The Math Behind Creative Hits (With Real Spend Data)

- Ad creative is a hits business, right? Just like music or movies or gambling, if you will, right? The idea that a small number of ads drive a very disproportionate share of all your results is something you have to believe in if you're gonna be an effective meta-avertiser. - This episode of the e-commerce playbook is brought to you by Outer Signal. If a celebrity bought from your brand tomorrow, would you even notice? Probably not. Most brands have no idea who's actually in their customer list. They've got order numbers and emails, not people. So when a Fortune 500 CEO, a creator with two million followers or a celebrity quietly buys from you, they get the same marketing as everyone else. That's the gap Outer Signal closes. It identifies the real person behind every order, flags the celebrities, influencers, and VIPs in your customer base, and groups everyone else into clear personas. So go to outersignal.com/thread. That's outrsignal.com/thread. You'll get your first 1000 customers in rich for free, plus 50% off your first two months when you upgrade. One more time, outersignal.com/thread to discover the VIPs buying from you. - All right, hello, and welcome to this episode of the CTC Canon, where today we're gonna dive deeper into the CTC Canon as it relates to creative strategy. And really, this is our methodology for turning creative production, which can be this very ambiguous, confusing, and frustrating kind of avenue of paid media into a much more predictable data driven system that feels efficient scale. What I hope to provide today is actually freedom. I think too many advertisers really see creative production as this beast that they just can't really get a hold of. They're constantly changing production partners. They're constantly changing their internal strategy. It feels to them like this beast that really can't be handled in what our Canon really provides and has provided our clients and our own production system is the freedom to just understand that we have no idea what it's going to perform. And therefore a predictable system actually outweighs any level of quote unquote creative strategy that you could ever inject into your ad account. And really, your ad account of being obviously the one that we're primarily spending on as advertisers should be this flywheel of production, not this channel that we over-resource against and over-think, because that's where we get stuck as advertisers is overthinking something that really we have no business outsmarting. And as I go through these numbers and this methodology, I hope that it provides freedom and really peels back a lot of the layers of confusion. So to arrive here, we analyzed 504 stores across our stateless data set of clients, which aggravated into about 3.35 billion in meta-adspend on seven-day click attribution over the last 365 days. Now what's also really interesting is I'm going to include data in here from meta and from motion that solidify and validate this methodology. It's not just a CTC methodology that is siloed in our own thought universe. This is fully backed by the same patterns and the same data that meta and motion are seeing and producing in their own articles. Really, there's two parts to this philosophy and two parts that should go into every ad plan. So we think of an ad plan as the number of ads that you need for any given month. So that's part one, quantifying how many that ads that really is against your spend target and then part two, determining how to allocate those ads across calendar moments, evergreen moments, core products, creative types. So the format, whether it be branded videos, branded statics or UGC videos or UDC statics, and then the producers. So getting very clear on the allocation of the number of ads needed against the spend target. Now, what we need to understand, and if this isn't clear, this is central to this philosophy and we cannot drill into any other part of philosophy unless you agree or understand this core premise. Ad creative is a hits business, right? The idea that a small number of ads drive a very disproportionate share of all your results is something you have to believe in if you're gonna be an effective meta-avortizer. The volume is the lever that is bending probability in the favor of the brands that are doing this. For the brands that are not doing this, it is bending the probability outside of your favor, right? So what's true across our stat list data set in the last 365 days is that only 74% of ads got any spend at all. 23.8, let's call it 24%, ever cleared $100 in spend. Very little, I mean, if you're working with an A of the above $100, you're likely not even getting a purchase in that window, right? And then 7.2% became real contributors, meaning they spent 1K or more. And then 1.8% became significant performers, meaning they spent 5K or more. And then 0.9% became whales, right? Whales being those are the ads that drove a disproportionate share of all results. So the raw hit rate, you can call it and just simplify this from creation, on creation to a whale is roughly 1 in 100. Now, let that free you from the idea that a disproportionate amount of creative strategy needs to go into producing 100 ads. Because if 1 in 100 is going to become a whale, who are you to predict which one of those 100 is going to perform? It's not about making better ads. In fact, the term better ad is so subjective to the person sitting in the seat of approval or creation. This is all about making enough ads to where the math starts working in your favor, right? And so scrolling down here, you can see the same pattern on motions 2026 created benchmark article that they put out. They measured 550,000 