Why do 20% of your ad creatives generate 80% of your results?

We all know that 80% of the effects are created by 20% of the causes. The 80-20 rule, or the Pareto Principle, is an aphorism that asserts that 80% of outcomes (or outputs) result from 20% of all causes (or inputs) for any given event. But, why do 20% of your ad creatives generate 80% of your results?

The 80-20 rule in business

That interesting principle applies to everything and any given event. In business, the goal of the Pareto Principle is to identify the inputs that are potentially the most productive. And make them your priority. For instance, once a sales manager identifies where he/she gets the most sales, to drive the company’s growth, they could give them the most focus and iterate to even grow bigger and faster. The same principle that applies to most things in life also applies to advertising and marketing, where 20% of your campaigns, creatives, and efforts drive 80% of your return. This also means that 80% of your campaigns, creatives, and efforts only generate 20% of your return.

Here’s an example from our practice:

The upper line represents the winning creative and the lower line represents the performance of all other creatives. The first graph shows the percentage split: our example even goes beyond the 80/20 rule to 85% of installs and 90% of spend. Learn More: Ad Budget Calculator

In the next graph, we can see how the different creatives stack up against each other:

As soon as the winning creative (purple) gained traction against the previous one (light blue), it basically carried the whole performance: new creative tests (dark blue) never managed to outperform the winner. This example illustrates how important systematic creative testing has become to make sure to find and leverage these outperformers.  Are you feeling curious to learn more about this outstanding creative now? Thanks to our client Petit BamBou you can take a look:

The Admiral Media Framework – How do we test creatives?

Understanding how advertising algorithms work is an important part of the process. You will need to know why a particular ad is spending all your budget without really driving good results, while the only difference between this ad and the others is just different background color or call to action. This understanding will help build your optimization activity and creative production around the right communication messages. In addition to that, creating a system of creative testing is important. Creative testing means running a number of different ads at the same time, those could be different in design or just the ad copy used in each ad.  Creating a good system for creative testing is going to require some work up-front, but will ensure that you stay on track and reveal the next big innovation more quickly. Here are things to keep in mind while building this system:

• Campaign and targeting: You need your campaign to directly optimize for the most valuable event, targeting your best-converting audience, and best placements or OS type.
  • If your account doesn’t have enough data, feel free to go for top-funnel events such as installs or signups.
• Budget: Your understanding of the ad algorithm will help you decide on how much you can spend. However, you need to keep in mind that your creative test budget is part of your channel budget so be careful of overspending and excess tests.
• Decide on winners: Your decision should be based on a number of metrics including the amount spent, CPM, CTR, and cost per result. Keep in mind that you’re looking for an ad that spends the money fast at your desired costs.
• Assurance: This is an extra step only if you have an ad in your evergreen campaign that spends most of the money at desired costs. In this step, you just need to re-test best performing ads from test number 1 to get the ultimate best performer.
• Iterate: You got your winner? Well, iterate on it and try to find 1-2 versions of it that help you spend 80% of your budget.

Pre-iOS 14 vs Post-iOS 14

When a user sees your ad, you get seconds to either grab their attention or completely lose them, once and for all. This makes it very important to design something that gets users’ attention but how do you do that? Before the iOS 14 rollout, advertisers used to test hundreds of creative designs every week to find that one ad that works well, and creative tests were very customized, advertisers used to test different background colors, font sizes, people vs illustration, and much more. However, iOS 14 came into our lives with a lot to digest. The first problem is that iOS 14 uses SKAdNetwork which only allows a maximum of 100 campaign IDs including the ones used for optimization purposes to get the advertising algorithm to perform. This problem forced ad channels to limit the maximum number of campaigns an advertiser can open targeting iOS 14 devices. For example, Facebook (or should we say Meta) allows only 9 iOS 14 campaigns and a maximum of 5 ad sets in each campaign. This means less creative testing and fewer winning ads which means that you might get hit by ad fatigue that kills your 20% ads that drive 80% of your results and that is a nightmare to any advertiser.

How to find new ad ideas?

So many businesses and ad agencies produce hundreds of ads every week, but not every idea is the next big thing. It can be difficult to determine which ads stand out and create an impact and which ones just fade away into the background. However, most marketers search for new creatives in the wrong place. Marketers are looking to friends, family, competitors, random Facebook Feed, or TikTok. On the other hand, you must have one ad in your ad account that is already winning and spending almost 80% of your budget. This ad is your starting point. You need to take a deeper look into this ad. Look for the detail that makes it a winner. Think of how you can make a new ad of those details. I believe that the best ad ideas come from existing winner ads, not from outside the world of advertising. In case you don’t have that one winner, you can try any of the following. And kick-off your search for the new big ad:

1. Look at competitor ads and find the pattern.
2. Run a survey and ask your clients what was that thing that made them click on an ad of yours. Iterate on that reason.
3. Look into viral news, tweets, or videos and find if you can produce something around them.

Conclusion

Finally, new ad ideas are everywhere. If you only know where to look. But not every idea is the next big ad creative that will help you decrease costs and increase spending. So, try to look into that one detail that can help you produce something better. That’s it for this one, see you in the next article on Admiral Media Blogs. Ciao!