"Building a brand takes time, there are no shortcuts."
Our guest today didn't know what he didn't know when he started an apparel brand in 2009, and only grew to dislike it the more successful he became, so he eventually exited the business in 2017 to focus on digital marketing.
Today, he's a go-to expert on Facebook ads, with a lot of unconventional opinions, and a no BS approach that's refreshing in the marketing space. That's the kind of experience we can benefit from.
We're joined by Jason Portnoy, owner of JPORT Media, a 7-figure agency that has generated over $150M in revenue for their clients.
The Unofficial Shopify Podcast
7/12/2022
Kurt Elster: There’s a lot of naysaying going on in the news. I can’t open CNN, whatever site, wherever you get your news, and not see a negative headline, and so sometimes it’s hard to tell the difference between… All right, what are things I need to actually worry about and what are things that are just headlines seeking clicks, right? Just as money seeks return on investment, so too do news headlines seek engagement. And so, sometimes it’s hard to know, and so I think it’s helpful to talk to people who’ve been there, done that, who have experience, and with experience could use that lens to determine, all right, what are things I actually need to worry about right now?
And so, today on the show we’ve brought someone who has been there, done that. Someone who I met at Blue Ribbon Mastermind, Ezra’s event in Miami Beach, where he was a speaker, and who has owned and scaled an eCom business that ended up in 250 retail stores and has since gone on to run a digital agency that manages huge seven-figure budgets and has produced, what, a quarter million, or a quarter billion in revenue for clients. I’m joined today by Jason Portnoy, who is going to talk us through from over 10 years of experience. He’s going to talk us through what he sees as today’s challenges and what he thinks we should do about them.
This is The Unofficial Shopify Podcast. I’m your host, Kurt Elster.
Ezra Firestone Sound Board Clip: Tech Nasty!
Kurt Elster: And I am joined by Jason Portnoy of JPORT Media. Jason, thank you for being here.
Jason Portnoy: Thank you for having me and I want to package up that intro and I’m going to send it to my mother because she has no clue what I do for a living. She still thinks I’m in computers or something like that, or I fix… So, I want to send that intro to her because I think it’s a nice intro. Thank you. I appreciate it.
Kurt Elster: But will you still fix her printer when she asks?
Jason Portnoy: Yes. Yes. By unplugging and plugging it back in. Yeah.
Kurt Elster: I’ve trained my kids. They’re always like… Anything goes wrong and they’re like, “Uh, is the Wi-Fi on? Can you help?” I’m like, “All right, step one, whatever it is, just turn it off and back on.”
Jason Portnoy: Yes.
Kurt Elster: And years of this, they now will. They’re like, “All right, something’s wrong. I already turned it back on and off.” And that fixes 50% of things.
Jason Portnoy: And it’s like wizardry to them when you do it. “Oh, but I’ve tried everything.” And you do it, they’re like, “Wow.” Yeah.
Kurt Elster: Yeah. Turn it off and back on. That’s all I’m doing. Did you reset the router? That’s always step one when you call the cable company.
Okay, so when did you get into eCommerce?
Jason Portnoy: So, I started a clothing brand probably around 2009. eCommerce to me wasn’t even a thing. I had no clue what I was doing. Before that, I graduated university, I was supposed to go to law school, hated school, decided not to go, worked a couple of jobs, absolutely hated every moment of having a job, and I decided I was gonna start a clothing brand. And I started a clothing brand and I thought, “Yeah, that’s easy. I should just go start a clothing brand.”
No clue what I was doing.
Kurt Elster: Yeah. Sometimes it’s helpful to not know what you’re about to get yourself into.
Jason Portnoy: Oh, 100%, and I was just… I loved… Even when I was in school the electives I took in school were all marketing and business related, and I loved that are of it, and I remember when I started I was just so naïve, like I went to go build a site and I wanted a website, so someone introduced me to someone, it was like $14,000 to build a Joomla website.
Kurt Elster: Joomla.
Jason Portnoy: Yeah, and-
Kurt Elster: Joomla. I remember people telling me around this same time, probably 2009, that Joomla was gonna kill WordPress. Well, well, well.
Jason Portnoy: And the best part about it was it was almost impossible for me to upload any new products, so I had to keep that web development firm on a retainer, and I had no money, because I haven’t sold one thing yet. Just a bunch of ideas with ugly ass designs, just didn’t know what I was doing, and slowly started building that up by just sitting there saying… I would see a celebrity talk about a shirt and they said, “Where can I get this shirt?” And I’m like, “We make it.” We never made it. We just made the design and knocked it off and that’s kind of like the hustle that I started learning it.
