You Can’t Do PPC Without Doing This!

Everybody, welcome to Module 2, where we're going to be talking about how Google works and bidding effectively. We got Brandon Bateman here with Bateman Collective and we're doing our PPC Masterclass on PPC, right? You know, I think one of the things that a lot of people are using PPC, it's a very effective strategy, but not everyone has the experience or the foundation necessarily to, you know, get either asking insightful questions or really getting the nitty-gritty. We have a high level, we understand how it works, you know, is that yellowish background or the different background, but really how does this work at a deeper level? So let's talk about building a foundation for a high level strategy. What are the things that we should be considering? What should a business owner as using PPC be considering? Yeah, I think there's a ton. And really the goal this episode is to build that pretty solid foundation. So the thing is sometimes we like to jump straight into strategy, but if you don't understand kind of the basics of how the platform works, then the strategy doesn't make sense. So this is going to be like, I'll openly say this is going to be like, we're going to do six episodes here and this is the most boring of all those episodes. I'm going to try to make it as engaging, as interesting as I possibly can. But this is straight up boring. We're going to talk about technology and how it works, but it will make all the other ones make a lot more sense. And this is the critical knowledge that a lot of people are missing where they keep on like falling into holes with their PPC strategy. So that's why I'm really excited to do this. So there's going to be other things that are a little bit more practical that we're talking about later, like how do you optimize for the quality? How do you do your budget strategy? How do you do location strategy? All that kind of stuff. And this is just a foundation that you need for that. So that's what I'm excited. You know, like Paul Sparks, we do the Wheel Club together and we talk, you know, one of the challenges that we have as entrepreneurs, right? Because we're fast movers. Because we always want to jump to strategy and execution. Let's go to trade the strategy and execution, right? But, you know, what we talk about inside the Wheel Club is we got to take a step back. Now, let's look at things like, you know, what are your, at the highest level, which isn't PPC necessarily, but the highest level is like, what is your programming? Like what, like, how are you wired? Why do you believe what you believe? And if you don't know these things, like, you're going to do some things sabotage yourself without knowing, right? So we talk about that. And then we also talk about first principles. Like, what are the ultimate realities? Doesn't matter how smart and strategy, whatever, like the realities of reality, right? And then you got your belief system. And then once we have a belief system in place, now we can talk about how are we going to execute what you actually want? And we can't execute what we actually want if we don't understand the strategies, right? Because what people want to go through maybe, they want to go straight into tactics, techniques, tools. I want to do this. I want to do that. But without understanding all the strategies, how can you possibly apply the right strategy? It's true. And oftentimes people will just tell us, like, just do whatever works for that guy. And then they just fall on their face with it. Right. Right. So they're just like, well, it works for him. It must be fine for me. But like, you have to understand yourself, like your business and how you operate. And it's going to be different for everybody. And I hate being the guy that says that, I wish I had like a copy and paste way. Or it's like, I'll just do this and you're going to kill it. But it's a, you'd be surprised how often we have like the same strategy doesn't work for two clients. And then we, but it works really well for one and then really bad for another one. And then we change what it is for other one. And then that works for them. But then we change that with the first one, hoping they do even better. And then they do worse, right? Because there's different strategies that are working better for each of them. Well, and every business is different. Right. We want to think it's all the same. Right. Like, hey, I want to do what Doug Hopkins is doing. Right. Or I want to do what Eric Brewer is doing. Right. I could just go out and say these things. I don't run their operations. Yeah. There's a lot more details here than a lot of us realize. So let's just start with the foundation of how Google works. And I'll start like really, really simple. And then we'll, it'll get really complicated, really fast. Right. So people, they have desires. They go to Google to search for those things. The moment that they click the search button on Google, there's going to be a bunch of results generated. And in case you're not familiar, I actually have talked to some people that are like, I don't get PPC ads. I guess you do. You just don't realize their ads. Because it used to be that like Google highlights these in yellow and says, hey, these are the ads at the top of the page. And then over time, they've just slowly made it harder and harder to tell the difference between PPC and organic results. Yeah. Well, they've had a company mission of don't be evil. And then I think at some point, one of the meetings they just removed that part. Did they legitimately have a don't be evil company mission? Yeah, when they found it, it was don't be evil. Don't be evil. But it's no longer, no longer on their list of things to do. That's so funny. Yeah. I didn't know that about Google. So maybe in the spirit of not being evil, they used to highlight the ads. And then, and then now they just put this like tiny little ad symbol next to the PPC ads. And then the organic results look almost exactly the same just without the ad symbol. Right. So a lot of people don't even realize their ads. Right. So we're usually going to see, so you could make searches on Google where there's no ads just because there's no advertisers looking for those searches. But if you're searching like sell my house fast or we buy houses and guarantee you, there's people looking for those searches. Right. So then you're going to see four ads usually at the top. That's the maximum that Google will allow. And then you're going to see a bunch of organic results underneath that. Potentially after the Google map. Yeah, potentially after the Google map, which interesting update there, there was a core algorithm update to Google in March. And the percentage of the time for a search that's localized in this industry that the map pack is showing up is down by 20% after that algorithm update. So Google is more favoring the organic results over the Google business profile results, which is fascinating and throws a lot of SEO campaigns out there for a complete loop. So that's a little bit less than it's actually if you look at it like net net, it's kind of like a positive for PPC and it's sort of a negative for SEO from a Google map pack standpoint, although SEO otherwise probably gets a lift too. So yeah, that anyways, it's I know that's kind of fascinating. So what happens that a lot of people don't realize happens the second that you search, the second you hit enter, essentially what happens is Google will send