Ecom Growth Insider · Podcast episode

The 10% Rule For Ad Creative Budgets | Matthew Gattozzi, Goodo Studios

With Matthew Gattozzi · Published 2026-08-11 · 58 minutes · Hosted by Andrej Tumachowitsch

The 10% Rule For Ad Creative Budgets | Matthew Gattozzi, Goodo Studios

Matthew Gattozzi is the founder of Goodo Studios. He says most brands call creative king while their P&L says the opposite. His rule of thumb: put about 10% of monthly ad spend into creative production. Slide it toward 5%, then 1%, as spend grows. Plateaus and rising CAC trace back months, he argues, to under-investment in new content. Not to last week's missing ads. He has met plenty of brands underspending on creative and none overspending.

The episode gets specific. Divide the testing budget by roughly 5x AOV to find how many new ads a month a brand needs. In his example that is about 40 ads at $100K in spend, not hundreds. And when briefing a team, ask for different, not more. A raw volume target like 60 ads a week invites headline swaps of the same ad. Briefing for new angles, personas, formats, and funnel stages produces the volume on its own.

A founder also gets Gattozzi's path from ballet to advertising, why the approach can be perfect even when no ad is, how he handles creative disagreements with clients, his tool-agnostic production philosophy across cinema-camera shoots, creators, and statics, plus a lightning round with a standout coffee ad, an underrated John Caples book, and one hot take on visual brand.

What you will take away

• The 10% rule for creative budgets Gattozzi's rule of thumb: allocate about 10% of monthly ad spend to creative production, tapering to 5% and then 1% at higher spend levels. He adds a caveat: if spend has been stuck at a threshold for months, go higher, because the account likely has a creative problem.
• The P&L test reveals real priorities Per Gattozzi, brands that say creative is king but spend almost nothing on it are exposed by their own P&L. He says he has never met somebody overspending on creative and has met too many people underspending on it.
• Cut ad spend to fund creative, then scale past the old ceiling His worked example: a brand spending $100K a month unprofitably on Meta with $5K on new content should drop spend to $80K and put $20K into fresh creative from multiple sources. Spend gets more efficient at 80, and the new inventory can carry the account to $150K-200K.
• Do the math on how many ads you actually need Gattozzi's formula: testing budget divided by roughly 5x AOV. At $100K spend with 20% for testing and a $100 AOV, that is $20,000 divided by $500, which equals 40 new ads a month - far fewer than the hundreds many founders assume.
• Brief for different, not more Asking a team for 60 ads a week gets the fastest path to 60: the same ad with changed headlines. Brief for distinct styles, themes, personas, and funnel stages instead, and Gattozzi says quantity and spend capacity follow on their own.
• Plateaus are a months-old creative problem When performance hits the fan, Gattozzi says it is never because content stopped a week ago, it is months of under-investment. Brands that win Q4 spent the whole year funding creative and absorbing some underperformance to bank evergreen winners.
• Stay tool agnostic Goodo shoots on cinema cameras with actors but also produces creator content, edits, and statics. Gattozzi says he does not care what an ad was shot on, only about having enough different tools to find winning ads for each specific brand.
• Hot take: visual brand matters Gattozzi's contrarian closer: brands have over-optimized for performance and under-optimized for a recognizable visual brand. He points to being able to spot Nike from a mile away as the standard modern DTC brands have lost.

Jump to a chapter

• 00:01 - From Ballet To Building Goodo Studios
• 03:24 - Injury, Identity, And Eight Years Sober
• 07:07 - Harmony Beats Work-Life Balance
• 09:54 - Ballet Discipline Applied To Creative Teams
• 16:17 - The Perfect Ad Does Not Exist
• 19:03 - When Client And Studio Disagree
• 21:47 - Lo-Fi, Hi-Fi, And Staying Tool Agnostic
• 25:37 - The P&L Reveals True Priorities
• 29:49 - Two Brands, Two Creative Budgets
• 38:38 - The 10% Rule For Creative Budgets
• 43:53 - Diversity Beats Volume: The Ads-Needed Math
• 51:42 - Seek Coffee, John Caples, And A Hot Take

Full transcript

Lightly edited from the episode captions for readability. The episode is the record - where they differ, the audio wins.

00:01 - From Ballet To Building Goodo Studios

Andrej: Matthew, welcome to the Ecom Growth Insider.

Matthew: Thank you for having me. Really excited to chat today.

Andrej: Me too. Me too. I want to start somewhere where most marketing podcasts don't start. Ballet. You trained as a professional dancer for over a decade. Give people the short version of how that ended and how advertising and creative began.

Matthew: Yeah. So obviously the lore of my background is that I was a professional ballet dancer. You know, I started when I was young, 8, 9 years old. Was training all up through high school. Eventually moved away from Boston, where I grew up, moved to Seattle, started dancing here, and then moved eventually to Austin and danced there professionally.

Matthew: And I stopped dancing really young in my career, 21, 22, because of a back injury. So that was really hard. But obviously, I'm a very artistic person. I'm very creative. And so, you know, outside of me dancing, I was making vlogs.

Matthew: And this is during Casey Neistat's era, and I was really inspired by his work. I loved photography. I'd done photography in high school, so I had a passion for visuals. And around this time, when I stopped dancing, this is around 2018, I realized that I could make money from my camera.

