How do you identify the right verticals for scaling ad buys?
Secco Squared President and performance marketing veteran Jon Lender has invested in and scaled up enough DTC businesses to put together some interesting answers to that question. And at a recent Affiliate World event, Jon shared his blueprint for identifying and scaling multiple verticals to eight figures in just six months.

4 Indicators For Scalable Verticals 📈

Identifying profitable products is a fundamental component of Jon’s ad strategy, which is really just a fancy way of saying “do your research first.” He looks at four key market indicators to determine whether a vertical is scalable.

1️⃣ Market Competition

Start by evaluating the competition within the vertical. Are multiple companies operating in the space? If so, you can look at what they’re targeting to identify gaps that could be profitable for your campaigns. On the other hand, if just one offer or brand is dominating the vertical, there are even more opportunities available.

2️⃣ Presence Across Mediums

In verticals where one brand has a monopoly-level market share, they’re usually achieving that dominance through just one channel. When you identify that channel – usually either email, social, native, or search – you can choose to invest in other mediums that will be more lucrative due to a lack of competition.

3️⃣ Understand the Business Model

Successfully scaling ad buys in a vertical requires understanding the business goals behind the offer. If a successful lead for a law firm generates a six-figure settlement, for example, putting more budget behind delivering those leads will be more valuable than a six-dollar children’s toy.
Key Market Characteristics
Knowing the business model – where leads go, what the key metrics are, etc. – is crucial to scaling and sustaining growth.

4️⃣ Payouts and Conversion Rates

The highest payouts don’t always lead to the highest results. In some cases, payouts that are a little lower are more successful, because they are capable of scaling on volume due to a consistent conversion rate.

3 Capital Sources For Sustainable Growth 🌱

Ad buyers know that access to funds has a lot to do with your ability to scale and sustain growth. If you’re scaling ad buys and concerned about bridging receivable to keep your campaigns active, a few actionable tips include:
1. Negotiate favorable terms with advertisers. In some cases, reducing your profit margins by a percentage point or two may be worth it if your advertisers are willing to pay out more quickly than their standard timeframe. An early payment discount, especially on consistent performers, can help fund and scale other ad buys.
2. Plum Card. The American Express Plum Card is accepted by most vendors and, unlike other credit cards, offers a 60-day window to pay your bill. If most of your receivables are net-30, this opens up additional resources for funding campaigns.
Diverse Strategies
3. Money in the bank. Companies with strong financials can usually set up a line of credit at their bank to access additional funds. This option can be less profitable given recent interest rate increases, but it’s an important option for ad buyers to have on hand. Finally, your own money in the bank can also come in handy for keeping campaigns afloat.