How a Single Media Buyer can Build a $50,000,000+ Profitable Sellable “Business” | AWeurope 2017
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How a Single Media Buyer can Build a $50,000,000+ Profitable Sellable “Business” | AWeurope 2017


How’s everybody doing today? Come on, I need a response. How are we doing? Liking the speakers?
I think everybody’s been great. It’s Trey Lewellen. I’ve known him for a couple of
years now. I met him over at the Canton Fair and, man, the stuff that he’s doing
in that business is pretty amazing.
Also, I am so impressed by what the Stack That Money crew has
put together in this. I remember when Stack That Money first started, I was
one of the first members. Lorenzo had me join over in that forum, and just
to watch the amazing things that they’ve built out of that community and the
amazing things that they’ve done for the affiliate world really, really impressed
me. So I’m here to talk today — well, actually before I start, could I
see a show of hands? How many people know who I am? Not that many. I’m here to
talk today a little bit about how to take a affiliate business, an affiliate mindset,
and I know this because I started as an affiliate. I’ll
talk about that a little bit later but, oftentimes, when you’re an affiliate and
and when you start as an affiliate, all you’re looking at is you’re looking at
“Okay, there’s this offer. I’m just trying to make some money on this offer” and
you start to build a very cashflow-driven mindset, that is “How do I
spend $1 and make $2?” and what I’m here to talk to you about today
is, how do you take that same mindset, still think about spending $1 and making
$2, but you also create and you’re focused on a longer-term goal and a
longer term vision. There’s a misnomer that in order to build a large business you need to lose money,
you need to raise investment capital. And I think this is a thing that’s
propagated by the venture capital world and I totally believe it’s not true. I
believe just planning properly from the start of where you’re gonna go and then
thinking about “How can I take the first steps into this thing and make money
each and every step of the way?” So that’s what we’re going to talk about
today, and so if we look at this and if you
start thinking about this from the perspective of a cash flow business and
if you could take that same cash flow business, in five years from now,
you could get anywhere from 8 to 12x on EBITDA, which is where
I’m hearing stuff is trading at, from private equity and venture capital type
people that are starting to become interested in our space. So if we look at
this and we have year 1, year 2, year 3, and each year we get better, right? So our
first year, we make a $100,000. Our last year, we end up at $2.5 million,
and if we add all that up, it’s $4.35 million. So if we do
that again with a longer term vision created, we get the same $4.35
but we also get a multiple on year five, which is our biggest year, and you
know, that might be anywhere from 8 to, like I said, 8 to 15 times is kind
of what I’m hearing. I hear 12 sometimes. I’m hearing different stuff. So you
could do the exact same amount of work and essentially create $34 million
in wealth potentially doing the exact same thing, but just doing it with
a good plan, a good strategy from the start. So what we’re gonna discuss today
is “Why now? What’s changed in recent years?”, how to build this,
how you can plan even smarter from the front end, and then how you can start. I’m
gonna talk about if you run a media buying business, how you can start to
think about building some of the things that you need in order to be sellable
into that media buying business. About me, I was an affiliate. I don’t know how many
people are affiliates or merchant or network people in this room, but I
started as an affiliate back in 2003. I was into black hat SEO, so that
essentially means I would reverse-engineer Google’s and Bing’s
algorithms and then I’d build automations and I taught myself to code,
and we’d build automations in order to capitalise on that, I guess
is what you could say. I did media buying and I put growth hacking up there
because that’s what the the venture world likes to hear at this point. And
then around 2008, I started training a bunch of other people to work with me to
do media buying and in doing that, I set up a network platform at that time. I was
a moderator on what used to be the largest affiliate forum, which was called
“Wicked Fire”, and a bunch of people got wind that I had an affiliate platform
and I’d been helping a bunch of people. So next thing you knew, I had about 2,000
media buyers sign up on my platform. So my history is all in media buying, and
you can see there in 2012, I got sued by the Federal Trade Commission. We did
about $400+ millions, between $400 and $500 million in nutra re-bills, nutra
sales, back when there was no cloaking. There was none of that type of stuff. The
advertorials had just come out and blogged landers and all that kind of
stuff, and we really did some huge numbers there. So after 2012 I had to
reinvent the business, and then that kind of shows you some stuff there. Now, we’re
getting heavily into ecommerce. There’s that slide there, a few pictures are just
my family and my kids. So what’s changed? I think there’s a few things
that are going on right now that are really starting to make a difference.
