S: In this episode number 114, you’re gonna learn how to create high-performing Google Ads. In fact, you can apply these techniques to Facebook too, for that matter. Did you know that pay-per-click is $100 billion industry? One of the world’s leading experts in that industry is Perry Marshall and he is our guest today. He’s the author of The Ultimate Guide to Google AdWords and author of the 80/20 Sales and Marketing. His books are course material in several business schools. Perry, it’s great to have you on the show.
P: It’s great to be here. How are you doing today?
S: I’m doing great. It’s quite an honor to have you on the show. You’re a pretty big deal.
P: I feel like, sold a lot of books and having lots of people on my email list and stuff is the best way I know of to be actually useful and help people do something that they actually wanna do in their life. That’s what’s exciting. There’s certainly more than enough people that are barking up the wrong tree or using the wrong tool or whatever. There’s nothing more than watching the light bulbs go on. We’ll make sure that we have some light bulbs go on today when we talk. I appreciate being on your show. We’re gonna have a good time.
S: For sure. Let’s talk about some of these light bulb moments. What would be something that would be a big epiphany for one of our listeners who is not say super into AdWords but they are interested or at least semi-involved in the process? For example, negative keywords, great opportunity, you can have up to 10,000 negative keywords and AdWords can reduce the cost of your campaigns by just loading up lots and lots of negative keywords and a lot of people don’t even know that you can put in up to 10,000.
P: On that particular example, there is a lot of situations where the only way to make something work is to be very strategic and very thoughtful about the negative keywords. In AdWords, you have various match types, you can have exact match where the phrase has to be precisely spelled that particular way, you have phrase match where it just has to have that phrase in it. There’s broad match, modified broad match. AdWords is a pretty fine art these days. It’s not a spray and pray thing anymore. It’s not a sling up against the wall and see what sticks, not in the usual sense anyway. There’s a lot more precision and often times there’s keywords where if you’re bidding on the exact matches, all the bidding phrases are too expensive because other people have already dialled those in really carefully. But you can pick up some broader traffic affordably if, and only if, you exclude a bunch of junk. It’s kind of like painting with a broader brush but imagine using a paint brush on a canvas that’s broad but then taking a razor blade and scraping some of the edges of that so that it actually becomes etched in some particular way. That’s kind of what you’re doing with negative keywords. Now, AdWords, like you said, it’s advanced a lot and there’s several things that you need to be aware of before you dive in. First of all, Google has all kinds of stupidity tax, and furthermore, I’m hearing the second hands probably, from a very reliable source, let’s put it that way. But he said the most recent fun show running AdWords that came in tweaks all of the default settings when you open a new account to favor Google just making the most money. This is a casino and you are playing against the house. Furthermore, if anybody, if any friendly person calls you from Google and they have advice, “Hey, you know, our team looked at your account and they suggest that you should use this or do this or do that.” Never take their advice. They’re just vacuuming out your wallet. Google actually has a fairly adversarial relationship, especially their new customers. If you’re spending $15,000 a day on AdWords and you’re one of the premium accounts, they do have a grade of customer where they give you reps that really know what they’re doing, but the rank and file reps don’t really know what they’re doing. They’ve never spent their own money buying advertising. There’s an old book by Harvey Mackay, Beware the Naked Man Who Tries to Sell You His Shirt, or a big thing that Nasim Nicholas Taleb likes to talk about is skin in the game. Are you talking to a person who has skin in the game or they have skin in their game not yours. Very few people who work at Google AdWords have ever actually ran their own Google account, been an entrepreneur, had to buy the ads, get the profit, meet the payroll. So really, you gotta be really careful about what you’re doing. On top of that, don’t even attempt it unless you are willing to get a really solid education on AdWords because otherwise it’s just not gonna be worth it. AdWords has been around for coming up on 16 years. I started using it two months after it came out when nobody knew what it was. We were in the wake of the Dotcom crash and everybody thought it was armageddon. It was pretty then although nobody knew what they were doing. It was easy but the wild west and Microsoft, the Windows 98 was crashing every other hour. It was like a totally different world. Now, AdWords is really competitive and man, you just gotta sharpen your pencil and there’s just no if, ands, or buts about it. If you’re gonna be in it, you need to be in it seriously, all in from the first click to the landing page, whatever the sales process is, to the pricing, and the margins of whatever you sell. It’s all tied together.
S: You can end up spending $50 a click if you’re buying competitive keywords.
P: Pretty easily, yes.
S: It can really add up fast.
