#HOLY HECK THIS IS ALSO MY FIRST POST FOR 500 FOLLOWERS | Explore Tumblr Posts and Blogs

festivehanlon-blog · 7 years

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500+ Follow Forever Binch

I just hit 500?? How?

Honestly I’m so grateful y’all like my low quality shitposts so in celebration I’m linking all my mutuals blogs and telling you why you should definitely follow them because they are the funniest and most talented people on this planet!! At the bottom there will also be a face reveal so you can see the grinch who only posts about ‘To Psycos In Love’

(members of the Bennywise gc will be bolded)

@meezui Holy heck this blog is a M E M E ! Fantastic! Showstopping!! Spectacular!!

@you-suck-bowers Definitely one of the best blogs of all time, Bowers gang content, can always rely on their content to be 10/10

@birdbabestan Lyssa!! Funny and lovely and one of my favourite people in the universe!! My? Actual? Child? Do yourself a huuge favour and follow her n o w

@beepbeeprichie Such a pretty blog!! Loads of moodboards, memes and amazing headcanons!!

@richiedenbroughs Can you believe that amazing, incredible and beautiful are synonymous with Sarah?? Neither could I until I met this amazing person with one of the best gotdamned blogs! If you want go000od fanfic this is where to go

@staanuris Lmao if you’re in the ‘IT’ fandom you’re following this blog. Actual royalty, I am a humbled peasant and I feel like crying tears of joy whenever they reblog or like one of my posts. (Also responsible for 99% of the memes in this fandom)

@hauntedkaspbrak Y’all want hockey???? Y’all want fuckin quality memes???? This is where you get them kids

@polaroidreddie Headcanon R O Y A L T Y I tell you. I don’t know how it’s done?? Probably witchcraft tbh, but this blog is one which with no hesitation is one of the first and best blogs to follow on this site

@k-aspbrak So many Losers Club memes!!! A blessing!!! S T A N U R I S CONTENT!!!!!

@richiietozierr AMBER!!!! FUNNY!! AMAZING!!! TALENTED AT LITERALLY EVERYTHING?!?!? DON’T NOW HOW SHE DOES IT!??!? TEACH ME YOUR WAYS!??!

@toshitophchan Toshi !!! When I see your content on my dash it always brightens my day!!!! Can always count on for a m a z i n g stuff!!!! Also so nice and supportive!!!!! One of my favourite people on Earth?? More likely than you think

@httpsalien Livi!!!!! Oml, one of the funniest and coolest people I know!!! I always feel so blessed that I can call you my friend!!! One of the best freaking blogs to exist and so nice and talented!?!?! Ily so much!!!!

@kingdenbrough If you wanna follow a blog you can count on to post regularly this is the one!!!! 10/10 content!!! Your Mike Hanlon posts give me a reason tfor living t b h

@exceededexpectations my tuMBLR CRUSH!! When you like or reblog anything of mine I actually s c r e a m!!! So nice and amazing!!! I A D O R E all your content!!!!! On my handwritten list of mutuals, this blog is underlined 5 times

@edsrich Can you fucking believe they’re following a peasant like me?? Has written one of the m o s t i c o n i c fanfictions on this site and is a blessing to all. Idc what you summoned to give you all that talent but like’ if there’s a ritual or anything hmu

@brightlykaspbrak Gorgeous inside and out!!! SO beautiful with words!!! One of the blogs I’d definitely recommend straight off the bat. INCREDIBLE content ‘nuff said!!!!!

@irl-richie-tozier Such a rad blog!!!! If you want your daily dose of Stranger Things content as well as IT then this is the blog to follow!!!!

@eddiessecondfannypack So nice!!! When I had literally no followers they would still talk to me even though they had the beEeEeEeEest hecking content. Whenever any of your posts come up on my feed or you like/ reblog any of my posts i’m so happy!!!!!

@etherealstanley How can one have such a beautiful blog with amazing movie and cast GIFS as well as memes on another fricking level??? Idk how it’s done but you achieve all of these things !?!?

@kaspbraket Their fics are some of the best things to exist!! So much talent!!! And so nice as well!??!? Whenever you pop up on my feed my day gets so much better!!!!

@golden-orchid iF YOU WANNA SEE G0O0O0O D CONTENT ABOUT THE IT CAST THIS IS THE PLACE TO GO!!! ALSO SUCH A BEAUTIFUL BLOG?? IDK HOW YOU DO IT?!??

@bettyripsomsshoe oml M E M E S and amazing fanart rb’s are the first things I think of about this blog, I feel like I’ve been following you forever and tbh you deserve all the followers in the world!!!

@oceanssurface You got GIFS! You got memes! You got 10/10 cast content! There was a cat GIF at one point which made me wanna cry bc it was so amazing! This blog has it all!!!

@trashboii-tozier All your content brightens my day!!! Such a large variety of memes it’s ridiculous!!! Definitely one of my favourite blogs!!!

@richietozzzier MEMES!!! FANART!!!! DOGS!!! I LOVE THIS BLOG SO MUCH!!!

@gazebos-are-bullshit Makes the prettiest gotdamn moodboards! Am blessed with your way of words as well!?!!? All around one of the prettiest and most original blogs!!

@wonderfully-wondering-alone SO NICE AND LOVELY!!! YOUR BLOG IS SO PRETTY AS WELL!!! 10/10 GIFS!! SO AESTHETICALLY PLEASING I CAN’T BELIEVE!!!

@spookerlymarsh Fucking i c o n i c, your Beverie content is so good it’s not even in this plane of existence!?!? One of the funniest people on this godforsaken site and so nice as well??? Lmao you’re literally that person I want to be best friends with but am so intimidated by how cool you are!?!?! One of the first blogs I started following and I’ve loved a l l of your content!!

@eddieweezyweezerkaspbrak I!M!P!O!R!T!A!N!T I only follow IT blogs really but I love to stay up-to-date on social justice issues so THANKYOU for having amazing fandom related content as well as really important global stuff too!!!!!

@reddie-for-death Tbh one of my favourite blogs ever!! I feel like we’re stuck in a cycle of mutual support and reblogs and whenever you come up on my feed or activity log aI always start smiling!!!!

@takeurgazebos FOLLOW!THIS!LOCAL!ASTHMATIC!WHITE!BINCH! SUCH A PRETTY BLOG!!! AND MEMES!?!?!? ACTUAL G O D

@richietczicr 10/10 content!! Fantastic! Amazing! Showstopping! Spectacular!! WhenI see your icon on my feed I know it’d gonna be some go00o0o0d stuff

@eggboyben LITERALLY HAS IT ALL?? GIFS? YOU BETCHA, MOODBOARDS? DEFINITELY! MEMES? YOU GOT IT, HOE! Amazing variety!!!!!

@richietoziersglasses YOUR REPOSTS GIVE ME LIFE,, YOU HAVE SUCH AN AMAZING COLLECTION OF CONTENT ON YOUR BLOG I CAN’T BELIEVE!?!??!