I think one of the first ones we saw, we saw someone put out a brand, put out a shirt that said stop wars that looked like Star Wars, and a couple of celebrities on Twitter at the time were saying, “Where do I get this shirt?” And I’m like messaging my designer, “Make this shirt. Make the template of it. Make a mockup of it.” And we put it on the website. I’m like, “We sell this shirt too.”
So, yeah, it’s totally unethical and not the right way to grow a business. Please don’t stop the podcast here and this is what you take from the podcast. And then around 2011, Harley from Shopify-
Kurt Elster: Harley Finkelstein. Shopify President.
Jason Portnoy: Fellow Canadian. I know his wife through different communities. Someone told me he started this thing called Shopify. I should look into this thing Shopify. So, I moved my site, my $14,000 site onto a $400 Shopify store development, which was crazy cool because now I had access. I could do my own stuff. Everything like that. So, I spent $400 to build that site 2011. Got my confirmation. Welcome to Shopify. It wasn’t until 2012 until I actually did anything about it and started moving it online, and that’s when I started really understanding business a lot more, getting it on celebrities, getting it on athletes, really buckling down.
But at the time, really trying to use wholesale and retail to cover my inventory so that anything I sold online was gravy. So, now I started to understand margins. I started to understand the game a little bit more. The problem was I was in a cadence and the brand was growing. I hated every second of being part of this brand. Hated every second of the clothing business. Completely out of love with it. And through the success that I got through it, I started getting a lot of consulting offers. People sitting there saying, “Hey, can you help us with our brand? Can you help us with this?” Facebook ads was just starting, and I met the head of team… Well, now he’s the president of VeeFriends, but at the time he worked for Gary Vaynerchuk, and he messaged me. He was like, “Hey, Gary’s bullish on this thing called Facebook ads. You should try it.”
I tried it. It was a beautiful time where you could literally scrape people and just the wild west of Facebook ads and do that. I wish I could go back there with the knowledge I have now of years of online marketing and do it again, but I was so, so… I call it burnt out, but it was just frustrated of just hated every aspect of it, but I loved talking the marketing, building brands, and I loved helping the other people, and it was my wife who was like, “Hey, look. We’re married. We’re gonna start a family soon. You can’t be miserable, so figure out what you want to do. I ask you about the clothing business, you get all upset. I ask you about marketing question or someone asks you a marketing question and you’re out for a three hour lunch with them, so figure it out.”
And I was like, “Cool. I’m gonna help people run Facebook ads because that’s what I’m spending all my time on.”
Kurt Elster: Was that decision… Was that inflection point obvious to you at the time? Or was it obvious after your wife made it obvious by holding up the mirror?
Jason Portnoy: I knew I was unhappy. I just didn’t know there was an alternative. Because we haven’t had a down year, right? So, every year was going up. It wasn’t like we were going up to $100 million, $500 million. The numbers weren’t there, but there was no down year, so I always felt like, “Man, I’m gonna be tied to this.” And I saw where retail was going and most of our money was coming from retail, and we were starting to get nickeled and dimed on everything. I’m like, “Man,” and Daymond John running it in my head again over and over that brands have like five years of being really hot, clothing brands, and this is at the time, right? It’s different now. The whole landscape’s different now. But clothing brands have five years of being really hot, and what am I gonna do? What happens when this all goes sideways? What happens when this all goes down?
So, I was miserable, but I felt trapped. I felt stuck in my business. And I didn’t know how to tell people I was leaving, and I was worried what they were gonna say. I was worried people were gonna say, “Oh, he failed,” and how to handle that. I was worried what my parents were gonna say. I was worried about so many different things, so I ended up writing this really blog article called Why I’m Leaving True Rivalry, and I put it out right when I was about to go off the grid so that anyone who saw it couldn’t message me, right? I was off.
But at the time I wanted nothing to do with that business.
Kurt Elster: So, this was your first entrepreneurial effort, and then it’s successful, and you became a victim of your own success. And without having been through that before, it’s both hard to recognize it, accept it, and then know what to do about it. And so, you said, “All right, I’m leaving this.” So, how’d you get out of it? Yeah, you committed to it, and maybe you quit. I don’t know. I think I gotta side with your wife on this one. I think you’re being too hard on yourself. But then, so what did you do? You can’t just say, “All right, I’m done.”
Jason Portnoy: Honestly, I was so out of it, and it’s hard for people to understand that, but I was just so unhappy. And one of the lines in that blog article that I wrote, and I still remember is happiness is the most important thing. It’s what matters the most, and I kept being reminded of people who worked their jobs their whole life, and being miserable, and I was like, “That’s going to be me.” And I didn’t want it, and I knew we were eventually gonna start a family, and I wanted… There’s one thing about you being happy and there’s another thing about you potentially being a role model for your kids, and showing them what to do, and making tough decisions, and doing all that, so a lot of that weighed in my mind.