out a ping to all the Google ads accounts and will basically say, this is the person that's searching. And that includes a lot of information. It includes like, what did they search right now? It's also like all the other information associated with that person, which is like other websites that they browse the content on those websites, other searches that they made yesterday, the day before, which is a lot of intent stuff, right? I just came here to see you in Phoenix. Do you think Google knew that I was going to come here to see you in Phoenix? Yeah, we got to reading your Gmail. Yeah, they read the Gmail. They know that I searched on Google for flights to Phoenix. They see my likely they are connected with companies that see my credit card history and I've got a purchase to flight. Yeah. Like there's a lot of reasons that like Google knows that about me like that's that's really really insightful, right? So all that data kind of comes together and this data is so many things. The best way I could describe it is we know that there's tens of thousands of data points per person. Obviously brand new account, Google knows less, season to account, it knows more, but there's a lot a lot of data, right? All that data is used and then all these accounts, they kind of get that ping that says like, hey, we've got a new person that you might want to advertise to here and then they all come back with like their bid on what they're willing to pay for it based on their calculations that they do on their side. So that's kind of the basic foundational piece. So all these bids come back in and there's also the element of quality score if you've you've ever heard of quality scores. It's honestly a little bit tricky, but it's basically like if you do the things that Google likes for you to do, then you're more likely to be what they consider a better quality advertiser. Like let's just say your landing page loads really slow. So people never get it loaded and they click back, Google doesn't like that, right? So they're going to penalize you. All right. So let's just say we take quality score off the table. Basically, what's happening is all these accounts kind of put in their bids and then what's going to happen is the company who spends the who's willing to pay the most money for that click, they're going to show up number one company that's willing to pay the second most money, number two third most, number three fourth most number four. And then whichever one gets clicked. So let's just say the person clicks the top one that's going to cost more money for that advertiser. And then if they click the one that's on the bottom, then it's going to cost a little bit less money for that advertiser. So that's kind of the order of operations and the kind of things happen. Does that make sense like on a foundational level? Yeah. Yeah. You're saying like it sends it out as I kind of when you're saying that I kind of picture like the the the new guy that walks into onto a card dealership. Like you've got a new one right in all the car guys are. Yeah. You look like what's he wearing. Yeah. Right. So is he is he likely to buy a car? Right. So that it's it's very it's very similar. Right. So they use all that data to do that. So common misconception about PPC is the goal is to show up number one. Like a lot of our clients like search on Google and they see their ad and like the third position. They're like, well, I must be the third best advertiser in my market. If I'm going to be in the third position, it's not true. Right. Because because basically what's happening here is there's I'm trying to think of the best way to describe it like there's some advertisers that are going to choose to go after something someone else could be like, I know that's not actually worth that much money. I'm not going to bid that much on that. Right. And maybe they don't win that click in that circumstance. And is that a problem? Maybe it's not right. Right. Advertises that spend more money are going to show up higher more often. But so much of PPC is actually the science of bidding. And the science of bidding is basically how do you value that inventory when people are searching? And I kind of think of it like I guess you could think of it just how we underwrite a house. You underwrite a deal. You think well, what zip code is this house in. Yeah. And where is it? Or you think like how many square feet is it? How big is the lot? How old is it? How many bedrooms? How many bathrooms? And all those things you use to kind of say roughly what is this house worth? Just like all of that data that you have from Google about like what do they search historically and what kind of a fin and days do they have and what are the psychographics and what is the key word that they're searching right now? All those things are somewhat predictive of the value of that click. So each of these accounts is basically underwriting the value of the click and then they're trying to pay for it. I think a common comparison here is comparing this to real estate and I'll show like where people like go wrong sometimes. So I've noticed a lot of people that like you mentioned that episode with Robert Wensley with that clip that went viral of like you'd pay $2,500 for this lead. I've noticed a lot of people that I've talked to have taken that kind of the wrong way and just that the whole goal of PPC is to find the best quality leads and who cares what they cost. Right. That'd be like me coming into like let's just say I'm like the new guy and I'm coming to I'm coming to Phoenix Arizona and I'm like I'm in a wholesale and I'm just saying you know what how does a wholesaler make a lot of money? They just sell houses for a ton of money. That's how you get good spreads. You have to sell really high. So I'm just going to find the most expensive houses I could possibly find in the market and I'm going to go wholesale those and that's how I'm going to make lots of money. Right. So that wouldn't work if I'm just like you know what this just fine. Let's just find the most expensive possible houses and I'm just going to buy those and that's how I'm going to make money in real estate. Right. Probably not a good strategy. No. On the other hand you could say well wholesalers they make money because they buy low. Right. This is this is how a lot of marketing agencies approach this. Right. Where they go and there's like I want to show my client we're getting so many impressions. We're getting so many clicks so much so many leads. Mm hmm. Whatever. So I'm just going to try to focus on how do we buy the cheapest possible clicks. Right. So I'm like I'm coming to this market of Phoenix. I'm just going to look for the cheapest stuff around. And is that a good wholesale strategy? No. Right. Because I might look at this house and say like oh it's only 200 grams. Maybe it's worth like 150. Right. That's that's not a good strategy. So what you have to do is you have to take into account like value and cost and a lot of people think this is most of keyword pace. It's not like keywords like the zip code. It tells you a little bit. It doesn't tell you a lot about like what this what this click is worth. Right. So so the way that this this works just like if I wholesale I'm not looking for like really high value houses or for really low cost houses. I'm looking for houses that have a large discrepancy between the value and the cost of the property. In other words I'm looking to buy it a discount usually a certain