Hal Smith says lowering clients’ customer acquisition cost on Meta and Google is a focus of his agency, H Street Digital. He cites 5 performance levers, starting with the offer.
Hal founded the D2C-focused agency in 2020 after stints managing political fundraising campaigns. “I learned the importance of the right message,” he told me.
In our recent conversation, Hal shared his approaches to ad messaging, testing, targeting, and, yes, reducing CAC. Our entire audio is embedded below. The transcript is edited for length and clarity.
Eric Bandholz: Who the heck are you?
Hal Smith: I’m the founder of H Street Digital in Austin, Texas. We manage performance marketing for direct-to-consumer brands, mostly in the outdoor space.
I started in political advertising, such as small-dollar grassroots fundraising. I learned the importance of the right message to get folks to donate to a candidate, a cause, or a committee.
I now focus on scaling D2C outdoor brands through advertising.
Bandholz: How much of ad performance is the marketing hook versus telling a brand’s story?
Smith: I have a couple of thoughts.
First, the top goal of advertising is to get someone to stop scrolling and click. And the best driver of that behavior is curiosity. Novelty creates a scroll stop because it’s something they haven’t seen. Some clients want very polished, professional-looking ads. The problem is that it’s not novel and is easy to overlook.
So it’s important to be intentional about how novel your creative concepts are versus brand constraints.
The second thing is hooks — the first three seconds of a video ad or the headline on a static ad. How do the hooks drive curiosity? We often lead with a question that’s specific to viewers or readers. It speaks to a pain point they might have. They get curious and want to know the answer.
There are a lot of tactics for that kind of storyboarding or scriptwriting. Figure out which part of a video or static ad drives the most interest. That becomes your hook.
Bandholz: How do you help brands understand that? A $5,000 photo shoot may not stand out.
Smith: We often see those glossy ads, especially on Meta, that don’t target the right customer. So our first step is to figure out the pain points merchants are trying to solve or the aspirations they’re trying to hit. Then we hone in on the language that those target prospects use to describe the pain point or need.
The final piece is ensuring the people in the ads actually reflect the target audience.
Bandholz: When do ads peter out and require new content?
Smith: I think about this question every day.
With creative, the biggest ad mistake that brands make is not optimizing for the right purchase event. In Meta and Google, brands typically go for the highest volume at the lowest price point. But that approach trains the platform to go after any purchase.
What you want from the platforms is to get new customers. So the challenge is training the algorithms.
A better approach is to set up a custom purchase event for new customers and use it as your main optimization goal in Meta and Google. That creates a framework where the platforms have to work to reach new customers.
It also drives a creative testing strategy we call a matrix approach. Assemble all target customer personas, the main angles to reach them, and the formats. These could be static image ads, GIFs, user-generated videos, whitelisted or partnership ads, et cetera. But you need a large variety to cover enough of your target customers and know how to convert them.
Then you create that content.
If you test only the right purchase event, Meta and Google will tell you what creative is doing well.
Bandholz: A large variety. How many ads are we talking?
Smith: Aim for enough conversion actions in a given period, such as a week, to know confidently what’s working and what’s not.
You’re not learning anything with, say, a $500 daily budget and a $500 target acquisition cost. But if your target CAC is $20 and you’re spending $10,000 per day, you’re learning fast and can create much better variety.
So the ad volume depends on your budget and your target CAC.
Bandholz: How do brands lower CAC?
Smith: It’s a focus of our agency. In our experience, five performance levers impact CAC. Number one is the offer. A strong offer does a lot of the work to reduce cost.
The second is the creative. Compelling creative lowers CAC.
Next is the account structure. When auditing accounts, we often find brands have placed platform restrictions that limit learning.
The fourth is the landing page. A high-converting landing page lowers CAC.
The fifth is signal engineering — setting the right targets for Meta and Google to optimize for.
Bandholz: Cool. Where can people follow you, reach out, hire you?
Smith: Our site is HStreetDigital.co. Or message me on LinkedIn.
