ET44- Making Millions with a Tool for Facebook
How AdEspresso Improved the Facebook Ad Process and Cashed in Doing It
Starting a great business is as simple as identifying a pain point in the market and stepping in to provide a compelling solution.
In the case of Armando and AdEspresso, it just so happened the pain point they found was part of the billion user Facebook phenomenon and as a result their sales took off like the rocket they strapped themselves onto. He shares with the process they went through sa well as some gret tactical Facebook advertising tips and why it can be such a great platform for building any business as long as you understand it and use it the right way.
We also covered his path to being a founder, content marketing and general entrepreneurship topics in a fun and informative thirty minutes.
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Matt: Welcome to today’s episode of Entrepreneur Talk Podcast. Today, I am chatting with Armando Biondi of AdEspresso. Thank you so much for taking the time to join me today. Like I ask everyone, why don’t you just kinda give me a little background on how you got to where you are today? I know you got a lot of experience in startups and small business and entrepreneurship. We probably don’t have enough time to cover it all but maybe the high-level view of how you got to where you are.
Armando:: My pleasure, by the way. It’s a weird story – my story. I actually started as a physical therapist. I graduated in Italy as a physical therapist. I work in house for 10 years and there, I specialized pretty soon in the startup phase of new companies. I saw the first million dollars, the first zero to 15 people, and the first couple of years. I did that several times and usually around the country. Then, I kinda got tired of that because I was within [inaudible 0:06:46.3] group in Italy which was the best of the country. I was one of the top 5. So, what do you do next? In the meantime, another thing that I love to do was I love radio and so; I wanted to become a radio speaker at some point. So, I started. I learned how to do it. I started going on air initially during the weekends. Afterwards, daily. My own show, talking, entertainment, news and stuff which was completely not related from my day job. Then, I wanted to see a little bit more of the world. I wanted to travel a little bit more. I wanted to do something that was more scalable faster. So, for every ounce of energy that you apply, you get the potentially highest output possible. This was, of course, technology. This was around 2010, I would say. Then, my first technology and then AdEspresso which I co-founded with my co-founder of September 2013. Since then, we have been growing really aggressively. We are now a team of 28. This month, we are going to process the company, the Facebook advertising optimization, for small and medium businesses, and small and medium enterprises. So, anyone that’s spending anywhere between $3K and $100K per month, that’s how it works. [Inaudible 0:08:25.2]. This month, we are going to process around $15 million in Facebook Advertising budget which is a little less than 1% of the global added revenue for Facebook. So, that’s fun.
Matt: Wow! That’s tremendous growth in a short amount of time. That must really be resonating with people. So, let me ask you so I understand a little better how the company works. If I wanted to go on Facebook and post an Ad, they have a couple of different; they have the Power Editor, Regular Ad Manager. So, what do you guys do that’s different? How do I get more value from my dollar by working with AdEspresso?
Armando:: So, the main problem is when you start to spend sizeable amounts, let’s say $6,000/month to create a lot of things, lot innovations from that, discovering what’s working and what’s not working and to do that with the Facebook Power Editor is super time consuming and super annoying because you have to create every single resin by yourself – one by one. Right? So, in AdEspresso, instead, you go on AdEspresso. You use the elements that you want to test. Like for example, 5 titles, 5 pictures and 5 demographic targets. We create the 125 versions for you in a matter of seconds instead of hours of work. Then, we push the version for Facebook. We got from Facebook analytics. We package them in a way that’s more comprehensive and more actionable for you so they can act upon that faster. Essentially, we enable you to do a better job with lower investment of time and money. Recently, we also implemented the automated optimization so you don’t need to do anything else besides pushing the button and letting us do the results for you.
Matt: Ahh! Okay. I see. So, you’re taking a lot of the manual effort out of it and enabling faster results of AB Testing and trying to beat your test with whatever new variations you come up with. So, let me ask you this. I’m sure you got a lot of experience in seeing what works and what doesn’t. For small businesses that are looking to advertise on Facebook, what are some of the key elements that they should be doing? Is it getting a right image? Coming up with a good headline? Figuring out who to target? How do you kind of help them get started?