But maybe a lot of stupidity, like cool, I’ll just go start something else and make that work, right? Because why not, right? So, I was very, very lucky, because when I landed in the Facebook ads world, it was early enough, and I ran an ad to get my first client and I know that sounds really cliché right now, because everyone runs ads to get clients, but at the time no one was really doing it, and the reason why I did it was the biggest objection I kept getting when I was talking to clients, the biggest objection I kept getting was, “How do I know these Facebook ads things work?” And I couldn’t tell them like, “Hey, well, we tried it on our brand.” This is how early we’re talking about, right? People were literally sitting-
Kurt Elster: They were skeptical of it. This was before big brands would touch it.
Jason Portnoy: Exactly. They’re still in the SEO world, right? And they’re still trying to figure that… They’re dinosaurs there and they were like, “How do I know this Facebook ad’s gonna work?” And I’d be like, “Well, how’d we get on this call?” And they’d be like, “I clicked on your ad… Ahh.” And that was my, “Hey, I know what I’m doing because I’m able to get you on the call.” And our first client, my first client, it was me, my first client at the time was doing $2,500 a month in sales, a clothing brand, so something I knew really well, just worked, and they were working out of the basement of their mom and pop, out of their house, and in under a year, in around 11 months I believe, we scaled them to $300,000 a month in sales. From $2,500 a month at a 3X-plus ROI.
I’m lucky because if my first client would have been a disaster, I don’t know where I’d be. I’d probably be like, “Okay, well, this doesn’t work. I’m done.” And maybe would have quit. But that first client was kind of my entrance into this world and gave me the lighthouse, became a lighthouse for me and kind of showed me the way.
Kurt Elster: Yeah. Well, someone has to take a chance on you first, and in this case it was an apparel brand. Something where you had a lot of experience. And so, beneficial for both of you, for your confidence, and for their ad account. What’s different now between… Because you’ve got over a decade of experience here. What’s different today versus Facebook ads years ago? How has the landscape changed?
Jason Portnoy: So, I mean the landscape across the board has changed, right? Organic was huge. We literally put out a post, like for my own business I could put out a post with a picture of the product and say, “Share and like for a chance to win,” and literally boost that post for lack of better words, or that’s probably the only option you had back then was boosting the post. There was no ROAS even. And you would get literally 5,000 organic likes and shares and then sales would go up and you’d be like, “Okay, sales have gone up.”
Now, I think ROAS became a metric, and then everyone became focused on that, and it used to be like before that happened it would just be like, “Oh, man. I’m running these ads and my sales are going up. Must be the ads.” And just associate it and kind of do that, which now people are starting to go back to with like MER. But the landscape kind of changed a little bit with one is all this tracking, lost signals, platform performance. You have rising costs of advertising. You have big players and small players coming in. But I think the biggest change has been people still playing the old game with the new rules, or I guess the new game with the old rules, however you want to phrase it. I think that’s the biggest change people make is I think the last five years, before iOS and before all that, have bred probably the laziest group of marketers and the laziest group of business owners I’ve ever come across.
And that’s the truth the last few years especially, where it’s just it was easy to get results. It was easy to do things. You didn’t have to be a marketer. My skills was never in the fact that I was such a good technical media buyer. My skills were really I understood marketing. And if you understand that, if you understand how to craft an offer, if you understand how to do all those things, then the media buying is the easy part, to be honest with you.
But I think the whole landscape completely changed, especially now, compared to where it was three months ago. Forget going back to when I ran ads, that’s a dinosaur. That’s completely different. The landscape changed from there to two years later, the landscape changed, but going just based off the last couple years, before iOS to now, we are seeing a lot of people struggling. A lot of different agencies have popped up. A lot of… When I went to school to study marketing, it was data entry. When I wanted to go get a job as a marketer and I had no marketing experience it was like, “Cool, do you know how to use Excel?” And I’m like, “What does that have to do with advertising?” It was so stupid. I was like, “That’s not advertising.”
And now, I think just anyone saw the wave, saw the gold rush, and they then became Facebook advertisers, and an agency, and now they’re TikTok agencies, and now they’re this, and now they’re that, and tomorrow they’re gonna be this, and for three months a year ago they were crypto experts, and that’s the landscape we’re in right now that’s kind of hard, and if you’re a brand, there’s so much noise out there.
Kurt Elster: So, the thing… Two things. One, you think the past hyper efficiency of Facebook as an ad platform as it was growing created complacency, because it was like shooting fish in a barrel.
Jason Portnoy: Yep.
