Hey everyone, today we’re talking to AdEspresso’s CEO Max Chieruzzi about how to quickly optimize and A/B test Facebook ads. He’s got some interesting insights on setting up an online inbound marketing funnel and how to evaluate the cost of a click vs. the cost of lead and customer acquisition.
How Establishing an Agency Led to Launching a SaaS Company
Max started working as a tech journalist when he was only 18 years old when he noticed lots of people getting rich with internet-based businesses.
He started his own online business a month before the dot com bubble popped in 2000, but eventually morphed his business into a boutique web development firm that focused on big projects in Europe (like eBay, for example) that needed to scale.
They handled Facebook ads for some of their customers, but got bored working on products they didn’t have any control over.
They started shifting their business model towards what is now AdEspresso, and launched it in Italy in October 2013.
Soon after, they got accepted into 500 Startups, moved to the US, and kept growing there.
At it’s core, AdEspresso is a SaaS solution for Facebook advertising optimization to better manage the money companies are putting into Facebook, even if they don’t have the deep pockets to afford enterprise-level tools. It’s designed for people spending $2,000 to $50,000 per month on Facebook, and they focus heavily on making the user experience very intuitive and simple.
Beyond helping you create 100+ ads to split test within minutes, it also yields tips on which photos are costing more than average so you can cut them out and focus only on what’s providing the best ROI.
Their Smoking Gun of Customer Acquisition
Last year, AdEspresso grew 10x, and this year they’re growing 30% month-over-month.
Their revenue streams are nearly profitable, and they’ve gone from managing less than $100,000 per month in Facebook ads budgets to managing $2 million per month.
Their strategy for acquiring new, quality customers is all about Facebook advertising (they practice what they preach) and content marketing.
They’ve found that using a sales team isn’t a very good approach for them, because they’ve got to build up a lot of trust before a potential client will trust them with access to their Facebook budget.
They’ve realized that if users find them first via their content, it’s much more effective… and also an extremely cheap way to increase conversion rates and lifetime value.
With great, valuable content backing them up, then Facebook ads become a really huge weapon to maximize the distribution of that content and build out a robust online funnel.
Once someone’s visited their blog, they use Facebook to retarget them to an ebook, then they convert them into leads and use Hubspot to do lead nourishing and convert them into paid customers with time.
For Those Who Are Skeptical of the ROI of Facebook Ads
“Just try it,” says Max.
It’s not a medium like TV where you have to spend $100,000 just to test it. You can test it out with only $100 and see how things go.
Max says that with Facebook ads, their overall cost per acquisition within their funnel is more than 50% cheaper than sending people directly to a landing page.
The High-Level of AdEspresso’s Online Marketing Funnel
After acquiring traffic and converting them into leads (a good percentage subscribe to the product via a download), AdEspresso has two more big steps:
- To get the prospect to connect their Facebook advertising account so AdEspresso can get data on how much they’re spending.
- Start a 14-day trial during which they send out tips based on spend and how the users are interacting with the product to help them derive the most value out of those 14 days. They also host a webinar during that time to do a product walk-through and give general Facebook advertising tips to get them started. This 14-day trial period autoresponder sequence is where things can get a little complex, as we discuss at the end of the interview.
And after the trial, they’ve ideally been convinced of the value of the product and are ready to become full-fledged paying customers.
The Unique Part of Their Content Marketing
The fact that they do content marketing to acquire customers is not unique… lots of businesses are doing it.
What’s unique is that they’ve got a tool feeding them huge amounts of data about Facebook advertising, so they’ve got concrete proof to back up all the claims they push in everything they publish.
Creating Blog Posts & Images that Offer Value & Brand Appeal
Max and the rest of the AdEspresso team do an incredible job at not only creating good content for their blog, but also at creating wonderful, memorable images that are brand-friendly and grab attention.
For a huge post around 6,000 words, Max says it usually takes him a couple of days to write and research, but a normal blog post of 1,500 to 2,000 words can usually be done in a day.
At the beginning, he says, the image creation was really time-consuming, but now it only takes them a couple of hours. Max says the images also help them out in their Facebook ads, giving them instant brand recognition and higher conversion rates compared to stock photos.
The Cost of Email Collection on Facebook
To drive traffic to blog posts, Max says they spend around $600 to $1,000 per month, depending on who they want to target… whether they’re going after totally new users or interest targeting based on competitors.
For this, they pay around $0.10 per click.
But when they do retargeting ads based on people who’ve already visited their site, but didn’t convert into leads by giving them their email ID, their costs go down significantly to $0.03 to $0.05 per click.
Lead generation, or actually collecting email IDs is where it gets a little bit more expensive (but not much), and where they spend something like $2,000 per month.
When they use website custom audiences, their cost is only around $0.20.
But once they start targeting for ebook downloads, things get more expensive, with huge variations from country to country.
For example, in Brazil, they pay about $0.50 per ebook download, but in Sweeden, that cost increases to $2.00.
However, when they look at how much it takes to actually get a paid customer, the cost per acquisition in Sweeden is actually cheaper than Brazil.
Two Big Struggles While Growing AdEspresso
The first struggle Max says they had was scaling with Facebook advertising.
When you’re small and only have a $100 campaign and are acquiring people for $0.10, you thank you can easily scale the budget to get one million users, but then you realize as you scale your advertising, things become more expensive and tougher to keep the costs under control.
The other struggle was finding a great content writer to work with them on their blog.
He likes writing posts, but it’s tougher for him to be consistent, and they wanted to publish more than one blog post per week.
Working With (And Paying) Freelance Writers
When he was trying to find a good freelance writer to work with, the first thing he did was go to ProBlogger and put up a listing.
They had a huge response: 200 emails within a couple weeks, but the downside was wading through all the applicants and finding that a lot of them were low-quality people who sometimes didn’t even read the job description.
Then they used Inbound’s job board, which had much more qualified respondents, but not a very high response rate.
The solution he found instead was to go on blogs he loves and monitoring all their guest posts, since he knows they have a strict guest post policy to only accept high-quality people. He approaches these writers and asks them if they’d like to write for the AdEspresso blog.
He’s been pretty lucky with pricing, paying between $100 and $200 for blog posts, which is a really good price. Good internet marketing writers are hard to come by and often charge $300 to $800+.
Advice For His 25-Year-Old Self
“Immediately ask for the money.”
When he started AdEspresso, Max says he wanted the product to be absolutely perfect and complete before they started charging their users.
He kept delaying it, but being in 500 Startups was really helpful to fix that.
One Productivity Hack
“I don’t have any. I’m totally disorganized.”
One Must-Read Author
Max suggests reading all the books by Dan Ariely, including Predictably Irrational.
Dan is a behavioral economist and has tested everything about how people react to paid incentives, free products, and so on. Even if his books have nothing to do with online marketing, they are full of information you can use to improve your product.
Resources from this episode:
- 500 Startups
- Rand Fishkin on Content Creating Higher Lifetime Value
- ProBlogger job board
- Inbound job board
- Books by Dan Ariely
- @MassimoCw on Twitter
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