Armando:: That’s a great question. So, probably 3 things, top of mind. The first one is that you need to be aware that Facebook is a very different channel. You’re watching a very different way. On Google, you target people based on what they are searching for. So, at any given point in time, there would be a certain amount of people looking for certain keyword. Right? While on Facebook, you target people based on who they are. The fifth time that you see an app from a certain company, you kinda bought already or you hate the company. Right? So you need to change and tweak things much faster compared to Google. The shelf life of an ad on Facebook is much shorter. That’s the first thing. The second thing, there are a couple of things that are very powerful right now on Facebook. One of them is video which actually doesn’t apply for small companies because producing good quality video is hard and time consuming and complicated. The other thing that works very well is custom audiences. You can, through Facebook, if you have an existing customer base, you can target people similar to your existing customer bases by uploading information regarding to your customer base on Facebook. So, e-mails or unique IDs or even phone numbers. This is very powerful because Facebook is gonna look at the similarities and commonalities in your customer base and find out that they have ten million people more that can be a good target for you. So, you can leverage that power in a very efficient way. The 3rd thing is the fact that the vast majority of the people, the vast majority of the companies think about Facebook the same way they think about Google also from a targeting stand point. Google, from this stand point, is very transactional. Again, because people are searching for stuff, that’s direct intent. Right? So, you have fulfilling direct intent. On Facebook, because people go on Facebook to unwind a little bit, or relax or spend some time looking what their friends are doing, they are not directly searching for stuff. But they expect the interesting stuff to pop-up from their news feed. So, because of this, what works very well on Facebook nowadays is if you have a more high level approach from a marketing funnel stand point. The suggestion here is to not be super sales-y and try to push sale or discount or a purchase or whatever. But, try to give some value to your potential customer. Give them something. Offer them content or entertainment or some kind of thing that they can engage with and through which they can recognize that you are someone that they could be willing to do business with in the future. So, a little bit higher in the marketing funnel. It’s more demand generation vs. demand fulfillment or use a technical term. But, those are probably the three most important things for somebody starting to look into Facebook advertising.
Matt: That’s interesting! That’s an important point, I think. Right? People are on Facebook to get away from business and people are on Google searching for solutions to their business problems. So, its 2 totally different mindsets. With that said, if you’re doing it, do you have a recommendation or can you see from the tests that your customers are running? If I’m running an ad on Facebook, should I send people who click on it to my own landing page or should I try and keep them in the Facebook world and send them to a post or a page that is still within Facebook. Is there a better approach to it?
Armando:: It depends on what’s your target. From a marketing standpoint, the real goal for you as a company, as an owner is to get customers at a rival price for you which are the lowest possible compared to your price point. Right? That means Facebook is one element that goes into a marketing mix. That said, because of that, Facebook can be less or more expensive of your other marketing channel. Because of that, if it’s less expensive, it’s better to use it a little bit sooner. If it’s more expensive, it’s better to use a little bit later. Depending on that, if it’s better for you a little bit sooner, it’s better for you, again, to generate leads or to have users subscribe to you newsletter or stuff like that. While if it’s better to use it a little bit later, it’s better to use it for converting purposes – to remind people that visited your website put something in the shopping cart but they don’t finalize a purchase, they can actually still do it maybe with a small discount if they do it now. It really depends on how you are thinking about your marketing funnel and what’s the purpose of the Facebook Advertising Strategy. Is it getting more leads? Is it getting more subscribers? Is it helping people convert more efficiently? Anyone of these situations has different consequences on the choices that you’re gonna make. That said, from a general stand point, if you are sending customers away from Facebook, it’s better to have a dedicated landing page. Landing pages can convert very well because they simplify the message. They simplify the options that your customers would have on your marketing website in a more efficient way. So, that’s the best practice that we usually recommend.