@richiee-bitchyy R A D!!!! Amazing content!!!!!! One of my friends!!!! I wanna be you when I grow up tbh!!!

@incorrect-losers-club MEME GOD KIDS, IDK WHAT ELSE TO SAY EXCEPT AMAZING FRICJHGNG CONTENT OML

@wyattghouleff oml my current mood is constantly? crushing? on? you? and? your? blog? One of the first people I followed and I am honestly so humbled that you follow me!??!? Thankyou so much ily!!

@wolfhardly YOU WANT SOCIAL JUSTICE + IT CAST ?? THIS IS THE RIGHT PLACE TO GET IT Y’ALL

@kingkaspbrak So freaking nice?????? A lovely person with a lovely blog and honestly deserves the world!!

@alexxlea3 Lmao my one IRL friend off this website, super rad pennywise content!! Just in general really awesome!!!!!

@ri-chietozier CHELSEA!! Probably the coolest person in the chat tbh, majorly crushing on your blog, it’s? so? good? Ily!!!

@january-emb3rs Gilli!!!!! The Q U E E N of Benverly and Ben Hanscoms no.1 stan! One of the nicest people I know and I’m so blessed to be able to call you a friend!!!!

@denbruhh MY MOTHER !??!?!? ONE OF THE COOLEST PEOPLE EVER!! THE REASON BENNYWISE EXISTS!!!!! WHAT AN ICON CAN YOU BELIEVE

@askyaboyrichie The cutest and funniest drawings!!!! I love your blog so much and when you followed me I actually screamed!!!! Whenever I’m bored I just stalk your blog tbh

@eddieconfettii You had a ‘Total Eclipse Of The Heart’ meme, meaning you automatically qualify as one of m favourite blogs of all time, your amazing content boosts that even higher, sorry i don’t make the rules

@wyttolff If I’m feeling down and I wanna cheer up all I have to do is look at your blog!!! Definitely on of the best blogs involving the it cast!!!!! You brighten my day!!!

@patrick-hockstutter Y O U R P E N N Y W I S E M E M E S A R E I C O N I C

@punkwolfhard Reddie content!!!! Memes!!!! Wyatt!!!!! Anti-Fack!!!!! These are some of my favourite things and your blog has them all!!!!

So those are all my mutuals!!!! You all make me so happy and noah fence but I consider all of you as my friends

So here is my face (sorry in advance lmao)

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lvtvr · 7 years

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ftagged by @pining-keith and @kukinta (on my main but im gna put it here)!! thanks both of u i love u aaaa <3

Name: charlie Nicknames: char, my one friend calls me charleston dance, also “cholderton” don’t ask Zodiac Sign: pisces im an emotional gay fish Height: 167 cm (so like 5′6″???) Orientation: bi as FUCK Ethnicity: eating white bread feels like cannibalism Favourite Fruit: heck i love most fruit but not much beats a good tangerine or strawberry!!! Favourite Season: spring! Favourite Book: american gods by neil gaiman is my all time fav but i have Different Favs for Different Reasons i can talk abt books all day Favourite Flowers: i dont think about this a lot???? i prefer green plants to flowers honestly skjgsdg Favourite Scent: aaaa i’m not sure but i tend to like crisp scents like mint or citrus Favourite Animal: u know that really old video with the girl making her eharmony bio but then she starts crying and gets emotional when she thinks about cats? that girl is me Coffee, Tea, or Hot Chocolate: hekc this is like the holy trinity but i’ve gotta say tea. i relate to uncle iroh a lot Cat or Dog Person: see above. (i mean i like dogs??? but i see a cat and i fucking LOSE IT) Favourite Fictional Character: lavi from dgm is my husband who will always have a place in my heart tbhhh. i also really love delirium from the sandman comics, cloud strife from ffvii and lately i’ve gotten super attached to the drifter from hyper light drifter dfsdgdsg Dream Trip: palios the dream has always been to live in tokyo and that’s happening in less than a month i am dying Blog Created: made this blog in october 2016 but i first joined tumb in 2011 bc of homestuck (SHUT UP I KNOW) and its been an on and off rlship ever since Number of Followers: less than 600 more than 500!! it’s like the comfy side of nobody where people still kinda interact w u but u dont get hate aw yiss What Do I Post About: voltron on here; anime, cats, aesthetics, bullet journal stuff and funny text posts over on my main @charmkvark which u should check out ;3 ;3 ;3 and i also run a cool cyberpunk blog @synthpulse Do I Get Asks on a Regular Basis: not like suuuper regularly but i get one or two occasionally and they always make my day!! im real approachable i promise <3 Aesthetic: i have like 98 different aesthetics omg... on the one hand i like bright colors, urban landscapes, trains, fruit, and soft animals!! but i also like witchy stuff and of course i would Die for cyberpunk and i also adore 20s-40s film noir style aaaaaaaa Favourite Band: mucc Fictional Character I’d Date: l a v i listen u dont understan d Hogwarts House: confession time i never did the pottermore quiz bc i was real scared of Not getting ravenclaw sdkjsdgg i identified deeply as one when i was a kid

tagging: @konekat @sleapygazelle @wolfwisp @daretoweeb @ja-e-muffin-art-dump @parinite @kattkvitter @ace-pidge @floralkeith @undinelance GKSDLJDSG I ALWAYS FEEL LIKE I’VE MISSED PEOPLE WHEN I DO THESE BUT O WELL also no pressure just want u guys to know i appreciate yall~

#tag meme #thanks u guys!!#long post

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the-daily-kenny-blog · 7 years

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First off; holy shit. 500+ followers. I really did not expect this account to get that popular, and honestly, I have to thank all of you guys for even liking this blog enough to get us to this point, and I hope I can still do this blog justice in the future.

Second; for anyone who remembers that time I said I needed more mods, great news; I figured out a way to consider bringing in more mods!

Details below the read more for those second people.

So back on this post, I said what and why I’m looking for mods. Well I have an idea.

If you want to join in as a mod, here’s what I need you to do; I need you to post a submission for me in the submission box and, in that submission, have the following things included.

Draw a sampler Kenny. Like, I need people to be able to draw Kenny, right? Draw him as how you would draw him on the blog. It can look like your style, the show’s style - heck, even my style, but you need to include that first and foremost so that I know what you can do artistically do.

Give me a short overview on how you view Kenny as a character and/or how you plan to have him interpreted as on the blog. That may sound weird, but here’s the thing; character is all. Probably. Like, here’s a sampler for you guys based on my version of Kenny.

I view Kenny as a little kid with a fowl mouth but a good heart. He’s very bitter about the whole ‘him dying and no one remembering’ thing, but he still likes living to the fullest, whatever that means to him. He’s friendly and loyal, but doesn’t say much unless he feels he needs to. He likes getting free shit and has a worn-down self-preservation instinct due to him being able to die and come back. He doesn’t give a shit about his hair and he loves his family and friends very despite the shit they put him though.

