you want to do, and still allow your business to grow? Give me one thing that you did that had outsized results.
Chad: The biggest thing was looking at the stuff that I was doing on a daily basis. I mean really analyzing and writing down every single action I did. Then, saying what things I need to do, what things I must do, and what things someone else could do. I had some money now, to outsource a bit. Even though cash flow was sometimes tight because it’s rolling into campaigns, it didn’t matter. I had to compromise some profit to get somebody else.
Andrew: I went through a situation like that. I was going to go bonkers just doing Mixergy. There was a little bit of money here because Mixergy Premium was starting to take off. I thought that it was time for me to hire somebody to help out. Then, we could do a better job overall and I could have some space. Otherwise, I was going to burn out. I came to the understanding that I could have someone pre-interview, for example. Owen, who creates sweetprocess.com, said I should at least outsource that. I asked him, “How do I outsource it?” I had to spend a lot of time breaking down my process, and finding someone who is the right person to talk to my guests. Jeremy was a good guy, right? You talked to him.
Chad: Absolutely. Yes.
Andrew: You didn’t have to talk to him. But the fact that you talked to him makes this interview better. You wouldn’t have done it if he was a jerk. You would have pretended something come up and you would have left.
Andrew: Or something would have come up. That takes a long time. The question that I have for you is: how did you make the time and have the discipline to structure what you were doing, and then find the right person, and then pass it on? Because it’s not so easy as just having the understanding and executing it.
Chad: No, it’s not. My situation was a little unique in that I had an email list of about 8,000 people that had followed my stuff or bought my original product. I had a forum as well. I went to the forum initially, where there were about 200 members at the time. I said that I was looking for someone who is going to get the chance to see inside a lot of the campaigns that I am running. You’ll get to manage, help manage, and all of that stuff. I had about 20 applicants and right off the bat looking at the resumes, I dropped it down to six people that I wanted to interview.
And after the interviews and pre-questions and that sort of stuff, which didn’t take too much time because I had them email a lot of it, I had three guys that I did video interviews with. The guy that I ended up hiring, he became an absolute star. He was the least experienced of the crew. He was the least experienced, but he was coachable. He had a lot of energy, he was young, and he was a hustler. That was a big thing for me. He ended up coming on now. Understand, he only had been really doing advertising on Plenty of Fish. He didn’t really do media buying the way that we do media buying. I’m not the best trainer of someone. I just kind of throw them in the mix.
Andrew: You’re just getting started.
Chad: Exactly. So it took some time. It took a couple of weeks which is a fair amount to get up to speed.
Andrew: That’s fairly quickly. But what most people will do is I now have enough money. I hired somebody. I’ve got to pass this on to them, and they go, “This is what I need you to do. I need to . . .” and they give them an assignment and they move away. What I’ve discovered is, obviously, a new person who comes on does not just want an assignment and then go figure out how to do it and figure out how you do the way that you like it and then implement it and it fits with everything else you’re doing, you have to say, “Here are the steps that I’d like you to take. Try that. You try that, and afterwards you can tell me how we can improve our process.”
Andrew: How did you do it?
Chad: The first thing that we did, so we set up calls like this where I would screen share, and I’d show them. I kept the pool of things that he does small to start. And I have very slowly expanded it out, but even still he doesn’t do everything. So setting up new buys, he doesn’t do right time. Media planning, he doesn’t do. For the most part I’ll still do that. Setting up relationship stuff, I’ll still do that. But what I needed him to do was getting ad created and getting reporting to me because I’m not very good at reporting myself. And he’s really good at it himself.
Andrew: At reporting?
Chad: Yeah. I can look at profit and loss and see where I need to optimize, but in terms of pulling out a nice pretty report from Excel that shows all my EPCs and everything I need, he’s very good at that. So what I did was I said, “I want you to start with just setting up ads.” So I showed him how to do that in the ad server. I explained everything, and we recorded those as well so he could go back to them. He was really diligent, and he’s just one of those guys that kept looking at the recordings and then he did it. So once he . . .