Matt: Okay. That makes sense. Another question on Facebook Advertising. Maybe you can help clear up the confusion. I’ve heard the term pixel and pixeling and something about putting or gathering pixels and re-targeting to pixeled customers. Can you tell me kind of what that process is about and what that means? How do you take advantage of using that process to increase your conversions and generate more leads out of the same dollars? What’s pixeling all about in the Facebook world?
Armando:: Yeah. The main point is that if you are spending – again, as we are saying before – since you are spending money, advertising money and you can deploy that cash in any other way, you want to be as sure as possible that you’re spending it in a wise way which means that you have economics that you understand. You have a threshold where at some point it’s profitable to use a certain marketing channel which Facebook can be one or at some point it’s not profitable anymore if you go below or above these thresholds. This is the general thought and idea inside this framework. Up to a few months ago and years ago depending on the markets, people were using Facebook Advertising to generate likes or things that are not truly measurable and not truly directly co-relatable to the business. That’s why pixels exist. From a general stand point, it’s always better if you have a targeting pixel and a conversion pixel. They enable you to do the best job possible in, again, measuring the funnel from the beginning to the end and having a clear perspective of where your marketing dollars are going and if you are doing a good enough job.
Matt: So, it’s really just a tracking tool that’s part of a campaign to see how effective you’re spending and the people you’ve touched if they’re coming back and eventually buying from you?
Armando:: Yeah. It’s a way on which you discover and become aware of the fact that people are actually buying something and how much is that. You can measure, again, beginning to end, the marketing funnel and see how things are working out for you.
Matt: Got it! So, from a higher level, for your business, AdEspresso, how do you find customers and how do you get them to understand your value proposition and become clients? What is the marketing and advertising that you guys do?
Armando:: For the fun part of this is that we acquire customers through content marketing. We write interesting stuff that people, our potential customer, discover because they are looking for that on Google. We teach them something new and something interesting and something valuable for their business. We establish our first intro relationship that way. The typical case is that our typical potential customer is looking on Google for things like 10 tips to improve your Facebook Advertising, or stuff like that, which we write. So, they discover the content. They get value out of the content and then discover that there’s an actual product behind it and you subscribe. In this way, we are now generating around 200,000 monthly unique which are the best in class in the category. For us, it’s super convenient and super interesting. If you can do it efficiently, content marketing can be very effective and affordable way to go to market and to acquire potential customers and price it in the market and become top of mind.
Matt: Well, it sounds like it works very well for you because people are searching for very specific kind of long tail keywords. You know that if they put that into a search engine, you already know they are self-qualified as a good candidate. I’m sure that if they find your content and they find value, then it’s a natural process to then check out your offering and potentially sign up.
Armando:: Yeah. That’s correct. So, we started 2 years ago – something like that – by publishing one post per week. We are now publishing more than per day. We have weekly webinars. We have e-books that we are producing within [inaudible 0:21:51.5] just a couple weeks ago. If you go on, just press look, call me and then find it out. We do slide share presentations. From all these stand points, you can actually think of us as a publishing company with a product on top.
Matt: Yeah. That makes sense. There’s no shortage of people interested. Facebook as an advertising platform has really exploded in the last few years. So, I’m imagining there’s lot of people who now need help with their ad creation.
Armando:: Yeah. That’s cool.
Matt: Is that something you offer as well? If somebody wants to test all the headlines and the images and the demographics, do you help them figure out how to write good headlines and how to pick good images or is that on them?
Armando:: We do it but in an indirect way. Education is a super strong value for us. We invest a lot of time and money in helping people do a better job with Facebook advertising. There are girdles of the fact that at some point that will become the special customers. We have a lot of resources. We have an academy section on our website. We have not only a lot of types of contents but also tools that you can use. For example, we have this gallery of Facebook advertising – actual Facebook advertising examples – that you can browse and look at to understand what’s working and what’s not working. We have several thousand – actually I think 15 thousand or something ads – in the free version. Then, we have a premium version with 150,000 Facebook ads plus Twitter ads as well and landing pages that could relate to that. You can see how the marketing funnel works.
Matt: Wow! Okay. Are they ranked in any way? By conversion? So, you can see which ones did the best or which sales funnel … ?