You need to tell me on whether you just want to add art or if you really wanna be a new mod here. Also, you need to tell me if you’re just kinda into South Park or if you’re full blown into it. I just need to know that really. I promise I won’t judge you if you’re just a little into it, but I want to know if you’re down to party.

Weird one; If you were a mod, what would you want your mod alias to be? I’m asking because I’ve realized that I don’t have a mod alias either so if/when more join this blog, I’ll let you choose yours.

Example: I would to be Mod Blank

Example: Call me Mod Chocolate

Example: Mod Alias: Mod Alias

I will not post your submission, but I will look over them. Give me about a month, and I will tell you who I’ve decided to bring in as mods. I don’t have a number in mind for max amount of mods yet, but it’ll probably be under ten of them.

If you have any questions, instant message the blog.

#Kenny McCormick #Daily Kenny #South Park #mod sage

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andrewmrudd79 · 7 years

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How to Fuel Your Predictable Marketing Funnel with Facebook Ads

Meet Bond. Amanda Bond, also known as The Ad Strategist. I first met Amanda briefly before Traffic and Conversion Summit here in San Diego in February, but I’ve mainly heard about how awesome she is through her colleague and my friend Greg Hickman, who wrote part one to this two-part complete ads and funnels series here on SPI.

Greg’s post was titled The Beginner’s Guide to Predictable Marketing Funnels, and helped you define and understand what you wanted traffic to do when it came to your website. Amanda’s follow up is now about how to get that traffic you’re looking for with Facebook Ads—the hot thing that everyone wants to use now, but so few know how to use correctly.

Without further delay, here’s Amanda to walk you through it. Let’s get some traffic and convert it! Take it away, Amanda!

Ads are sexy. I get it.

“Run your own ads on Facebook,” they say. “You’ll make tons of money, get five cent clicks, and sell ALL. THE. THINGS.” they say. Sounds like a cakewalk.

But after trying it yourself (and dropping a bomb on your bank account with untargeted clicks at $13 a pop—OUCH!), you might realize what everyone knows but doesn’t say. The Facebook Ads environment can be hard. But it doesn’t have to be.

Last week you learned from Greg Hickman of System.ly, a simple way to design your predictable marketing funnel. You’re ready to pour fuel on the fire. Or are you?

Let’s face it: there’s a ton of misinformation online. Most of it is costing you time and money in your business that you just can’t afford to waste. The ads marketplace is noisier than ever—leading to higher click costs, higher opt-in costs, and as a result, conversion rates are plummeting. Everything considered, profitability is suffering. And ain’t nobody got time for that in business.

So what’s a business owner to do?

Stop Guessing. Start Getting Results.

I want you to stop wasting money on Facebook ads. Don’t spend a single cent. At least until you have a strategy, that is! And you’re in luck, because we’re about to break the silence on the strategy that fuels our clients’ success. The strategy that sits at the root of the 20,000,000 ad impressions my company, The Ad Strategist, served up in the past 12 months.

Before we dive in, let’s refer back to last week’s post where Greg talked about building the solid foundation with a good marketing funnel that your business needs for your ads to be successful. Until you do that, you’d be better off throwing dollar bills into the air. The return will be greater than your ads at this point!

But if your engine is built and you have an intelligent funnel that predictably moves leads to create customers, it’s time to throw fuel on the fire. When done right, you’ll be able to take $1 and turn it into $2, $5, $10, $100+ on the back end with Facebook advertising.

Connect. Convert. Close.

To set ourselves up for success, we need to understand the framework that fuels any decision you make around your Facebook advertising. Here at The Ad Strategist we call this framework: Connect. Convert. Close.

Connect.

True Connection—the long-forgotten element of advertising.

The Ogilvys of the world dominated at using psychological triggers. They focused on overall branding to create relationships in the minds of potential customers months, and even years, before they ever made a purchase. With the advent of digital advertising—and instant measurement—many brands have done away with this type of connection advertising. Instead, they go straight in for the goods.

And for a while it totally worked! Back in the good ol’ days we could get those $0.50 or $1-2 leads and laugh all the way to the (conversion) bank. But today, with all of the competition on the platform, prices for direct leads have skyrocketed. And those poor users are getting bashed over the head with crappy lead magnet after lead magnet in their newsfeed every single time they login to their account.

Think about what happened with email marketing. Your first email inbox used to have you jumping for joy when you saw, “YOU’VE GOT MAIL!” Now . . . well . . . my inbox gives me panic attacks. I say that facetiously, but honestly, things are a-changin’, friends.

This is what is happens when brands try to go straight in for the conversion kill without creating goodwill and connection. Diving head first into cold audiences (without a str-AD-egy) drives your costs UP and results way DOWN. Let’s be smart about our ads and create purposeful connection. Can you imagine walking up to someone, not saying a word, and just leaning in for the kiss? I’m pretty sure they’d slap you and tell you, “get away, you creep!” Don’t be that person, m’kay? Focus on earning your audience’s trust, making them laugh, and ultimately having them enjoy your company.

Here are some great ways you can CONNECT with your audience:

Host a Facebook Live show Mine’s called “Breakfast Wine with Bond” and Pat’s is #AskPatLIVE

Create a pre-recorded video indoctrination video Let people know WHO you are and WHAT you’re about, like Katie Momo from The Copy Pro sharing why “I love copywriting”

Repurpose an audio clip into a video Check out Pat’s podcast snippet chatting Content Mastery with Neil Patel

Quotables or branded images Danielle LaPorte is the Queen of Branded Quotables and strengthens her values and brand image with each engagement interaction

When creating these ads, you’ll set the Facebook Ad Objective to video views (if there’s a video) or page post engagement (if it’s a static image or text only post).

And you’ll only be targeting cold audiences with these ads by using Lookalike Audiences and general interest targeting. These cold audiences will slowly warm up to what you’re throwing down and be more receptive to the ads they’ll see from you in the future.

Convert.

Convert. Ohhhhhh . . . convert.

Commonly referred to as lead generation, it’s the spot in the funnel that a majority of marketers are starting with these days. In a well executed strategy, it’s the piece that turns lukewarm audience members into warm subscribers. When used haphazardly, it’s a recipe for disaster if disaster included increase conversion costs and lower click-through rates.

“Oh, you have no idea who I am? No worries. Just give me your email and I’ll give you the forgotten world of Narnia in exchange.”

Check any podcast, or blog post on the topic of Facebook ads and people are talking about, “How I grew my list to 80-gazillion people in 7 seconds while Facebook paid me $42,000.” HUH!?!

Okay. That last one is a little facetious. Our convert ads are as if you wined and dined your (fictitious) date. Now is the time to ask if they’re interested in a kiss. It’s asking a user for their email address in exchange for something they value. It’s requesting they attend your webinar to help them solve a business or personal problem. It’s giving them a quick actionable download that will move the needle on their success.

But most importantly, it’s about asking them to make a micro-commitment to your brand. No monetary transaction has happened at this point but there is now an energy exchange. We’re priming them to become a customer in the near future and demonstrating your value and expertise in micro-format.