P: Yes, you really have to pick your battles and you have to start with something that you can bite off and chew. Here’s a major tip, it doesn’t matter whether you’re starting in Google AdWords or you’ve been in it a little while. I recommend that any new thing that you do, maybe you’ve had an AdWords account for ten years but you’re gonna launch a new product line or something, you’re gonna write your Google Ads. What I’m about to tell you will be worth ten times the time you spent listening to this podcast which is start with remarketing aka retargeting and then kind of let out the clutch towards getting cold traffic but start with warm traffic. On Google, there is actually two kinds of remarketing. First, there’s the really familiar kind that everybody has seen which is you go to some website and look at lavender blinds and then there’s lavender blinds follow you all over the internet, that’s the first kind of remarketing. The second remarketing is called remarketing lists for search and that is you’re remarketing to people who already visited your website once on Google’s search engine. There is a way where you can say, “I want this ad to show up on Google search for these certain keywords whatever they are. But I only want it to show up to people that already visited my website.” That’s very valuable because a person who already visited your website once is more likely to buy than somebody who didn’t. But on the display network which is all the other websites all over the world that use Google Ads, for the display network, if you target people that have already visited your site, you will skim a bunch of cream off of the top of a particular group of people. That’s the people, they were almost interested enough to buy, get on your email list or whatever, but not quite. Most websites already have some traffic and so if you’re gonna wade into the pay-per-click game, wade in starting with remarketing traffic so you can test ads, because the response is three or four times higher, it’s gonna cost you one-third or one-fourth the money to actually do that, it’s a more forgiving medium, you can then test a bunch of ads, find an approach that works, figure out a landing page that works, get your metrics working, and then go, “Okay, now that I got this working for let’s say the people that visited my site in the last 3 days, let’s open it up to last 7 days or last 14 days. Now, let’s start buying some cold traffic, people who never bought.” If you take that path that I just gave you, you’ll have a much better chance of actually surviving and getting into that cold traffic and not losing your shirt, that $50 click may only cost you $5 or $10. You dial in your ads with some testing and stuff, you’d get your $5 or $10 down to $2 or $3 and then, “Okay, now we’ll go buy cold traffic for $15 a click instead of $50.” That’s a lot better of a deal any day.
S: By warming up your account and by buying the traffic, that’s warm traffic first, you’re actually lowering the price of the cold traffic that you’re gonna be buying, is that what you’re saying?
P: That’s right. It’s partly for warming up your account but it’s really from warming up you. Because we have all kinds of assumptions about what’s gonna sell or what are people gonna want or whatever and they’re wrong, at least if you can start with the people that almost bought from you and work from there, you got a much better chance of dialling it in before you go broke.
S: The reason partially for this accruing is that quality score is a big component to the algorithm and how much you pay, it depends on your quality score. If you improve your quality score by improving click through rates and by improving your ad accounts and coherence between the ad and the landing page so you’re using the same kinds of words and so forth, then that can improve your quality score and you’re gonna pay less.
P: That’s absolutely right. Quality scores’ really important and if you have consistently good quality scores in your account, the gods of Google look down on you favorably and you advance better and faster.
S: What would be some of the components to quality score that our listeners should know about?
P: About three-fourths of it or more than half is click through rates, it’s simple as that. They’re just looking for the highest possible click through rates, we can talk about how to get those up. Another component is they have bots increasingly, it’s AI kind of stuff, that are looking at the keywords that are being typed in the keywords of the ads, the keywords of the landing pages, are looking for that to all match up. There’s even some subtleties where they’re looking for signals, think in terms of the SEO side which I think you’re super familiar with, where Google knows that pages about garden hoses are also talking about grass and stuff like that. This gets probably a little murky but at least you need to have the general idea that Google’s looking at stuff like that. Another big one is bounce rates. What percentage of people are coming to your site and leaving 10 seconds later? They don’t want that number to be high. They want it to be low. I’m pretty sure that when you type in, let’s say, some search about how to fix something on your computer, you know how Google put these little things at the top where it’s hopefully an answer to your question, you don’t even have to click on the link. Well, usually those are scraped from the sites that are ranking number one already in the organic side and those sites are specifically ones that have a low bounce rate. Google’s going, “Well, apparently, people find that site pretty useful because they go there and they spend a half an hour looking at it and they don’t come back. Why don’t we just put a little paragraph or two from that site right here and maybe…” You kinda gotta use that same mentality and then you’re dialling in. You’re using whatever your measurement tools are, Google Analytics perhaps, you’re split testing landing pages, and you’re testing offers, maybe even the color of the buttons or what have you, just increasing that conversation.