Armando:: No. we don’t have the data. But, it would be very interesting. We do that type of analysis in our guest, in our blog posts and our e-books. We publish examples. We publish used cases and studies on different performance generated doing different things. That’s also along the way. We gather prices in the market and one of the reasons why we are so interesting from our potential customers stand point because we do data-driven analysis based on actual data which is something not a lot of other people out there can do.
Matt: Right. It’s always more interesting to look at studies like that with real date, real clicks, real conversions rather than just somebody saying I think this ad looks better than that ad but without the data it doesn’t mean much. Let me ask you this from a different stand point. How did you manage to manage the growth? It sounds like that you’re company is really growing fast if you have 28 people. You’re only a few years old. What had been the big challenges in managing growth at that rate?
Armando:: We’ve been growing quite aggressively. Last year, we grew 11x in revenue year over year, 8x in ad spent crosses. The best thing for us venture back companies after 1 million dollars in revenue, the expectation grew 3x. So, very aggressive growth. It’s a good problem to have. That’s probably the most important part. Your whole job as a founder is to remove friction. When you see something that’s working, you double down. There are different phases. Phase 1 is test a lot of things. Find out something that’s working and look at that thing from unit economics and numbers stand point. Once that you find something that’s working and that is scalable up to a certain point and it’s automatize-able, you double down on that. Once you start doubling down on that, your whole job is removing friction – how to do a better job faster. The more you can do that, the more velocity you get. So, the other thing is that it’s a bit difficult to generalize because you have different problems at different stages of your wealth. When you are growing from 3-5, 8 and 12 people, you have different issues compared to when you are growing from 12 to 20, 30, and 50. Same thing for ad spend stand point, number of customer stand point or revenue stand point. The problems that you are going to solve when you have 0 to ten customers are different compared to the ones that you need to solve when you get from 10 to 100 and then 100-1000 and then 1000 to 10000.
Matt: Yeah. No doubt. There are lots of different plateaus where the problems are different. So, for you guys, I would imagine is probably been finding staffing at that growth rate. Another one I would imagine is how to scale customer service. Are there any tools or anything in particular you found to help that with either those 2 challenges that help not bottleneck your growth?
Armando:: Yeah. From a hiring stand point, a good strategy that I’m seeing more and more with silicon valley based companies and silicon valley based founders as well – Silicon Valley has a very good ecosystem for startups both for a very competitive and a very expensive one because the average okay engineer will cost you $150k per year just for starters plus all the cost of office space and everything that’s correlated. A few years ago was a minus in the mindset of the Silicon Valley Ecosystem which is having people outside of the valley. Nowadays, it’s kind of becoming okay if not at last because if you can’t find efficiently and manage efficiently a team that’s distributed – I’m not talking about outsourcing – I’m taking about having an actual team that works for you and works with you. If you can manage that efficiently, that becomes a competitive advantage because anywhere else in the world, you pay people. We have big percentages of our work team in Italy. We pay 20% – 25% more than the market average is there and is still, it’s like 50% off of what we would be forced to pay somebody here. It’s not only that. It’s the fact that when here in the Silicon Valley, [inaudible 0:29:13.7] is like crazy. You have to change people often. People that you hire will leave you within 6 to 12 months. While in the vast majority of areas outside of here, the market is not that not liquid. So, when people choose you and want to work with you, they stay with you for years. That can be, again, a competitive advantage for international founders but purely because they have a network outside of the valley. But I’m starting to see this happening more and more with founders and companies that are Silicon Valley native first. They are starting to have people outside because it can work. If you can make it work, again, it can be a very real competitive advantage because the same dollar is worth 2 times if not 3 times outside.
Matt: Yeah. That makes a lot of sense. For more and more jobs, especially in the text paste, there’s really no reason to have people sit in your physical location in Silicon Valley. It’s just isn’t required.
Armando:: It’s easy when you hire because you have to be [inaudible 0:30:20.3] vs. one of the ten thousand companies that has some million dollars in funding and some million dollars in revenue. So, it’s a faster process. So, that’s how we sold from our stand point which is very connected also to the support.