Number one is how many of you saw this up there?
I thought that the McDonald’s story that, so McDonald’s was with an
agency called Leo Burnett for 25 years. McDonald’s spends $1 billion a
year in media and that’s been ad spend and creative and all that kind of stuff. They were Leo Burnett for 25 years and
McDonald’s basically went to Leo Burnett and they said, “Hey, we want you to go on
performance and you can participate on performance.” Leo Burnett said, “No, we don’t
want your billion dollars’ worth of business.” And my guess is they didn’t
think that they could do it. So then, they went and that business moved over to
Omniture. We’ve also seen, if you’ve been following this at all,
Matomy going public, XL marketing raised a couple of rounds of funding. I
think, over $170 million in total funding at this point.
So you know, the venture world is starting to look at the white hat and
the cleaner businesses that we’re involved in. There’s also another really
interesting thing that’s going on that I think is going to shape this and we
all are familiar with, at least if you’re from America, and it may be going on
here too. In America, all the large retailers are starting to go away. So
that’s JC Penney’s, Sears, Macy’s, Big box stores are shutting down that were
really big just five, ten years ago. The home run place is, you’ve got
Best Buy starting to shrink. Obviously, retail is inevitably
never gonna go away totally, but what is gonna happen, in my opinion, is
it’s gonna continue to shift online. And all these people, they still need to sell
their products. They still have to sell their products to consumers or they’re
gonna go out of business. So when they come online, they’ve got a couple of ways
to do that. They can sell through Amazon, but then Amazon owns them, right? They
have no way to build their brand. They have no way to you represent themselves
in any way special than any other Amazon-commoditised reseller. So they’re gonna
want to build all of their own stores or go through other retailers that allow
them to have this experience online. And I think right now, it’s 8 to 12 time multiples.
I think what we’re gonna see in somewhere between five and ten
years, my guess is we’re gonna see 20 to 30 time multiples on any business that
is good at driving consumers to purchases. So some of the
thoughts on that is “How are we gonna build enterprise value for
investors?” So how are we gonna do this and what are investors gonna want to
look at, or potential purchasers? Right now, I don’t know how much you know
about exits and stuff like that. Right now, private equity is really interested
in our space because of the growth curve. I think strategic still or not,
so brands are not buying up a lot of performance-based marketing
companies at this point. You don’t have strategics and/or agencies really buying
up performance-based marketing companies but I think we are gonna see it come
five or ten years, between five and ten year window, you’re gonna see a
real competitiveness and the prices of those businesses go way up. So how do we
build a business? How do we build a platform? Everybody wants to buy something that they can apply more people to, apply more
capital to, and then it can accelerate whatever they’re doing potentially. So
things to think about inside of your business that are valuable.
Number one is data. So data can be everything from records to, do you have a
massive amount of cookies for retargeting pixels? Do you have a lot of
lookalike campaigns and custom audiences and Facebook? Data has
all different facets but the more data that you have, the more valuable
that your company is. So Fluent sold for over a $100 million, they’re a co-reg
company. They potentially got bought specifically for the data
because they got bought by, I believe, an ad network or something like that.
So data is number one, systems and processes is number two. I’m just gonna
run through these pretty quickly. Smart people, just an interesting
little side note, I invest in start-ups. If you have, for every investor or every
engineer you have inside of a start-up. So if you’ve got ten engineers, they’re
going for $1 million a head. So if the company’s not even profitable, Google
or somebody will potentially buy you at $1 million dollars a head if you have
thirty engineers that are that are high-quality engineers. So smart people on
your team, technology of any sort, any kind of automation or technology or
integrations with other stuff algorithms, you know, decision making stuff,
relationships with vendors, brands, whoever it might be. Brand equity,
do you have a brand name in the space right? Let’s see, and then, there’s a
couple that help you build moats, I put on here. Intellectual property and hard
assets of any sort. Now, what’s not valuable? Cloaking.