ads and 1.3 billion in meta ad spend from 6,000 advertisers for this study. And motion found that only 5% of ads became real winners. So roughly half received minimal or zero spend. And hit rate only increases with volume. So top advertisers ship 12 to 19 plus new evergreen creatives per week and achieve hit rates more than double those of smaller accounts. All right, cool. If you understand and are prepared to resource your team or your production partners against this idea of hit rate being 1 in 100, then the next step to effective creative production for meta is understanding the creative demand formula. So this is how we take a advertisers monthly spend target and tell them exactly how many ads I need to make for the upcoming month against that spend target. You can do this if you have a yearly forecast, you could do this for the whole year and be set and understand, okay, in January, I need to make 20 ads in February, I need to make 30 ads, Marches peak season, we're launching this product, production's gonna go up by X amount because we're gonna be spending X amount more, right? So you're able to look ahead and plan ahead on production well into the future if you have an accurate forecast that you're budgeting against. So the creative demand formula is your target spend, minus your current spend times your carry rate, and they go into each of these in a moment, divided by your expected spend per new ad. That will give you the number of new ads needed against the spend forecast that you have set for any given month. So let me go over the definitions of these because they're very important. So your current spend is the estimated end of month spend. So how are we, you know, it's July 27th, where are we going to land the month of July? That's your current spend. It's a month to spend plus the status calendar, projection or another fallback if you don't have this, is just to take your month to date spend plus your daily run rate, adjusted for the day of week pacing and any planned moment spikes that you have. Your carry rate is your computed carry rate per ad and that it's aggregated. So for every brand in your trailing 60 day active inventory, we measure whether it survives into the next month or not and how much it's spend it actually retains. So you're really measuring how many of these ads can live past this month. That's your carry rate. And we're able to measure that directly with the ad level data in stateless in the Facebook overview report. This episode of the e-commerce playbook is brought to you by Outer Signal. Outer Signal identifies the real person behind every order, flags the celebrities influencers and VIPs in your customer base and groups everyone else into clear personas. All of that then pipes straight into the tools you already live in. ClayVio Slack Meta Google, Sharper Marketing Lower CAC and the brand moments you would otherwise miss entirely. Here's two quick examples. Jolie ran an outer signal look like against their best meta audiences and got four times the sales at a 32% lower CPA. Magic Mind discovered Kim Kardashian had been a customer for two years. Center of Care package. and got an Instagram shout out worth millions. There's certainly a VIP buying from you right now. You just don't know it yet. If that sounds useful, head to outer signal.com/thread. You'll get your first thousand customers in rich for free, plus 50% off your first two months when you upgrade. Once more, outer signal.com/thread to discover the VIP's buying from you. And then expected dollar divided by new ad. So how much spend could you count on for every new ad that you launch? We measure the spend it absorbed in its first month. So the brand level expected dollar per new ad is the average of those per ad outcomes distributed across whale, winner, testing, and then dust tiers. So then this formula tells you the gap between where you're existing creative will land and where you need to be and then divides that gap by the productivity of each new ad you introduce. And so what's really important is to really understand more about our carry rate by account relative tier. So this is essentially the survival percentage versus the spend retention percentage. And these are tiers defined relative to each accounts own meat. So basically whales have a survival rate of 82% and they have a spend retention rate of 70%. Similarly, winners have a survival rate of 71% and then winners have a spend retention rate of 90%. So the point of this is for you to understand that we're not treating every ad as equal carry rate. We understand that whales behave differently than winners, behave differently than testing and behave differently than dust, right? And so those are being sacked into the ad plan for the upcoming run. I mean, you can see, I know obviously accounts where whales are active for years on end. These are being factored in to a part of the spend plan because we can count on them taking a certain predicted percentage of the upcoming month's ad spend. So really, the net effect of this is that roughly 70 to 75% of your current spend carries forward on its own. And then the other 25 to 30% must come from new creative value introduced, right? So brands that actively push budgets on existing winners can carry 85 to 100% or more of prior spend forward. The actual observed range is 65 to 65% to 122%, but the highest carry rates belonging to brands that scale budgets on proven performers before reaching for new production. So a little bit more about what the data says about expected spend per ad and why this matters when we're calculating your carry rate. So we know that whales are only going to be about 1% of the share of the new ad you produce if you make 100 new ads and one