Matthew: That was the goal. Because food trucks, restaurants, they also needed Instagram content, not just Nike and the big brands. So that was really kind of the thesis: let's just make some money, let's pay my rent. And living in Austin at that time, before Austin really popped off, I kind of got to see the rise of that.

Matthew: I was able to do events and was really able to do a lot of the, you know, shooting of just local businesses, which was really great. But then I realized that the people that were hiring me were actually marketing managers.

Matthew: Right. I need to really speak their language. I loved business. I loved learning about advertising and copywriting. But I realized that my camera friends weren't thinking about advertising and my advertising friends weren't talking about production.

Matthew: And those two things needed to be combined. And so it was in that crossover that I realized that I could really combine two different passions of understanding people and psychology, while also using my camera and being able to do my passion creatively. And that's really kind of how we transitioned. It was at one point just gotta pay my rent to, hey, I really want to make the biggest and best commercials in advertising. And I think I can do that through understanding people and production and putting those two things together.

Matthew: And that is really kind of what started Goodo Studios, which then was me going away from just being a freelancer to let's build a team, let's build a studio around this. And that was about four years ago. So, you know, it's been a journey and really excited to be chatting about it.

03:24 - Injury, Identity, And Eight Years Sober

Andrej: Nice. Really, really exciting journey. I imagine the injury at 21, 22 was tough. I can't imagine how that was, because I had, around the same age, I had to get shoulder surgery.

Andrej: And I just love working out, love going to the gym. Never did it professionally, not even close. But then had a shoulder injury, a lot of problems with it, had to get surgery. And even that was tough because I wasn't able to work out for a few months. I had pain for, I think, two years with that.

Andrej: And I can't imagine how that is if that's basically your whole career, your whole life revolves around that.

Matthew: Yeah, it was really hard. I think that it was some of my darkest times, just for myself, and I really lost my identity. I think I found myself having my identity around being a ballet dancer.

Matthew: And even people kind of knew me as a ballet dancer, right? That was because it was such an interesting, different thing that it made me stand out. You're not saying, hey, here's Jim, he's a marketing manager. You're not introducing your friends like that. But you're gonna introduce me as, oh, this is Matthew, he's a ballet dancer. Isn't that cool? I was the icebreaker. And so whether I liked it or not, I was making that my identity, which was very hard when I lost that, because not only did I lose my dance career, but I was losing my identity and who I was.

Matthew: And so I was in a very dark, lost spot. And actually, yesterday was my eight years being sober, which is kind of a crazy thing from this. So that was May 31st.

Matthew: Because it was kind of my rock bottom. And really from then on out has been me just trying to build my new identity of who I am. And so although I love the work that I do and I am able to have a great business and work with amazing clients and have a great team, that is not me a hundred percent. It's part of me, but it's not a hundred percent me. And I think I'm trying to take a different approach of how I approach and see my work. And my worth is not going to come from the work. I've done that before and I've seen how that's been hurtful. So I'm still very passionate about what I'm doing, of course, but I'm not trying to get my self worth out of what I'm doing.

Matthew: And I think that's been a big shift in terms of how I approach my work differently than how I approached the first part of my career, which was very much just, I am doing this and getting my worth out of, you know, the success of me as a dancer.

Andrej: Yeah. And I think that's what a lot of business owners are struggling with. And I can't say that I haven't been doing that. For me, it's also, I've been dedicating a lot, a lot of time into building the business.

Andrej: And then it tends to, if you are too obsessive about it, too much into the hustle culture, into the bubble, you tend to make your whole identity the business. And I was talking to a mentor of mine and he also said that the issue with that is if at some point something happens, the business doesn't go well, something breaks, whatever, you'll be in a very, very dark place. What happened to you with the ballet? Because then you have nothing else.

07:07 - Harmony Beats Work-Life Balance

Matthew: Yeah. I will say that a lot of times people look at the time spent as this balance. So when people talk about work life balance, I don't like the word balance, because balance is about a state of equilibrium. So it's about evenness.

Matthew: So people want balance is what they say. And so that would mean that you would need to evenly sleep, evenly be with friends and family as you are with work and all these different things. And that's just not the reality.

Matthew: What you really want is harmony. Right? Harmony is about how all of these things play together. And there's certain seasons and times where you need to spend more time on work versus other times. And then other times where you can be closer with friends and family and you're able to have levers to be pulled at different times.

Matthew: And so I think when we think about just like identity and work, sometimes people often think, well, if you're working a lot, that means that that's where you're getting your identity. It's like, you could actually be working a lot, but still not get your identity from that.

Matthew: Right? And so for me, when I'm approaching work, if you look at my calendar, if you look at how much time I'm spending and thinking about work, it's a lot. It's definitely a lot, right? But I'm just not going to make my worth out of it, right? This is something I'm very passionate about. I'm excited about it. I'm learning a lot. I'm going on vacation, but I love reading copywriting books, so I'm going to read copywriting books, right? It's what I love and I know that it's what I love.

Matthew: And so that doesn't mean that, to not get my worth out of this, I have to limit my time. So I think often people are afraid about spending time on something, and I think it's just about how you approach it, right?

Matthew: Are you spending a lot of time on something because you feel like you need to prove to people that you're great and you got to do this, or are you spending a lot of time because you are getting energy from it and it's fulfilling you? I think that those two things are very different.

Matthew: The time in the calendar looks exactly the same, but your approach to it and your heart behind it is very different. I would argue that most people aren't probably honest with that approach.