Kurt Elster: And then it gets harder, and people are like, “Oh, no. It’s not super easy anymore.” And then when really, it makes you-
Jason Portnoy: But not only it got harder, but then the response was, “It doesn’t work.”
Kurt Elster: Ah. When really they should have been going back to first principles, looking at okay, what are we marketing here? Go back to the really traditional stuff and reevaluate.
Jason Portnoy: Yeah. Whenever anything gets tough, right? Jeff Bezos said this perfectly. He said, “I get asked all the time what’s going to change, what’s going to change. Tell us what’s going to change. What’s going to change?” And I feel like that’s the world we’re living right now in the online marketing space. Everyone’s like, “What’s gonna be next? What’s gonna be next? How do I jump-“
Kurt Elster: They’re chasing trends.
Jason Portnoy: “How do I jump on the TikTok?” Versus Bezos said, “But the real question business owners should be asking is what’s not going to change?” And there’s still marketing fundamentals and principles that will never change. I could give a talk on how to build a brand that I think minus a couple of nuances and tweaks could have worked five years ago and could work five years in the future from now. Just minus, because I’m not into the hacks and that. I’m into the foundations and the principles and those principles exist that like David Ogilvy, do you think he would be complaining about iOS issues writing an ad right now? He’d be like, “What do you mean? I could get this in front of millions of people, and it would cost me what, like 20 bucks to get in front of a thousand people?” The guy was stuffing mailing envelopes or putting it in magazines and not being able to track it. So, that’s where I think the complacency and the laziness is coming.
Kurt Elster: Going back to fundamentals, you have… In your head, I know you have an SOP for this is the rough approach to scaling a brand online. Give me the overview of the… What’s the Jason Portnoy method here?
Jason Portnoy: The Jason Portnoy method or the Market Domination method was what I call it, but it’s literally there’s five levers of a business, right? Jay Abraham said there’s only three ways to grow a business and that’s one, get more customers, two, increase your prices, and three, get them to buy more often. Those are the only three ways to grow a business. Any way that you can think of falls into one of those three ways.
I like to look at it from a business, you have different levers that you could pull. And you have awareness, right? So, how many people are finding out about you? And that could be your impressions, that could be how many people are seeing your ads. If you’re doing tradeshows, how many people are you getting in front of? There’s so many different ways to judge awareness. How many people you getting in front of?
Then, you have lead gen. What percentage of those people are raising your hand and saying, “I’m interested in what you have to say.” And then three, you have conversion. Of the percentage of people that raised their hand and said they’re interested; how many are actually converters and actually gonna buy from you?
Then four is you have your AOV or your price. How much are they actually spending with you? And then five, you have your buying frequency. How many times are they buying from you? Those are the five levers of a business and it’s very easy to look at your business and sit there and map it out, and look at it, and be like, “Okay. Well, what if I pull this lever a little bit more. What does it do?” And I think the biggest problem is most businesses sit there and say, “I’m gonna go all in. I want to go all in on one thing.” And that never works.
Or they make the other mistake and like, “I want to go all in on everything,” and that doesn’t work. When instead, you just have to get incrementally better, like compound interest is a real thing in finance. Why don’t we apply it to business? It’s a real thing in finance. Warren Buffet talks about it. Albert Einstein called it the eighth wonder of the world. Why aren’t we talking about this from running our own business of like why do we have to go for that get rich quick? What if we just pull… If we doubled every area of those five levers, let’s say we could double everything, and I know that’s hard. You can’t really just double your price and can’t double your AOV, but hypothetically, we doubled. You don’t double your business. You 32X your business. That’s the power of compounding, right?
If you take all that and you compound every single one of those levers, you actually… And do the math, right? I just walked you through what it is. You’ll 32X it. If you get 10% better in each one of those levers, you almost double your business. Can you get 10% better? Sure. Maybe you can’t get 10% better on price. You’re stuck. That’s your price. But can you get 20% better on everything else? Can you increase your conversion rate? So many times, we run ads for clients who have like a 0.8% conversion rate on their site and then they’re like, “Ads aren’t working.”
I’m like, “Ads aren’t working?” There’s things in your control versus out of your control and I think that’s what I mean by we breeded the laziest group of business owners and marketers because they don’t want to work on the things that they could actually… are in their control. They just want to throw it out there. And we get this all the time in our agency, people sitting there saying, “Hey, I don’t know anything about online advertising. That’s why I want to hire you guys. I don’t want to touch this. I don’t want to know anything about it. I just want you guys to go do it.” I’m like, “No,” because that’s such a dangerous place to be, and that’s how you get people… The agencies who say yes to that is what causes the, “I hate agencies and I’ve been burnt before.” And why this whole digital marketing space is I hate this space. There’s a reason why marketers rank lower in trust than politicians and it’s because of a lot of those things.