of those might be a whale. However, there'll be 41% of the all new ads spend, okay? So the number of ads is just is totally disproportionate to the actual percent of ad spend that they claim in the ad account. Same with winners, 5 out of 100, you might find five out of 100 ads are winners, yet those winners will take 34% of all new ad spend in the ad account. So that's factored into your carry rate as well. Carry rate, just to close out the section, carry rate is how we calculate your number of new ads needed against an upcoming spend target. And then what's really important to understand is the creative score metrics that go into evaluating the health of any given ad account. So there's five metrics, each mapped to a specific variable in the math. And three metrics specifically drive carry rate. So you could be a brand that is on benchmark for carry rate, meaning 75% or more of your existing ad foundation are going to carry into the next month. That's a healthy carry rate. You could also be a brand that is experiencing a 30% carry rate because your creative score metrics are extremely low. Your state of health is poor and therefore your carry rate is also poor. So the three metrics driving carry rate are your evergreen share. So this is the percentage of ads running consistently for more than 30 days. Your spend degradation, this is your average week over week spend change after the ad launches. So does the ad improve and spend an efficiency and volume or does the ad degrade and spend over time after it's launched and how quickly that happens? And then your ad concentration. And so the percent of total spend sitting in the top five ads, the higher this is, obviously the more risk is introduced, right? So if a very, very high percentage of your total spend is sitting in your top five ads, that introduces more risk that your account could quickly degrade if one thing were to happen to one of those ads. A product goes out of stock. You lose rights maybe to that creator's handle. Someone on your team says that you have to retire that ad for so and so reason, right? We've covered three of the five creative score metrics and I'm just going to go over really quickly exactly how each of these impact carry rate so your evergreen share directly measures the survival rate. So an ad running 30 days is by definition an ad that survived, which means the higher evergreen share you have, the higher carry rate you have, which means a smaller gap for new creative production to fill. Spend degradation measures your spend retention. So how much of a surviving ad spend holds up as it ages? So a brand showing 39% spend degradation has surviving ads bleeding almost 40% of their spend every week. Therefore their carry rate is going to be very low and because their spend degradation is very high, right? And then ad concentration determines your spend mix. So well heavy accounts carry at 59% benchmark tier while mid tier distributed ad accounts carry out of 64 to 92% tier. So high concentration means your carry rate is hostage to a handful of ads and then low concentration, which means low concentration means your carry rate is a lot more resilient. So then there's two metrics that are going to drive the expected spend per new ad that you watch. You have your zero revenue rate, which is the percent of ads generating zero revenue in the period. And then you have your robust degradation, which is the average week over week efficiency change after launch. So zero revenue rate is by far the most direct predictor of how efficiently new creative converts into spend. For example, a brand that a brand at 30% produces a creative that algorithm wants to distribute and then a brand at 65% needs two to three times more ads to fill the same spend gap. So the higher your zero revenue rate is, the higher your production necessity is going to be because the worse your carry rate is. Or sorry, the lower your expected spend per new ad is. And then robust degradation really modifies the expected value of new creative over time. So a brand with 5% robust degradation has winners that stay efficient as they age and they can really carry forward into future inventory and performance, whereas a brand with a very high robust degradation is going to need an outsized amount of ads because they have a low creative health score. So the creative score really makes the difference between accounts super drastic. You could see, you could have a brand spending 200K a month on meta with a really great aggregate creative score needing only needing 40 new ads a month. And then you could have a different brand also spending 200K a month on meta with a really poor creative score and they need 200 ads a month in order to find winners. So we've talked about hit rate. We've talked about understanding your carry rate. We've talked about understanding your creative score and how that impacts the number of ads you need against a spend forecast. Now there's three, there's only three levers that can impact the actual performance of your ad account. And so continuously polling on these three levers in a systematic way that gives you the number of new ads you need every month is how you win. How you honestly compete against all the other brands that are doing this better than you. So lever one, mining historical winners. So this is the work you should be doing before asking for or producing anything new. Revive last year's top performers, revive the last 30 days, top performers, re-enabled pause winners launch existing creative to new landing pages. I promise you there's gold in there that people just sit on and they always think it has to be about new ads. Number two is make better ads, not just more ads. So volumes sake production