Andrew: You gave him a very structured set of projects to work on at first.
Chad: Yeah. About as structured as I get for sure, and then after that we went into the reporting aspect. And I said, “This is a dream scenario for reports. For me it would be seeing CPM of the buy, EPC, the EPCM, yada, yada. And so I said, “Figure it out, blah, blah, and I want to see it per buy.” He came back to me, and he said, “This is how it would look.” So that one I didn’t give him a lot of guidance on the reporting side. I just showed exactly what I’d want to see. So I tried to give the guys the end result once they know the mechanics of everything, and the kind of build themselves and empowers them a bit.
Andrew: You know how this approach to business where you say, “I look at how much my time is worth, and then if I can find someone. . . really look at how much I wanted to make hourly.” Oh, how much you wanted to make hourly, and then anything I could make and get done cheaper than that, I’d outsource. Right?
Chad: Yeah. That’s what I was doing when I started up. Yeah. Not started up but started doing this outsourcing and stuff.
Andrew: I’m really lucky in that I moved to San Francisco recently, where you can have anything outsourced.
Andrew: For twenty-five bucks you can have somebody go to the grocery store and pick out just the stuff that you like, or I’ve had people come in here for 25 bucks; I said, “I don’t know what’s taking me a long time with email.” I’ll pay you 25 bucks for an hour, sit right here next to me, and just categorize all the email that I respond to, and then at the end I want us to look at the categories, see what I spend most of my time, and then I need you to brainstorm with me what I can do to pass that on. Twenty-five bucks. That stuff exists all over here. You’re not living here.
Andrew: How are you outsourcing stuff?
Chad: So my one guy, he lives in Michigan. He’s in the $30-35 range, but we also do bonuses and stuff like that. I have another guy who’s a developer, and I actually pay him between $100 and $120, which is going to sound like a lot for a developer. But this is a guy where a malware attack on our server, it’s 3:00 a.m. in Miami and he’s driving through Florida. His girlfriend is driving, and he’s on the phone. And he’s getting it worked on as I’m talking at 1:00 a.m. here. So it’s that type of commitment, so I’ll pay that. Him, the guy, the developer, he was actually an affiliate marketer that I knew before I got sick of the whole ups and downs of the affiliate game, but he was a wizard developer. So he started out his development business, and I just started going with him. Yeah.
Andrew: All right. At what point did you start bringing on these clients for your agency?
Chad: OK. So that was early 2012. It was about April 2012, and the first one I had — there was two, actually, but the account came within a week. It was odd, but the first one I had was a guy on Facebook that I knew. His name was Kevin. He came to me and he said, “Hey, I have a client . . .” He was like a JV broker. Right? And he came to me and he said, ‘I have a client who’s got a seven-figure business. Do you want to take it to eight figures? And so, you know, I think you can help them do that with the media buy-in [sounds like].’
So that pretty much how I got the first one. The second one who came within that same week — it was my old affiliate manager in my CPA network. He said, “Hey, I know a guy who needs some lead-generation in the real estate space, and so . . .” He’s like, “Are you open to it?” I said [??] ‘I’ll take a look.’ The agency thing at the time was, like, really odd to me. I didn’t know how to make money with it. I think I mentioned that in the [laughs] pre-interview.
Andrew: You didn’t even know how to price it.
Chad: No, I had no idea how to price it properly. What I would do is . . . I’m like, ‘OK. I’ll do a flat rate, and then you guys pay the ad spend,’ but then after about a month-and-a-half, two months, I was like, ‘This isn’t the way these guys do it. It’s kind of a waste of my time.’
One reason why I took on the one that came from my buddy from Facebook was it was a nutritional supplement. I had always been interested in running my own nutritional supplement, because I had that traffic. A big part of that one was just learning what was behind their offer, because I knew their offer was successful, and so that type of education is hard to pay for, so that was one big reason I took that.