Matthew: And which side are they actually on? Because I think they're focused more on the calendar and the balance part versus the harmony and your approach to it. So I think that's, for me, the biggest difference, honestly, with that.

09:54 - Ballet Discipline Applied To Creative Teams

Andrej: I love that approach. That's a really, really good take. Here's something that I'm curious about. I think, from what I hear, ballet is very brutal. You have tons of repetitive tasks, a lot of small refinements, things that a normal viewer would not even notice.

Andrej: Very, very tiny changes. And then obviously a lot of pressure, a lot of stuff going on. How much of that do you think has shifted your view on advertising or what you're doing today? How much does still come from that?

Matthew: I would say, well, there's kind of two tracks. There's me, the business owner and entrepreneur, and then there's me thinking about advertising and quality and creative. So I think, you know, it would be foolish to say that it is not a massive influence on how I see and approach things.

Matthew: So in terms of the business owner, entrepreneur side of things, I have been lucky to have done something for over a decade and seen that through, seen the progress, seen what it takes, the sacrifice to do something over a 10 year period and actually get the thing that you wanted at the end, which for me was a professional dance contract.

Matthew: Now of course I didn't get to continue on beyond that as much as I would have wanted to, but I saw it, right? I got to experience that thing that I had been training for and wanting to do and making that my life. I was able to make that my life for a few years, right?

Matthew: So now as I approach this next business, I have a long term view and mindset and I know what it takes to last a long time, because I've already done it, right? So although I'm young, that is the thing, I've gotten my first win, right?

Matthew: Not my first business win necessarily, but I've seen something through for 10 plus years and now I can do that same exact thing with Goodo Studios and with my business, right? So I am not looking at, well, where are we in the next year?

Matthew: I'm thinking, yeah, where am I going to be in 10 years from now? And really having that approach and knowing that I can withstand time because I've already done it one time, I can do it again, right? So just that confidence to approach something from a long term perspective is really, really helpful, as well as just having extreme focus.

Matthew: I know that when I first started dancing I wasn't at the professional level. I knew that it took years and years of getting better and better, work on the same exact thing. So I am very good at working at the same exact thing for 10 plus years. That's true for this, right?

Matthew: So it'll be advertising every year for 10 plus years and I know that I will get to a place where I really want to be. Now, how does dance help with how I approach creative? You have to sweat the details, right?

Matthew: Because ballet is the most rigorous in terms of the technique. Most other dance forms, they come from ballet. They are a progression from ballet.

Matthew: But ballet is the most technique based. So there's really not a lot of error that you can have. Very specific small details, and you're working on those small details day in and day out for years and years and years.

Matthew: And the same is true when it comes to approaching creative. Right? You've got to be able to try multiple times. You got to think about the details. You really have to approach it with a very deep mindset of wanting to get better and refine yourself.

Matthew: And oftentimes when I have kind of a gut reaction to how I train my employees and my team members, it comes from the many of the lessons that I've learned and have thought about from dancing, from my teachers who taught me.

Matthew: And I've been able to kind of bring that over to how I teach other people, how I think about things. But if my standard for dancing was perfection, then that's the standard that I want to have with creative. And so when we don't do that, I'm very disappointed.

Matthew: Right. And it's important because we need to have a very high standard. So if we're not hitting that high standard, then it's going to kind of crash and burn. The last thing I'll say about that is that in dancing, although you were training yourself, from a singular body, you were getting better and refining, you were working in productions with many different people, and that created so much coordination.

Matthew: So it was your job to have your job and know your choreography, know the things that you needed to do so that the overall production could work. And people trusted you on that. And when you did not prepare, you lost the trust of other people, and that hurt the production.

Matthew: Same is true for a creative team. There is not just one person making an ad. It's multiple people. And it's our job to make sure that each person is doing their job, they're getting better, they're executing, so that the overall ad can execute at the highest level and the client is growing and is happy with the work that we're producing.

Matthew: So if we're not doing that, it's a problem. And so I really think a lot about our creative team just like I think about a ballet production. It's very much the same way. And so, although I haven't had a ton of corporate experience, I've had a lot of experience on teams coordinating creative work.

Matthew: And so I know what it takes to build kind of a group of people to come together to make something really beautiful. And so that's really what I try to do in the work that I produce now, although very different industry.

16:17 - The Perfect Ad Does Not Exist

Andrej: And you mentioned perfection before. Do you think there is the perfect ad creative?

Matthew: I don't think that there's something that is perfect in the sense that, ultimately, art is subjective, right? People either like it or they don't. It's by the people. Guess what? Ads are the exact same thing. Right? But there are a lot of technical things that should be right.

Matthew: We shouldn't have typos, right? That just shouldn't happen. Right?

Andrej: So there's engagement bait.

Matthew: Yeah, yeah. But if you're intentional about it, that's fine. But if you weren't intentional and just lazy, that's a problem, right? And so I think there's a difference, right? If you're intentional, if you know the rules, you should always know when to break those rules, right?

Matthew: That's totally fine. But I think that when I think about us as a studio, I want to be putting out the best quality work. That doesn't mean the prettiest work. It just means that how we approach our client service is at the highest level.

Matthew: How we communicate with people, how we work as a team together is at the highest quality. Every detail matters to me. So if we are making mistakes, that is not okay. We do not tolerate mistakes. We should not tolerate mistakes, right?