S: Right. What you’re referring to is the featured snippets that are essentially position zero, and they can actually come from other listings on the page besides number one.
S: Statistically speaking, the majority of the time, it comes from positions one, two or three. But in studies, they found as deep as eight pages in, you can still take the featured snippet, it’s pretty mind blowing. But if you don’t have that higher than normal click through rate for your position in the search results, you’re unlikely to get that featured snippet. That’s a keypoint is you need to get a higher than typical click through rate and then you have an opportunity to get the featured snippet. It’s another thing that from a paid search perspective, if you got a higher than normal click through rate, that’s gonna make a huge difference to your quality score.
P: That’s right. The average quality score is probably three to five or something like that. You get from 7, to 8, to 9, to 10, you get significantly more impression share on your ads, you get significantly more traffic, you’re much more likely to get the top spot, often times people that can dial in that top spot do really well. Actually, the cost per click decreases. There’s a really nice sweet spot because that’s what Google wants to do. Google wants to give 95% of the traffic to 5% percent of the advertisers. That’s what they wanna do. They wanna give 30% of the traffic to basically one advertiser. That’s how it works. It’s all very, very 80/20, it’s 80/20 squared or 80/20 cubed. The winner takes all. We’ve been talking about some of these blocking and tackling things within Google, I find myself mostly talking to people about the wider strategy of their products and what their selling and how they’re selling it. The economics, the profit margins, the uniqueness, the positioning of their product within the marketplace versus all the other products. What I always find is you have to find an angle that nobody else is using and really get a leg up on the unique selling proposition over everybody else in your market. There’s definitely some alchemy involved with that. If you’re just doing a good job with Google AdWords, that’s not really enough in 2018.
S: To differentiate the basic blocking and tackling stuff, we’re talking about having related keywords, you gave the example of lawnmower and then grass, if you’re not talking about grass in the landing page, that’s looks pretty weird, a very surface level sort of article. Same thing goes with SEO. If you’re not using those related keywords or LSI keywords some people refer to them as, you’re very surface level and you’re unlikely to dominate in Google organically, those are basic blocking and tackling sort of things, but then the overall strategy, I love this quote from Art of War, Sun Tzu said, “Tactics without strategies, the noise before defeat.”
P: Oh, yes. Oh my goodness.
S: It’s a great quote.
P: Amen, brother. Oh yeah! Look, everything Sun Tzu said, I watched in exquisite detail as Google AdWords took over the world more than 10 years ago. When AdWords was new, first, it took about a year, a year and a half for the world to kinda figure out that it was there. Even at the same time, people were still moving from other search engines onto Google, like Excite and HotBot, and Altavista, Yahoo and everything. Probably by 2004-2005 most people have figured out Google is the best search engine. Google was growing like crazy then they had this amazing advertising system that most people haven’t figured out. If you’re in early, it was really a bonanza. It had all these people and if you kinda knew what you were doing and the tactics, if you knew how to do some negative keywords, do your bidding well, some basic direct response copywriting stuff, you could be way ahead of everybody. There was this giant, all Mexico city, or Nairobi or Sao Paulo or one of these developing countries where there’s shanty towns, cardboard shacks and stuff, there was this giant sea of businesses built out of cardboard shacks running on Google where I get my Google ad, I get my affiliate program, I get my keywords, and man, I’m making $50,000 a month, ‘You guys, look how awesome I am’. Then there’d be a windstorm where Google would roll over something and 8,000 people crashed in tsunami. It was just dreadful and it was because, I don’t know how many people I know that were making $5000, $10,000, $15,000, $20,000, $30,000 a month one day, then the next day it was all gone. That was the clamor and clinging of tactics with no strategy. That’s exactly what it was. Man, that’s a rude awakening, man. Last night you’re on top of the world, and this morning you got nothing and they’re not accepting your phone calls and there’s not a thing you can do about it.
S: Isn’t that happening nowadays with Facebook advertising or hasn’t that already occured there too? Then now, you have maybe with Bitcoin, people think they’re so smart because they’re winning right now but it’s all tactical. There’s no strategy there. They’re just riding the tide with all the lemmings.
