Need Advice from the Big Boys: How to Handle a $500,000 CPA Ad Budget Wisely? (9)
Need Advice from the Big Boys: How to Handle a $500,000 CPA Ad Budget Wisely?
I've been a lurker for a few months now and STM is great. This is my first substantial post here, so hi!
This question is for the big dogs of STM. I have a $500,000 ad budget which I would like to spend within 30 days... while keeping compliant AND my unit economics in line. 
Given my situation which is outlined below, what is the wisest way to manage this spend? In other words, what would you do?
My background: I am an offer/product owner who up until now has also been the exclusive promoter of it. I know my numbers, and have a solid idea of what a user is worth to me and what the cashflow looks like. I've spent north of $1M in my history as an ad buyer for different brands in the agency world and for my own products over the last 7 years or so on a combination of the major PPC platforms, Facebook, and Popups/unders. I have a small team of about 5 guys who do everything from VA work to landing pages, UX design and programming. The only thing I don't have team-wise is an ad buying team.
The offer: I can't give too many details here, but I will say that it's an above-board download offer with wide appeal which generates a small amount of revenue per user over a long-ish period of time (well under a $1/month/user). So basically, I spend once to get a user then earn revenue from them monthly like an annuity. I earn the most in the first month before it tapers off over the next several. Some users will stick around forever but the product isn't old enough for me to know what happens after a few months at this point.
Given the nature of the offer, it is best for me to spend as much as I can up-front--so the revenue snowballs and becomes re-investable. I have a slug of $500,000 earmarked for acquiring users. It is obviously important that I don't fuck up, given the amount of money at stake 
.
Current progress: I'm spending about $2K/day and getting users at under a dollar a piece. My target maximum CPI is $0.50, but I've been doing better than that up to this point (sometimes much, much better). Popunders have been really good although banners have worked okay too (just takes a lot more work). My best traffic source so far has been adult in nature but the offer is something that can be promoted on both adult or non-adult traffic sources alike. The money spent so-far doesn't eat into the $500K, so I really do still have the entire amount to work with here.
Here are the options I'm considering:
Option 1. I could hire a long-time, highly trustworthy friend who I've worked with in the past (at length) and who is an (actual) rocket-scientist turned marketer to oversee, optimize, and automate the spend. I would be inclined to pay him a flat salary and/or a 2-3 cents per acquired user so he has some good incentive.
Pros: This guy is wicked with a spreadsheet. He is creative and frequently sees micro opportunities that pass me by. He'll take his responsibility seriously and not screw me, can learn very quickly, has managed a team, and has an automation mindset. He can help us expand our offer into East Asia when the time is right. He's a good buddy and I like to share opportunity with my friends. I trust him 100%.
Cons: He lives in a different country (but would skype, travel and/or re-locate). He will have to leave his current 9-5 job. While he has managed Adwords and FB campaigns before with success, he's never done anything on this scale. He will require some training.
Option 2. I could sign a deal with a CPA network and have them help figure it out.
Pros: A reputable network will know what the F they are doing and will have handled this kind of budget before.
Cons: The possibility of compliance issues. I know how sharp you all are around here, but I also have seen some stuff that would make my stomach turn if I saw my offer being promoted that way. The CPA networks typically pay-out in the neighborhood of $1+ for this type of offer and I can't pay that. Also, what if I accidentally handed my money to the next Ryan Eagle 
jk. Finally, since we will probably still do some ad buying, it might increase bids/ad costs due to competition.
Option 3. Similar to Option 2, but instead of hiring a network, I would hire a performance marketing agency who would handle the ad spend on their own, without the use of affiliates.
Pros: Theoretically, these guys would also know their shit and get the job done.
Cons: I don't know of any good ones that would work on a CPA model. I could imagine easily paying an extra 10-15% per user which could really increase my CPI. No established relationships/trust.
Option 4. Hire and train someone and/or a team of someones.
Pros: I could hire someone experienced at managing ad campaigns. They would theoretically know what they are doing. Alternatively, I could hire some fresh blood and train them.
Cons: Takes a lot of time and training to set-up. Management burden. Lack of established relationship/trust. Not sure what it would cost. Other than STM and the usual freelance sites, I'm not sure where'd I would go about finding such a person.
Option 5. A combination of the other options.
Finally, I could manage the whole thing myself, but I have a family that needs my attention and the rest of the business to run. It would be nice to bring someone else in to help.
What would you do? Which option would choose? Would you do something totally different?
I'm all ears!
Unless you are able to provide some reasonably accurate indication of your ARPU and APPU, it is a bit senseless to expect any meaningful business advice.
Have you split tested their EPC vs your EPC at the $0.50 payout?
You have got pretty good budget and you know your numbers as well ,Going CPA Network route wont be a bad idea. About the payout etc you know your numbers you can easily get your offer listed on networks with a payout you are comfortable with + networks cut .. The reason i am advising you for CPA Networks is that this way all you will have to take care of is tracking and tracing fraudulent traffic etc and things like that while hundreds of people will be promoting and advertising for you .
Originally Posted by panthary
Originally Posted by kjrocker
Originally Posted by baaron
Give it to me :P
</sarcasm>
Interesting situation!
As cmdeal says, it'd be useful to know some more metrics here. What's your LTV (lifetime value) per customer, and what sort of variance does that have? Do you see it vary highly on different traffic sources or is it pretty stable?
Primary advice I'd probably give (partially based on conversations I've been having recently for an STM tutorial on scaling to five figures a day) would be to aim to expand as a much as possible within your already proven channels. You say you're spending $2k a day - is that on traffic sources where there's enough volume to ramp that up by an order of magnitude (FB, Adwords, etc) or is it on smaller traffic sources with a ceiling that you're now hitting?
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