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Episode 271
:
Sean Frank - Ridge

How to Win in 2024 with Sean Frank of Ridge

Sean Frank is a true legend in the DTC space.

He's the CEO of Ridge, a thriving 9-figure DTC brand. They started by selling wallets and have since successfully launched a premium travel line and rings. 

Sean is arguably my favorite DTC follow on Twitter, and he's the co-host of a new podcast called The Operators. He co-hosts with other 9-figure Ecomm CEOs, Jason Panzer (Hexclad), Mike Bertulli (Lomi & Pela Case), and Mike Beckham (Simple Modern).

I wanted to get Sean's take on his expectations for Ecomm in 2024 and what it will take to win. As always, he did not disappoint.

Here's a look at what we discuss:

  • Why MER is the magic number for measuring your Ecomm growth.
  • How AOV is likely where you need to focus to improve MER. You can only do so much with conversion rates, and ad costs will increase over time.
  • He expects 2024 to be a normalized year for growth for eComm.
  • What to focus on if you're under $10M in annual sales as a brand.
  • What channels can you start to focus on when you're over $10M in annual sales?
  • How he thinks about selling more new stuff to new people in new places
  • How to take advantage of his advice to "be lucky."

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Chapters: 

(00:00) Introduction 

(01:18) The Operators Podcast 

(06:30) Ridge’s Background

(09:38) What To Expect For DTC Brands In 2024

(16:08) What Does It Take To Win In 2024

(25:13) What Channels Is Sean Most Excited For In 2024

(30:15) How To Grow Profitably 

(38:52) Expanding Your Product Line

(43:44) Outro

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Show Notes: 

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Connect With Brett: 

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Past guests on eCommerce Evolution include Ezra Firestone, Steve Chou, Drew Sanocki, Jacques Spitzer, Jeremy Horowitz, Ryan Moran, Sean Frank, Andrew Youderian, Ryan McKenzie, Joseph Wilkins, Cody Wittick, Miki Agrawal, Justin Brooke, Nish Samantray, Kurt Elster, John Parkes, Chris Mercer, Rabah Rahil, Bear Handlon, Trevor Crump, Frederick Vallaeys, Preston Rutherford, Anthony Mink, Bill D’Allessandro, and more. 

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Other episodes you might enjoy: 

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Transcript:

Sean:

LTV doesn't matter if you go out of business. You're thinking about future harvest when you could starve this winter.

Brett:

Well, hello and welcome to another edition of the eCommerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce. And today I have the man, the myth, the legend, Sean Frank. He's the CEO of Ridge. And listen, if you are in the D2C space, if you pay attention, if you care at all about this industry, then you're probably on Twitter. And if you're on D2C Twitter, then you know who Sean Frank is because this guy just owns it on the D2C Twitter sphere. And so he's one of my favorite follows of all time. Got to know this dude several years ago talking influencer marketing and Ridge was very successful then. And now it's just Upper Stratosphere, which is awesome. And one thing I didn't realize until recently, he's also the co-host of the Operators podcast, and I hear this is just news on the street. He's the most handsome member of that four person podcast, the Operators podcast. So with that, Sean Frank, welcome to the show. How's it going man?

Sean:

It's going good, man. I'm sorry I had a bribe you to say that, but it's very funny

Brett:

And truth be told. So you got the best beard of the bunch for sure. But in all honesty, that's not a bad looking group of dudes, right? So break down for folks that haven't heard of the Operators podcast, who are your other co-hosts?

Sean:

Yeah, nobody worth mentioning. No, I'm just joking.

Brett:

It's Sean Frank and some kind of wannabes that are trying to be like Sean Frank riding on his coattails.

Sean:

Yeah, so you have Jason from Hexclade, and if you dunno, Hexclade they are probably the most premier cooking company out there right now.

Brett:

So Good

Sean:

Ridge is doing good. Hexclade is doing three or four times as good as Ridge. Those guys are just fucking crushing it. I mean, they have eight figure days, they're just on top of the world. It's insanity. So there's Hexclade, there's Matt, he has two companies. So he has Pela Case, which is Tech Accessories, and he has Lomi, which is like, I don't know how you would describe it, but I call it like a new age composter. It is a dirt making machine, basically you buy and put it in your house. So he's on the Green Tech front. And then you have Mike from Simple Modern, who is by unit sold the most popular water bottle on Earth. So he's crushing it. So it's just all of us chopping it

Brett:

Up. And I love each of those brands and Simple Modern, so cool. Actually, they're going to be on the podcast, spoiler alert here in a few weeks, but really a brand that launched on Amazon, but it's a real brand. It's not just a product that people are hawking on Amazon. It's like a real brand and they're doing it. And yeah, Hexclade, what a story. And then, yeah, I got to meet him when Pela was young in its infancy and it's doing so well. And then of course our mutual friend, I hate to give him any airtime, but Ryan McKenzie told me about the appliance business that TUI has and sounds like that's doing some good work and it's really taken off. So yeah.