But going back to the point, five key areas of the business, and you just have to get incrementally better, and if you map out your business on them you’ll realize which lever you need to pull at the right time.
Kurt Elster: So, the mistake people are making, the mistake you’re seeing, is people saying, “I want my success but not enough to put in the work myself. Instead, I’m going to throw money at the problem.”
Jason Portnoy: That’s definitely one mistake people make. And marketing and paid media is really good. Paid media is an accelerant. It’s not the spark, right? It’s gasoline on the fire but you kind of have to have that spark there. You kind of have to have that fire. And I think people look at it as a Hail Mary approach and throw dollars at it, but it's not… Great marketing will definitely… If you have a great product or service and I’m assuming that people that are listening to this product do, right? You teach them really well. I’ve heard your episodes before. You’ve been on my podcast, and I know you, I know how you are, so I’m gonna make the assumption that they have a great product. The people listening here, great marketing helps a great product. Bad marketing kind of helps a great product. It’s a great product. I’m just trying to show the great product matters more than the marketing.
Great marketing on a bad product will speed up the rate at which you fail. So, either great marketing will either speed up your success or speed up your failure rate.
Kurt Elster: How so? How does it fail faster? Just because I’m throwing money at it-
Jason Portnoy: You’re throwing money at it, and it’s not gonna work, and you’re just gonna burn through all your cash and be out. It doesn’t matter. Great marketing doesn’t fix the problem so you’re just gonna throw… You’re gonna think you have the best marketing in the world, you’re gonna hire the best agency, you’re gonna do all that, you’re gonna throw all your money at the problem and think that’s how you’re gonna build the brand, and build the business, but you’re just gonna burn out really fast.
Kurt Elster: So, is the approach here to first validate it? Validate the business, product market fit, by getting successful organically through word of mouth and then when I have that and I may be small, but my KPIs look really good, now I go to pay per click, I go to digital marketing, and I start spending real money and see if it scales.
Jason Portnoy: Yeah. If you have no budget, then yes. I mean, people sit there like… We get asked this all the time. Hey, my budget’s $3,000. I’m like, “Okay. Who’s your audience?” They’re like, “Everyone in the United States.” I’m like, “And your budget’s $3,000? Cool. That’d be really good if we could hit everyone in the United States for $3,000. Good luck.” And that’s a problem.
If you have a lot of money, paid media isn’t the silver bullet, but why wouldn’t you want to? You could just fail a lot faster and figure out what wins. You could just test. It just allows you to test more. But if you have no budget, then yes, your mom, your sister, your brother, your friend all saying they love your product, they love what you’re selling. I had friends. When I started a clothing brand I had friends that were like, “Man, I love this shirt. Can I have one?” I’m like, “Well, would you pay for one?” They’re like, “No, but I would take one for free.” I’m like, “Okay, this really isn’t a good concept, right? That’s not good market fit.”
But you kind of have to look at it and you need to validate it. The only way to do that, though, is to get people to actually see your product. So, if you didn’t have money to spend on paid ads, well, what can you do? You can do joint ventures. Find someone who has the list of your ideal audience that you’re looking for but there’s a big enough gap between you and that person. So, if you’re selling t-shirts and they’re selling pants, for example, that’s a big gap, right? They don’t have t-shirts and you don’t have pants. Can you do some sort of joint venture where you get access to the list? What value can you bring them? And that’s a very simplistic approach but I’m just trying to show an example, but that’s the best way to start.
I mean, go knock on doors. Go into stores. Go into retailers. Go into places like that. Do consignment. In fact, if I have to start all over again and I want to start a clothing brand, I’d go into a store and sit there and say, like a trendy store, and sit there and say, “Hey, can you carry this?” And they’d be like, “No, no, no.” And I’d be like, “Look, I’m gonna give you 10 pieces. You sell through the 10. I don’t want any money. You keep 100% of the sales. I don’t even want any money back. But after you sell out those 10, I’m gonna come back and now we’re gonna make an order.” And now I’m gonna get paid like a wholesaler.
But people don’t want to do that anymore. Why? Why would I give them 100% of the profit? Why would I give them 100% of the total sales? Now I’m out money. You’re still out less money than you would be on a Facebook ad, first of all. You’re out way less. But there’s a long game approach and I think people are so short-term thinkers and looking for that latest track. They don’t want to build. Building a brand, Kurt, as you know, takes time. Building a business takes time. And I think that’s where people make the biggest mistakes is when they try to short track things. Then they slip.