When creating these ads, you’ll set the Facebook Ad Objective to “Conversions” (formerly “Website Conversion”).

Next, you’ll select to optimize your Facebook pixel event to “Lead” or “Complete Registration.”

This time when it comes to the targeting, we’ll be getting in front of ONLY those people who already have an awareness of who you are, no matter how small.

The 4 Warm Audience Buckets comprise the following:

Your email list subscribers

Your Facebook page fans (+ overall page engagement)

Your Pixelled Website Traffic

Your Facebook video views audience

Outside of Facebook ads, your objective should be to continually grow these four buckets. By doing that, you’ll continually have a larger and larger market to get in front of the next time you launch (so it won’t be like launching to crickets).

Go on now, ask for the kiss. Your odds are better now.

Close.

The Holy Grail.

The transactional opportunity! “Making ‘dat interweb monies.” Sang in autotune.

The Convert aspect of ads are, you guessed it, closing the sale. These are the sexy ads that lead directly to a monetary transaction. When creating these ads, you’ll set the Facebook Ad Objective to “Conversion” again (formerly “Website Conversion”) but this time, we’ll optimize our Facebook pixel event to Purchase.

The ones who see this ad are only those people in the purchase consideration phase. In the last post, we identified those as our informed audience members of our funnels. They’re the ones receiving your sales emails, or clicking through to your sales page. They’re HOT! They know the heck out of you. Now it’s time to entice them to buy.

Plug a Leaky Bucket Before Adding Water

Now that you see the pathway of the Connect. Convert. Close. framework, let’s talk about implementing it. Most of us start with list building. Then, if we remember, go straight in for the sale, and usually never get around to the branding/connection ads. With our framework, we’re going to implement the ads you run in a backwards sequence.

Starting with the Close ads.

This is like plugging a leaky bucket. Right now you are probably making sales offers in your business. Here’s an example:

Let’s create opportunities to increase the number of successful transactions retargeting anyone who lands on your sales page or checkout page.

Our client, Nikki Elledge Brown, does a great job of engaging in conversation with those who hit the checkout page. Don’t be fooled by the lack of likes or social proof. This ad doubled the conversion rate of her last webinar.

https://www.facebook.com/plugins/post.php?href=https%3A%2F%2Fwww.facebook.com%2FNikkiElledgeBrown%2Fposts%2F613278732185542&width=500

Going back to our example, if you were to double the number of successful transactions from 3 to 6, your sales conversion becomes 6 percent. The cost you paid to now acquire a sales looks like this:

We’ve now halved the cost to acquire a new customer. These types of successes allow for you to capture quick wins and increase overall sales conversion ratios. We’re fixing the delivery and success of what you’re selling, and only NOW that we have the greatest possible number of people becoming customers, we’ll start putting more leads into our machine.

If you don’t plug these holes, it’s like having a leaky gas tank. Every time you fill up, you’ve spent money to leak gas out onto the road instead of fueling your car. Enough about land vehicles, let’s jump on a boat.

Let’s Test the Pond Before Heading to the Ocean

Before we crank up the ad spend, let’s test the waters.

Let’s review your website conversion ads that you’re currently using to attract your existing warm audience into your funnel. As Greg mentioned, this is your afflicted or informed funnel depending on your setup.

Here we’re asking people who already know, like, and trust us if they’d be willing to take our relationship one step further by giving us their email. Until we know that these ads are working with the people who already like us, we’ll stick to targeting those who are in the inner circle:

Pixelled Website Traffic

Existing Email List

Facebook Business Page Fans

Video Viewers (This is a goodie—and coming up, I’ll show you how to create it.)

We’re not going to target cold audiences just yet. You may be saying, “But Bond, how the heck do I know if it’s working?”

Measuring Success

Let’s get our math nerd on and figure out two metrics: Earnings Per Lead (EPL) versus Cost Per Lead (CPL).

Back to our example:

For every 100 people that come into your funnel, 6 are now becoming customers.

Leads = 100 at $5 each = $500 in ad spend + $20 in sales retargeting.

Total sales = $3,000 Expenses = $520

The Earnings Per Lead is calculated by dividing total sales by the number of leads generated to make those sales. In our case, that’s $3,000 divided by 100 people, equalling $30 EPL. For each new person you add to your funnel, you are currently generating $30 in new revenue.

Let’s compare this against the cost to acquire a new lead. The Cost Per Lead is calculated by dividing total ad spend by the number of leads generated to make those sales. In our case, that’s $520 divided by 100 people, equalling $5.20 CPL.

Now you might have remembered that we’re only targeting WARM audiences at this time before we unleash our awesomeness on the world. The people more likely to take action on your offers because they’re already familiar with what you’re offering.

The cost to acquire a sale ($500 ad spend) divided by 3 purchases = $166.67 each.

Where Most People Kick the Bucket

Now you understand the entire process of Connect. Convert. Close. Let’s give you the tools to make sure that you don’t make one of the most common mistakes entrepreneurs make as they’re starting to scale.

The mistake? That their ads STOP WORKING because they forget to fill their bucket.

At this point in your journey, you’ve likely had success reaching out to your existing warm audience who knows, likes, and trusts you. Emails, Facebook Live, Facebook Group visibility, and an occasional podcast interview (or two!).

Your list has grown steadily, but the thing is, after seeing the same pitch over and over, most of them are tuned out. As many of my mentors say, “What got you here won’t get you there” in terms of your growth.

So if you’re ready to scale your business, you need to go back to doing what made you successful in the first place.

Get back onto the podcast circuit, write guest blog posts, amp up your social media engagement, work on improving your SEO ranking. Consistently get your voice and message out there.

Whatever you were doing in the past that allowed you to build the momentum of your first product/service—do that.

Connect with More People.

And if you’re not sure how to do that, let me introduce you to:

The Facebook Video Amplification Strategy

“Ekkkkkk! I have to be on camera, Bond?”

As a recent camera-phobe, let me first remind you that video comes in many different formats:

Facebook Live

Pre-recorded content

Screenshare with voiceovers

Animations with sound

Soundbites from any training/content you’ve ever created

And any other variation you can think of

And it can be incredibly simple to get rolling with Facebook Live videos. SPI TV’s very own producer, Caleb Wojcik, talks about it here.

This is a strategy I’ve been rigorously testing with our client, Screw the Nine to Five, in 2017. Every week, co-hosts Josh & Jill Stanton go live on their Facebook page, talking about all things related to their sales funnel entry points. In the span of 15 episodes, we’ve grown their total three-second video views audience available for retargeting to 8x the size of their email list.

To date, we’ve spent $4,351.26 to amplify these videos which resulted in $10,677 in IMMEDIATE revenue (as tracked by the Facebook purchase conversion pixel). As in, purchases made from people who have viewed Screw the Nine to Five’s live show and then entered into a sales funnel (listed in the show notes) and made a purchase.

