Sam Altman, ex-president of Y Combinator, investor in AirBNB, Dropbox, Zenefits, Stripe, Reddit, Istacart, Optimizely, Soylent, and founder of OpenAI, wrote an eye-blowing, mind-opening piece last year titled "How to be Successful."
While most of the 13 points gave advice to individuals running businesses, one stood out as highly relevant to businesses as well. In fact, it was the very first point:
Compounding interest is the concept of snowballing returns. You roll a tiny snow clump down a hill and it gets huge fast. So fast, it's exponential.
There are two other important aspects of compound interest:
So what does all this have to do with your advertising?
Since creative makes up nearly 50% of advertising success, I'll use creative as an example.
What can you do to compound your creative effectiveness?
Your ads are getting purchases for $20.
How can you make those ads exponentially more effective through incremental improvements?
You want $1 per purchase ads.
In order to get there, you first need to figure out how to improve them $1 dollar per purchase, a mere 5%, to $19 per purchase.
How can you do that?
You need to develop a system that is scalable and long-term. That means there needs to be some action you can take that is repeatable no matter how many times you do it, and that will consistently get you results years down the line.
For advertising, this system is testing.
When most people are using intuition or 'customer research' or 'competitor research' to determine what their ads look like, you can steadily plug away with real knowledge of what works and what doesn't on your specific audiences.
Here's what that process looks like:
That's the scientific method re-imagined for ad creative.
It's successful because it's:
It's as simple as that. Success in advertising is scientific.
As Sam Altman says, "Trust the exponential, be patient, and be pleasantly surprised."
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