Kurt Elster: So, we have to commit to the time to build it initially. We gotta do it organically without shortcuts, meaning we can’t… You can throw money at paid ads but you’re probably just burning that cash if you’re doing it too soon. Get the fundamentals right, which will be proven by your KPIs. Put in the legwork. You’re like, “Look, go into stores. Sell the stuff. Do the hard work.” And then turn around and now is when I want to spend money on ads and scale it, is when I’m confident in it. But it’s not like… It’s not a shortcut. It’s not a Band-Aid to a bad product market fit.
So, it sounds like a lot of the statements, the sentiment about Facebook ads are dead, and no one buys online, et cetera, is really you think people looking for excuses? Am I being shrill?
Jason Portnoy: So, one is we’re making it sound like the least sexiest podcast in the world, because it’s like, “Oh, wait. I gotta listen to this and do work? I thought this guy was gonna come in and give me a silver bullet. This is the least sexiest podcast.” But you have to know these foundations and principles in order to build a brand. I’m sorry. Any hack or strategy you use will lose steam if you don’t have any of this. But to answer your question, yeah, it’s really you need all that. You need that to get going. And I don’t think it’s Facebook ads are dead. It’s your offer sucks. I’m sorry, no one… Oh, no one’s buying anything online anymore? No, no one’s buying your product online, right? Because we’re making millions for our clients still.
And there are businesses that are still making millions on Facebook ads. The landscape changed. The layouts changed. The rules of success may have changed. You may have to pivot in doing it. But you’re not finding results because you’re trying to play a game based off the old rules and expecting the old outcomes and you haven’t adapted. Or you just haven’t really been able to figure out how to get people to buy your product and you’re hoping that it’s gonna be a silver bullet, and when you go on Facebook ads and you run an ad and it doesn’t work, you sit there and say, “Facebook doesn’t work.”
Kurt Elster: So, what are the metrics that we should be looking at?
Jason Portnoy: From a media buying standpoint?
Kurt Elster: Yes.
Jason Portnoy: So, from a media buying standpoint, if you’re running ads right now, ROAS is kind of a metric that doesn’t really make sense anymore. We have so much loss of reporting and loss of signal now and I think that’s gonna get worse. Google moving towards a cookieless web in 2023, all that’s going out the window. Attribution is… All these tools that claim to solve attribution, no one solves attribution. There will never be a tool that solves attribution. It will never be 100% solved because until they figure out a way to measure word of mouth and me taking a screenshot of an ad, sending it to Kurt, Kurt showing it to his wife, his wife going on the website and then signing up to an email and then buying it, but then everyone says, “Oh, look. My email did a good job.” Until they can figure that out you’ll never have 100% attribution. Won’t work. So, take that out of the equation.
I think one of the simplistic approaches is MER, which is how much money, how much percentage of your revenue are you spending on ad spend? I think that’s a very easy way to look at things. Those numbers don’t get tainted. There’s no loss of signal there. And as long as that makes sense for your business, right? Because you have other areas of your business that could dictate how much you want to spend on that. The higher brand recognition you have, the lower you need to spend, the lower your MER will go, right? So, if you’re at 25% of revenue, if you have a huge brand, you could fall all the way to like 18%, right? But then you could get more creative. You could fall down to 9% even the bigger your brand because you don’t have to pay to get people to know about your brand anymore.
Kurt Elster: And let’s redefine for folks what MER is.
Jason Portnoy: So, MER is your marketing efficiency ratio. It’s how efficient are you with your advertising. So, what percentage of your revenue are you spending on advertising? Some call it a blended ROAS. If you’re really heavy in paid media AMER is a big one, so acquisition MER, because paid media’s job is to bring in new customers. So, if you’re listening to this, and you have a business, and you have an agency, and you go look at what their account is, and they’re spending less than 60% on prospecting, and I think that number should be closer to 70-plus. If they’re spending less than 60%, and there’s nuances in all this, but roughly 60%, then you need to have a talk with them. Because their job isn’t to bring in existing customers for you. Their job as a media buying agency is to bring in new customers for you.
Old customers, you control, right? You have email, you have a bunch of different things that are in your control. As a media buying, media buying is in acquisition, so then you have what’s your new cost per acquisition, right? How much is it costing you to acquire a new customer into the funnel? Are you profitable?
I think LTV and RCR, so lifetime value and repeat customer rate are super important in eCommerce, because that dictates whether you could actually lose money on acquisition. And people listening are like, “Why would I ever want to lose money on acquisition?” Well, you could scale a lot more. So, if Kurt and I are running the same business, we both sell toothpaste, and Kurt needs a 3X return on his money and I need a 1X return, I could just outspend him. I’ll eat him for lunch. I’ll just take it out. And the reason why I could afford to do that is because I know that the backend of my selling system is so strong. I know that they’re coming back and over 30, 60, 90 day, even 12-month period, I know how much that customer is actually worth to me. So, if they’re worth after 12 months to me $500, why wouldn’t I spend $200 to acquire a $100 customer?