Matt: How about on the customer service side? Are there any tools or anything that you used there to help manage that many clients who could potentially have questions or problems or need help?
Armando:: We are using the average stocks and desks. There are a bunch of tools out there but we use intercom or user voice. The main learning there is that you should facilitate communication as much as possible between you and your customers even if at the beginning, they are reaching out to you more than what you would want. But, that’s a learning process for you to understand what’s working and what’s not working in your product flows and on boarding and how you define success for you product and how do they define success for their purposes. If you can funnel the request coming from the support to your product team, that can be a very powerful mechanism because through that, even when your volumes begin to increases more or less aggressively, if you did this work, the volume of request and incoming questions will kind of be the same.
Matt: Yeah. That make sense for sure. Let me ask you a last question here to just kinda wrap up. Is there anything that you learned in your prior startup experiences or in this startup experience that you would like to pass on or wish you have known or somebody had told you that would’ve made the whole thing go smoother? Any advice that you would give to new entrepreneurs or startups that you learned overtime that would be very helpful?
Armando:: Yes. There are a lot of things. But, the first one, the most important one, nature. One, it’s gonna be hard. It’s also gonna be fun. You’re going to learn a shit load of things. The second one, which is actually something that I often say when I meet other founders as well. Founders don’t often realize this as importantly as they should. When you do startups and potentially have investors, you’re making money and you have somebody that surrounds you, people and your team, but mostly your investors are investing their capital, but you’re investing your time in you. Because you are committing to work for something for 1 year. Maybe two, if it works, 5, if not, 8. Make it worth your time. That’s the general suggestion and based on the fact that the average founder doesn’t value their time as much as they value outside capital. But, you can raise capital. You can make money from customers. But, you cannot make time. Make sure that the investments that you are doing together with the investment that other people are doing is geared towards the right direction. [Inaudible 0:34:12.8] because nobody is giving you 2 years or 3 years that you would be spending doing this. So, the question is, if things are working out, that’s great. If things are not working out, is there a way through so they can work out and how much time more are you investing to find out.
Matt: That make sense. Time is obviously a very precious and limited commodity. So, don’t spend it working hard for something where you’re not gonna be compensated accordingly or where the chance of success continues to diminish.
Matt: Excellent! Well, for people who are interested in finding out more, what’s the best way for them to do that to get a hold of you or to check out your site?
Armando:: I’m fairly public so they share it – adespresso.com. There is a lot of information there on the major list. They can reach out at email@example.com if they want. I’m happy to help.
Matt: Okay. Great! Well, I definitely appreciate your time and the tips and information on Facebook Advertising and kinda sharing your story on getting started with AdEspresso. Congratulations! I think you’ve mentioned you’re close to 1% of the global ad spent on Facebook. That is amazing, considering how big a number that is.
Armando:: It’s fine. Last year, they need a convenience. It’s more or less 1.5 average billions per month. Its interesting numbers.
Matt: That’s very cool. Do you have a target goal – 5%, 10%?
Armando:: That’s another one of the things that I learn. You don’t need usually set goals in terms of absolute numbers. You define processes and you see where they needs you. The current growth strategy and approach has been gliding to 5% or 10%. I don’t know. Let’s find out. Another interesting thing is that the market we are talking about is going to expand very aggressively as well in the next few years. Last year, it was 18 billion. This year is gonna be 22 billion or something like that. The next one, 25 billion or 28 billion. We actually has been this whole ecosystem of companies around Facebook do a better job with their Facebook Advertising dollars. By doing so, people are willing to spend more because they are getting more.
Matt: Sure. If you’re having success with ads and generating leads and conversion, you’re not gonna stop your spend. You’re gonna increase it. So, you’re adding value to the whole system which is great.
Armando:: That’s polite.
Matt: Thank you so much for taking the time. I really appreciate it. I will definitely let you know when everything is up and live. Thanks again!
Armando:: Likewise! Best of luck.