P: In a growing market, everybody makes money pretty easy and people make the mistake of thinking that they were smart. No, you were lucky. You didn’t hit a third base, you woke up on third. You wanna be in growing markets, we can talk about that, you don’t wanna go into a market that is shrinking. I’ve learned that the hard way a bunch of times. My students have learned this a bunch of times. I remember when the 2008 crashed, they were several people I thought I could save with even more brilliant marketing tactics. No, all the real estate guys went bankrupt regardless. You wanna be in a growing market but you have to understand that just because you’re in a growing market, just because you seem to be making all of this money, a lot of times it’s more of the market. In fact, I actually believe that the millionaires and billionaires and the success stories in general are more about the market than they are about the person in the market. It’s actually true. I’ll tell you how I know this. First of all, I’ve seen a lot of stuff happen, a lot of stuff come and go, but one of my good friends is Richard Koch who wrote the original book The 80/20 Principle, he also wrote a brilliant book called the The Star Principle, and Richard, less than 30 years ago, Richard was a working staff. Richard’s now worth about $500 million. Richard’s got this great book called The Star Principle where he explains that the number one key to success in any business is being a star business and the definition of star business is number one in a market that’s growing 10% a year or more. You will find that if you take a business or a product that’s in a market that’s growing 10% or more and it’s the first mover, it’s the Coca-Cola of that because they caught it at the time when it was just taking off. If you take a person of reasonable skill level in business, and you put them in a star business, they will tend to succeed. If you take a not star business, not number one, market not growing 10% or more, it’s actually zero or shrinking, it almost doesn’t matter how smart you are. For example, Coke’s number one, Pepsi’s number two. Nothing Pepsi does, no matter how smart would get them to number one, unless Coke majorly screws up. You can take that to the bank. Number one, the incumbent has an overwhelming advantage over the rival. This is really important because so many people, they wake up one morning they are like, “Hey, I’m gonna do x. I’m gonna be a marketing consultant. I’m gonna do this. I’m gonna do that. I’m gonna sell strawberries, I don’t really care what it is.” If you can’t be the number one person in that market, forget it. What you have to do is you have to find a market that’s growing but where part of that market, nobody’s claimed leadership, you have to grab that little part that nobody’s claimed leadership, and make yourself king of that, and then continue, and then grow that.
S: What will be an example of that?
P: Okay, I’ll give you several examples. I’ll use myself as an example. Richard Koch’s book, The 80/20 Principle, great book. Richard’s the 80/20 guy. It doesn’t matter what I do, I’m not gonna be the global king of 80/20 because Richard’s already there and his books are already there. It’s the incumbent. What I did, I wrote a book called 80/20 Sales and Marketing. I said several things about 80/20 that nobody’s talking about like 80/20 squared, and 80/20 cubed, and 80/20 being fract or we could talk about what that means in few minutes if you’d like. I applied it specifically to sales and marketing, chapter after chapter. Here’s how 80/20 applies to pay-per-click. Here’s how it applies to how you manage your time as a marketing person. Here’s how you apply it to email and autoresponders’ copy. Here’s how you apply it to market research. I said a whole bunch of things that Richard didn’t say. Well, that’s a new niche. 80/20 Sales and Marketing is really a different topic than just 80/20 general whatever. I own that. I own that topic in the marketing space and everybody knows it. That was very, very deliberate. That’s the strategy that Sun Tzu’s talking about of really picking your battles. The most important decision that you make in all of these is picking the battle. Because if you go into a battle you can’t win, forget it. They could memorize every word of your SEO book. But if they’re going up against King Kong and they’re still a toddler, there’s no way.
S: Yup, so true.
P: Dan Kennedy told me this story once. He was in the green room with Norman Schwarzkopf. If you remember, this was early 90’s after the Desert Storm thing, and we crushed the Iraqi army. Norman Schwarzkopf is like ticker-tape parade man. Dude, you are the man. $70,000 speaking fees, he’s on TV and everything. Dan says, “What’s your number one secret to success?” Actually, it was more specific than that, it was like, “How did you manage to become the hero of the United States?” He said, “I only fought battles that I can win.” Now, you fast forward, 10 years, 12 years whatever. George Bush decides to go into Iraq and man, that hasn’t really turned out very well. That was not a battle you could win. All Schwarzkopf did was get the Iraqis out of Kuwait and when they came to the border they’re like okay, and stay out.
P: George Bush got our butts smeared all over the Middle East and made a giant mess. There’s like a hundred, trillion moral lesson or however much that cost. Are you gonna learn from it for yourself? Because you can learn from that.
S: Right. What would be an example of learning these lessons? What would be going into a market that is shrinking? What’s an example of a market that’s shrinking that you should just stay the heck away from?