Matthew: Because if we tolerate a small mistake, what does that mean about big mistakes? Right? And so although the ad itself I don't think can be perfect, I don't think there's such a thing as perfection, because ultimately the market decides what it wants and what it doesn't want.

Matthew: Our approach can be perfect. And that's what we should be striving for, right? Giving ourselves the best shot for performance. And most of the time, there's really good ideas that die because execution was not perfected.

Matthew: And that's a problem, because we should be perfecting the execution so that it gives us the opportunity to see if we can make the best performing ad possible. And so that's what I want my team to do. And if we're not doing that, that's where conversations have to be had.

Matthew: And it's a high standard, but it's the only way that we're going to be able to produce great work. And so, again, it's the standard that we hold ourselves to. So if a client isn't happy, I'm not happy. I'm not happy until they're happy. And I'm not happy until we're executing at the highest level.

Matthew: And it's really important for us to make sure that we're maintaining that as best as possible.

19:03 - When Client And Studio Disagree

Andrej: And what about if the client is not happy, but you are super confident that the ad will crush it, that it will work, and based on the data that you have, it's something that you want to test?

Matthew: If there's ever a creative strategy or creative direction mismatch, usually I'm trying to ask questions as to why.

Matthew: Why do they believe that? Can they point me to some data? Where is the pushback? Is it just because? Is there a reason behind it? And then try to find what is the middle ground there?

Matthew: Sometimes it is about, hey, this is what we believe. We'll do your idea and you'll do our idea, and let's test both, right? Because ultimately, I am not a predictor of success, right?

Matthew: I am not going to say that I am a predictor of success. But you are coming to us with trust and with the insight that you wanted our perspective of how to approach this problem.

Matthew: This is our approach, right? And if you trust us, let's do it, right? If there was some sort of data, hey, we've already tried this idea, this doesn't work. Cool, back off. I'm good. Right? I don't need to keep pushing forward on it.

Matthew: But if there's just an opinion, then I try to understand why that opinion exists. And then how can we find some middle ground? It does happen, of course, but I think that asking more questions before making statements is always a good way of approaching many things in life, personal or business.

Matthew: And so I think that it's really about that. Most of the time when there's a disagreement, it's just a mismatch of expectations. But I think both parties would want to have the same outcome, which is more growth, more profit, more money.

Matthew: Right? So if we know the goal is the same, then let's sit on the same side of the table, look at the problem and say, how are we going to together solve this problem through creative?

Matthew: Right. Here's our way of doing it. What's your way? Is there a way we can do both? Mix it together and understand that. But those are the conversations that I want to have before just being like, you're wrong, I'm right. It's like, there might be something to be said there.

Matthew: So asking questions always helps.

21:47 - Lo-Fi, Hi-Fi, And Staying Tool Agnostic

Andrej: Yeah, yeah. And you said the content that you guys produce is not necessarily pretty. How do you see the split or the difference between ugly ads, lo fi content, compared to high production, beautiful, branded content?

Matthew: Yeah, yeah. So what makes us different than most providers out in our space is the fact that we shoot in person. So we do shoot with a cinema camera and actors, and we do a lot. But we're also doing creator content, we're doing edits, we're doing statics.

Matthew: So we give you that visual diversity for any brand that works with us, which I think is really great. But also it's about the idea, right? So less so about what it was shot on and more so about the idea execution.

Matthew: If I'm only doing creator content, I can only brief out ideas that a creator could do. But if I can shoot on a camera and I can get five people to taste test your product, that is a concept and an idea that could not be done by somebody who's just doing creator content.

Matthew: Right. So the reason why we have the production and the capabilities is to give us the opportunity to come up with the best ideas for the brands. Ultimately every brand is going to be different.

Matthew: Right. So some brands, I think, will skew more on the prettier hi fi side and others will be the opposite. I don't care about a tool or how it's shot or whatever. I care about finding performance and I care about having the tools to find that performance for you.

Matthew: Right. And so the way I'm setting up production is giving us the best shot at finding and putting out as many different ideas and executions of those ideas to find what's going to work for you. Because there's nothing worse than only doing hi fi.

Matthew: And the thing is, is you really need lo fi and I can't provide that. But what am I going to keep you paying me for? Or vice versa. Right? So I am tool agnostic. I just care about finding you winning ads, because that's ultimately what you're paying me for.

Matthew: And paying our team for is finding winning ads. And so the more openness I think you can have to it, the better. And I think that, again, each brand is going to be very different. I don't think that there's one right tool.

Matthew: I just think that you got to find what works and that's going to be different for every brand. And I would say when brands get bigger, you also have to take into consideration things like visual brand and all of those things as well. And that is valuable.

Matthew: But it also creates some different dynamics when it comes to creating content as well. And so I think that we try to be thoughtful of all those things, but yeah, tool agnostic. So some accounts are going to be really heavy on the AI stuff and some are going to not touch it at all, because it doesn't work or they don't want to do it.

Matthew: Right. And that's fine. Our goal is to help them find performance, and that looks very different across many different brands and different industries that we're in. Which I think also keeps it very fun and engaging in terms of us, in terms of problem solving.

Matthew: Right? Because we don't run off of one playbook. We are able to come up with a lot of different ideas.

25:37 - The P&L Reveals True Priorities

Andrej: Yeah, definitely. And you said something that I think every operator needs to hear, which is your P&L reveals your true priorities. Walk me through what you mean by that.