Sean:

Yeah, it's a good mix because you have a retail focused brand, like Simple Modern, very big. And Target, Walmart, whatever else, you have a subscription business, which is Matt and Lomi, right? So it's Hard Tech with subscription tied to it. You have a rocket ship in Hex Cloud and then you have Ridge, which is the greatest e-commerce brand of all time. So good combo guys. Dude,

Brett:

I love it. I love it. It's hard to argue that for sure. And so yeah, check it out. And really before we dive in, there's so many things I want to pick your brain on related to e-comm and the growth that Ridge has experienced. But you guys decide to do this podcast, and by the way, it's crushing. I'm watching your viewership on YouTube and other places. People are loving the pod, but why do it?

Sean:

Well, I used to do a newsletter and the newsletter would just be like me on Sundays just typing whatever thoughts, and it took about an hour and I'm like, oh, well the podcasts will take an hour. So I just stopped doing the newsletter, started doing the podcast, and it is more three dimensional, not just me sitting alone with whatever I want to talk about. I get feedback, I got to learn from people who are smarter than me. And being a CEO is like, I mean, it's obviously a prestigious jobs. Lots of people want it. It's incredibly lonely. It

Brett:

Is for sure.

Sean:

You have problems that nobody cares or wants to hear about,

Brett:

Right? Can't tell your family. Probably can't tell a lot of your closer friends. They wouldn't understand and they don't care. I mean they care, but not really. Yeah,

Sean:

I'm from a blue collar background, same. My best friend's from high school, one works in a warehouse, one does, if there's disasters, he cleans up. If there's a suicide, he'll clean up the houses or whatever, just like the gnarliest job ever. And then one of 'em installs garage doors. So they have real problems, wife, kids working hard. And I have to be like, well, my ROAS is down this week and I'm pretty upset

Brett:

About it. What's wrong with you?

Sean:

They're like, shut the fuck up, get some real problems. So it's just good to have other people who I can bounce off issues, even if things, I mean, this is what everyone talks about, how great their brand's doing all the time. Anybody ever raising money tells you how they're changing the world and everything's going great, dude. The reality in every brand is I got two things that are going good and I got 50 things that are breaking any point. So it's hundred,

Brett:

It

Sean:

Have people to synthesize with

Brett:

Skeletons in everybody's closets. There are issues in every business. And if you say they're not, then they're probably bigger issues than in other businesses. Yeah, man, really great insight there. So for those that don't know Ridge, give us a 62nd version of what is Ridge and what's, what's your background? You got kind of this unique trajectory to get in becoming the CEO of Ridge?

Sean:

Yeah, so we are a modern men's accessories brand. We're trying just to be a modern accessories brand, drop the men's part of it. But we mostly sell, we have a travel line that's doing really well. We have a men's wedding band and engagement line that's doing really well. And think about the products that a Tomi would make or a coach would make. And we're making the updated modern premium version of those. So the men's accessories business is probably like a 25 billion a year tam. The wallet business is a 10 billion a year tam. We have over 1% of the global wallet market and we're growing really fast. So our biggest competitors are whatever your parents got you when you were 18, whatever wallet from Walmart or LVMH. We're just trying to be the new age accessories brand. How did I get here? I had an ad agency. One of my clients, the only client that was actually crushing it was a company called Ridge Father-son, best friend started it. They didn't want to run it anymore, they just wanted to do product. They didn't want to do marketing or customer service or ops or logistics or whatever. So we merged, me and my CMO Connor took a big chunk of the business and we've been running it ever since. And we started working together in 2016 and it's 2024. So a big part of the company history. It's been us working together,

Brett:

It's so awesome. And Connor's the man love talking marketing with that dude as well. So yeah, the wallet is primo. You guys, I dunno if you invented the category, but you certainly dominate the category if you don't have the George Costanza fat wallet, right? The reference from the nineties or a money clip or something else. You need a rich, right? So the RFID wallet basically indestructible. Did you guys invent the category or just the ones that dominated it?

Sean:

So we have a lot of patents and technology around our particular wallet. And I would say we definitely invented our style of wallet, but wallets have been trending minimalists for 10 years or whatever billfolds that the old classic dad wallet has been losing market shares like card holders. We've made an updated card holder that can fit as many cards as you need, as much cash as you need. So it's the expandability of the storage capacity of a billfold, but in the profile of a card holder. And I'll tell you, we invented it, but people have been buying wallet for a long time. It's a big stale category. Yeah,

Brett:

Yeah. Hats off to you guys for so much success there. I want to get into travel and rings in a little bit. We'll circle back to that here as we go, but want to get your take as we're still in the early stages of 2024. What are your expectations for this year and what do you think it's going to take to win for a D two C brand in 2024?