After a couple of months I started to see that it just wasn’t working — doing it hourly. You know, I’ve got to pay my guy to run ads and that sort of stuff, and so what ended up happening is I switched to a ‘percent of ad spend’ model, which is what a lot of agencies do. But a lot of agencies do it strictly on percent of ad spend, so they, you know, you spend a million dollars, and it’s 10 percent, and then that’s what you get.
That, to me, didn’t really make sense, because the client is going to look and say, “What’s the incentive with these guys to spend a lot of money?” So we would set performance indicators, you know, we have to be over ‘x’ percent [??] ‘y’ or we would just get our base monthly, which was next to nothing, so what we would do is set performance indicators, and that’s pretty much how we’ve been functioning ever since, and it works really well.
Andrew: When you go in, you basically have a campaign that already works. Right? For them? What can you do that increases it?
Chad: Well, for one, when we started out, I just took some on as a challenge, like, so the one with the guys with the health supplement. I took that on as a challenge, but it was converting on email traffic for them. They didn’t do any banner stuff. So what do we do is nowadays, I like to say that we’re not so much a testing platform; we’re a scaling platform.
A lot of these guys will come to us now and they’ll say, “We’re generating $100,000 a month in overall revenue.” You know? We’re spending ‘x’ amount, but we can’t take it any bigger. I know, like you said, now I can only cherry-pick the one, so I take it. [laughs] If one is already converting, I know the EPC is doing well, I know exactly where I can roll it out where we can start hitting volume very quickly, so they come to us now for volume — for big, big volume.
Andrew: And then they only pay for the volume that you bring them. They keep the ads that they’re running as-is.
Chad: Yeah. They can keep their own. I mean, we don’t mind if they run their own internally, but some of them just say . . . a couple of the guys just say, “You know what? I want you to handle everything.” Some don’t, so . . .
Andrew: One of the issues that you have with these guys is that they don’t know what their lifetime value of a customer is. Is that right?
Chad: Yeah. So what that . . . [SS] . . .
Andrew: . . . [SS] . . .
Chad: Yeah. So what happens is whenever we are setting up with a client, we like to say, “What’s your ideal CPA? What can you pay to get a sale?” And, you know, they’ll tell us . . . they might say ‘$120 or $110.’ But that was factored in, and they didn’t keep in mind their refund rate, for example, or you know, they underestimated their refunds, or they underestimated their actual cost of goods and everything.
So now the way that impacts us is, you know, a couple of months later, a few months later they look at us and say, “The ROI is too low, blah, blah, blah,” but we were trying to hit certain numbers that we were provided, you know, three months prior. So now we’ve got to renegotiate or we’ve got to now start to optimize down, where we were pretty optimized before at $120 CPA [sounds like], and now we’ve got to knock $20 off because of these expenses that we didn’t know about. That’s what was a challenge. That’s why now we drill potential clients a lot on, you know, ‘Is this your actual cost? Are you factoring all your overhead, staff, refunds, whatever?’ So . . .
Andrew: Yeah. Great. Let’s talk about this new product that you’re coming out with — Traffic Black Book 2 the first one is the one we talked about earlier. Now, you’re about to launch, maybe by the time this interview is launched, this new program will be available for people. What I’m curious about is, this developer who worked for you, the guy who was driving through Florida and helping you out with your tech issue, he gave up on affiliated marketing because he didn’t like the ups and downs. For a guy who knows you that well, who had experiences in making this work, how are you packaging this process well enough that other people can make money with it?
Chad: I didn’t say he couldn’t make it work.
Andrew: Ups and downs were just painful.
Chad: He didn’t like to deal with that stress and that sort of stuff so now what we’ve done on the new one is: number one. The first one was more targeted at affiliates and that sort of stuff. The second one is more towards guys who are actually running a business who have a higher visitor value, higher margins than an actual affiliate would. It could be software developers, infopreuners, agencies as well would get something out of it. I’ve seen when buying traffic as a merchant or former merchant, it’s a lot easier then when you’re running as an affiliate because the margins are bigger.
Andrew: If you’re buying ads for yourself you have a bigger margin then if you’re buying ads for someone else.