Matthew: Yeah, I think that everybody is like, oh, creative is king, right? We always talk about, oh, what's going to drive the most performance in your ad account? Creative. Creative. Okay. Why do you spend no money on creative, right?

Matthew: You want to grow, but you're really afraid of spending money on creative. Those two things are just not going to work out, right? And so everybody looks at these big brands that have grown a lot and they're like, oh, look at Gruns. Gruns is the latest one, right?

Matthew: But there's always something before and whatever. And there's going to be other ones, right, that pop up. What do they have all in common? They weren't afraid to spend on creative. Now, is that Facebook creative? No, it could be, it could be influencer, it could be creators, seeding, et cetera. The only unit that you need to grow is creative, right?

Matthew: You can pick your channel, you can pick your flavor, whatever, but the base thing that you always need is creative. So you should be spending money on getting creative, right? So oftentimes people are, let's say they're spending a hundred thousand dollars on Meta. You're spending $100,000 on Meta, it's not profitable right now. Or maybe let's say you're struggling with profitability.

Matthew: And CAC is rising. With $100,000, currently you're spending whatever, $5,000 on new content, but you know it's not working. Okay, right now you're okay with keeping pushing that 100k, unprofitable, bad CAC, when why don't you just drop it down to 80, spend $20,000 on brand new creative from a bunch of different other people who could then maybe help you get that CAC down.

Matthew: So you're now spending more efficiently at 80 than you are at a hundred. And now, because you have all that new content, you could probably go from 80 to 150, 200, as opposed to what you were doing at 100. Right.

Matthew: You got to be okay with going less on ad spend and more on creative, because that's how you're gonna find efficiency. As I need to find new winners, it's how you're gonna find and drop your CAC, or at least give yourself a chance to do that. Right. Outside of, of course, offers and other things.

Matthew: Right. But if creative is a needle mover, that should be one of the first things you're willing to spend money on. And oftentimes even today it's not. And I just don't understand that.

Matthew: Right. You can't be like, I want to be like Gruns, but then also be like, I'm only going to spend up 1%, if that, on creative. You can't say, why am I not growing fast enough? Or why am I not growing enough? Or I'm struggling to grow right now. Literally all you have to do is look at your P&L and say, how much am I spending on creative? Because most likely it's the same. And if you are spending a lot on creative and not growing, then you have a true creative problem.

Matthew: You need to get better creative or something. But very rarely is that the case. Very rarely are people overspending on creative. I've never met somebody overspending on creative. I've met too many people underspending on creative.

Matthew: So that's the biggest thing for me.

29:49 - Two Brands, Two Creative Budgets

Andrej: Yeah. And I'm totally with you on this one. And we had both things. We have basically exactly that thing play out recently with two different brands that we are working with. And one brand is exactly what you pointed out in the first example. So they're spending 150k a month or so on ads and are not willing to spend more money on the creatives. They're not willing to spend more than 5 to 10k maximum on creative. And even that, if it's not necessary, if they can pass by without that, they would prefer to do that. And performance has been declining over the past few months and it's not where they want the performance to be.

Matthew: And you could probably get there through a month or two months. Right. But it's when things start to plateau, they start to raise questions about, well, why are we struggling? Well, you just wasted two months not testing new stuff, right?

Matthew: So you might have been able to keep it going. You got a few new ads going, it's fine. But when stuff really hits the fan, it's never because you didn't put new content in a week ago, it's because you haven't been investing in new content for the last few months, right?

Matthew: It's the same thing. Why is my Q4 not so great? Well, you decided to start creating content in Q4, whereas the brands that win in Q4 are the ones that spent the whole year maybe spending more on creative, maybe underperforming a bit, because they are willing to take on a little bit more of that pressure, knowing that when they find all of those evergreen ads, then in Q4 they're going to blast off and it's going to all work out.

Matthew: Right? They're willing to take that risk a bit more because they're investing in it, because they know, and they're putting their money where their mouth is, right? So it's one thing to say creative's important, but then they don't do it. And you're not going to see the effects right away, right?

Matthew: If you don't put ads in the account next week or two weeks, you're going to probably be fine. But a few months from now, when you've only put in a few new things and the ones you already have aren't really working or whatever, that's why you're not growing. And I think that is where people always look at it too late.

Matthew: And if you just looked at your P&L and looked at your investment of your P&L in terms of creative, I could probably predict that you're going to kind of crash in your ad account based on just how much money you're spending. So as you spend more, you've got to spend more.

Matthew: You have to be okay with that. But also by spending more on creative, you're giving yourself more inventory to get more ad spend efficiently. Ad spend is like a math problem, right? Like if you know you're acquiring customers at a hundred dollars, you're going to take that bet every single time, but when it goes to 110, 120, you're going to be like, I'm not sure.

Matthew: Right. But if you can double your ad spend at that same 100, you're going to do that all the time, because the math is always working, right? Barring any inventory issues. But to get that growth in that spend is not because you spent more, it's because you have more creative to go into the account that can then allow it to have that more spend.

Matthew: And I think people are just not thinking about that. And creative production and creative ads, it's not finite, it's a growing thing. It needs to grow with your account, or else you're just gonna start to grow and crash, grow and crash, grow and crash.

Matthew: And you've gotta be able to anticipate your content needs based on your spend. If you spend double the amount, you need more content. Maybe not double the amount of content, but you need more content. So are you able to do that? Yes or no? If not, you gotta go hire out creative creators or agencies or studios to get you that stuff.