Sean:

Okay, so first my expectations, I think it's going to be the best year for e-comm since 2019. Nice. So everyone had at least one good year in 20 20, 20 21 or 2022, depending on your category, depending on your supply chain. You had at least one really good year, but then you had one okay year and one really bad year. So it just depends on your business and your profile. And if you zoom out and look at that, the collection of three or four years as a cohort, it's a pretty blended flat line. But when you zoom in, you see these spikes, you see these troughs. So this is going to be the first year of 2019 levels of normal like normalcy. And the number I always point to is E-commerce penetration. So e-commerce penetration since 2010 has been a straight steady line up until 2020 when it spikes. But then there's a pullback because people are traveling and shopping in person or whatever. And at the end of 2022, we were in a worse place than if the trend has continued. So if the trend has continued the whole time covid never happened, we would have more higher e-commerce penetration. So there's some charts we could post 'em either in show notes or maybe right here on screen. I don't know how much editing we're going to do, but

Brett:

Show notes for sure. Let's see what Nick is up for if you want to throw some graphics in there. Nice. And part of that too is what really made that difficult. I love the way you frame that, right? In that three-year period, you probably had a great year, you probably had a year, and then you probably had a bad year. And we saw that with our clients or companies we invested in or people we talked to. But the issue with 2022, especially in 2021 potentially, is we all thought we were going to ride that rocket ship forever and we were staffing up and we were buying inventory, we were doing all kinds of stuff, and then things pulled back maybe even below trendline. And so that compounded issues for sure.

Sean:

Yeah. Yeah. So we talk about the global economy, or specifically the US economy did not have a recession, but there was an e-commerce recession for sure. Right? E-commerce growth wasn't existent in some of those quarters depending on the category. So this is the first year where I think we're back to where the trend would be if covid never happened. So we have solid steady e-commerce penetration growth. That trend isn't going anywhere and the world is kind of normalized VC dollars civil out. So there's, people aren't just dumping money into Facebook ads, there's more ad space. And I think by the end of the year, temu stops being a thing in America or it stops being a big spender. So

Brett:

I think interesting. You mean because of regulation or why is Temu exiting?

Sean:

Well, this has to do with the Chinese stock market, but I think is, so Temu is owned by a very large worth, hundreds of billions of dollars, big Chinese conglomerate. And I think the entire thing is actually a fraud and

Brett:

Interesting.

Sean:

It wouldn't be the first time, but there's been a massive fraud on the, I mean, go to their website and go to their investor relations. I think their company's PDD check out their investor relations. It looks like an Enron style scam. So that's my,

Brett:

But consumers want their $9 trendy hoodies or other gear that we might want for our midlife crisis or something. But yeah, it's taken off for sure. Timo has taken off, but watch out. It may be on the decline. Oh

Sean:

Man, I don't know how much time we have to talk about this, but without going full tinfoil hat. So every day Amazon does, I think it's like 4 billion in GMV across the Amazon's total ecosystem. And teos goal this year is like 15 billion in GMV. So it's like a week's worth of Amazon sales is what team is shooting for all year. And TikTok shop's like 10 billion. So they're literally just drops in the bucket of what Amazon is doing on a day by day basis. And then the other thing is they're paying for all this customer acquisition in a time when you can't do that, right? The arbitrage is gone. Amazon gives you all this value, it gives you not only movies and TV shows, not only music and audio books, it gives you all of these things. And they acquired those customers back in 2008, 2010, 2012. So DMU has none of the premium features. It is literally just like buy shit for cheap, the lowest common denominator.

Brett:

Yes, that's exactly what it's,

Sean:

And they're dumping money into it and all of that is propped up by this large conglomerate who's down to lose money. But the Chinese stock market in the past two weeks, they've restricted short selling. They know that there's a big correction coming. So

Brett:

Interesting. Well tune in. You heard it here first, folks. Sean calls that this is not going to be a good year for stay tuned. Yeah.

Sean:

But anyway, what was the question? Oh

Brett:

Yeah, so what else are you expecting? So in 2024, we're going to get back to normal style, normal pace growth for e-commerce. What else are you expecting for this year and or what is it going to take to win? Yeah,

Sean:

Okay. I think it's going to be a very, it's going to be the first normalized year for a long time. We're going to see m and a come back. So we've already started to see, I've started gotten a lot more emails from PE groups who basically shut down in 2023.

Brett:

Yeah, we're seeing that tick up as well in the agency space.