P: Book stores? They actually might be coming back. But certainly, I think, actually they are. But if you rewind to a couple of years, and go from when Amazon showed up until not very long ago, man, book stores is just… I’ve learned this the hard way with a venture with different people. Whenever there are downturns in industries, all of a sudden an entire industry is contracting, you’re almost better off leaping into some other industry or finding something else that you can do rather than trying to save the ship from sinking. I have just tried this in vain so many times. The ones that come to mind are when mortgages and real estate were going down the tubes. Dude, there was nothing you could do about that but I didn’t know it. I didn’t understand Star Principle the way that I do now. What are some of the signs that an industry is growing or there’s bunch of little tell-tale signs? One of them is everybody’s hiring. One of them is nobody can quite seem to get enough talent and they’re willing to pay for it. One of them is there’s a whole bunch of people in this market, and even some of the stupid ones appear to be making money, so far as I can tell. Another one is there seems to be all kinds of new people coming into this field all the time. Another one is there just seems to be lots of articles, and media, and everything else about it. You kind of learn to, almost in your muscle memory, you get a sense of what it’s like when you’re in a growing market and you get used to it. When you go into a not growing market it’s like, “There’s something wrong here. This doesn’t feel right. This doesn’t feel normal.” You want that to be your normal. It can be. There’s no reason why not.
S: Makes a lot of sense. We got some good strategy discussion going on here. Let’s go back to AdWords specifically and you mentioned there are ways to get your click through rate up because that is such a huge component to quality score. Let’s talk about some tactics and strategy both around getting your click through rate much higher than it is now.
P: We just came out with our fifth edition of our Ultimate Guide to Google AdWords and my co-author, Mike Rhodes, I think he did a really bang up job with. There’s this concept that we talked about briefly in the book, this was our main knife concept. It’s the idea of doing permutations and combinations of elements in ads that you deliberately mix together rather than just sitting there and trying to think of something, which is what most people do, “Oh, okay. I’m gonna write a headline. I’m gonna write another one. I’m gonna write another one.” What you tend to do when you do that is you end up in a rut where you’re kinda doing the same thing over and over and then people, “Well, let’s try capitalizing this word.” That’s not what you should do. Here’s what you should do. In a Swiss Army Knife model, we ask you a series of questions and I’ll try something out for you. Tell me five things your customer loves and write them down. Tell me five things that your customer hates, write them down. Describe the five people or institutions, organizations that you could say are your customer’s best friend. Describe the five people, organizations, institutions that you could call their worst enemy. Maybe one of them is the IRS. Maybe it’s Trump or Hillary or whoever. Tell me five positive beliefs or expectations that your customer has right now. Tell me five negative beliefs or expectations that your customer has right now. If you did that, you just got a list of 30 things. It’s not too hard. It’s a really good exercise, it gets a good exercise to have this stuff written dow. Now what you do is you start combining them. Well, let’s take one item from worst enemy and combine it with one item from positive belief or expectation and now I write an ad that says something like ‘The IRS is out to suck every penny out of your wallet. However, the 5% most financially astute people will always make more money than everybody else put together’, there’s an ad for you. This works splendidly well on Google display network. You can take combination of ideas and just throw them on there. How many ways are there to combine 30 different things, I didn’t even know how many, hundreds or thousands. You could take those 30 things and you could literally write 100 ads and they would all be different. You start testing those ads, one of them is gonna hit the ball out of the park. If you write 10 completely different ads that do reflect what your customers love and hate and so on, out of 10, 1 of them will beat the average click through rate by 3x.You’re almost certain to beat a control with that strategy. Then you could take all of that, you can compile with different images or different offers or different prices or different elements of proof. All the sudden, you have almost twist the dials formula for just writing a new ad, writing a new ad, and you don’t have to try to ring your brain out like a dishrag and ask yourself to be creative. It’s just combining questions and asking… This is a very serious strategy. I do this all the time. I even do it for things like blog posts, and Facebook ads, and things like that. Let’s say you’re talking Google search, not Google display network. On display network, you can do almost anything you want because you’re assuming that you’re on the right page talking to the right person, you just have to get their attention, you can say anything. On search you have a much narrower constraint because you have to fit the keywords. You have to match the conversation inside the customer’s head. What I find is that you have to use the keyword phrases and stuff that people are typing in but you use the additional other space in the ad to do this kind of Swiss Army Knife stuff including the ad extension which there’s an abundance of them. Those are the extra links under the ad that Google lets you include like information about different products that you sell or your locations or whatever to the map, the phone number. Most of that stuff you can appropriate to communicate more about your products. I reach into this Swiss Army Knife, in fact, about a month or two ago, I was selling my car, and I said, “Well, I’d probably sell it faster if I ran some Google ads for this thing.” So I started running Google ads and I have to come up with, “Well, what interesting thing can I say about an Infiniti G37?” I went through this well, ‘five things your customers love, five things they hate’. I ended up writing ads like, ‘The high testosterone car’, some of them might even been ‘mid-life crisis’ or whatever. One of them was about ‘my kids love to ride with the top down’. I came up with all these ads and I’m watching the click through rates and as I’m starting to say things that most classified car ads don’t say, most of them just tell you about the mileage, the color, whether it’s got air conditioning. I get these emotional clicks going on. The click through rate was double or triple what the kind of standard approach was. This absolutely works. If your competitors are squeak and buy with a 3 ½% click through rate and you got a 6% click through rate, you basically have a 40% advantage over everything they do. It’s huge. Man, if you gotta test 100 ads to get to that magic ad, do it. Do not hesitate.