percentage discount. Right. And I'm going to underwrite those properties and then I'm going to buy them at 70% of ARV minus repairs or whatever my formula is. Right. Like that seems so simple. That's how we do with real estate. Meanwhile people then go into PPC and they're like I'll just buy the cheap stuff or like I'll just buy the really expensive stuff because that's probably worth a lot. And what they don't do is look for deals. That that's how companies actually really succeed with PPC is that you buy clicks for less than what they're worth. And knowing what they're worth is like half of the game PPC theoretically if you bid really really well on PPC all this stuff that most people care about doesn't matter anymore. Like I could I could have a keyword that's not that good. Right. Maybe it's not the right lead quality. A lot of people would say don't target that. Well what if I bid right for that? What if I know that it's worth hurting anything and then I bid according and I can actually get it for a discount compared to what it's worth. You know could be worth something to me. Right. Or on the other hand like you know they're like in Robert Wednesday's example if there's these leads that are very very valuable would I pay a lot of money for those? I absolutely could and it could be totally worth it. Does that make a little bit of sense like this concept of like valuing traffic? So for example right you know in Phoenix you know it's not unusual for a cost per click to be 40 bucks. Yeah. So we might say well you know if someone's saying what's my house worth right that's only worth five bucks. Correct. Well you're saying the argument is like it's worth paying a dollar. If we know it's worth five. If we know at five dollars that still gives us a significant return on investment. It's still worth bidding five or it's still worth five dollars free market value. It doesn't hurt to bid a dollar to get that. More or less. One hundred percent. There's no such thing as like a bad click. There's just a bad price for that click. Now some clicks are so bad the bad price. Like you could be like you could be a fraction of a penny and you're still paying too much. Right. And then you probably just won't get them at that price right. So practically like there is like a zone that you just don't go into here. But and I'm not necessarily saying like the whole game here is like you go after cheap clicks and get them even cheaper. What I'm saying is in every market investors have different strategies. There's going to be that one guy that's like this is your competition. There's going to be the one guy who's like I'm just picking all the best key or as I'm just going to pay whatever it takes to be number one on that. There's always that guy because he just thinks it's a great strategy because he's just like let me just dominate and dominate sounds great until you're out of money. And then it's not as fun anymore. Right. And then there's somebody else who's going after like super cheap traffic and stuff. And where you find your best success as a PPC advertiser is going to depend on where the weak spots of your competition are. If they're really good at buying those high value leads, then you're going to have a great niche in those medium value leads that you get for really cheap costs because they're not competitive or maybe they're just going for cheap leads and then you just know like well they're only bidding $30 for these clicks. And if I pay $100 for these clicks and I get just the right ones, that's going to be really valuable to me. The key is that you bid according to value. Right. Yeah. And that's how you get the return on investment. That's how you get a return on investment. And that's how you make it safer. Because if you know what these things are worth and you bid the right amount of money, then it will work out. And like like in Robert Wednesday's example of like if we want $10,000 per contract and we know that we can close one in four. The thing is almost nobody has that certainty on their numbers. But if you work with a good company, they can have a lot more certainty. So something that we do with all of our clients is we'll actually model out before you've actually been to this exercise. Do you remember like when we started your PPC campaigns and we looked at what kind of return on investment do we want to get from the campaigns. And then we worked backwards. We reverse engineer that return on investment. We said if we're going to get there, these are the things that would need to happen along the way. We should be getting leads of roughly this quality, roughly this cost, et cetera. And then you can see how things are tracking according to that. Because people say like, oh return on investments is the only thing that matters in a marketing campaign. But you don't realize that to get statistical significance for return on investment costs a ton of money. And by the time data, which requires a ton of money. Yeah. Yeah. I hired a data scientist recently to answer one question for me. That question was how much money do you have to spend on PPC to know if it works or not? There's a really hard question to answer. You might be kind of curious to see like how we went about it. So we basically said, like I'll compare this to something like simple that we all understand, right? It's like flipping a coin. So here's an equivalent question the way we'd have to phrase it for flipping a coin. So you'd say like well, we're going to flip a coin. And every time we flip it, the coin itself is going to have a 50% chance of getting heads, 50% tails. How many times do we have to flip the coin to at least have 90% confidence that it gets heads at least 40% the time based on the stats proving that because you have to choose kind of like your confidence interval and you have to choose your margin of error. Yeah. So we did that same thing. We basically said assuming and that's assuming the coin actually works. Right? So what we did is we said for a PPC campaign, assuming it's headed for a five-exert turn, how much data do we need to actually prove that we're getting at least a four-exert turn? In such a way that nine out of 10 times we're going to be right and then one out of 10 times we're still going to be wrong. All right. The answer, $144,000 for the average investor. It's how much you'd have to spend on that campaign. Well, here's the thing about this. Like people sometimes like get a little mad at me for saying this. Like why is PPC so expensive? That's that's not any more true for PPC than it is for any other marketing channel in this industry. But the reason it's like that is because there's data sparsity with the deals that we're doing. Like you're looking for really sparse outcome, just like how you wouldn't flip a coin twice and get tails two times and say like that coin doesn't work. It's never going to get heads. People do that with their marketing though. Right. It's the equivalent of literally flipping your coin twice and seeing it gets tails and just like right enough that coin like that coin is never going to get me heads. It doesn't work. The results don't lie, right? It's 100% the time it's gotten me tails. So why would it ever be different? Yeah. That's how people think about their marketing. But I thought that was super fascinating. So when you're doing that and then just imagine then you're segmenting deeper. So you're not you're not just doing that for like all of the marketing. Now we're saying like oh