Note: The $10,677 in revenue doesn’t include the future Lifetime Value (LTV) of their new members who purchase their flagship program, Screw U, as they continue to make monthly recurring payments.

Imagine being able to get in front of 157,000 people who already like what you’re throwing down. Imagine having them hungry to consume what you put out into the world, willingly and wantingly becoming clients and customers on the daily.

Here’s my super-loving kick in the butt to get out of your own way and to take advantage of this Facebook Video Amplification Strategy.

Let me show you how we did it:

Implementation

Each week, you’ll go live (or release a pre-recorded video) that shares what you/your brand is all about. Then, we’ll relentlessly (but nicely) stalk people around the internet with your ads. You know, those fence-sitters who saw at least three seconds of your video but didn’t take action. Once we’ve proven that the ROI is positive, it’s time to smash the amplification by adding some paid (cold) traffic amplification.

“Heck YES! Let’s do this.”

Step 1: GO LIVE

From your Facebook Page on your phone (or using Chrome on desktop), go live from your Facebook Business Page.

Note: Do NOT go live from your personal Page or Facebook Group. The retargeting we are about to set up only applies when broadcasting straight from your Business Page associated with a Facebook advertising account.

Step 2: Create Your Retargeting Audience

Inside Ads Manager, navigate to the Audience Dashboard.

You’ll create a retargeting audience made up of video viewers who watch three seconds or more of the video you went live with.

Click Create Audience.

Select Custom Audience.

Choose the Engagement on Facebook box.

And we’ll pick Video.

You’ll select “People who viewed at least 3 seconds of your video” then click to choose the Live video you just created. I like to name these Retargeting: [Name of the Show]—Episode [#].

Step 3: Create a Retargeting Facebook Ad Campaign

Now create a Facebook ad campaign targeting the 3-second viewers of this video with content that is relevant to the Facebook Live topic.

At the Ad Set Level, you’ll select the Retargeting: [Name of the Show]—Episode [#] audience to be INCLUDE:

Watch this tutorial on how to set up step 2 and 3:

https://www.facebook.com/plugins/video.php?href=https%3A%2F%2Fwww.facebook.com%2Ftheadstrategist%2Fvideos%2F1845892062394933%2F&show_text=0&width=560

Make Sure It WORKS

Before you go thinking you’re a retargeting ninja, STOP!!!

Make sure your ads machine is working before you go making it rain with the $$$ you’re about to hand over to Facebook. Before you move on to these next steps, confirm that for every $1 you are spending on retargeting, your Return On Investment (ROI) dollars is greater than $1.

You can easily create the ROI Snapshot report inside of Ads Manager (pictured below), or simply compare the amount of money you spent on Facebook retargeting to the dollars in revenue made from what you’re sending them to in the retargeting ad.

Last measure of success: find the number of people who took action on your retargeting ad. How many people opted-in? Once you know your total revenue earned and the total number of opt-ins, divide the former by the latter.

In this example, $3,160 divided by 353 leads = $8.95. This means that each lead is worth $8.95 to your business. This is your Earnings Per Lead. To break even, you are now able to spend up to $8.95 PER NEW LEAD. Anything below that number is considered profit. Anything higher than $8.95 is a big ol’ red flag.

Of course, you’re a business owner first, so we want to build profit into that equation. At The Ad Strategist, we advise our clients to generally spend no more than 25 percent on their Facebook advertising costs.

$8.95 (x) 0.25% = $2.24 would be the recommended number to STAY BELOW in this example. If you’re successfully keeping your costs low and your profits high, let’s move on to the last piece of the puzzle.

Amplification

Now that your ads aren’t kicking the bucket, it’s time to SCALE, baby!

Let’s take it full circle and get back to that CONNECT piece. To really ramp up your exposure and your impact, we’ll start broadcasting your Live replays to a larger (cold!) audience.

This targeting will be entirely made up of two types of Facebook audiences:

Lookalike Audiences

General Interest Targeting

This SPI post with Rick Mulready will help you research your exact target market before you set up your campaign. I recommend one lookalike audience and two general interest targets related to your ideal customer (and where they are currently hanging out online).

Step 4: Create an Amplification Campaign

You’ll create a Facebook ad campaign targeting the cold audiences you selected above with the Video Views objective:

At the ad set level, you’ll duplicate your ad set with three different targeted audiences.

In our case, it’s:

Interest: Amy Porterfield

Lookalike (US) Purchasers

Interest: Smart Passive Income with Pat Flynn

Once a person from these amplification campaign audiences views three seconds of your live REPLAY video, you’ll be able to retarget them into your sales funnel. And since we already set this up previously, these new viewers will see your retargeting ad(s) auto-magically. That’s it, friends!

In a nutshell:

Follow the Facebook strategic framework: Connect. Convert. Close.

Use video content to CONNECT and turn cold audiences into warm audiences.

Retarget the heck out of your new friends with valuable and relevant content that pulls them deeper into your sales funnels.

And once you know it’s working, use Facebook’s targeting ability to go out and connect with even more of your ideal clients.

How to Fuel Your Predictable Marketing Funnel with Facebook Ads originally posted at Homer’s Blog

0 notes

williamjharwick · 7 years

Text

How to Fuel Your Predictable Marketing Funnel with Facebook Ads

Without further delay, here’s Amanda to walk you through it. Let’s get some traffic and convert it! Take it away, Amanda!

Ads are sexy. I get it.

“Run your own ads on Facebook,” they say. “You’ll make tons of money, get five cent clicks, and sell ALL. THE. THINGS.” they say. Sounds like a cakewalk.

Last week you learned from Greg Hickman of System.ly, a simple way to design your predictable marketing funnel. You’re ready to pour fuel on the fire. Or are you?

So what’s a business owner to do?

Stop Guessing. Start Getting Results.

Connect. Convert. Close.

Connect.

True Connection—the long-forgotten element of advertising.

Here are some great ways you can CONNECT with your audience:

Host a Facebook Live show Mine’s called “Breakfast Wine with Bond” and Pat’s is #AskPatLIVE

Create a pre-recorded video indoctrination video Let people know WHO you are and WHAT you’re about, like Katie Momo from The Copy Pro sharing why “I love copywriting”

Repurpose an audio clip into a video Check out Pat’s podcast snippet chatting Content Mastery with Neil Patel

Quotables or branded images Danielle LaPorte is the Queen of Branded Quotables and strengthens her values and brand image with each engagement interaction

When creating these ads, you’ll set the Facebook Ad Objective to video views (if there’s a video) or page post engagement (if it’s a static image or text only post).

Convert.

Convert. Ohhhhhh . . . convert.

“Oh, you have no idea who I am? No worries. Just give me your email and I’ll give you the forgotten world of Narnia in exchange.”

Check any podcast, or blog post on the topic of Facebook ads and people are talking about, “How I grew my list to 80-gazillion people in 7 seconds while Facebook paid me $42,000.” HUH!?!

When creating these ads, you’ll set the Facebook Ad Objective to “Conversions” (formerly “Website Conversion”).