Nobody’s interested in a business that’s doing cloaking. Nobody’s
interested in any kind of scams or false claims, instability, churn and burn.
People want to buy companies that they can take on, they feel good about.
When they take a look at you as an
organisation. This is another little thing that I’ve heard at this show,
because two companies I know have sold in this space recently. So what they were
saying, just a little side note. They were saying that they got a lower
valuation on their companies because they were not based in the United States.
So just something to consider as you’re looking to form an entity,
potentially having your main, your company domiciled in Delaware, if you
ever plan on potentially exiting the company and looking for a buyer.
Anybody from the United States and I think anybody international, would look
at a United States company more favourable as well, just because of all
the laws and just terrible crap we have to deal with.
How do you plan even smarter? What you want to do is, you want
to actually spend a little time before you act. Before you start to do something
right. So I’ve been in this business for quite a long time now and there’s been
many flavors of the week. It’s like every affiliates is on CPI. Then they
then they’re moving to PPB and then they’re moving to mobile pops, content
arbitrage, ecommerce, who knows what the next thing is gonna be? But when these
things come along, you need to take a look at them. You need to take a look at
them and you need to ask yourself is this thing gonna be here in five years?
Would somebody want to buy whatever this thing is and just because
somebody told you something is gonna make money and it’s making money right now, really ask yourself, can I build
this into something that I can get a multiple on? I put this up here because I
remind myself of this all the time. The further up you get in this business, the
more people, the more opportunities show up in order for you
to make millions of dollars very quickly. It’s like oh, there’s a there’s a glitch
in this ad network and you can go make millions of dollars really quickly but should you do that right? And
just because you can doesn’t mean you should. Anybody know what this
this little symbol up here is? That’s the Fyre Festival. They flew all these people
to an island and they took all their money, they lost $7 million
that they were supposed to be on a luxury vacation and
they wound up in FEMA tents on some island in the Caribbean. Pretty bad deal.
So what you want to think about is, you’ve got your long-term plans and
then you’ve got your day-to-day and as affiliates, we typically start in the
day-to-day right. Somebody gives us a campaign, we try and make some ads and we
put them up, it doesn’t work, we iterate on the process and then we just get into
what we call the grind. We’ll take some time at least once a month or every two
weeks, if you can and then start going up these different levels. Where do I want
to be in five years from now? Where do I want to be in ten years from now? Yeah I
can make money today. I can always make money today but
what am I building towards and so then you’ve got these basically these
different levels. So as you create a vision of where you want to be in that
five-year goal, then you start to build strategies and tactics and strategies
might be, I want to get into the CPI space because I see the future and I
think I can build something that’s unique there that’s sellable. The tactics
are more specific. So as you go into Facebook, this is specifically how
you bid on Facebook today. At least for us, we start
our campaigns on auto, yada, yada yada. So as you build these goals out, you
want to make smart goals always. This is just something I adhere
to. If you don’t use this strategy for making goals, I highly suggest to
and invite you to try it out. Specific, measurable, achievable, realistic,
time based goals. So as we look at that, a goal you might have, and this is how it
might look, I’d like to build a company that does a $100 million in revenue,
20% margin with no more than 20 people in five years and I’d like it to not
require me to run, operate or grow. There’s nothing here about a product, there’s
nothing here about any of that stuff right. Once you build this vision, this
five-year plan for yourself of what you want to create, you know, the other thing
that I would probably add to this is I want to make money from day
one. I don’t want to lose money on my operation. I want to build a real
business not a VC funded operation. For me, that’s how I have to operate.
There’s another thing that would go into my goals is, I need to see it
work quickly. I’m not going to spend two years building a SaaS platform, which I’ve
built too, I’m not gonna spend two years doing that. So set this big goal
and then what you do is, as you have that big goal or that big vision up there,
then everything that comes into your life, analyse it. Whether it plays into
that larger vision or not think about that for a second. I judge everything
that shows up in my world. It’s like dude we’re killing it on this.
It’s like, okay great. Does that make sense to go there? Because if
it doesn’t make sense to go there, then I’m gonna have to pass on it because
there’s more and more opportunities show up all the time.