for this keyword. So now we need $144,000 per keyword. You understand? And then like we're probably running multiple split tests. So this gets like wildly, wildly wildly expensive. So everybody wants to think along the lines of like oh just you know what that's worth and then you pay that. But the reality is unless you have a ton of data that's not really practical. And that's where an agency comes in because we have a lot of data that that makes it like we have literally 200 times more data than you'll ever have and we still don't feel like we have enough. That's the reality of PPC in this industry, which is why I think it's so fascinating. Yeah. So then we have to talk about budgets or is this the budget component? Well, let's talk about how you get the like just just for building the foundational bit deeper. Let's talk about how you like do use this data to bit because there's going to be like two specific schools of thought on this. School of thought number one is manual bidding. School of thought number two is automated bidding. Right. You're acting like you're familiar with this. I'm sure you look in the basics. I think you did manual bidding probably back in the day. I did manual bidding with a third party tool that automatically changed it. - Okay, because I didn't trust Google at the time. - Yeah, yeah, okay. Yeah, and that's actually pretty common. I guess we could go deep into that. So the natural progression of how we think about this is like, okay, so we know that bids really matter. So how do you bid? 'Cause it's all based on this data that nobody will have enough data to have it anyways. So what do we do if we don't have enough data to actually bid properly? So the way that you do it, there's kind of two camps here. There's manual bidding and automated bidding. You'll find that in general, people tend, like let's just say you found a hundred of the top PPC marketers today and ask them if they do manual or automated bidding. 99 out of 100 are gonna say they do automated bidding. But just say you got a small business and you ask a bunch of marketers, more often they're gonna be doing manual. So there's kind of like, like this is like a holy war that exists within like the world of PPC. So it's like, it's a hard question to answer, like which one's better. I think the best comparison I have for you is like stocks versus real estate. You know, like someone will say like, oh, stocks are way better because I bought a property and I lost money in real estate. So I'm getting negative 20% returns there compared to 9% in the S&P 500 stocks are better. But like it matters how well you manage it. Like if I'm a horrible property manager then my returns and real estate are gonna be horrible. Like it's simple, right? Just like if I horrible at picking stocks, my returns and stocks are gonna be horrible, right? So that's where like so many people say like, I've tested that and that doesn't work and this one works better and like, it's like, well, yeah, of course you're doing better with stocks and real estate if you're a bad property manager. Like that's just natural, right? So that's kind of the thing that exists here. That what generally will happen. Also a lot of investors think manual bidding is the best way to do it. Because the word manual just sounds like more work and more work for the PPC company must be better, right? Yeah, it gets like manual. I feel like I trust that versus automated might not be as good. But here's the thing. - Or they might feel like, what am I getting, what am I paying for? - What am I paying for if I'm doing automated? Like because manual they picture just like, they're just like this dude with like glasses or like really long hair and like a sprite or something. Like just kind of like coding away PPC account. Like hours into the night so that they can like, like it's 11 o'clock and the metrics dipped a little bit. Hold on, let me just press these few buttons. I'm just gonna boost this game. Like that's what people picture when the picture manual bidding so far from the truth of how it actually works. But the, yeah, so those are the two schools. I'm most a fan of automated bidding. I think automated bidding will like to give you a picture of how deep we went into manual bidding. Like actually like, you could ask people like early on in my company. Most of the people that could be in my company listening to this right now, might not even remember this because they weren't there. We had, we used to have a manual bidding computer like a computer for manual bidding in the office. I bought an old computer from one of my employees and I, 'cause I wrote this whole like, I know a little bit about data science, not a lot. Enough to make a machine learning algorithm. Not enough to make it run fast. So I had this algorithm for manual bidding that literally took like three or four days to like run one cycle. So we got this like separate computer. Like this is our manual bidding like computer and we'd run the algorithm on all the data. Like so just, just like, I'm just giving you like a little picture like how deep I got into manual bidding and I still can't make it work as well as automated bidding today into day's landscape. Manual bidding was like the thing back in like, 2017, 2018, 2019 when I got into this, but it's not anymore. Yeah, well, I mean, I was doing it before then, 'cause I was doing like in 2012. Yeah, that's, that's when like manual bidding was the only way. Yeah, so I try to think, I think Marin was the one, it was the company I use. Yeah, have you looked at their market cap recently? No, last time I looked at it, they had expenses last year that were greater than their entire market cap as a company in the year that I looked at that number. There's numbers because manual bidding nobody doesn't anymore, except like these random like old school marketers that think that they have like the world figured out with their emotional way that they like to change bids and accounts. So it's, it's like they just like the power, you know, like I'm just pressing on specials. Hey, there is a lot like Blackjack more than a slot machine. Exactly, yeah, it feels like Blackjack, not a slot machine. Yeah. You know, if you had a slot machine with great odds, which doesn't practically exist, but if theoretically did, that's what automated bidding would be. Right. But here's the thing, it's about how well you do it, too. Like there's a wrong way to do it. And there's certain things that you need to get right. But picture like this, Google has those tens of thousands of data points per person. If you're manual bidding, you're just, you're bidding based on the keyword. If you use automatic bidding, then you can leverage all those other data points. I didn't know that. So automated bidding includes all the psychographics and things you were saying earlier and intent in previous search history. Yes. I didn't know that. It does. So here's, here's the best like comparison I can give you. So like we were just talking about our kids earlier. I have like a daughter that's two and a half. She just randomly thought of this one day. So it was a weird analogy. I'm sorry. But the like we went to a beach when she was like six months old. She had no idea where she was. She had no idea where it was. Right. Went to a beach again when she was like 18 months old. Right. And she looked at the sand. And she was like, this is sand. And she knew those things. So I thought like what changed from like person