So, what’s your new cost per acquisition? What are your margins? What’s your contribution margin? How much are you actually making per new customer? Because if you’re making a dollar per new customer, the answer is very simple. Sell more units at a dollar profit. But so many people are sitting there saying, “Well, how do I drive down my acquisition costs? How do I do all that?” No, sell more. Sell more and figure out your margins later. You could work on your margins. Margins are in your control.
Kurt Elster: Yes. Focus on what’s within your control.
Jason Portnoy: 100%. You trying to battle the platform and be like, “Okay, how do I lower the CPM? How do I get my clickthrough rate just a little bit higher? How do I do all that?” All great. All great things that you should be looking at after you fix what’s in your control. Because if I could lower my margin, if I can get my margins from 60 to 70%, I don’t even have to worry about the platform. I just made a ton more money. If I could get my conversion rate up from 1% to 1.5%, I made a ton of money. I’m not even worried about… It solves all of the problems that you’re experiencing in paid media.
So, again, what’s in your control versus what’s out of your control.
Kurt Elster: All right. Going back to our beginning and using your experience, Facebook ads are dead. True or false?
Jason Portnoy: False.
Kurt Elster: People don’t shop online post-pandemic. They blew all their money during lockdown and are now focused on purchasing life experiences and $6 a gallon gasoline.
Jason Portnoy: So, you just changed the whole dynamic of that question. False, people are buying online. We sell millions of dollars through Facebook ads, which solves the first question in it. But the zeitgeist of what’s going on is very real. You raised really good points. I think as a business owner you don’t operate in a bubble, and you may think you operate in a bubble, but the truth is you have to operate in your customer’s bubbles. And when you sell a $150 blank t-shirt, that’s great when people were getting money printed for them, and handed to them, and low costs, and cool, I could go buy this $5,000 TV, and I could pay it off over time at this interest, and I don’t have to worry about it.
And now they have to make real hard choices because the money ran out, and there’s a recession coming, and inflation happened, and a lot of different things, so it’s not everything stopped working, right? It’s never the case. You’re never just running Facebook ads, la-la-la-la-la, things are good, I’m printing money, everything’s good, and oh my God, everything sucks. Facebook just broke.
There’s usually something a little bit more to it than that and I think what’s right now going on in the world is super simple. People really have to make choices. So, yes, people are going shopping online. They’re still clicking on ads. They’re going to the site. They’re adding to cart. And then they get hit with a question. Should I really buy this? Do I really have to do this? Which is why you’re seeing people still add to cart, right? But then right before they’re clicking buy they have to make that decision of being like, “Okay, I just added up my cart. Looks really good. But it’s $400. Man, I don’t know. I don’t think I should spend $400 right now.”
Kurt Elster: So, it’s a question of consumer confidence?
Jason Portnoy: I mean, we see right now, I mean the Washington Post wrote a whole article about this, about consumer confidence is down, and consumer buying is down, and everything is down right now. And I think that’s the case. I think the last few years have been really tough for businesses because a lot of businesses like to look at LY, like this year compared to LY, and looking at year over year, but that’s been the problem because when COVID happened and online boomed, you couldn’t say, “Look at LY.” Because LY was just nothing and then all of a sudden you boomed, so it wasn’t a fair comparison.
Then a year out of COVID… Well, out of COVID, into COVID, whatever you want to call it, a year into COVID, now we’re like 2021, they want to compare ’21 to 2020. You can’t because you have the COVID boom in 2020, so you can’t compare it. It’s not a fair comparison. And now you’re in 2022 trying to compare it to LY, 2021, and you still can’t compare it because one is you have iOS issues, most people pulled their spend instead of trying to figure out how to do it, and at that time in the moment it’s probably the right move but looking back people should have continued spending. But it’s you can’t, so it’s a very unfair and it’s very hard for businesses, and I am empathetic to that because they’ve had three years pretty much where they can’t compare it to LY, so what are you comparing it to?
And that’s a very hard thing for business owners to kind of rectify in their mind of like, “Well, I need to compare it to something.” But you’re comparing it to like one, a unicorn moment; two, the post-unicorn moment; and three, consumer behavior is completely changed, right? If you’re selling luxury goods, maybe you’re okay because it’s usually the upper class that isn’t affected by a recession. It’s usually the middle class and lower class. So, if you’re selling that, if that’s your demo, yeah, it's tough and it’s not your Facebook ads sometimes. It’s not your marketing sometimes. It’s not necessarily your product. It’s not that no one wants it. It’s that you also have to be empathetic to where people are and that’s what I meant by don’t operate the business out of your own bubble and understand what’s going on in the world and how consumers are behaving.