Next, you’ll select to optimize your Facebook pixel event to “Lead” or “Complete Registration.”

This time when it comes to the targeting, we’ll be getting in front of ONLY those people who already have an awareness of who you are, no matter how small.

The 4 Warm Audience Buckets comprise the following:

Your email list subscribers

Your Facebook page fans (+ overall page engagement)

Your Pixelled Website Traffic

Your Facebook video views audience

Go on now, ask for the kiss. Your odds are better now.

Close.

The Holy Grail.

The transactional opportunity! “Making ‘dat interweb monies.” Sang in autotune.

Plug a Leaky Bucket Before Adding Water

Starting with the Close ads.

This is like plugging a leaky bucket. Right now you are probably making sales offers in your business. Here’s an example:

Let’s create opportunities to increase the number of successful transactions retargeting anyone who lands on your sales page or checkout page.

https://www.facebook.com/plugins/post.php?href=https%3A%2F%2Fwww.facebook.com%2FNikkiElledgeBrown%2Fposts%2F613278732185542&width=500

Going back to our example, if you were to double the number of successful transactions from 3 to 6, your sales conversion becomes 6 percent. The cost you paid to now acquire a sales looks like this:

Let’s Test the Pond Before Heading to the Ocean

Before we crank up the ad spend, let’s test the waters.

Pixelled Website Traffic

Existing Email List

Facebook Business Page Fans

Video Viewers (This is a goodie—and coming up, I’ll show you how to create it.)

We’re not going to target cold audiences just yet. You may be saying, “But Bond, how the heck do I know if it’s working?”

Measuring Success

Let’s get our math nerd on and figure out two metrics: Earnings Per Lead (EPL) versus Cost Per Lead (CPL).

Back to our example:

For every 100 people that come into your funnel, 6 are now becoming customers.

Leads = 100 at $5 each = $500 in ad spend + $20 in sales retargeting.

Total sales = $3,000 Expenses = $520

The cost to acquire a sale ($500 ad spend) divided by 3 purchases = $166.67 each.

Where Most People Kick the Bucket

The mistake? That their ads STOP WORKING because they forget to fill their bucket.

So if you’re ready to scale your business, you need to go back to doing what made you successful in the first place.

Get back onto the podcast circuit, write guest blog posts, amp up your social media engagement, work on improving your SEO ranking. Consistently get your voice and message out there.

Whatever you were doing in the past that allowed you to build the momentum of your first product/service—do that.

Connect with More People.

And if you’re not sure how to do that, let me introduce you to:

The Facebook Video Amplification Strategy

“Ekkkkkk! I have to be on camera, Bond?”

As a recent camera-phobe, let me first remind you that video comes in many different formats:

Facebook Live

Pre-recorded content

Screenshare with voiceovers

Animations with sound

Soundbites from any training/content you’ve ever created

And any other variation you can think of

And it can be incredibly simple to get rolling with Facebook Live videos. SPI TV’s very own producer, Caleb Wojcik, talks about it here.

Note: The $10,677 in revenue doesn’t include the future Lifetime Value (LTV) of their new members who purchase their flagship program, Screw U, as they continue to make monthly recurring payments.

Here’s my super-loving kick in the butt to get out of your own way and to take advantage of this Facebook Video Amplification Strategy.

Let me show you how we did it:

Implementation

“Heck YES! Let’s do this.”

Step 1: GO LIVE

From your Facebook Page on your phone (or using Chrome on desktop), go live from your Facebook Business Page.

Step 2: Create Your Retargeting Audience

Inside Ads Manager, navigate to the Audience Dashboard.

You’ll create a retargeting audience made up of video viewers who watch three seconds or more of the video you went live with.

Click Create Audience.

Select Custom Audience.

Choose the Engagement on Facebook box.

And we’ll pick Video.

You’ll select “People who viewed at least 3 seconds of your video” then click to choose the Live video you just created. I like to name these Retargeting: [Name of the Show]—Episode [#].

Step 3: Create a Retargeting Facebook Ad Campaign

Now create a Facebook ad campaign targeting the 3-second viewers of this video with content that is relevant to the Facebook Live topic.

At the Ad Set Level, you’ll select the Retargeting: [Name of the Show]—Episode [#] audience to be INCLUDE:

Watch this tutorial on how to set up step 2 and 3:

https://www.facebook.com/plugins/video.php?href=https%3A%2F%2Fwww.facebook.com%2Ftheadstrategist%2Fvideos%2F1845892062394933%2F&show_text=0&width=560

Make Sure It WORKS

Before you go thinking you’re a retargeting ninja, STOP!!!

Amplification

Now that your ads aren’t kicking the bucket, it’s time to SCALE, baby!

Let’s take it full circle and get back to that CONNECT piece. To really ramp up your exposure and your impact, we’ll start broadcasting your Live replays to a larger (cold!) audience.

This targeting will be entirely made up of two types of Facebook audiences:

Lookalike Audiences

General Interest Targeting

Step 4: Create an Amplification Campaign

You’ll create a Facebook ad campaign targeting the cold audiences you selected above with the Video Views objective:

At the ad set level, you’ll duplicate your ad set with three different targeted audiences.

In our case, it’s:

Interest: Amy Porterfield

Lookalike (US) Purchasers

Interest: Smart Passive Income with Pat Flynn

In a nutshell:

Follow the Facebook strategic framework: Connect. Convert. Close.

Use video content to CONNECT and turn cold audiences into warm audiences.

Retarget the heck out of your new friends with valuable and relevant content that pulls them deeper into your sales funnels.

And once you know it’s working, use Facebook’s targeting ability to go out and connect with even more of your ideal clients.

How to Fuel Your Predictable Marketing Funnel with Facebook Ads shared from David Homer’s Blog

0 notes

judithghernandez87 · 7 years

Text

How to Fuel Your Predictable Marketing Funnel with Facebook Ads

Without further delay, here’s Amanda to walk you through it. Let’s get some traffic and convert it! Take it away, Amanda!

Ads are sexy. I get it.

“Run your own ads on Facebook,” they say. “You’ll make tons of money, get five cent clicks, and sell ALL. THE. THINGS.” they say. Sounds like a cakewalk.

Last week you learned from Greg Hickman of System.ly, a simple way to design your predictable marketing funnel. You’re ready to pour fuel on the fire. Or are you?

So what’s a business owner to do?

Stop Guessing. Start Getting Results.

Connect. Convert. Close.

Connect.

True Connection—the long-forgotten element of advertising.

Here are some great ways you can CONNECT with your audience:

Host a Facebook Live show Mine’s called “Breakfast Wine with Bond” and Pat’s is #AskPatLIVE

Create a pre-recorded video indoctrination video Let people know WHO you are and WHAT you’re about, like Katie Momo from The Copy Pro sharing why “I love copywriting”

Repurpose an audio clip into a video Check out Pat’s podcast snippet chatting Content Mastery with Neil Patel

Quotables or branded images Danielle LaPorte is the Queen of Branded Quotables and strengthens her values and brand image with each engagement interaction

When creating these ads, you’ll set the Facebook Ad Objective to video views (if there’s a video) or page post engagement (if it’s a static image or text only post).