S: Right. For example, if it’s getting close to year end and some companies are flushed with cash and they wanna reduce their tax burden, they might wanna buy your Infiniti G37 as a company car and reduce their tax bills and you can incorporate that into the ad.
P: That’s right. If you’re thorough about your ad writing process, and you really thought about your customer, what do they love, what do they hate, what are the reasons. Somewhere, tax or company car, something like that, that’s gonna make it in there. Of course, selling your car, you’re only selling one, it’s not that big of a deal but if you gotta sell 1000 of them which is what most people listening are actually doing, then absolutely, man. You need every resource, and a lot of times, it’s that kind of weird reason that nobody else is talking about that’ll catch somebody’s attention.
S: This gets back to what you’re saying a while ago in this episode, find an angle that nobody else is using.
P: Yeah. Everything about what you do in 2018 has to have a USP. Your ad has to say something nobody else is saying. Your landing page has to say something nobody else is saying even if you’re just offering a white paper or a report or a little piece of software or some kind of lead generation or a quote. There has to be something in that that truly has a unique selling proposition and nobody else has that. Your product has to have a unique selling proposition. Whatever you sell after that has to have a unique selling proposition. When I say unique selling proposition, it’s such a cliche to marketers, people kinda forget what it really means. Well, ‘fresh hot pizza in 30 minutes delivered, guaranteed or your money back’, that was Domino’s Pizza’s USP in the 1970s. That was a good USP in 1975. It’s not anymore. A really good USP is ‘I’m gonna turn in my cell phone before I even come into the room to listen to you because what you say is so important. I’m gonna stand in line outside the building before I get there. Whenever you get done telling me whatever you’re telling me, I’m gonna reach for my wallet right now and I’m gonna buy whatever you’re selling me’. That’s a USP. It’s not just some ‘Well, we’re a little bit better. Our customer service is a little better, we’re a little nicer, we care a little more’. No, that will get you nowhere in the 21st century. I’m not saying this is easy. I’m just telling you the truth. If you don’t have that then you need to go to the drawing board because if you go into Google AdWords with a product with no particularly great USP, you’re gonna get slaughtered.
S: That’s what Tony Robbins says. Back in the day if you had a good product or good service you can get good rewards. Now you just get pain. If you have excellent products, at best, you get good rewards these days. If you have an outstanding product, then it’s winner takes all. That’s that two millimeters above everybody else. That two millimeters can make the difference between winning the horse race and the second place horse gets almost no price money. You gotta go for outstanding. Excellent isn’t gonna cut it in today’s economy.
P: That’s right. We really do live in a winner takes all world. We used to live in an 80/20 world. Now, we live in a 95/5 world. Most people haven’t really wrapped their heads around 80/20. They don’t really realize that the 20% is 16 times more effective than 80%. They don’t really realize that. In the 95/5 world, the 5% is literally 100 times better than the 95% and it can make 100 times more money. And you really see that. The brick and mortar world is 80/20. What do I mean by that? I could go ask your 10 year old kid, “Can you name a dozen car manufacturers?” Any 10 year old could come up, “Yeah. Kia, Suzuki, Chrysler….” If you ask your 10 year old kid, “Name a dozen search engines.” Even I couldn’t name a dozen search engines. I could probably come up with five or six or seven and then that would be the end of the list. In the United States, you got Google and they’re number one by far, and then you got Bing, and then you got nobody. On the internet nobody’s number two or three, really. There’s just one. There’s one Facebook. There’s one Google. There’s one eBay. There’s one Apple. There’s one Uber. I know Lyft is kind of trying but I don’t really think it’s gonna pan out in the end. You don’t wanna be number two, you wanna be number one. Figure out what you can be number one in and it needs to be a growing market, not a shrinking market. I don’t care if it takes you two years to figure out the answer to that question. It’s better to figure out the answer to that question than just go stick a pencil, buy go start a business and hope for the best. If you can’t be number one, you’re not gonna get anywhere.