number one to person number two, right? It's just like the basics of the human brain, basics of the basics of learning, right? Because if you think about it, like a lot of people would say the data changed. I would say the data didn't change. Because if you look at it, like what did her eyes see when she was six months old versus when she was 18 months old? Turns out her eyes saw the same thing. Like they were like the same pixels, the same picture going into them. But her brain understood it differently. Right. Processed it differently later on based on learning that had happened, right? Because that's the definition of learning. Like we receive the same input as we did before. Yet we behave differently than we did before. That's how you know you learned. Not just like that you know something. Like if you don't actually do anything, then it's you. So that's the definition of learning. Is that now she looks at it? And she says like that's sand or like that's yellow, that's green, that's blue, right? So that's like the basics of like humans and how they work, right? So just just like that. Because I know like AI is this super big topic. Buzzword. Yeah, buzzword. Last time I was on the show, I think it was a buzzword. Because the thing is like people figured out language models for AI recently. Like chat GBT is like an amazing language model. Yeah. Turns out when it comes to numbers, computers have been better than us for a long, long time. Yeah. Like there's like AI, it feels like people think it just like started existing. We've been using AI and digital marketing for like a really long time. And then like predictive analytics for a really, really long time. Right. Because it's really good. Because no human can look at 10,000 numbers and make a decision. Well, it goes back to the definition of intelligence. One definition of intelligence is the ability to recognize patterns. Yes. Yes. Absolutely. And just like if we're just thinking of numbers, like let's just say you had a graph, you have x-axis, y-axis. And then you have things that are kind of clustered on there. You can notice like, oh, there's a few dots here. There's a few dots there. You're like seeing like how those things are grouped together. And the pattern's there. The way computers can do it, imagine there was like that's an actual form machine learning algorithm called a cluster analysis. That was the type of analysis that my whole bidding algorithm is based on. Computers can basically do that as if that graph had 1,000 axes. And they can see those trends in the data. Humans, they can't. They can't because I've realized that. No. So it gets really powerful. So just like-- but it depends on what information you give them. Like let's just say, we like gas lit my daughter and always told her that green is yellow instead of-- [LAUGHS] Which would be a horrible thing for a parent to do. Let's just say we did that. She would think that. Right? Or let's just say we never made the distinction. Like we never told her like green is a different thing. She just knew about yellow and blue. It would be like yellowish blue. I don't know. It's like that in between one. So there's the data that you feed it is really, really important. So when it comes to targeting, a lot of people, the first thing that they think of is, oh, how do I target the pre-foreclosures on Google? How do I target the probates? Whatever. Those are all data points that are features. That's like the data. It's like the sand grains that are coming into the eyes of the baby. That sounds horrible. Well, visually they can see those things. But then the data that we use to train Google without made a bidding is the data of what actually happened. Oh, you see all this. This is a beach. And the next time they see it, they recognize this is a beach. And then they go in the sandbox and they say beach. And you're like, no, that's a sandbox. That's a beach. So then they start to have these finer and finer distinctions and understand the difference between things. So if you do that right, you can actually train Google on the difference between a buyer and a seller, or the difference between a seller and a motivated seller. If you do that wrong, then you just end up completely wasting your money. So I hope that analogy makes a little bit of sense. But the way automated bidding algorithms work is they basically use all that data, far more data than we could ever use in our manual bidding scenario. And they use that to put in that bid. So then the game becomes not can I just like, can I as the mastermind decide that I really want to target this? So I want to target that. Or this keyword is not good because I don't feel like it's the right person or whatever. Believe it or not, there's-- we even have our best performing keyword right now. You wouldn't believe what it is. It's something that nobody expects. But it's all based on the data that Google actually observes in that circumstance. And then it learns and it gets smarter and smarter over time. So then the game becomes, how do I train Google? How do I get on Google's side? And how do I give it the right data? So I can get really, really smart. So it can underwrite my traffic. for me based on tons of data I'd never be able to see or be able to know about. Right. So that when a click happens or there's an opportunity for a click, I can bid just the right price so that all my competition they were underbiting, but I know it's more valuable. So I'm going to pay more or everybody else is paying for that and they're willing to pay 50 or 100 bucks to that click. But because of my data, I know that's not as valuable as they think it is. So I avoid that click. Well, and it goes back to, you know, people don't necessarily recognize this, but Google's job is to get you to spend money. And the way for them for you to spend money is actually for you to have success. More success you have, the more money you spend. So their job is to take as much money from you and me as possible. And the best way from the take our money is to give us success. And so they create automatic bids that help us be more successful. They make more money. Yes. 100%. It also, there's, yeah, we can go pretty deep into like the, because yeah, a lot of people do automatically think like, oh, Google just wants to like sell off all its bad inventory and stuff like that. It just wants to monetize everything it possibly can. And it wants everybody to have a similar to each other or return on investment as possible. That's basically like, I don't know the care. I actually ROI is, I think we just don't make sure that we're spending our money. That's true. If let's just say there's a landscape where like, like, this is why Google kind of handicaps manual bidding doesn't give all those people all the data that they could. Let's just say there's a scenario where some people just really know how to like nail Google ads and other people don't. It's worse for Google because these people quit and then these people don't pay that much. Right. So when Google wants more people there, so we have the auction process. Yeah, they want it to be pretty equalized. So anyways, I hope that makes a little bit of sense because it'll, it'll work into like our budget strategy and stuff like that. And it helps you understand like what the real goals with PPC. Like the goal isn't to show up high on the page. It's not show up low on the page. It's not to, so some people are like, oh, first position strategy. That's the way