How Cost Caps Transformed Our Growth

I’ll be honest with you. I have been resisting cost caps for a long time. It’s not that we haven’t tested out cost caps in the past. We have, but they have not worked like we thought.

So we shelved them.

But when someone that you trust goes super in-depth about how they’re scaling ALL of their brands using cost caps, you’d be a fool not to listen up.

I am not going to share everything that Zach Stuck shared (founder of Hollow and Easy Street Brands), but I will share how we are implementing the information to scale.

By the way, the recording of this epic video is available in the Andrew Foxwell group. He has been a loyal sponsor since the beginning of this newsletter and said if you email him at [email protected] and said that I sent you, he will get you a monthly price that is significantly lower than the $547/mo that new members are paying. Mention you read my newsletter, and he will get you hooked up.

So let me talk about some of the struggles we were having with our smaller brand over the last couple of months, and what has changed for it.

Stalled Growth

One of the most disappointing elements of scaling a brand is seeing stagnant growth. For me, I want to continue to see exponential growth when we’re early on and have found winning angles. I would love to share an in-depth guide on how we find winning angles if you’re interested. Just reply and let me know if this is a newsletter you’d enjoy reading.

But back to my story. Here’s the timeline of the brand the last few months:

• June: $36k

• July: $48k

• August: $49k 😬 

• September: $38k 😭 

Ok, so not the right direction AT ALL. It had me applying for jobs at Target.

Ok, maybe not Target, but I was wondering if I was in the right business. The reason I was so bummed out was that I’ve helped tons of brands grow over time, and the first 12-18 months of growing the brand through paid is very impactful in terms of the possibility of scale. Yes, there may be a couple down months at times, but generally we see mostly linear growth as we build a strong funnel of new and returning customers.

But if we did a deeper dive, we would see a trend that was at least promising.

Returning customer rate go up. That’s a great sign, and something that is important. Buuuut, when scaling an early stage brand, I generally never want to be above the 15-20% mark in the first 12-20ish months of scaling due to the fact that most of my growth will be coming from new customers.

Yes, your returning customer rate should increase over time, and I eventually want to see a healthy 35-40% of customers be returning customers, but that is when you’re closer to to 6M+/year in revenue. Until then, I want to be driving new customers at a very high rate. It would be best if it was profitable as well.

Looking at this data, I was encouraged because we were getting a lot of returning customers, but the data can be misleading because our total number of customers went down in September. This was concerning.

So what is one to do? Enter the cost cap conversation. This literally happened about 10 days ago mind you.

So essentially Zach shared in the Foxwell call how he transitioned his spend from highest volume CBO campaigns to almost fully cost cap. And the results were wild.

Higher daily spend ✅ 

Higher NC-ROAS ✅ 

Higher Profit 🤑 

So this really made me think about our situation with our brand. I felt it was clear that we needed to make a change to our account structure which was focused on highest volume campaigns, most of the spend going to a CBO campaign.

Let me share the comparison of what we were doing about 10 days ago (one day of spend): $625

Let’s take a look at what we’re spending yesterday, just 10 days later: $1,232

Ok, so we doubled spend, with the doubling going mostly to the cost cap campaign (ASC CC). For context, we were around a 1 overall on platform ROAS in the first date, and we are now sitting around a 2.6 on platform ROAS AFTER doubling our spend.

So what were the steps we took to do this? First off, we took the top performing ads in the CBO campaign (outside of our top spending ad) and turned them off, and moved them to the ASC 1DC cost cap campaign. We set the cost cap at $50 because our target CPA is around $38 - so we wanted to see if we could get spend.

This is edited in the campaign level for CBO and ASC, and the ad set level in ABO. If you do follow this setup, I highly recommend doing 1DC if you can, but you would need to figure out what works for your brand. I like 1DC (one day click) because it helps Meta focus on getting purchases in a shorter time window and though your on platform ROAS may be lower, you will still see strong results.

Creative Setup

If you didn’t catch it, I did say that we did not take our top performing creative and put it in our cost cap campaign, and the reason for this was to see if we would see meaningful results from creative that has gotten spend in the past but wasn’t able to perform long term.

This also doesn’t completely destroy your current momentum, while also giving you the ability to possibly transition fully to a cost cap campaign.

Note: Don’t turn off stuff that’s working. As you can see, we do have a few different campaigns because this is what’s working and getting us a really solid CPA. Don’t turn off stuff that’s working, that’s rule number one.

Adjusting Budgets

There are a lot of resources out there about bid caps and cost caps. I believe Andrew Faris has a lot of resources on this, check out some of his stuff.

But to understand how it works, you just need to look at setting your cost cap 1.5X your target CPA, and adjust accordingly based on how much Meta is spending on your campaign.

If it’s not spending, it’s likely one of the following issues:

• Bad creative - Meta won’t spend toward creative in a cost controlled campaign if the creative is terrible and it doesn’t think it can hit the target cpa

• Too low of a target CPA. Raising your target may seem scary, but that’s why you don’t start off at 10k/day in spend (unless you’re crazy).

• Competing post-IDs — this is something that I would highly recommend you not do. Do not run an ad in a highest volume campaign at the same time as a cost cap. I believe it’s either one or the other.

Please let me know if this was helpful for you and if you have any questions.

Ways to work with me or support me:

Agency partnership: We have officially opened our doors for Q1 of 2025 for 2 brands in total to join us. We prefer to work with health & wellness brands that are solving a real problem. If you’d like to learn more about our work and how we can support you (through creative strategy/production + media buying) you can do so here.

Consulting Call: If you want advice on scaling your agency or your brand, I am happy to help. You can find a time to meet with me here.

Resources for Q4: I highly recommend checking out LiveRecover for Q4/BFCM - they have live agents that recover abandoned carts and we have rolled this out for many of our brands and it has been epic. They’ve recovered 100’s of thousands of revenue for us in the last few months. They’re waiving the platform fee for 3 months if you let them know I sent you. Check them out here.