Would you believe it if someone told you that Facebook Ads are more difficult than Investment Management?

Recently, I have been reading Principles by Ray Dalio. Great book, read it if you have not done so yet. Dalio is an Investment Manager and a Founder of one of the most successful hedge funds in the USA, with an estimated net worth of 18.4 billion dollars. He built his company from ground up.
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In his book, he explains a few core principles that lay behind portfolio management. For example, on page 58 we can read:
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“Making a handful of good uncorrelated bets that are balanced and leveraged well is the surest way of having a lot of upside without being exposed to the unacceptable downside.”
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If you ever had a situation where you were betting all your money on one Facebook campaign and then it stopped performing, you know what I’m talking about.
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In both Investment Management and Facebook Ads management, it is important to diversify. Where in the first you might bet on few uncorrelated revenue streams, in the ads you may target multiple audiences with different products and messages. If you know your average and target returns, this way you may minimize the risk of loss without compromising on your targets.
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So what if your campaign brings 5X ROAS from 5k spend if the overall return for a month is below breakeven? This does not stop some of the ‘gurus’ to create a case study based on that misleading data.
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There are many more similarities between these two industries, but let’s talk about the differences. In both cases, there are numerous variables that come into play and influence the financial outcome. In order to handle that and ensure profits, Ray Dalio has built predictive models. He was creating conditions for assumptions and then he was testing whether the outcomes matched his predictions. The way he was building those models was by using historical data. The idea was that market conditions do not change significantly in a free market economy, so if one wants to test a predictive model, they can use historical data to predetermine the accuracy of the model. This let Ray and his team build models that completely outperformed the competition by making their clients a ton of money.
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Being a Fb Ads freak myself, I immediately thought whether you can build such a model for Facebook Ads. And I don’t mean some really advanced AI machine-learning technologies dealing with monstrous sets of data, but few simple decision-making models in order to predict how the campaigns will go at the early stage of running them. I quickly realized that you can’t build such a model, or at least it is extremely difficult to do so.
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Why? Because working with Fb algorithm is something different from working with the market. In the free market economy, market conditions change to some extent, but the Facebook algorithm is updated all the time. Whatever works today will not work tomorrow and it didn’t work yesterday either.
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This constantly forces us, advertisers, to use our minds in order to try and judge how to play along with Facebook’s algorithm, which we do by learning about marketing constantly, reading every single Facebook update and trying to guess what’s in Facebook employee’s minds. The environment is constantly shifting and if you are not on the top of your game, you will be out of it pretty soon.
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This, on the surface, may make Facebook Ads management more difficult to deal with than Investment Management. However, I am not an expert in Investment Management, so the comparison is humouristic only. The truth is, both industries require immense effort and expertise to make a success, but also both yield a promise of huge profits and scalability.
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So, if you feel like you want a Fb Ads freak to manage your investment in paid traffic so that every cent is squeezed for the sake of maximized profits, let’s chat.
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You can book a discovery call here: salesgenomics.co.uk/mike