S: Yeah. What would be an example of 95/5 strategy or an activity or something that will be in that 5% that would generate 95% of the value?
P: I’ll tell you an example, one of my students. This is a really beautiful case study of what I’m describing. We’re going back, by the way, probably six to eight years, I suppose, and he was in the Google AdWords game, bought my book, then he’s getting into my coaching and all that. He was a broker for car shipping. If you’re shipping your car from Boston to Dallas and you need a truck to come pick it up, this is what he’s selling. Back then, it was this big, giant, affiliate mosh pit. All these affiliate programs for selling car transport, he was just one of them. But he’s gotten a little bit better at Google AdWords than all the other people so he was number one and he was getting a lot of traffic. He signs up for one of my programs. What he imagined that we’re gonna do is man, we’re gonna trick out his Google AdWords account, we’re gonna put turbochargers, and magwheels on that thing, it’s gonna go 190 miles an hour. Well, yeah, we did do that. But, I’m like, “That’s not really what this is about, man.” I said, “Okay, I got a question for you.” I said, “Why should I have you ship my car instead of anybody and everybody else in the entire world? Give me an answer.” And he’s like, “Uhhhh…..” Didn’t really have one. “I don’t know. I get better ads. I got a nicer website.”
S: Nobody cares about that.
P: That’ll last for six months, or three. I said, “Okay, so here’s what we’re gonna do. We’re gonna figure out a reason why people need to buy from you. We’re gonna invent one if necessary.” I don’t mean lying. Don’t hear me wrong. We started crunching through this problem and what we came up with was a guarantee. I started asking questions, and one of the things I figured out was quite a few of his customers had classic cars, like a 1966 Mustang or something. He goes, “Yeah, when I talk to these people they are like, ‘Oh, you’re gonna take really good care of my baby, aren’t you?’ Yes, we will.” I said, “Alright, here’s what we’re gonna do. We’re gonna guarantee that that car gets there safely. Your guarantee is gonna have teeth in it, your guarantee is gonna say if your car doesn’t get there safely without a scratch and everything else, we will pay the insurance deductible to get the damage fixed. It will be on us.” He’s like, “Uhh, not sure I wanna do that.” I said, “Well, that’s why you need to do it. Because they’re not sure either. If you’re not sure and they’re not sure, they’re not gonna buy from you. You need to take the risk out of this.” Here’s what evolves out of this, he’s putting up money to cover this, I think, he might even have bought insurance, I forgot what he did, but now he realized, “Hey, I’m actually in the game of vetting these car shippers because I know some of them are ramming things with screwdrivers and some of them are really conscientious. It’s my job to know which ones are which.” He starts selectively, “We’re not gonna have this shipped by so and so. We’re gonna have it shipped by the good guys.” He keeps giving more business to the good guys, he ends up building this whole backend, computerized bidding system where every time a job would come up, it would get posted to some bulletin board that all these car shippers can look at and then he’s gonna pick the winner. They can bid on it or whatever but they’re gonna pick the people partly based on the past history. Now there’s an 80/20 of, “I’m gonna use the 20% of car shippers that give me 80% of the best results and I’m gonna have a hierarchy. Now, I know all the stuff about the marketplace that nobody else knows. Nobody else knows how good all these shippers are or how bad they are or whatever, we do. Nobody else knows whether they show up on time or not, we do.” They started putting this all into their system. Today, if you go to shipacardirect.com, you’ll see they got some crazy number of Google reviews, it’s 4.7 stars and it’s thousands of them. There’s a picture of a beautiful 1966 Mustang with kid gloves, it looks like it’s on a velvet thing, and they’re guaranteed. They’ve become the only people in the whole industry that can have that good of a guarantee on that many shipments because they actually know something that Google doesn’t know. They know something the customers don’t know. They’ve built a whole ecosystem around it. This is kind of a long, complicated story, but I mean this is a case study in how you go from being just another guy out in the mosh pit who can do something kinda like everybody else, to where all the sudden they have a really serious, badass operation. This is a valuable business. If Michael wants to sell that business someday, he can do it. He’s innovating all kinds of other interesting things right now. He’s still evolving and that’s what I’m talking about and that’s probably the best simple case study of what you should really be doing with Google AdWords. See, that’s strategy. That’s not tactics.
