How To Build A Creative Moat For Your Business

How to use data to build better ads, beat your competition, and create a world-class creative system to unlock revenue.

Table stakes – Creative is a moat for your business. Outside of your product and your brand, it is the only unique differentiator you have in the market. What’s more, your product and your brand being seen are predicated on volume passing through your site through a variety of mediums, with your creative being the gateway.

Paid ads are the only way to guarantee that a given number of people will see your brand. Yes, CPMs dictate the actual volume of people reached, but TikTok, Instagram, Twitter, Pinterest, LinkedIn YouTube – the channels that drive the traffic – are dependent on your content is impeccable. The better your creative, the better the engagement rate of your target demo when you publish the content, and the more likely that the algorithm gods will be on your side that day.

Yes, you can create unfair organic advantages, but how many brands have the ability to do that when they are starting out? With paid ads, the audience is guaranteed. Think about that for a second! Creative is a moat for your business when using paid advertising to drive growth.

But how to make your moat powerful and scaleable? At Pencil, I’ve seen nearly 2 billion dollars in ad spend from our brands. That means I’ve been privy to what:

• Creative they’ve made

• Creative they are spending on

• The creative works.

• The creative doesn’t work.

This also doesn’t take into account when I was running media for e-commerce brands myself. In that time, there’s something I discovered that no one thinks about this when running ads…

YOUR AD STACK FORTIFIES THE MOAT

Ask yourself - are the ads you’re currently running for everyone? No? They shouldn’t be, but you’re clinging to that one ad that’s working. Let’s paint a beautiful picture of what your best ad style delivers:

• Great first purchase AOV

• Short payback period - even the first order breaks even 🔥

• Strong modelled LTV

• Real legs on word of mouth

Sounds great, right?

What if that ad only answers for 40% of your TAM? (this is a high number, to be honest)

Can you only depend on that ad to drive your business forward?

I wouldn’t, and the best brands in the world aren’t, either. Here is some interesting data we gathered to back this up:

This table shows you the delta between the top and bottom-performing brands.

What do you do with this information?

CREATE MORE AD STYLES

At Pencil have found 61% of ad accounts have greater than ~50% of their ads fatiguing at all times.

That means you need options, and you need to test what other creative angles deliver against your core metrics and enrich brand equity.

Most brands find one thing - and drill down on that until it has diminishing returns, then work to find the next angle that drives business results while being in the red on that ad.

That's understandable. I've done it. You don’t want more work.

But - what if you spread the burden of conversion across 4-5 different ad styles targeted towards different subsets of your audience - maybe none of them die?

Like this 👇

Style A = 40% of the market

• 10-12 variations

Style B = 15% of the market

• 4-5 variations

Style C = 27% of the market

• 6-8 variations

Style D = 18% of the market

• 5-6 variations

27 variations running!

This means full coverage - true broad targeting through differentiated creative angles.

The big call out here is that under each style, you can create and test hundreds of variations over the course of your brand's lifecycle. 🤯

Don’t short-change your possible customers by not differentiating your brand through testing.

You can answer all of them by building your ad stack.

HOW DO I ACTUALLY DO THIS?

Practically, there are a few methods, all of which are constrained by time and budget.

1. Hire a creative agency (expensive/high quality)

2. Creative UGC (expensive/quality varies/time intensive)

3. Use UGC Network (price efficient/quality varies)

4. Use Software (price efficient/operationally efficient/quality varies)

5. In-house designer (expensive/time inefficient/high quality)

6. Freelancer (price efficient/quality varies)

Similar to creating your styles + variations, you MUST deploy a variation of this across the stack. Remember, one feeds the other.

Here’s an example:

1. An agency creates three months of high-end footage + UGC

2. You get Soona to create product shots

3. You plug both into Pencil to amplify the ads/assets from #1/2

4. The learnings from testing 1-3 give you a sense of what you can go to a freelancer with

5. The freelancer creates lower-fi assets/ads from what worked in #1

6. Then you can plug the assets created in #5 with your freelancer into Pencil/Canva/etc. to create ads and test

7. Once you’ve run this cycle a few times, you can go back to your agency with learnings on what else you would like to create and run steps 1-6 again

This process will give you the following:

• Create unlimited variations of ads

• Uncapped ability to figure out what your core + adjacent customers respond to

• Lessen the valleys of ad fatigue you have dealt with when your winning ad decays

• Launch new products with velocity

To recap: to win, you need to realize that Creative is a MOAT, that you need an ad stack to create/reinforce said MOAT, and that there are multiple ways to source/create an ad stack.

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