Matthew: Right? And so I just think that people aren't anticipating their creative needs until it's too late. And that really hurts them.

Andrej: Yeah, yeah, exactly. Yeah. And the opposite example of that brand that I just mentioned is another one that was spending less on ads at that time. They were getting close to 100k per month in ad spend on Meta.

Andrej: And they decided to commit to spending 30k a month just on content production and just on new ads, and hired two or three different agencies to help them with a lot of different content, every type that they wanted.

Andrej: And now, a few months later, they're spending 3, 400,000 a month and still scaling, because they just have so much content, and so much is working. CPAs are great, ROAS is great. Everything is just crushing it compared to the other brand that is not willing to invest into content, where things don't look great.

Matthew: Yeah. And it happens all the time. It's literally the difference, right? We know, especially in consumer, what drives growth is gonna be, barring you wanting to do a very long growth trajectory of building brand and doing other things, that is definitely a route you're going to, right? If you're listening to this podcast, though, you are focused on performance marketing, which is great.

Matthew: Awesome. That is the main driver of growth. Obviously this is with the understanding that your product is good, right? And yes, you can work on your margins here and there, but what is the major factor is going to be ads.

Matthew: Because, even out, you can also argue offer as well, offer and landing pages. It's like, you got to drive traffic to those offers and landing pages anyway, right? So even though that actually might be the thing that really gets the sale, and really how you make that offer can really create efficiency with those ads.

Matthew: Those ads at the end of the day are the first impression and they have to make you click, right? So you don't really see the offer in the ads most of the time, the offer's on the back half, in the actual website where you're driving traffic to. So of all the things you can do as a consumer brand, it would be creative.

Matthew: Now, do you want to do organic and do the TikTok Shop content play? Okay, you're still spending on creative, right? You have to be. You're still spending on it. If you go and do it all on Facebook ads and stuff, that's fine. But whatever flavor you're deciding, even if you're going to say, I'm going to go all organic, okay, you need to spend money on that, right?

Matthew: You can't just do that yourself. It doesn't just happen. So whatever channel you decide is the best fit for you and what you want to do, that's fine. There has to be some sort of content engine to make that happen. And it's the most important thing for any consumer brand.

Matthew: So if you as a consumer brand aren't doing that, there's just no other way to really grow, unless you're cool with slow growth and doing all this stuff. That's fine, if that's what you want. But if you're somebody who's like, look at Gruns, why am I not them? It's because you're not spending nearly as much money on creative as them. And I'm not saying, because they're a billion dollars, they're spending a lot of money. I'm saying, even at your level, at the same level, right, as you are, whatever it is, they were spending more on creative than you.

Matthew: That's it. That's the driver, right? They had the same offer essentially the whole time. So what were they doing? They were just continuing to build larger content engines, more channels, but they knew that they had to spend the money, so that's what they did.

Matthew: And so you just gotta be able to do that. It's the biggest driver of growth, but it's the thing that people are most scared to do, in terms of the P&L investment. So you gotta know where the growth is gonna come from, and it's gonna come from content.

Matthew: Now, is all the content gonna work? No, it's not. It's not going to all work. I get it. But you got to be taking bets. If you're going to take a bet anywhere, it's there, because that's where you can get your growth.

38:38 - The 10% Rule For Creative Budgets

Andrej: If someone asked you point blank, what percentage of ad spend should go into creative production, what do you tell them?

Matthew: 10%. And then it goes down to five and then down to one. Right? So it's a sliding scale depending on how much you're spending per month. Right. But it's a good rule of thumb, right? Can you get to certain levels of spend, 100, 200, spending less than 10k?

Matthew: You could, but most likely that's happening because you, as the brand founder or whatever, are willing to make the statics and do all this stuff. And maybe you're more inclined to do that. And so you can get away with that. But let's say you're just like, hey, I need to get content and I need to do this.

Matthew: And I've got a lot of other things. I'm more of a product person, and like, where your strengths are. And maybe creative is not the biggest one. It's like 10%, right? Like that is a good fair bet. And you're building in, think about it, if you had to build an internal team, you'd have to hire people, you need to know how to train them and all that stuff, and then you still have to output that content, right?

Matthew: So you could hire creative strategists, but then you got to still get creators, you got to get a lot of stuff. So like 10% towards true creative production would be extremely valuable. And then, yeah, once you get to higher levels of spend, it probably tapers off there.

Matthew: But I think that's a good rule of thumb. It also really depends on where you are in terms of your testing budget. So if you're really kind of in a smaller stage and everything is really testing, and you don't have a ton of evergreen ads, then you might need a bit more content to output so that you can get some wins and start to scale that spend.

Matthew: So it kind of just depends on what your ad account looks like. But I think that that's a good rule of thumb, to be honest.

Andrej: Yeah, I agree. That's a good number. Obviously there are some brands where it's beneficial if they're more aggressive and if they have the money, that they spend 20% or 30% into the production, just to get results faster, because then it will allow them to reinvest more into ads once they have found the winners.

Andrej: But yeah, obviously you also can't just spend everything, all your money, on the content, for sure.

Matthew: And I think that, let's say you are scaling into a hundred. Last month you did 85, now you're at 100. You might want to stick to that 10%, right? Because you're kind of growing into it.

Matthew: If you've been like, we're at 100, 120 every few months, for the last few months, we really haven't cracked it, I would probably go a little bit higher, because most likely you have a creative problem, right? So sometimes those percentages are also dependent on what the momentum of your ad account spend is.