I like this slide. It says, “It’s easy, you just have to…” so as affiliates, we do
so much stuff and we’re like, oh you just throw up a website and then you send
some traffic to it and it just works and whatever. When you get deep into any
of these things, when when this guy says to you, hey I made a million dollars
last year doing this thing and you think about it, you’re like all I have to do is,
blah. This is what it almost always ends up like. This is reality. You get
into the weeds and you got to iterate and figure stuff out and then you find
out that, oh it’s actually, I’ve talked to a bunch of people here about
white hat campaigns and and stuff like that. I was talking with somebody last
night and they’re they’re like, I’m building out a white hat campaign and it
was around, I believe it was around a skin care product and I was, like
Facebook overall doesn’t like skin care products because of what the
affiliates have done to them on skin care products. So does it make sense to
be involved in a vertical that you start out with with Facebook not wanting it.
You having to fight an uphill battle in order to do that and my
my answer is no. He asked me what is the the first thing that you look at when
anything shows up into your world? Whether it’s a product, whether it’s an
opportunity, and the first thing that I look at is can I run it on every single
traffic source compliantly. That’s the very first question I ask,
because if I can’t do that then I’m building everything on a sand foundation
at the end of the day. So few strategic questions that you can ask yourself as
you look at these opportunities, will this thing still be here in five years? Will it add
asset value to my company besides cash? Some of that’s earlier stuff.
Am I gonna get a ton of data right? Like I build a co-reg company out,
I’ve got 10 million records and I’ve got way more cookies
than that on users and I’ve got profiles and that’s really, really valuable to
companies. If I’m 1% of the market, will that get me to my number that’s in that
goal or it’s in that vision? If I’m 1% of the market because that’s a
market that I want to be in. If all I have to capture is 1% of it, then I
feel pretty good about that opportunity. Can you turn this into a
system, hire VA’s or staff to handle most of the work? I’ve seen
people try and scale businesses and they they try and scale them with unicorns.
That is people that are the best people, and most businesses, you don’t want to need to you have unicorns to scale. So if you
think about media buying business. If you need the best media
buyers in order to scale your business that’s not a very good operation because
those people are not easy to retain. They’re super expensive. You need a
couple of really good media buyers including yourself and then you need to
build out a whole operational team to hang in silo, a lot of the component
parts of that, and that’s what we do, is we have a whole media team and a
whole creative team and everything’s kind of silo-ed. So everybody can really
focus it being amazing on their one simple part. So starting to pivot your
business. Start to think about just some of the building blocks.
Some of the building blocks that you can work with what you have now.
I put up here just a media buying company. So white hat sustainable offers,
stuff that Facebook and Google and Taboola and everybody will call you and
ask for more of your business, not try and make you go away. Build
relationships with those ad networks. Build relationships with those reps, so
you can get in the special programs on the front end Facebook and all these
guys, they have all kinds of special programs that they roll out and if
you’re in their good graces, some of those programs create tremendous ROIs. On Yahoo, when Yahoo Gemini, before it was Yahoo
Gemini, they opened up the feed to very specific people and we were seeing
1,000% ROIs on a 100% white hat campaigns in that
Yahoo news feed, which has now become become Gemini and I used to have to buy it
through their right media platform but you don’t don’t have to anymore.
Systems for choosing offers. So when you look at an offer, is it sustainable? Is it clean? Is it gonna add asset value to my business?
The other thing I like to look at in an offer is like, alright
let’s say I go down the road of this offer and I’m really successful at it.
Could I become an advertiser to do the same thing? Would that be
interesting to me if that’s part of your part of your path to your vision.