Chad: Yes, your average sales, your “commission” is just a lot higher. You just have a bigger margin to deal with. It’s why merchants can go in and usually brute force an affiliate out of the way. If they know how to buy traffic even close to what a good affiliate can do, then they can just go in and bid higher. They can bid 50 percent higher just because of the math of it. That’s the segment we decided to focus on in the second one just because it’s not as much ups and downs because you control the offer, it’s the learning curve of it and that sort of thing so we went that route and it’s been well-received so far.
Andrew: What is the process?
Chad: The first step is understanding the paid-traffic mindset. The biggest thing is guys getting over the hump of, I’m losing money, or I’m buying data. That’s always the biggest one. You’ve probably heard it. I always need people to get into that mindset of anytime you’re do a buy, you’re getting something out of it. Even if it doesn’t look like you’ve got any sales, you are getting some data on the ads on your landing pages that are telling you that this is the direction the audience is telling you they like.
Andrew: So if I buy an ad and the first one out of the gate sucks, it doesn’t mean that I’ve wasted my money, I’ve learned something about what the landing page works, whether it doesn’t work, or about the way that I bought ads. I’m willing to come at it from that mindset. Now, what do I do?
Chad: After that, it comes down to having your offer set up and structured for cold traffic. A lot of guys come to me on the agency side even and they say, hey, we have this offer, it’s pulling crazy PCs, it’s doing so well, blah, blah, blah. I say, how have you tested it? Right away they’ll tell me it’s an in-house list or affiliate traffic and that sort of thing. We’ll see a three times to five times higher response from affiliate traffic and in-house lists especially then you would from cold traffic. So, number one, it’s like structuring your funnel or sales funnel to accommodate for paid traffic and to structure your actual pitch because the pitch is different.
The big thing I try to tell people is, don’t look at it as you’re just trying to sell something right away. If you can educate the person…I’ll talk about health stuff, for example. If you can try to educate the person with a video sales letter, for example. The pitch is never, hey, go buy this stuff on the ad and then when they click you just go right on a pitch. That rarely ever works with cold traffic. What it usually is…you’ve seen ads: five weird foods to avoid or something. It’s usually a hook that, what are these five foods that I’ve got to avoid. The person clicks and that’s where it goes into the video or to the sales letter.
Andrew: On that page, I sell?
Chad: Exactly. You’ve got the video, it’s talking about the five foods and why they make a person overweight, and then it gradually moves into the sale. That’s one setup.
Andrew: And then the sale happens right there on that page? What else do I need to know about making a sale to someone who didn’t know me before they clicked the ad a moment ago?
Chad: It varies on the niche, but in health that’s where we run a lot of…that one client that we run a lot of traffic are both big clients, that’s how they do it. Just right to a video, educates a bit, and then it says, this supplement helps out with all that or can potentially help with all that. Then the sale is made right then and there. After that, there’s usually up-sells or alternate offer they can take after which tend to raise the overall revenue. The guy with the highest overall revenue tends to win in the traffic game because it’s easy to buy the traffic from them.
Andrew: How do you increase revenue?
Chad: Number one is upsell, so I usually tell people to try to keep the upsells relevant, so if you have a supplement offer, for example, and it’s hard to sell an infoproduct right after, so more bottles of the same supplement might be a good idea, ’cause it’s just an easier sell, depending on what kind. Obviously, alternate supplements that fit alongside of that first one. In infoproducts, usually the good type of upsell, somebody buys the initial infoproduct, a good one that accompanies it is a monthly coaching program, or that sort of thing, or more secret info stuff. But, usually, the monthly coaching thing is pretty safe…
Andrew: It’s online coaching.
Chad: Yeah. It could be online.
Andrew: You do coaching yourself?
Chad: No, I don’t. Not one-on-one, no. I used to take some, but…
Andrew: I mean, what’s your upsell? I looked at the course, it was done through…right now it’s offered through you to me, because you wanted to get it up quickly. But when it’s on your site, and you can upsell, what are you going to upsell?