Sean:

Yeah, I think most of the bankruptcies have worked their way through their system. Obviously razzi will be in the big one, but I mean two days ago there's another Amazon aggregator that just went bankrupt. So I think those will be out of the system by the end of Q1 and we'll be back to an m and a and potentially an IPO and merger mark. So I think we're going to see that come back up. That always breathes life and excitement into the industry. That's kind of been dead for a little bit. Brett just asked me, Hey, what events are you going to, what talks are you going to? And dude, there hasn't been any good ones. Most of

Brett:

2023. It's so true. It's so

Sean:

True. People have just been in hibernation mode, right? Nobody feels good. No one wants to brag, no one wants to talk. I think a lot of that kind of just starts to reverse towards the second half of 2024 and what does it take to win? This kind of ties into the marketing conversation. So if we're ready to have that conversation, let's

Brett:

Do it.

Sean:

I talk about MERA lot. I think MER is the gold standard you should be measuring your business on, and that is for how much dollars are going into sales and marketing and how much revenue is generated and there's a ratio there. So you want a three XMER for every dollar in sales and marketing, I get $3 in total revenue.

Brett:

So not to say, just to clarify, and all our marketing junkies out there are totally tracking, but this isn't in platform ROAS per se, or what you're seeing in Google or Facebook, anything else. This is total money in and total money out. So I'm investing every dollar I invest in ads, my total revenue, total enterprise revenue should be $3 as an example.

Sean:

And I think that's best in class. So if a lot of small e-commerce brands listening to this, they're like, no, well, I need an eight XMER. I want to spend $1 on Facebook and get a total revenue of $8. They are living in 2015. Well, I don't know how they got a time machine, but that's where they're living

Brett:

Not happening. And that time's not coming back. It's not coming back

Sean:

Ever. Yeah, there's nothing the indication that the next time will come back. So the cost of marketing will go up forever because Facebook's a publicly traded company who needs to show revenue growth. Google's a publicly traded company needs to show revenue growth. They're not adding any more users. Facebook is adding more ad space, which is very interesting that they're able to do that. But outside of ad load increasing, which is the percentage of posts that are ads on a platform, where would they generate more impressions to lower CPMs? So the cost of advertising will go forever. Now going back to MER, another way to say MER is a OV over cac. Right? Now I'm leaving out the LTV part of this equation, right? Because there's no CAC associated with return of customer revenue. But what I'm really saying is CACs will increase over time. So one way to increase MER is to increase a OV. So a big focus, and this is just something people should think about. Clicks are going to cost what they're going to cost. So if your CPCs used to be 50 cents, now they're a dollar, they're always going to be a dollar or above. There's nothing and there's nothing you can really do.

Brett:

It's a new floor not going to change it.

Sean:

There's nothing you can really do to lower the cost per click. We've all seen in Facebook, you have an amazing click-through rate. Well, for some reason that ad has a higher CPM and you have a horrible click-through rate. Well, that ad gets a lower CCP M, and it's because Facebook wants to make a certain amount of revenue for everyone leaving their platform. That's what I think another tinfoil hat theory you're going to be hit. But all of that to say is if your business needs to operate on a, you have a $50 A OV, what happens if clicks go to $3, people are going to convert the exact same that they're always going to convert at your business that was soluble. And making money is now insoluble and losing. So the only way to combat that on a business level is to get higher. So you have to increase prices or launch new products with higher AOVs to that can thrive in this new ecosystem. Going back to, I'm going to tie everything together. Okay,

Brett:

Love it, man. Love it. I'm totally tracking. This is awesome.

Sean:

So what to expect in 2024, how to win in 2024? I think it's going to be the best year for e-commerce. So we avoided a recession back. So you have tailwinds going out of your business, but inflation did happen. So the cost to operate is going to be higher and the cost per clicks is going to be higher. So why did Ridge launch rings and why did ridge launch travel? It's because both of those categories have higher AOVs. So rings have high margins. So the perfect business, you could sell something for a thousand dollars that costs $1 to make. So you could put as much dollars into marketing as possible. That is gambling apps and that is who you're competing against. You're competing with Sports King and Draft Bookie and ESPN just bought all these different, because

Brett:

Driving up to CPMs, right? They're driving up to CPMs on these ad platforms,

Sean:

Insurance companies, gambling companies, and VPNs can spend as much money as possible to acquire customers because they're selling vaporware. You're selling a widget, so you don't have that headwind. So you have to look for higher, a higher AOVs with higher margins. So you can just put more money into ad dollars to get the same level of performance. That pressure is coming regardless if you do this or not. And if you do nothing, you eventually go out of business. So you have to be looking at higher A OB categories and higher margin categories. So that's rings for us, that's travel for us. So we have a travel line, we're going to sell $600 travel kits, the wallets cost 150 bucks. So I immediately can Forex an A OV on this new product line and assuming the same margin profile, I can have a CAC that is Forex higher. So that is what we're doing to survive and win in this environment.