Matthew: And obviously take into account, of course, seasonality if there is some in your business. But if you're really getting stuck at a threshold, you probably need to spend a bit more, because you've got to get to that next tranche of spend. You probably have not enough in terms of that ad inventory. Whereas if you're scaling and scaling, scaling, you probably could go a little under in terms of that percentage rule that I gave you, if you're kind of cooking and the momentum's behind you. So I think it kind of also depends on where things are. Most of the time, though, when people start to plateau, it's because they've underinvested in content.

Andrej: Yeah.

Matthew: So that's the biggest thing. And most likely, let's say you're at a big spend, 200k or something like that, and you're like, well, I'm spending, you know, 20, 30 grand a month. Why is it happening? Well, now you need different, right?

Matthew: And so you can't just do more of the same. So now you need more and different and new. And so that might require a new investment. So a new creator group, a new creative studio or whatever.

Matthew: Right. And so, you know, you don't want to be like, well, we did a hundred ads, now we're doing 200 of the same type of ad. That's not going to also give you the growth either. So there's a bit of that, knowing how is that $30,000 you're spending on creative, is that giving you diversity or just quantity?

Matthew: Because that's also going to hurt your ad account. And so I think that's something that people are missing and not thinking about as they're thinking about how they are investing in getting more creative.

43:53 - Diversity Beats Volume: The Ads-Needed Math

Andrej: Yeah, exactly. I've had people on this show who are very deep believers in creative volume, and especially with AI, systemizing your way to hundreds of ads, and even on a weekly basis launching hundreds of ads.

Andrej: But I think you're a bit skeptic of that, right?

Matthew: Yeah, I mean, I just would love for someone to actually show me that actually work. I haven't really seen that fully work. And I'm not against volume, because you do need more, but I think that you need to be pushing for diversity, which in turn gives you more.

Matthew: Right. So if you're thinking about, let's say you have whatever, 10 ideas and you're like, we're gonna 10x the amount of content. Most of the time when people are thinking about 10xing the amount of content, because they talk about quantity, the incentives are wrong. Because let's say I'm on your team and you say, hey, Matthew, your team's producing 20 ads and I need you guys to be producing 60 ads a week.

Matthew: What am I going to do? I'm going to probably find the fastest, easiest way to get 60, because you're telling me I need 60. You didn't tell me you needed 60 different ads. You just said, I need you to get maybe 40 more ads per week. Well, I got you 40 more ads, but then you're going to be coming to me and saying after a few weeks, hey, you're hitting the volume, but why is the performance not working?

Matthew: Oh, well, you didn't ask me to do anything different. I just changed the headline. But it all looks the same. But I got you 60 ads. So if you're making decisions off of this number without even taking into consideration the quality, and what I mean by quality, I'm talking the qualitative aspects.

Matthew: So not output numbers, files going into Meta, but types of files, and what is the theme and what's being said? How is it being said? Is it top of funnel, middle of funnel, bottom of funnel, styles and all these other things?

Matthew: If you're not going to take any of that into consideration, no, 60 more does not make sense. So I'm not saying don't, but you should be optimizing for doing, I want to do all these different styles, talk about all these different themes, talking to these different personas.

Matthew: And we're going to do it in video and static and hi fi and lo fi. That gets you 60 ads. But those are 60 very different ads. Right? So I'm setting up my team for diversity, which inherently gives you more ad inventory.

Andrej: Right?

Matthew: So if you just break it down, there's no way that you can say that quantity is the driver of success, right? And then when people say, oh, well, this brand or whatever does it on quantity, the reality is, it's not because there was more ads in the account, it was because they did actually happen to have some diversity that was different.

Matthew: The brands that I've seen that do a lot of content with not a ton of change, they're not spending more, they're not growing. That does not happen. So diversity has to be the first thing.

Matthew: And if you can figure out diversity, then inherently you'll figure out the quantity. The amount will figure itself out, and the spend will also work its way up too, because you have diversity. So now there's something for Meta to grow its spend. Therefore, you need more ads, but you have more money to spend on those ads, right?

Matthew: So focus on different versus more, because more will come if you focus on different.

Andrej: I agree. I think most brands overestimate just the quantity of the creatives, but not the diversification or diversity of the content that they have. And it's better to have 10 completely different net new angles, completely different ads, compared to 100 very similar variations of 1 ad.

Matthew: Because it's not like most brands are spending over $100,000, right? So I think most people think that they need more ads than they actually need, right? Because if you're spending $100,000 on ads and 20% of that budget is going towards testing new ads, that's 20k.

Matthew: And let's say your average order value is 100. And let's say you want to do 5x to 10x that. But for the sake of this, you want to do 5x AOV, that's $500. Then that means 20,000 divided by 500 is 40.

Matthew: Okay, 40 ads. I need 40 new ads this month if I'm spending a hundred K. These are all just general things. It's going to be different per brand. But let's just say that those are them. 40 ads, right? I don't need hundreds of ads. I need 40 ads.

Matthew: Right. And so I think that people don't even do the math on how many ads they really need, because they always just think, I need more ads. And if you have that mindset, oh, I always just need more ads, you're not actually thinking about the diversity. But if you knew legitimately by forecast, I'm spending $100,000, right? You're not going to randomly spend $200,000. Right? You're most likely, by forecast, going to spend $100,000. Right? You should have a forecast. $100,000. Okay, I know that going into this month of June, I'm going to need 40 ads. Great. Instead of always worrying about doing more, why don't you think about how can those 40 ads be very different than anything you've ever created before?