we do it. Well, that's not right. Third position strategy. That's the way we do it because you said the first positions over value. Like, no, not all the time. Like sometimes like these clicks are worth $100 and then the first position is like $20 and then the second is 10 and then the third is five. Right. Go first. Yeah. They might be thinking first is best because organically the first result is if you're not paying for a result. Yeah, but like first, like something a lot of people don't realize you make a Google search right now. You see who's at the very top and who's lower. That person at the top is the person with the worst return on investment. Not the best because they're paying more than those other people. Yeah. Now that doesn't mean that's not somewhere you want to be. Like that's, that's a volume game. Right. Like it should be a variety. Yeah, it just depends on what kind of business you want to run. Like, here's another like fund marketing fact. So you can actually model out dimension returns in a PPC campaign and you can from that leverage like certain information about the business like, like how much do they pay like their team for different things and stuff like that and essentially forecast out like a profit maximizing budget. Gotcha. What would you think is a profit maximizing return on investment in PPC? Profit maximizing. Yeah. I mean, we're talking about per deal or just for an organization. How much? ROI. I mean, we're trying to maximize ROI. I guess I'm just looking at that you want to get cost per contract as low as possible. Yes. Okay. So let's just say you do that. Let's just say it was 10 grand and now you get it down to two grand. So now what? Now you are left with the law of dimension returns and you look at, because here's what people don't realize. People ask like, what is the cost per lead in this market or that market? There's no such thing. Every cost per lead exists in every market because every bid exists in every market. Right. Like, you can go into the heart of LA and get leads for $50. You just won't get very many at all. Or you might not be in business. Yeah. Like, but you could bid that and like your bid will find a click eventually. Oh, yeah. I remember what I used to do. I don't think this will work anymore. What I used to do was I set my keyword bid at like $25. My daily budget at $10. And so I would consistently get the $10 spent for that keyword because at some point all my competition, however, he spent their budget for the day. Yeah. Right. I'm not I'm not a proponent for the strategy. It's just something that's worked for me over 10 years ago. I think it worked because the game was really easy back then. Yeah. But that's yeah. Like there's there's some merit to what you're saying. And it's just like here's the thing like I can go into a market where the average person's paying $200 for a PPC leads and I could bid $2,000 and I paid $2,000 per late and I would probably clean up from a lead volume standpoint in that market. Right. So it's just there's this law of diminishing marginal returns for sure where like because what happens you're going to go further and further up on the page close to that first spot or on stuff where you wouldn't have shown up now you're showing up right because it's like, oh, that clicks not worth that money. Well, now it is because you got to spend the money, right? So people ask me what's the cost per week in this market versus that market. Believe it or not, I actually have broken down by county the exact cost per lead based on all of our client data in every single county in the United States. One time my sales team got a hold of it and it was ugly because they were telling people like, oh, this is what the cost per lead is and that market and stuff and like that's not how it works because like yes, maybe in that market right now our average cost per lead is $75. But if you go put a $10,000 amount of budget into that market, it's going to be like $600. Right. Right. So that's the initial return and in the lower cost per lead is reflective of us not having now to spend there. So the, I guess the main point of what I'm saying here is every cost per lead exists in every market in every situation. The real question is add to giving cost per lead how much volume can you get and is it practical? So then the back to that question of what is a profit maximizing return investment? Let's just say the goals get cost per contract as low as possible. Okay. So we got our cost per contract from $10,000 and now we're, let's just say $1,000 in a single market for cost per contract. We could do that in Phoenix. I'd be really happy. Yeah, and unfortunately it might not be likely. But I mean, you could, that's the thing that's I'm saying here. You could, it's just how much money would you be able to spend? Right. And it's probably a minuscule amount of money, right? So, so then, but let's just say, let's just say we make it happen. Let's make it a miracle happen. We get down to $1,000 per contract. What's the next play? Well, the next play is we realize we're running a 20x return on investment. We need to scale probably. So what's going to happen is we're going to increase our cost per contract. Yep. Cost per contract is going to go up. So what's going to happen is now I'm going to trade efficiency for volume. So cost per contract is going up. And at the same time, my total number of contracts is going up. So now I'm at a 10x return, $2,000 per contract. And I'm getting a lot more volume. Now what do I do? Well, I could probably become more profitable as a company if I again trade efficiency for volume and keep on going up. So that just goes up and up and up. And at some point, it peaks and you reach peak profitability as a company. And then when you make a move from that point, it's like, well, now I'm actually just not making more profit because of it. So that point where it peaks on average is a 2.5 x return on investment. Believe it or not. A lot of people don't realize that. It's lower than a lot of people think. And if you're playing this game where you're looking for like three, four, five, six, seven x return on investments, you're playing an efficiency game, not a volume game. And you're not playing the game with how do you make the most money on the PPC? You're playing the game of how do you have this trade off between volume and efficiency? That skews towards being more efficient, which is a totally fine game to play. But yeah, a lot of people don't realize that. So you're talking about maximizing profit. You're talking about profit in a period of time. Yes. Yes. 100%. So like, if you want to maximize profit per month, for example, then 2.5 x is about the highest return on investment or that is high. 2.5 x at that point, you can't go any further because then you're going to be going down. Your profit will go down. Yeah. Monthly. On average. Yeah. It depends. It's fascinating. This is, I mean, you probably modeled it. But this one of those things is like a fun case study for game theory, right? Like that's basically what it is. This is a classic game theory. Mm-hmm. Yeah. That's like, if you, if you understand game theory really deeply and like some basics about Google, and you can actually like predict not just one, but like three, four, five steps ahead, what's going to happen in your market? Yeah. It's really fascinating. Yeah. So game theory is not generally a very entertaining topic. But if you guys are interested in it, a beautiful