Brett:

That's amazing, man. And that's exactly the right way to think about it. We of course, we're looking to optimize all of our ad channels, better copy, better structure, let's get increased click-through rates and increased view rates because there are some rewards there, but costs aren't coming down. You can make little improvements, little adjustments, and they do make a difference, but over time, costs are going to keep going up. And so really the only way you win is if you can sell customers more stuff. And ideally, and when you're looking at customer acquisition costs, what can you sell them immediately? And LTV is a thing. I know it's a little bit different for when you guys were primarily just wallets. LTV is pretty different there, but now it definitely has expanded. But yeah, how can you sell them more on that first purchase? Because that totally changes the game.

And I love the, I believe this is old Dan Kennedy wisdom, but he said the company that can afford to spend the most to acquire a customer, they win because all things being equal, ad costs are just going to go up. There's an upper limit, like you said, to conversion rate. You can only get so many people per hundred to convert. You're going to hit a ceiling. And so what are you doing to be able to afford higher CACs? And one of those is more expensive items, but then better margins. Love that. And so as you guys launched rings and travel, that's primarily for new customer acquisition and changing the math there, or was that also a play to say, Hey, we've got all of these wallet customers, what else do they want to buy? Let's sell them these things too.

Sean:

Yeah, the first point on L-T-V-L-T-V doesn't matter if you go out of business. So you're plotting out, it's true,

Brett:

A 12, you could die waiting for that LTV to kick in, right?

Sean:

Yeah, it is. You're thinking about future harvest when you could starve this winter. So let's just make sure this harvest goes great. Let's make sure your first customer acquisition is profitable and paying for everything. And if they happen to come back in the future, fantastic. I would love to have them back. And so what happens when we launch rings? Well, we launch rings, we email it to 5 million customers on our database and we sell some rings without a doubt, we're going to sell rings. Same thing with luggage. We sold out a luggage in like 45 days. We sell it into this big customer base. Awesome. That is not repeatable. You launch a new thing into your customer base one time and then I'm going to acquire customers, I'll have upsells, I'll have, I'll have all that stuff. No, you're looking for new product lines to acquire new types of business.

Got it. What we've seen is that there's some amount of people who need to buy luggage today. So we now have luggage and we can acquire a new customer who has a new need and a new pain point we've never been able to serve before because the amount of people who need a wallet today is zero. But if somebody's traveling in two weeks, they don't have luggage, they need it. So it's a brand new customer, it's a new entry point to the brand, and that person is very likely to buy a wallet from us in the future. So that is the real unlock is that we have these new flagship product lines that bring people in and then at some point we'll sell 'em a wallet or we'll sell 'em a ring or we'll sell 'em a luggage or whatever.

Brett:

But that's a secondary aim. That's a secondary benefit. The real benefit is this is a product that it's going to allow me, it's going to change the economics for me to go out and get more new customers. Love that. Love that a lot. So I want to talk in a minute about profitability and how you do all of this because I know you're a master at how do we maintain ebitda and while we're still innovating, launching process. So I want to get to that in a minute, but since we're talking marketing, what channels are you most excited about for this year and beyond? So as you guys are growing, speak specifically to Ridge, then also talk to the general D two C brand as well.

Sean:

So if I was a sub $10 million brand, I'd be very excited about TikTok shops, YouTube shopping meta shops, that's like the current white space. All three of those things. YouTube shopping isn't fully live yet. I think it's still a beta program you have to get accepted into, but it has more potential than TikTok shops does, right? It's

Brett:

Coming. Yeah, it's coming. It's big.

Sean:

And then meta shops, 10% of our sales in Q4 came through Metas shops. So I mean they're putting billions of dollars of volume through that. They're learning purchase conversion behavior and tying it to people. And I think that could be a massive, massive driver of business. So if you're sub 10 million, those are the three areas that'd be focused on and really unlocking those Amazon's harder than it's ever been. People talk about wholesale, don't go into wholesale until you're ready. But if you're a bigger brand, if you're doing above 10 million a year, the fastest growing lines of our business and our strategy year sums up in it through things. We're going to make more stuff. We're going to sell it to more people, we're going to sell it more places. So that is as simple as the company can get. We're making new stuff for new people and we're going to sell it in new places. So the fastest growing lines of our business are the new product categories because last year was the first year we had rings, it did eight figures. So that's pretty fast growing. It's insane. The second biggest product line for us, or the product expansion for us is actually going into wholesale. And I talk a lot of shit about going into wholesale, but we just got an eight figure PO from Best Buy.

Brett:

Dang, dude.