I got hit with a million LinkedIn messages the other day and it was the same message. Same message. And I’ve always found this fascinating that we market to people the way we hate being marketed to.
Kurt Elster: Isn’t that bizarre? It’s like no one likes spam and I still get spam.
Jason Portnoy: Exactly, but we’re like, “But my stuff isn’t spam. No, it’s spam when they send it but when I do it everyone wants it.” And it’s like-
Kurt Elster: Like that George Carlin bit. My stuff is stuff. Other people’s stuff is shit.
Jason Portnoy: Exactly, and that’s a very weird thing, and that’s what I mean by operating in our bubbles, and that’s why I think most of the success when it comes to paid media, when it comes to marketing, really comes down to understanding your customer and how to craft an offer to them at the moment they’re in, at the time that we’re in, at the time of the whole, taking and factoring everything else that’s going on in the world. That’s where true magic happens.
Kurt Elster: That is a beautiful line. That’s where we’re gonna end it. That is so good. You put a bow on it. Jason Portnoy, where can people go to learn more about you and what’s the name of your podcast for us?
Jason Portnoy: Podcast is called Perfectly Mentored. I would start with a great episode, the Kurt Elster episode. It’s a really awesome episode. Yeah. No, perfectly Mentored is the name of the podcast, and everything that I have, and knowledge, whatever, is jportnoy.com. You can find anything on there and I’m super, super accessible across all social media channels.
Kurt Elster: All right. Now that we’re at the end, the story I want to hear from you is you got Gary Vaynerchuk on your podcast. How did you manage this?
Jason Portnoy: So, I don’t know when this episode gets released, but we’re filming episode number two with Gary Vaynerchuk next month, so it will be Gary on the podcast twice. The way I got it, I was in a meeting with… So, Andy Krainak, who’s the president of Veefriends, who was the head of Team GaryVee, we became friendly. I was at VaynerMedia, I know some of the people there, and Gary was in a room, and he was talking to a bunch of people, and he was like, “Hey, everyone should start podcasts. Podcasts are big.” And I’m like, “Cool. I’ll start one. Will you be on it?” And everyone looked at me like I was like, “Oh my God. How could you ask that?” And he’s like, “No.” And I’m like, “But you told me to start a podcast.”
And he said, “Yeah, I’m just really, really, really busy.” And I said, “I didn’t mean like right now. We’re not gonna film it right now. But in the future when you’re not busy. It’s around your schedule, of course.” And he said, “Yeah. This year’s kind of tough.” We were close to the end of the year. “This year’s kind of tough. We got a lot going on and I’m traveling a lot.” I said, “No problem. We could do it next year.” And eventually he looked at me, he’s like, “You’re not gonna take no for an answer, are you?” And I said, “Gary, if you were mentoring me right now, would you tell me to take no for an answer?” And he smiled and he said, “Okay, do 20 episodes and I’ll come on.” And true to his word, he actually ended up coming on.
But the truth is I’ve had a lot of really, really big name guests on it.
Kurt Elster: High level people.
Jason Portnoy: High level people. And people ask me all the time how’d I get it. I never paid for any of them to come on. The one thing is I just ask. I ask. And I’m very persistent. If they say no, I’m respectful. It’s not like, “Cool,” and then next day, “Will you come on?” I find different ways to add value to them and make the relationship work and sometimes it takes a year. Like him or hate him, I’m not getting into it, Grant Cardone for example, took a year and a half of conversations back and forth. But everything that’s ever come that’s good in my life, and from business, to marrying my wife, has come with asking. And I think most people don’t ask enough. They don’t ask for help, they don’t ask for what they want, they don’t do enough asking, and it’s impossible. In life you don’t get what you deserve, you get what you ask for, and that’s why you see a lot of people who you look at and sit there and say, “How’d they get this? I wish I had this.”
But you never asked for it. It doesn’t mean you’ll always get a yes, but that’s where fortunes in the follow up, but everything, everything starts with an ask. Whether it’s asking that person out, asking them to marry them, asking someone to buy your product or service, or asking someone to be on the podcast, the worst thing someone could say is no and that’s a pretty good cost-risk analysis. No versus getting everything I want. A no and dealing with a rejection for 10 seconds or getting everything I want? I’ll take that bet all the time.
So, that’s pretty much that story on Gary.
Kurt Elster: Jason Portnoy, thank you so much.
Jason Portnoy: Thank you, buddy.
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