mind, right? John Nash was the, they made the movie out of them because he's the one that discovered it. Mm-hmm. Right. So if you guys remember that movie, that's game theory. But I talk about it in my sales training. But it's mostly applicable in my own experience, playing poker. Right. Yeah. I mean, game theory is a fascinating topic if you're a giant nerd like you and me. Yeah. Probably for most people it's probably not. Yeah. Yeah. Rob Wensley and I have had more than a few conversations all about game theory. Yeah. So it's a, it's funny when I learned game theory in college, I was like, okay, whatever. And then now I'm like, when you see it in the real world, like this is a, this is a real, this is a real thing. Yeah. And if you, if you understand these things, it's, it's really powerful. Yeah. I took an international business class when I was in graduate school and we went over it. Yeah. And so we had to learn it. Right. Yeah. I got a prize for this. I can't, I was like a Nobel Prize or I was like, it's got a basic, it feels basic. Yeah. So, but anyway, it's still, still good to know. Yeah. Yeah. So, yeah, just diving into that a little bit, like the practical implications. It has a lot to do with your strategy of where you want to be in your budget. Also, it explains a lot of how locations work and we're going to dig a lot into that in the next episode. There's one other thing I want to go through here, which is specifically like different types of campaigns and how that affects things because this is actually one of the biggest misconceptions. I know there are people who are listening to this that are going to save a lot of money because they're of what they're just about to hear. So, there's there are different types of keywords. There's one specific subset of keywords in PPC that's really dangerous. They're called branded keywords. You familiar with that? You ever heard of branded? I mean, this would be like, I think this is a hot button for Doug Hopkins, right? If I was to target Doug Hopkins as a keyword. That is just advertised. If you're in Phoenix, Doug Hopkins. Let's talk about it. I would technically call that a competitor keyword. So, let's just say, I mean, you're real estate business. Onward financial solutions. Let's just say onward financial solutions is running a PPC campaign. If the keyword that they're targeting is somehow how fast. That's just normal PPC. Yes, generic. If they're targeting Doug Hopkins, that's usually people call it a competitor, keyword, conquesting, keyword. It is technically branded by Doug Hopkins. What if you're targeting onward financial solutions? That's called a branded word. And those are one of the biggest areas of potential wasted spend in PPC, but also of value. So, a branded campaign, why would you do that? Why would you target that? Well, if you search anybody here who is listening, who's doing a ton of, especially if you do a lot of radio, TV advertising, anything like that, you get a lot of search volume for your brand. So, you search for that. What you're probably going to find is ads on Google on top of your organic listing. And that's not a good thing, especially on a mobile device, because now I have to scroll down a long way to find the actual you. And I'm going to end up calling those people instead. How do I know it's going to happen? Because every time we target a competitor, keyword or client will come to us and say, "I keep on getting calls for," it's like as if you came to me and said, "I keep on getting calls of people asking for Doug Hopkins." Once we get classically, is this open door? Open door is a great example of a competitor keyword. Yeah. Yeah. I appreciate you asking. So, we'll brought you to our website. Yeah, exactly. So, you have to turn this a little bit. But we want a target in Open Door. They just assume we were Open Door. Yeah, the same thing happens. But in-verse, if somebody else is targeting on-word financial solutions, so if somebody searches for you, you don't want them to have to scroll through four ads to then find your organic listing to find you. And then they should say that we're going to find you. Can you raise? Well, now there's a chance they call those other companies too. So now you may even have the same lead. You're going to get otherwise. But now, multiple people have the lead, which means like I have a lower chance of winning it. I have probably a smaller spread. I do win the contract. So that's why you would do a brand new campaign. But here's the other thing. I'll give this story. Honestly, I don't remember where this story came from. I might have just made it up. It might be, if somebody else deserves credit, I'm sorry to that person. I don't know where this came from. But it's more of an analogy than anything. Let's just say like you're a restaurant owner. You have, you want more people to come into your restaurant. You hire two people, right? And you give them flyers, unique to each one of them. And you say, pass out these flyers. And when people come into our restaurant, with your flyer, we'll know they came from you. And that's how we'll pay you. Right? So they give the flyers to the two salespeople. Those salespeople go out. The next day, there's 10 people that come into the restaurant with one guy's flyer. And there's a hundred people that come into the restaurant with the other guy's flyer. Right? So what do you naturally want to do if you're at the owner of that business? You say, well, this one guy who only got 10 people, he's not very good. The other guy who got 100, he deserves a lot of credit. Let's just say you then find out that the guy who got 100 was standing just outside the doors of the restaurant. And every single time somebody looked like they were about to walk in, he just handed them a flyer and said, go show this to them. And they'll give you a discount inside. Now who's adding more value to the business? The guy who was like out there on the other side of town, canvassing, convincing people to come to this restaurant. Maybe he was standing outside of other restaurants, right? The dog Hopkins. The example that you gave, right? Trying to convince people to go there, right? So obviously like with restaurants, we know this is simple. But the guy who stands outside the door and just like catches people as they're coming in, that's branded PPC campaigns. Because there's no such thing as getting a search for branded keyword that was from PPC usually. Like I don't search for on board financial solutions just because I just because I like for no reason, right? Like I saw your TV. Yeah, I saw your radio. I heard your radio ad. Maybe I got a piece of direct mail from you. Like there's some reason that I'm doing that. In those channels, there's a lot of credit. So what you'll find often happens is you have PPC agencies and what they'll do is they'll put brand and unbranded stuff together. And like I'll give you an example. Somebody that we both know was just auditing their campaigns recently. And they said, well, PPC is great for us. We get a four extra turn on investment. We're really happy with it. And I said, well, do you break out your branded versus your unbranded traffic? And they said, no, we don't break out branded versus unbranded. So I challenged them with the idea of like, why don't you try to break that out? So they break that out. And what they found is they had an 8x return, 8x return on their branded stuff. And they had less than a two x return on their unbranded