Sean:

Yeah, so wholesale is growing hundreds of percent year over year for us. So that is a big unlock for us. So if you're ready, if you can bite off and deal with payment terms and chargebacks and get displays wholesale, there's a lot of value to be unlocked there. The third one's international. The UK is in a recession, so it's a harder market, but Australia is an underserved e-commerce market. There's 27 million people basically in California just sitting down there and they love to buy stuff online. It's a big ass country, but it has pretty good infrastructure. So international has been a big unlock for us. So that's where we're currently winning.

Brett:

Nice. And so wholesale that, how recently has that become a focus for you guys? Because playing well into that nine figure space as a brand, when did you start really considering a wholesale? Yeah,

Sean:

It depends on category if get in earlier, but we got into wholesale in 2019 with Nordstrom's. That was our first big one. And then Shields, but it's always been single percentage points of our business, two percentage points of our business. It really didn't start to be more than that until 2023. So our wholesale engine took four or five years to really turn on. So in 2023 it was probably 7% of our business was in wholesale, and I think this year it'll be 10, something like that. So

Brett:

That is nice. I mean that's material and that also when you've got the wholesale component that does allow some of the marketing efforts that they multiply at least to a certain degree, a group of people that still really want to touch, hold, feel a product before they buy it. And we talked a little bit about e-commerce penetration numbers, and I believe the latest stat is like, it's like 15, 15.6%, something like that of total retail is e-comm, right? So I leaves 85%. I know, and there's different ways to dissect the numbers. Are you including auto and gas and some of those things or restaurants or not? So different ways to measure it, but is that the number you kind of work with as well? About 15% is,

Sean:

Yeah, I think this year it's 16 and a half. But like you said, do you include cars or not? That's the big one, right? Auto is a huge part of it, but what I'll say is wholesale is mostly demand capture. You build all this awareness on these great platforms, these big megaphones that are YouTube and Facebook and everything else. And then Christmas Eve we did seven figures in Best Buy because people are walking in looking for gifts and it's like, it's insane. They see the Facebook ad, they know it's in Best Buy, they walk in to capture it. So it's demand capture, but it's demand capture you can't get anywhere else. I'm not going to have stores, I'm not going to have 600 stores. Best Buy is

Brett:

Yeah, super, super cool. Love it man. So then as you look at, you're doing all these things and I know recently on the operator's pod, they talked about inventory management. You guys talked just all the big things that you got to manage to make sure you're growing profitably. But how do you approach this? So you're launching new products in new categories, you're launching in new places like wholesale and some of these other things. You are actively investing in new customer acquisition through all the meaningful channels. How do you do that and protect EBITDA at the same time? Well,

Sean:

We're very lucky. So our brands listening should try to be lucky, I guess

Brett:

If you can do anything, be lucky. Yeah,

Sean:

So we have never raised money, so no investors tell me to do anything. There's no debt on the business. So no, I don't have any loan payments or anything. I got to pay back. And everyone who is on the cap table at Ridge was super fucking broke at some point. So a father son, best friend who started it, he was a special ed teacher for like 35 years. So that's awesome. We talking about people who had no money. I mean me and Connor, when we started our agency business, I didn't own a car. So we would take Connor's 1997 Honda Civic with no paint, the paint was chipping off and we would drive back to client meetings, try to sell 'em. We lived in a one bedroom apartment.

Brett:

Dude, quick funny story. When I started my first agency, I had a 2002 Honda Civic and I would go into meetings and I would park a few blocks away because I wanted to not be seen in that thing. And what's also funny is that hit a certain age where I started getting pulled over more where it looked suspect dude's driving that he's probably up to no good, right? I was fine. But anyway, just interesting. Yeah, humble beginnings for short.

Sean:

So why does that matter? Us being broke? Well, because we can have a business that pays everybody decent salaries and distributions every once in a while and nobody's breathing down anybody's neck being like, I need a Lamborghini, I need this, I need this. Right? It's awesome. It's awesome. A lot of people who have a business, and this is my big

Brett:

Problem, it gives you optionality, right? You've got options now when you don't have to pay for the Lambo or for your 12th house or something like that.

Sean:

And this is one of my biggest problems with e-comm operators is that they have a $10 million business, so they think they're worth 10 million bucks. And it's like, dude, a 10 million business means you probably can make a salary of $500,000 a year. And it's like people hate hearing that You're better off working as a Facebook project manager, you'll make more money than owning your 10 million e-com business. So obviously there's enterprise value, but you're not fucking tapping into that dude. It could all go away tomorrow. So it's a huge disconnect in perceived net worth and income of e-comm operators and what's actually feasible living in the moment. So anyway, just throwing that out there, it's like, guys, it is really fucking hard to run these businesses, but so we bought a factory in Arizona this year. We bought two JVs for Chinese suppliers to get stuff made better, cheaper, faster, whatever. So we're investing all this money in this business so we can actually improve it over time and that's how we can do stuff, launch all these new product categories.