Chad: We’re going to do a monthly continuity, where some of the guys that were working on the course with us, and we have some other people, they’ll just be doing new videos, and that sort of thing, monthly, and that sort of stuff. But not coaching with me, personally. We may get into some of that later, at a higher ticket rate, but it’s time intensive, so…
Andrew: Looking here at Warrior Forum – I got to tell you, anyone who does infoproducts, needs to do a better job of promoting themselves online, away from the infomarket world. Let’s see what happens when I Google your name. I’m just going to do that. Because, I got researchers here, and we don’t have that much great stuff about you, so here’s what comes up. Your Web site – this is a step way beyond other people. When I go to your Web site, it actually looks decent. It looks good.
Chad: OK. [laughs]
Andrew: It looks like a personal blog, it looks like you’re caring about business, but also I see you’re a family man, I see your child there in the photo, I see your MMA stuff – it’s good stuff. And then Facebook, you link to that, and I see someone who, I guess that’s not so bad, someone who’s trying to already promote your stuff, and then…
Chad: I am amazed stuff is in there, too, if you Google my name.
Chad: My MMA fight stuff is in there, as well.
Andrew: Yes. Yes.
Andrew: The answer I’m looking for is more credibility indicators here, and you’ve got more than most.
Chad: OK. [laughs]
Andrew: What am I looking for? I’m looking for someone outside of this space that says, yes, I like that. And maybe that’s why you’re here on Mixergy, so that maybe when people Google you, they’re going to see, hey, he was on with Andrew on Mixergy, and Andrew’s kind of a pain in the ass, and if he can handle Andrew, then he’s okay.
Chad: No, it’s all good. As far as traffic drivers, I’m probably more well- known than most. You’ve probably heard the guys that run some of the biggest traffic, nobody knows of them, right, and that is very true. There’s a guy like Mike Colella; he came out because he had Adbeat, but before he had Adbeat, nobody really knew who he was, or anything like that. You’re not a pain in the ass, it’s all good.
Chad: Not at all.
Andrew: All right. I think I’ve got everything here. Yeah, did I miss anything?
Chad: There was one…I was on another podcast, and they had asked me what the one biggest piece of business advice would be, and the first one, like I said, if there’s something that I don’t need to be doing, I’m just going to outsource it nowadays. That made such a really, really big difference in my business, and the other one was, I, actually, learned this a while back, and didn’t listen to it much until last year. But, it was finding the biggest leverage points in the business, so nowadays I deal with a lot of traffic sources that don’t require a lot of babysitting.
A source that would require babysitting would be something like Facebook, right, got to get new ads up all the time and stuff, and I tend to now work with things that are more hands-off, to a degree, we still have to optimize a bit, but I know where are the profitable traffic sources. It’s just finding stuff like that, where a rep can help you manage it, and they can kind of do everything, or they can run it on a CPA model, and that sort of thing, and, that’s just what I would recommend, is small hinges swing big doors. So try to focus on that, in that area.
Andrew: All right. What is the Web site? The Web site that people can go to, is it, actually, you give the URL.
Chad: Yeah, so, for Traffic Black Book, it’s www.trafficblackbook.com, and by the time this is aired, you guys will be able to see it all, so…
Andrew: All right. And the media company, is it DSV2media.com?
Chad: Yeah, that’s it, DSV2media.com.
Andrew: What does DSV2 mean?
Chad: I don’t talk about that.
Andrew: You don’t talk about that either!
Chad: No, not that. Well, there’s not much I don’t talk about, just two traffic sources, and then there’s the company name, and the end of the mystery of it. Otherwise, I’m pretty open. I’m an open book.
Andrew: All right. Let’s hope that we…there we go. I thought that we just lost you, there, for a moment. Well, thank you for doing this interview. Thank you, all, for being a part of it, and thank you for handling all those tough pre-interview questions that I even hit you with, and for making the introductions to one of your customers, so I could confirm.
Chad: It’s all good, yeah.
Andrew: All right. Well, thanks. Thank you all for being a part of it. Bye, guys!