The problem with 'hit rate'

Hey guys,

Recently I had a consulting call with someone who was struggling with increasing their creative volume.

They had 2 internal strategists, and when I asked them how they are KPI’ing and incentivising their team, they said “it’s all based on hit rate”.

I’ve always found it odd when people use hit rate to judge their strategists/agency’s performance - because it doesn’t reward the right things.

If that’s you, then I’d strongly suggest giving this one a read.

But first, here’s what’s I’ve come across in AI this week:

• Interaction dropped Poke, an AI personal assistant in iMessage - and it looks very cool. Great launch video too.

• DTC Midas dropped another banger tweet on how to make ads that convert (not really AI, but worth sharing lol)

• Not from this week, but Meta partnered with Midjourney to integrate AI image and video generation directly into their ad platform

The problem with hit rate

Hit rate is a flawed metric to measure ad success by.

Here’s why:

Advertisers say: “If my hit rate is 20%, I've just got to make 100 ads, and then 20 of them will be winners.”

But here's why that's a backwards way to measure success:

It punishes the person who has more shots on goal.

Imagine there were two marketers…

Marketer A: 2 ads created, 1 is a winner (50% hit rate).

Marketer B: 20 ads created, 5 are winners (20% hit rate)

Assuming all else was equal, who would you rather have on your team?

Those that use hit rate as an indicator of performance would rather have marketer A. Those that care about their bottom line would rather have Marketer B.

Ultimately, I don't care if it takes you 3 weeks to make one perfect ad, or if you spend that time grinding out 100 “scrappy” ads. I simply care about who is creating the most long-term, scalable winners inside the ad account.

Would I love to have a metric like that where I could benchmark all of my creative strategists against?

Sure, it sounds great in theory.

But the reality is that having one creative strategist (or agency) with a higher hit rate literally means nothing if I have another with half the hit rate but twice as many winners.

Want to get even more “meta” for a second?

Consider:

What even is a winner?

Is it an ad that has an arbitrary amount of spend?

What if Marketer A made an ad that spent $3m profitably vs Marketer B’s 5 ads that only spent $100k each…does that change things once again?

What if Marketer A’s ads get launched in the low season in summer, whereas Marketers B’s are launched during the holidays when spend is higher?

These are a few (of many) reasons why you should be cautious of putting too much weight on the hit rate metric.

What you should do is focus on creating more long-term, scalable winners.

Quantity x Quality x Diversity.

That’s how you consistently create ads that perform in your ad account.

Announcements:

My friend Sam Piliero just announced that he’s dropping a course on how to scale Facebook ads profitably. Sam is rock solid and someone I learn a lot from, so I’d recommend you going to check out his upcoming course. The waitlist link is here.

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See you next week,

Alex

P.S. If you're spending $100k+ monthly on paid social and want help implementing AI systems like these, my team at Adcrate is accepting applications to work with us. Check out our case studies at adcrate.co.