Matthew: Right. And so I just think that people don't even condense or even understand how many ads, or few ads, do they really need to then go and create. And so they are always worried, they're always all over the place in terms of getting their ad production, when in fact they probably don't even need that much.

Matthew: Right. And so if you're spending $50,000 a month, it's gonna be even less than that. Right. You don't need that many new things. But I think people let whatever the world kind of make it feel like they need that all.

Matthew: And you end up spending and optimizing for the wrong thing. You're optimizing for more, I need more. And you're not even thinking about, what am I even putting out there? I'm putting out 60 trash ads. I would be way better and have way more findings doing 20 great ads that have thoughts behind it, that have a hypothesis.

Matthew: So even if they don't work, I know what doesn't work in my ad account. But if I'm just tossing up 60 ads, just chucking it up and praying, what are you going to gain from that? I don't know. That's not strategy, that's just guessing.

Matthew: Right. And so even if you win, you're just the lottery. But how can you recreate that? You won't. So I think that people really need to think about how many ads they really need, which is probably way less than you think, and then work your creative strategy off of that.

Matthew: And that's going to help you so much further. And be way more thoughtful moving forward.

51:42 - Seek Coffee, John Caples, And A Hot Take

Andrej: Yeah. Before I let you go, a quick lightning round, two answers only. What's the best ad that you've seen this year that isn't one of yours?

Matthew: Oh, the best ad. Dang. Dang. Let me think about this. Best ad, best ad. I'm gonna go on to my content inspo real quick.

Matthew: Man, that is a tough one. That's not a lightning round.

Andrej: It is.

Matthew: Here's what I'll say. I've seen one, this one brand, let's see, what's it called? Seek Coffee. Seek Coffee. S E E K.

Matthew: I'm a big coffee drinker, and it was this fast paced ad, basically saying how all coffee has mold, but theirs doesn't. I saw that and I said, this is gonna work.

Matthew: I think, I don't know how big the brand is. I don't think it's massive, but it's not small either. But the ad cooked and their content is very good. They're very good storytellers. So if you're looking for a good ad, that one was a good one.

Matthew: There's definitely some more higher production ones that I've been liking recently. But for the sake of our audience, our ecom friends, Seek Coffee is good. I think it's seektolive.com is the URL. But it's the coffee brand.

Matthew: Yeah, and also for coffee, most of the time when you think about coffee brands, because I'm really big on it, they're always hitting on roasting quality, a lot of the things. It's very hard to differentiate. But the fact that they were able to find a healthy angle on differentiating without changing, it's not like, we've got these cool flavors of this ready to drink canned coffee sort of thing. It's coffee beans, but just not moldy. And you're like, okay, I'm all in on that. So I think very cool product placement, or product design, while also having great storytelling.

Matthew: Phenomenal storytelling.

Andrej: Yeah. That's definitely not a lightning round. But what's one book, besides Claude Hopkins, that everyone in the audience should read?

Matthew: I mean, outside of him and David Ogilvy, How to Make Your Advertising Make Money is another one of my favorites. It's by John Caples. How to Make Your Advertising Make Money by John Caples. Very underrated book. I can guarantee you've never even heard of it, let alone read it. But it's very good also.

Matthew: Why it's good is that it can be a reference as well. You can always go back on it and reference it. So really good stuff for copywriting. So I'm a big fan of John Caples. He's kind of one of those Mad Men era type copywriters.

Matthew: His stuff is very good. But that's a great book.

Andrej: Nice. I'll check it out. Yeah, I've literally never heard of it before, which is weird, because I feel like I've read every single book on advertising and copywriting. Not that one.

Matthew: No, dude, I go, I go. You gotta find the old ones, you know, they're out of print. I go deep on them. So that one's a very, very good one.

Andrej: Nice. And now the last question. What's one thing you believe about advertising that most of your peers or our ecom friends would flat out disagree with?

Matthew: Visual brand matters. So that might sound counter, because of course I've talked about how I don't care how pretty something is, right? But there is something to be said about actually having a brand architecture that you follow. Now, knowing when to break that, I think, is the most interesting thing about modern day brands.

Matthew: But actually being embedded with how a consumer thinks and sees your brand, and they can spot it, like you can spot Nike from a mile away. There's something to be said about that. And I think that people have over optimized for performance, that they've under optimized for what does brand mean.

Matthew: And especially visual brand. So that's the hot take. And I think we are going into this new era of brands of understanding, how do you have a visual brand while also being able to be in tune with how content is produced, which is very, just all over the place.

Matthew: So I don't know that I have the answer to that, but I do believe that it is important, and I think most people don't agree with me on that.

Andrej: Matthew, this was genuinely a great conversation. I feel like I learned a lot. Where should people go to follow you and check out Goodo Studios?

Matthew: Follow me on Twitter, on LinkedIn, just my name, Matthew Gattozzi. And we've got a newsletter, we put out a podcast, we make content. But yeah, just check me out on Twitter, where I'm mainly active, and then you can find all the things from there.

Matthew: And if you need content, reach out to me. Or book a call and we'd love to chat. But thanks so much for having me. It's always good to talk about content.

Andrej: Yeah, thanks for hopping on.

Matthew: Thank you.