Convert.

Convert. Ohhhhhh . . . convert.

“Oh, you have no idea who I am? No worries. Just give me your email and I’ll give you the forgotten world of Narnia in exchange.”

Check any podcast, or blog post on the topic of Facebook ads and people are talking about, “How I grew my list to 80-gazillion people in 7 seconds while Facebook paid me $42,000.” HUH!?!

When creating these ads, you’ll set the Facebook Ad Objective to “Conversions” (formerly “Website Conversion”).

Next, you’ll select to optimize your Facebook pixel event to “Lead” or “Complete Registration.”

This time when it comes to the targeting, we’ll be getting in front of ONLY those people who already have an awareness of who you are, no matter how small.

The 4 Warm Audience Buckets comprise the following:

Your email list subscribers

Your Facebook page fans (+ overall page engagement)

Your Pixelled Website Traffic

Your Facebook video views audience

Go on now, ask for the kiss. Your odds are better now.

Close.

The Holy Grail.

The transactional opportunity! “Making ‘dat interweb monies.” Sang in autotune.

Plug a Leaky Bucket Before Adding Water

Starting with the Close ads.

This is like plugging a leaky bucket. Right now you are probably making sales offers in your business. Here’s an example:

Let’s create opportunities to increase the number of successful transactions retargeting anyone who lands on your sales page or checkout page.

https://www.facebook.com/plugins/post.php?href=https%3A%2F%2Fwww.facebook.com%2FNikkiElledgeBrown%2Fposts%2F613278732185542&width=500

Going back to our example, if you were to double the number of successful transactions from 3 to 6, your sales conversion becomes 6 percent. The cost you paid to now acquire a sales looks like this:

Let’s Test the Pond Before Heading to the Ocean

Before we crank up the ad spend, let’s test the waters.

Pixelled Website Traffic

Existing Email List

Facebook Business Page Fans

Video Viewers (This is a goodie—and coming up, I’ll show you how to create it.)

We’re not going to target cold audiences just yet. You may be saying, “But Bond, how the heck do I know if it’s working?”

Measuring Success

Let’s get our math nerd on and figure out two metrics: Earnings Per Lead (EPL) versus Cost Per Lead (CPL).

Back to our example:

For every 100 people that come into your funnel, 6 are now becoming customers.

Leads = 100 at $5 each = $500 in ad spend + $20 in sales retargeting.

Total sales = $3,000 Expenses = $520

The cost to acquire a sale ($500 ad spend) divided by 3 purchases = $166.67 each.

Where Most People Kick the Bucket

The mistake? That their ads STOP WORKING because they forget to fill their bucket.

So if you’re ready to scale your business, you need to go back to doing what made you successful in the first place.

Get back onto the podcast circuit, write guest blog posts, amp up your social media engagement, work on improving your SEO ranking. Consistently get your voice and message out there.

Whatever you were doing in the past that allowed you to build the momentum of your first product/service—do that.

Connect with More People.

And if you’re not sure how to do that, let me introduce you to:

The Facebook Video Amplification Strategy

“Ekkkkkk! I have to be on camera, Bond?”

As a recent camera-phobe, let me first remind you that video comes in many different formats:

Facebook Live

Pre-recorded content

Screenshare with voiceovers

Animations with sound

Soundbites from any training/content you’ve ever created

And any other variation you can think of

And it can be incredibly simple to get rolling with Facebook Live videos. SPI TV’s very own producer, Caleb Wojcik, talks about it here.

Note: The $10,677 in revenue doesn’t include the future Lifetime Value (LTV) of their new members who purchase their flagship program, Screw U, as they continue to make monthly recurring payments.

Here’s my super-loving kick in the butt to get out of your own way and to take advantage of this Facebook Video Amplification Strategy.

Let me show you how we did it:

Implementation

“Heck YES! Let’s do this.”

Step 1: GO LIVE

From your Facebook Page on your phone (or using Chrome on desktop), go live from your Facebook Business Page.

Step 2: Create Your Retargeting Audience

Inside Ads Manager, navigate to the Audience Dashboard.

You’ll create a retargeting audience made up of video viewers who watch three seconds or more of the video you went live with.

Click Create Audience.

Select Custom Audience.

Choose the Engagement on Facebook box.

And we’ll pick Video.

You’ll select “People who viewed at least 3 seconds of your video” then click to choose the Live video you just created. I like to name these Retargeting: [Name of the Show]—Episode [#].

Step 3: Create a Retargeting Facebook Ad Campaign

Now create a Facebook ad campaign targeting the 3-second viewers of this video with content that is relevant to the Facebook Live topic.

At the Ad Set Level, you’ll select the Retargeting: [Name of the Show]—Episode [#] audience to be INCLUDE:

Watch this tutorial on how to set up step 2 and 3:

https://www.facebook.com/plugins/video.php?href=https%3A%2F%2Fwww.facebook.com%2Ftheadstrategist%2Fvideos%2F1845892062394933%2F&show_text=0&width=560

Make Sure It WORKS

Before you go thinking you’re a retargeting ninja, STOP!!!

Amplification

Now that your ads aren’t kicking the bucket, it’s time to SCALE, baby!

Let’s take it full circle and get back to that CONNECT piece. To really ramp up your exposure and your impact, we’ll start broadcasting your Live replays to a larger (cold!) audience.

This targeting will be entirely made up of two types of Facebook audiences:

Lookalike Audiences

General Interest Targeting

Step 4: Create an Amplification Campaign

You’ll create a Facebook ad campaign targeting the cold audiences you selected above with the Video Views objective:

At the ad set level, you’ll duplicate your ad set with three different targeted audiences.

In our case, it’s:

Interest: Amy Porterfield

Lookalike (US) Purchasers

Interest: Smart Passive Income with Pat Flynn

In a nutshell:

Follow the Facebook strategic framework: Connect. Convert. Close.

Use video content to CONNECT and turn cold audiences into warm audiences.

Retarget the heck out of your new friends with valuable and relevant content that pulls them deeper into your sales funnels.

And once you know it’s working, use Facebook’s targeting ability to go out and connect with even more of your ideal clients.

How to Fuel Your Predictable Marketing Funnel with Facebook Ads originally posted at Dave’s Blog

0 notes

dstykitus · 7 years

Text

The Market Index Revolution

In 1896, Charles Dow created the Dow Jones industrial average as a way to track the direction of the stock market and the newer industrial stocks specifically. Originally comprised of 12 stocks, the Dow's first price average was 40.94. Since 1929, the index has been comprised of 30 stocks and today the average has risen to 20,591.86! The Dow is frequently cited in financial papers and media as a barometer of the health of the market and the economy overall. However, it is the development of index investing over the past 40 years that interests me more. Today, investors are investing ever greater amounts is so-called index funds that track the overall market (as oppose to trying to outperform it). In this blog post, I will explore this phenomena in greater detail.