stuff. So now the game changes a little bit because branded, what you have to recognize is that some of that stuff you were going to get anyways. I'm not saying branded doesn't have value because maybe you're protecting your brand a little bit, right? But generally, you want to assume that about 75% of those people were going to find you anyways. So when I see a $100 cost per lead on a branded campaign, I see a $400 cost for incremental lead on that campaign. So branded campaigns are one of the most common like wasted areas of spend because they often get overvalued. And I see a account all the time where they're paying just as much for branded lead as they are for unbranded. And the way it works out in the spreadsheet that the business owners looking at in the end of the day shows that PPC is really good. But the reality is that it's not just like that sales guy that just like if you had a flyer to people walking in a restaurant, like, yeah, I'm a fan of branded, but at it's severely discounted costs. That's exactly the ticket, right? Because you see the the URL is going to line up with your brand. So a, your Q or quality source are really good. And in B, they can see it like that's the company. And usually it is cheap. Sometimes it's not, we have a client where even if we put a $10,000 ad spend a month towards branded, we still can only hit like 60, 70% of their branded traffic because they have just so much and they're so wildly competitive. And there's other companies where you can just like get it covered for $200 a month. So it depends on how competitive it is and it depends on how much volume it gets. One thing that really helps you, like if anybody is listening to this and they're just trying to choose company names that are really friendly. So this kind of thing, onward financial solutions. It's a maybe because I don't know how many searches there are for like financial solutions. Probably a good amount, but we wouldn't do it unless there's onward. We have the plus. Yeah, onward. Yeah, like I'll give an example. We worked with a company and they had two brands. They had one brand for TV, one brand for like all their direct mail. They send it to the direct mail. I know it's wacky, but you and I probably know a lot of people like that in these kinds of situations. So one of their brands was, and I'm trying to like be like really in specific because I don't want to give away anybody. But one of their brands was like a location and then home buyer. So like an example for here would be Phoenix home buyer. The other brand was sell to and then the name of the person. Which one do you think had a really, really expensive branded campaign? Sell to. No. No. Oh, the home buyer is generic. Because it's generic. So here's the thing. Let's just say I'm the other guy in the market and I just have like these home buyers keywords and stuff like that. And it's like Phoenix home buyers is the name of the company. Well, I'm targeting your brand, whether I'm trying to target your brand or I'm not because the fact that it says home buyers in it matches to some other keywords. I have that aren't even like me trying to like take you down. It's just just the nature of it versus sell to Steve if that were a company. Like that doesn't accidentally show up when it doesn't accidentally match to a keyword that's trying to be something different. So that's one thing for you to think about is like how generic is my brand. The more generic my brand is, the more likely I have competition, whether I want to or not. Unintended competition. Yeah, exactly. Versus if it's like sell to Steve, then maybe I'll still have competition on it. But those are people that are like saying, I want to target Steve's traffic. Right. And I'm going to specifically go after it, which is actually a good strategy for keywords. If you can find other people that do like a lot of TV or radio advertising, get a ton of search volume. That's the right kind of stuff. Yeah, we have out here. So Doug Hopkins, Andrew the house buyer. For the longest time, we had 72 sold. Are they not around anymore? I don't think they're relevant anymore. I know at one point they had massive massive search volume, but the lead quality wasn't great. Well, they weren't great for people for buying houses. Yeah, ready for a realtor. For realtor, right? But they were everywhere. They were freaking sponsoring the stadiums and super bowl and all this other stuff. So, but yeah, I think that makes a lot of sense that the analogy of standing out outside, or else you know, that makes total sense. I think that was perfect analogy. Yeah. So yeah, I mean, so that's those are some things that you want to think about, like when you're thinking through like different keywords and stuff like that. And don't just think because someone came through your PPC landing page that PPC deserves the credit for it. I'd say if it's a generic term, PPC 100% deserves credit for it. If it's a branded term, usually the way that we treat those is that PPC kind of assisted that conversion, but it came from wherever it came from. You have to ask the person where they found you. That's the weird deal. Yeah, they're standing outside the door. Basically, yeah. And it doesn't mean that it didn't have, I mean, because I mean, that's like that's an aggressive analogy because it like undermines like the value that branded campaigns do have. I'm not saying you shouldn't run campaigns that are branded, just like you said, a heavily discounted cost. And sometimes it's pretty cheap. Yeah. Oftentimes the strategy that we use, you know, we talked about bid strategies. There's a type of automated bid strategy called a target impression share where you can target basically 100% of the time being the very top of the page. We'd often use that for branded campaigns where you're just telling Google, you have up to $1,000 to spend each month, but I just want to get the cheapest way that I possibly can while just making sure I'm at the top all the time. And oftentimes you'll find that to be pretty cost effective. In some cases, it's not. And that's when you got to start looking at other things. And then you have to start making trade-offs of like, I've had to have that conversation with clients before. Like I know because people get like ego-tistical with their brand, or it's like, I just got to be there 100% of the time. And at some point I'm like, okay, in platform we're seeing that we're paying $500 per lead that we get from that. Probably 75% of those people are going to find you anyways. That means we're paying $2,000 per incremental we lead we get from your brand. Meanwhile, we're paying $300 for fully incremental leads from the other stuff. It just doesn't make sense. And you have to control it. Yeah. Yeah. No, our ego can get in a way. I think that was, that was even a book. Right? So if you guys are still listening, you guys are getting time to value. You know, go to batmancollective.com/toolkit-disruptors to get access to all the different toolkits. It's fascinating. You showed me that on the screen, all the different things you can get from it. It's really kind of nuts. So batmancollective.com/toolkit-disruptors or go to batmancollective.com/disruptors if you want to talk to Brandon's team about any of the strides we talked about so far. And then make sure you tune into the next one where we're talking about location and budget strategy. So hope you're hopefully you guys enjoy this one and we'll see you guys on the next one.