P: That’s real strategy.
S: I love that and that is such a great example. I’m curious, what is your unique selling proposition? Applying that idea to you as an AdWords expert, what’s your USP?
P: My USP is really 80/20, 80/20 squared and so on. I’ll give you a couple layers to this. When I first started figuring out AdWords, I realized this is all 80/20. All the columns and the spreadsheets, and the winners and the losers it’s all… This is really my job to do an 80/20 on this whole thing. What I do now is I take equity in growing businesses. I identify star businesses, number one players in growing market. I work with them on a consulting basis and I take stock options. I look for needles in haystacks and that’s really what I do. Nobody teaches 80/20 better than I do. I teach my students 80/20 so they know how to identify the star businesses so that my business actually becomes a conveyor belt for the very best ones. Super quick story and we’ll wrap up. About seven years ago, I was doing a seminar in London and I had a hot seat for this guy and he was doing the sports betting business. He had this membership website and he had to explain to me what fantasy football was because I didn’t know. He explains all about it. I did the Swiss Army Knife exercise work with him and his wife. I explained to him why his customers buy. We did all this kind of stuff and everybody went on their merry way. Three years ago, I got a text from a guy that was at that seminar and he goes, “Hey, remember the fantasy football guy?” I go, “Sort of.” He goes, “Those guys just raised $200 million of venture funding, they’re called FanDuel. Their commercials are on every ESPN, Monday night football sports bar. I’m like, “Dang, those guys, that was that guy?” That was FanDuel. Didn’t they get bought up by DraftKings or something like that, I forget. Anyway, it was like “Oh, I get it. That’s the business I’m really in.” That was the business of figuring out who the stars are gonna be and helping make sure they make it. Now, I kinda missed that one. Well, that’s okay, you win some, you lose some. But I’m not unaware anymore. I’m really in a fishing expedition for those kinds of businesses that they could grow from 1 million to 20 million, or they could grow from 2 million to 50 or 100 million or billion, even. Those were the kind of clients that I take on now. I really enjoy it. It’s a wild ride.
S: That’s awesome. If one of our listeners feels like they’re the next unicorn, potentially. If they get your help, how would they find you? How would they work with you? Even those who aren’t too sure that they’re the next unicorn and they know that they could really benefit from your help with either as you being their consultant or maybe taking one of your workshops, what’s the next stop?
P: You can go to perrymarshall.com/8020. You can get 80/20 Sales and Marketing. We’ll ship it to you for $7 in the US and $14 international. It’s about $10 less than it costs on Amazon. Of course, we have Google books too. If you think you’re a unicorn, you can contact us by opening a support ticket and reference that you heard me on the show. We kinda have a process for this. You kinda have to go through the phases but I would recommend for most people either get Ultimate Guide to Google AdWords if AdWords is what you want, or if you’re not so focused on AdWords, you just want a really good strategy book, it’s 80/20 Sales and Marketing which it’s kinda my manifesto on how sales and marketing should be done. It will totally change your life. We didn’t really get into the nitty gritties of 80/20. But after you read that book, you will literally look out your window and you could point at 10 things outside your window that are 80/20. You would have never even thought about it before. When you can walk into a business and just conjure up, okay, there’s an 80/20 relationship. There’s an 80/20 lever, there’s an 80/20 lever. There’s a tiny hinge that swings the big door. There’s almost no end to the improvements you could make.
S: Yeah, I believe you. That’s basically how the brain works. You have the reticular activating system and you train it to pay attention to the things, let’s say, you’re looking for the color red, and you’ll find it. Your reticular activating system will help you.
P: That’s right.
S: I’m sure it help you with the 80/20 rule, finding those opportunities. Amazing.
P: I’ve got thousands of customers whose RAS sees 80/20. It makes them so much sharper. You walk into a room full of people, there’s a hundred people in this room and you know what, one of those people can do you more good than the other 99 put together. Who is it?
S: Powerful. Alright. Well, thank you so much, Perry. Thank you, listeners. Hope you will now take some action from this episode. Go to marketingspeak.com for the show notes, for the checklist that we’ll create of all the actions and important things to take out of this episode, all that is available at marketingspeak.com. We’ll catch you on the next episode of Marketing Speak, this is your host, Stephan Spencer, signing off.