The Index Revolution

While the Dow is the most widely recognized stock index, the S&P 500 is the more accurate measurement stick for serious investors both because of its size (500 stocks versus just 30 for the Dow) and because the S&P is market-cap weighted instead of price weighted. Explaining the differences is beyond the scope of this post, so if you want to know more I would suggest googling it.

Far from being just a measure of the direction of the market, in the 21st century indexes are being used to build a portfolio of securities intended to mimic the overall performance of the stock market. Possibly deterred by the weak performance of actively managed funds, investors are pouring money into index funds in record numbers. The funds hold every stock or bond held in that index in the exact same percentage the security makes up the overall index. Such funds will obviously never outperform the index but will also never underperform it.

The first index fund was launched in 1976 by Vanguard, whom now manages over $3.1 trillion in assets. Most of that money is invested in index funds managed by the firm.

Why index?

The trend of moving from active investing, i.e. stock pickers, to passive investing (index funds) is growing stronger by the day. From July of 2015 to July of 2016, investors pulled $308 billion out of active managed funds and poured $375 billion into passive funds. Moody's investor service is predicting that by 2024 passive managed funds will surpass active funds in assets under management. So, why are investors putting more of their money into passive funds (indexing) and less into active funds?

Two words: Performance and fees. Index funds are outperforming passive funds and they cost less too. It seems like a no-brainer really. Investors pay less fees and get a higher return. If that is the case, why would anyone ever invest in an active fund again?

Buffett's wager

Which brings me to Warren Buffett. About 10 years ago Buffett wagered that an index fund that tracks the S&P 500 would beat an average of hedge funds over a 10 year period. He wagered $500,000 to the charity of his opponents choice should he lose. Eventually, someone took him up on that offer. So far, it looks like Buffett won.

I mention this wager because I believe it gets close to the heart of the debate between passive and active investing. Hedge funds are active vehicles that trade lots of complicated and not so complicated securities every day and charge handsome fees for their efforts. Though not all funds are equal, the common fee structure is 2% of assets under management (AUM) annually and 20% of the trading profits. As stated earlier, index funds have very low annual fees and you keep all of the capital gains. The common argument for passive investing is this: No investor can outperform the market over the long run, so paying managers more to try do so is folly. Indeed, the results of active managers are, to put it mildly, underwhelming. Still, this is an indictment of active investing and not an endorsement of passive investing. Indexing has it own issues.

The problems with index funds

The major problem with index funds is that often the indices they track are one giant active fund that adds or subtracts securities in a process that may be arbitrary. The best example of this is the S&P 500. Stocks in the S&P 500 are selected based on methodology that is set by Standard & Poor's (the company that owns the index) and the stocks in the index (portfolio) can change from year to year and may look vastly different over time. Heck, the same is true for the Dow. The only remaining component from the original DJIA is General Electric. Thus, the index itself is not very passive and is managed by a committee whose membership is unknown. Essentially, passive funds are just copying the stocks selected by a handful of people. Worse, these handful of people are choosing stocks not on the basis of future prospects or undervaluation but on whether the stock is a "leading company in a leading industry."

Rob Arnott in "The Fundamental Index" described the S&P methodology:

“The process is subjective— not entirely rules-based and certainly not formulaic. There are many who argue that the S&P 500 isn’t an index at all: It’s an actively managed portfolio selected by a committee—whose membership is a closely guarded secret!—and has shown a stark growth bias throughout its recent history of additions and deletions… The result is that Standard and Poor’s is predisposed to add ‘popular’ stocks and those that have performed well recently, rather than those with potential to improve on recent poor results.”  

Like with any investment or investment fund the timing of investments matter. New additions or subtractions will affect the value of the index. The best example of this is the addition of new stocks to the S&P 500 in the run up to the dot-com bubble.

As you can see from the charts above, there was a flood of new stocks to the index from 1997 to 2000 followed by a sharp decrease in stock prices after tech bubble burst in 2000. The number of new companies declined thereafter and prices didn't rebound until almost a decade later. Indeed before the most recent bull run, I can remember investors referring to the 2000-2009 stock market period as the lost decade. Just because you own an index fund doesn't guarantee you'll make money.

The other major problem I have with index funds is that price is not the determinant factor for adding or subtracting stocks. Portfolio managers of passive funds are buying or selling stocks without regard to their underlying value. Stocks are added or deleted from the index based on a number of factors but one of the most prevalent is size. The larger a company is in terms of market capitalization, the greater chance it has of being added to the S&P 500. The opposite is also true, smaller market cap stocks will be deleted. This means that a stock that has had a recent and substantial increase in price could be added to an index while a substantial fall in price could mean it is deleted. The problem this creates is managers are buying stocks that have already gone up in price and selling stocks (potentially at a loss) that have gone down in price. This would seem to be the opposite of the common buy-low, sell-high approach investors have been taught for years (always more difficult in practice but still). It is now more like buy-high, sell low. The end result is that index funds behave in a herd-like way, buying stocks because other investors are buying them and selling stocks because other investors are selling them.

Finally, I should mention that many investors struggle with the volatility inherent in an index fund. Because index funds hold all of the securities in a given index, they are as volatile as the index itself. While I think saying index funds are too volatile is the weakest argument against indexing, to many this is a big concern. Volatility is a major reason investors invest in hedge funds and similar vehicles. Still, I am firmly in the camp that I will not sacrifice a higher long term rate of return for less short term volatility. What matters to me over the long run is to generate the greatest return I possibly can while preserving my existing capital. Alas, investors still struggle with seeing their portfolio go down during the trading day.

“the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons’ mistakes of judgment.” -Benjamin Graham, The Intelligent Investor

The joy and simplicity of indexing

Despite the issues I raised, I am still a fan of indexing. The simplicity of the investment and its low cost make indexing a winning proposition for many investors. Most of the money in my 401(k) and IRA are invested in index funds. Still, there are things to dislike about them and they are not the holy grail of investing that many Efficient Market Theorists believe them to be.

There are ways to improve upon indexing including equal-weighting all stocks in the index fund or by weighing stocks that are undervalued by certain metrics like price-to-earnings or price-to-book value more heavily. Some companies are creating funds just like that.

As for active investing, Daniel Crosby had a great article in the October issue of the AAII Journal about how to improve active management. In summary, Crosby believes active funds can improve by becoming more rules-based to reduce human bias, trade less frequently, and lower costs. He makes some persuasive arguments on how both indexing and active managers can improve investing results.

Dow's revolution

I wonder if Charles Dow foresaw the revolution in investing he created when he launched his first index in 1884 (his first index was a precursor to the DJIA he launched in 1896)? Could he have possibly known investors would copy his choices for their own investments? We may never know. Not that it will stop us from freaking out every time his index has lost a percentage point or two.

#stocks #stock market #investing #indexing #s&p 500 #dow jones #djia #Warren Buffett #stykitus

0 notes