Could I become an advertiser or a merchant that does something like this
offer? So you’re thinking one or two steps past, just can I run this campaign
and make money on it? Let’s see. Repeatable processes that is, processes
that happen over and over again. Scales with average people, that’s
what I talked about a little bit earlier. KPIs to measure performance. So you know
in any system, you need measurements. So what is your batting average on your on
your creative assets? Are you tracking CTRs? Are you tracking the CPMs of the
positive engagement on Facebook? And then how formulaic can you make that? So you
can do it over and over again, and then how do you take that and take average
people, get them trained up to be able to handle and just follow those systems? I
put up a post on my blog the other day that was like if you hire your first
employee and when you hire your first employee, most people hire a
media buyer and then they hire them in and then they think that, they’ve
been learning and just doing this stuff themselves and they think that this
person that they’re gonna hire in is them. But employees are not
entrepreneurs. Employees are not affiliates. They’re different kind of
different kind of people. So you need to think, what is this person, how m I going to equip them in order to be
successful? So as you go hire that person and the way you do that is systems and
measurements where they know, oh if I hit this number or if I hit this CTR or if I hit this, another interesting metric we
track is on video. We tracked that 10-second metric. So our KPIs for our
creative department is we’re trying to hit a 50% on Facebook video ads. We’re
trying to hit a 50% metric on people that are retained up to 10 seconds.
That’s their goal. That’s how they get bonuses. So we built really, really
detailed systems that we bring people in. We put them into systems and strategies
and then we scale that way. If I had to do it all over again, and there’s
there’s a little story here as I mentioned. I got sued by the FTC.
We did big numbers and whatnot and at the end of that, I could have
probably gone offshore and hit in and done all that debt stuff,
but for me I was just like maybe I’ll just get out of the
industry. Maybe I won’t work in affiliate marketing anymore. I was kind
of jaded and beat up. They sued me. I only had to pay him $1 million
so it wasn’t that that big of a deal but it was just like, do I even want
to do this? And then I pulled out. I pulled out a nutra, which was
say 90-95% plus of our business. Had $17,000 a day in in overhead, two
offices. One in San Diego, one in New York and I was like, well maybe I’ll just sell
the company and whatnot and then I looked at it and and I realised I
didn’t have anything sellable. There was nothing sellable inside of the
organisation and that’s kind of what sent me on this journey.
This journey that is how do I go build something
sellable and sustainable? I may never sell the company. I probably
will and I definitely plan to but even if you never plan on selling, always
always build something sellable because you may change your mind at some point
and you want to make sure you’re building something of value. So there’s a
lot of stuff as I mentioned, changing in the investment space. Planning
smarter and attracting the right investors and build strong foundation. There’s gonna be a lot of, you know, I
only had so much time to talk about this today and for those of you that are
interested in more of the specifics in the how of how we’re going
about this and how we’re doing this, Stack That Money has a
education side of their business. It’s called iStack. If you’re not aware, iStack,
they’re putting on a full-day workshop. I’m doing some speaking there
tomorrow. So if you want to learn some more about how I’m doing this
and how I’m going about it, some more of that detailed thought processes on our
systems and stuff like that. I invite you to come to the iStack events. If
you’re not signed up, there’s a booth right outside the front door there but
thank you so much everybody. I really appreciate you having me and again,
I’m not here for any other reason I own A4D, we’re a CPA network,
I assume you’ll find us. We’ve got a booth here. I assume that
you know we have a tremendous reputation in this space, but the main reason that
I’m on the stage is I really want to communicate with the audience here and
in the community and I love to hear the stories. I’ve had a couple of them at
this show that, hey you know what Jason, you gave that presentation and it kind
of stuck with me and here’s what I went and built. I got a minute and
a half more here. I had a story, I went to Summit at Sea and this
guy came and he sat down next to me and he’s like, Jason I learned affiliate
marketing reading your blog and then being on the A4D network and he’s
like, I took that knowledge and I’ve built the second largest
direct-to-consumer mattress company in the US. Just sat down next to me and he’s
like, I just wanted to thank you for really opening my eyes to
this space. I had some more of those some more of those today and yesterday
as well but I really hope you take some of this to heart. I’m
sure there’s some of you that are still thinking, well you know I’m in the black
hat world, I’m killing it on this and that and that’s great and I just invite
you to really think about where you want to be in five years from now. So you
don’t wind up stuck on the hamster wheel in the same place and I talked to people
that have been in this business that I’ve known for five, ten years and
some of them aren’t happy right. They’re still making a lot
of money but they’re not fulfilled just making money anymore and if you’re there,
I highly invite you to start to create that goal. Start to create that vision for yourself and wind up in a much better place five
five to ten years from now. So thank you everybody for having me.

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