just for volume sake is gonna get you nowhere. That's really the first layer to understanding and committing to the process. But the second layer to that is understanding how to make better ads and what for. So we think of this at CTC as product persona at pain point and then where's the ad going the URL. So the combination of those four inputs should create ads that are actually going to fuel the right products in the right places. So I'll say that again, it's product persona pain point and then URL. So what product are you making the ad for? Who are you talking to? What is the pain point that you're addressing and then where is the ad going? If those four inputs can create a a diverse set of ads across formats, so videos and statics and also across IDs, actual entity ID and the ad account, you're gonna be in a really good spot as it relates to quality and not just volume. The third layer in lever is the catalog layer. Catalogs, catalog ads are so overlooked across so many brands. And the truth about them is that they run on different math than other ad types and they run on a different cadence. And they need to be carved out before the formula applies. So when we're creating an ad claim for a CTC client, we're taking out the catalog layer from production. Those should not be included in the number of net new ad units that you need for an upcoming month. These are just inventory, right? So every other section of this canon treats and adds an actual creative identity, whereas catalog ads typically, especially with high-scu account brands, are routinely the highest robust line item in an ad account and routinely the most under-discussed in creative ad planing because they don't actually get brief, designed or tagged the way that other creative ads do. Catalog ads inherently have different math and all other ad types. And what we just talked about, the creative demand formula and all the metrics associated with it are about ads that have creative identities, that fatigue get replaced and need monthly production to actually fuel them, right? Whereas catalog ads invert all three of these assumptions. They persist, they recombine and they compound very fast. The carry rate of catalog ads is effectively 100% across any aggregate data that you look at as long as the feed and the product sets persist. So the unit is the product set plus the dynamic overlay configuration and there's so many ways to take your catalog ads and actually enhance them for potentially better performance and recently met us done a lot of studies on these about dynamic catalog video ads, for example, or even just simple sticker or motion overlays on your catalog seed. A lot of things you can just do with AI or through AI partners. But what's really important is to always carve out your catalog spend. So what we do, we exclude that from the creative demand calculation, it's tracked as a separate line and the formula compute, Tomnie Crayv ads any brand needs exclusive of the catalog layer. Many, many advertisers have looked at the catalog layer as a long tail retention layer historically, which is great for, you know, it still is very, very true. It serves your Laps customer files, your site visitor files, a band and cart, you know, what other folks might call middle of funnel or a bond, most funnel audiences. However, catalog ads are really, really under leveraged as an acquisition lever and the brands that are figuring out how to strategically use it as an acquisition engine are winning right now. So that's running your catalog ads with broad audience, Daba and Advantage plus catalog across your whole portfolio and being strategic about those product sets and those specific catalogs that you're running. So now that we have a very clear idea of why ThitRate matters, how our carry rate informs the number of ads we should be producing, how our creative health score impacts our respective carry rate, it all comes back to the unified workflow that put these pieces together. So the creative demand system ties everything into a single operating commitment, really, that all of the best meta advertisers are subscribing to. So it's really just five steps and then committing to that on a monthly basis for both your evergreen production and your moment based production. So number one is total demand, running the creative demand formula with your 60 day carry rate and expected dollar per ad from the audit, moments versus evergreen. So score the historical calendars through promo and LTV, back calculate add counts from expected incremental spend and protect your evergreen foundation. So no, do not over index on moment production and neglect your evergreen pipeline. Number three, products, moments follow the moment. So evergreen use your product matrix, roll assignment and weighted distribution across the products that matter most and then angles and treatments. So format split from motion, write the months angles and multiply across the brand's treatments, meaning what should our video production look like, what should our static production look like, what should our UGC production look like. And then ultimately at the very bottom layer of this workflow is assigning these things to producers. So who is producing this number of moment ads this month? Who's producing this number of evergreen ads this month and getting really clear on who's making what? Get those into the pipeline and get them into the add account on a regular basis. Don't fall trapped to the idea that over analyzing or over strategizing a single ad is going to get you the outcome you need. Rather just commit to the system, get the ads in the add account and you will find the winner is because the math is in your favor. (upbeat music) (upbeat music)