Brett:

And so I want to actually double click on something really quickly because this is important. You said be lucky if you can do anything, be lucky. But there's actually this concept that I heard from Jim Collins, which I love as they studied great companies and then comparison companies that weren't as great, but they had a lot of similarities. They found that there wasn't a difference in luck. One, the successful companies didn't have more good luck and less bad luck and the meh companies didn't have more bad luck and less good luck. There was a difference in return on luck. And so this is where you are setting yourself up to succeed, to ride the wave and capture opportunities, but you're also setting yourself up that if stuff gets bad, you are okay and you can weather the storm. You don't have a sixth house mortgage to pay for and that sort of thing. So I think that's really what you guys have done is you are set up to get a great return on luck. So hopefully this, and I would agree with you, I think this year is going to be a little more consistent, a little more normal in terms of growth. You are ready for that. If things get bad though, you're probably ready for that too. So you got this return on luck.

Sean:

Yeah, there was a two month period. Nobody ever wants to fucking talk about this in March of 2020 when the world felt like it was going to implode. It did.

Brett:

It did.

Sean:

I remember being, I was living in Santa Monica or Venice at the time, going to the Ralph's and just seeing people buy everything off the shelves except for medicine. I remember being like, I'm in the medicine aisle, I think people are getting sick. We buy halls or something, but they were buying bread, whatever. Nobody was thinking I should go on Amazon and type in ridge wallet and buy a ridge wallet right now. No doubt. So we watched sales fucking fall off a cliff. Obviously everything we're covered and we're sitting here today and it's awesome. But the first thing we did was every owner made zero money. We just took our salaries to zero because we're like, we got a business to support.

Brett:

You had the option to do that.

Sean:

And nobody DMed me like, Hey dude, I got a gambling debt, I got to pay off or something. It did not work like that. It helps a lot of people in our business at the ownership or executive level are some of the cheapest people I've ever met in my entire life.

Brett:

That's so awesome.

Sean:

We had a big ridge retreat in Vegas last year and that's when we fly everybody in and two of the guys who are on the cap table just assumed that they would be sharing a bedroom, just sharing a hotel room.

Brett:

We'll bunk together. Yeah, we'll take the room with bunk beds.

Sean:

Yeah, we give 'em separate keys. They're like, no, but the room has two beds. We could be saved at a hundred bucks right now. So that's really helped. That's part of our

Brett:

DNAI love that mindset and really once you have it, it never fully goes away. And I remember Moise Ali from native, good friend of mine, we helped native in the early days and still do, but he talked about how even when they were growing like crazy and making millions a month and stuff, he was still looking at the p and l and he's like, Hey, why are we paying $7 a month for this tool and stuff? He wasn't spending all his time doing that, but he was looking at it, right? Just like we can cut that $7 out. And I think part of that is, yeah, you saved seven bucks, that's great. Or you saved a hundred bucks on the hotel room, that's great. But I think the bigger thing is the mindset, right? We're not just going to waste money because we can. We're going to preserve it. I love that. That's awesome guys. You said built a warehouse or you built a factory?

Sean:

I bought a factory in Arizona.

Brett:

Nice, nice. And Matt, what has that done? Has that helped lower cost and speed up production? What does that meant for the business? Well,

Sean:

It, it's still in production, so I'll let you know in 35 or 40 days when we've actually fucking finished the thing. But the goal is to make wallets here. It adds consistency to the supply chain, helps us start buying already. China is essentially just an assembly factory. We're getting carbon fiber from Japan, we're getting titanium from, who knows, right? It's already all these raw parts. So we're mostly looking at changing the supply chain to be final assembly in America. We can start sourcing the parts from wherever makes the best. Whoever makes the best deal, we'll buy that. Whoever makes the best screws, we'll buy that. So it builds redundancy in the supply chain, builds resiliency in the supply chain and it's not that much more expensive. Like labor in China is getting pretty expensive. A lot of it's robots, fuck it. Anyway, so for the same price I can make stuff here, might as well do it. So that's what we're

Brett:

Doing. It's amazing. It's amazing. So really want to hear, and so we're coming up against time just a little bit, but you guys have successfully moved into rings. You had an eight figure launch there. You successfully moved into luggage. That's not that common. I talked to other brands that they have successful launches, but there's usually some misses in there. They launch a product and it's like that built flat on its face, thought everybody wanted it. Turns out none of our customers did. Or we launched a product and it just wasn't good. Our core product is great, everybody loves it. New product, it's getting bad reviews. What do you think the key is as you're launching new products and as you're innovating, how do you create products that both delight customers, so there's some customer satisfaction there and they sell well and they just work to grow the business? Yeah,

Sean:

What I'll say is it's not like we fucking only hit home runs. People are always shocked when they hear about a product expansion. People are like rings. That doesn't make any sense for your business. I have suggested every single product category to our product and occasionally I get one past the goalie. So I mean I was like, yeah, we need to do beef jerky. I literally have a deck written out where I'm like, yeah, we got to sell beef jerky. It's consumable. That's what we got to do. So I've suggested every single product category. Occasionally we make stuff that sucks, we launch watches and we make a great watch. Nobody wants watches. That is the reality. It's a

Brett:

Horrible category. It's a very tough

Sean:

Category. It's a horrible category to be in. So we didn't sell very many watches. I think we ordered 10,000. I sold the story maybe on the operator's, but I think we ordered 10,000. I'm like, we're going to sell out day one. No, it took us a year and a half to sell out those 10,000. Then we launched a second version and it's way more just like a gift for our customers. There's more value in that wash than any watch you're going to buy in the market. But it's a category that sucks. But I'm like, okay, cool. Take my lumps, move on. I did the same thing with deodorant. We did the same thing with T-shirts. We did the same thing with socks. We did razors. It's like you keep launching stuff until you find something that works and then you go back and tell the story that like, no, it actually was a success the whole time.

And I point to Bick as the best example, I brought this up in the last week's episode, but B makes the number one pen in the world, the number one razor in the world and the number one lighter in the world. Those things have nothing in common with each other. Now they have tattoo products. These things have nothing in common with each other except they made out of plastic. So what happened was a guy had a plastic factory in France and he is like, well, what else can I make? And he just made whatever the fuck he wanted until it worked. And now we talk about how it's a great business. There's billions of dollars a year in revenue, so don't be pressured with your product expansion. Try stuff, it's going to fail. Just make sure you buy in small enough quantities, it doesn't bankrupt you. And Ridge is a big enough paycheck or has a big enough checkbook that I can do things like waste 300 grand on watches and try 500 grand on luggage or whatever else I'm going to do.

Brett:

Yeah, it's a really great example. Bick. I hadn't thought about that, but yeah, it's not like you buy the razor and then you're like, man, I really wish I could just get a pin from this company too. Or dang, I wish I had a matching lighter. Not that they even match, but yeah, so there's some relationship and manufacturing, but not in anything else. And so I really love that and also love that. And I've noticed this trend and I get to fortunate enough to hang out with lots of successful entrepreneurs and just good quarterbacks or great athletes. You've got a short memory on the mistakes. Of course you take lessons from mistakes, but hey, we launched deodorant, it didn't work well, we better just take a little time away from launching products. Not good at it, apparently. Let's sit and stew on this for a little while now. You learn from it and you launch the next thing and you launch the next thing and you're going to be able to double, triple, quadruple down on the winners. And so yeah, how do you bake that ethos into your company? Or is it just kind of happening where you're like, Hey, we're going to try the next thing and we're going to be thinking ahead and we're not going to fear a failure on the next thing we launch?

Sean:

Yeah, really great companies, this is something we all have in common, create space for failure, and this is, it typically falls in the executive or the co-founder or something like that. What I always say is, I'm the CEO O, so I have to be reckless. I'm the only person who can be a rebel. I'm the only person who can't get fired. So I have to be pushing the boundaries of this business because I can't task a junior marketing person to do that. I can't task a junior product person to do that because they don't want to lose their job. So they're going to play inside the lines. And it is your job to be pushing the company forward and trying new things and failing because you're the only person who can do that. I go back to the ownership team and I'm like, yep, I tried all this shit, but I'm trying new stuff and I hope it works. And there's a high tolerance for me to do that because they trust me and they know that I'm not going to fuck anybody over or I'm doing things in the best interest of the business. But the first thing you do when a junior employee loses money is you're like, well, I got to fire. Like yeah, it's not creating space for failure

Brett:

And they know that. And so they're going to be risk averse. They're, it's just human nature. They're going to protect themselves. And so you've got to be the one taking the risk and being willing to make those mistakes and those losses really, really good. Man, this has been fantastic. I could talk to you for another hour or two at least, but what else should we be watching for? I mean, I recommend everybody go to ridge.com, get on the email list, go to twitter slash x, follow Sean, which by the way, what is your Twitter handle? It's

Sean:

Sean eCom.

Brett:

Sean eCom, so check that out. But what's coming down the pike for Ridge, or what should we be watching for here in 2024?

Sean:

We have a really big announcement in the next 30 days, so I can't spoil it. I'm under NDA, but it'll be the coolest thing we've ever done as the business. So that's be, if you aren't following me on Twitter in 30 days, you're going to get something really fucking cool coming across your timeline. So be on look after for

Brett:

That. That's awesome. And then, yeah, what's next for the Operators podcast? I just feel like you guys, you're in your groove. Everybody's cranking. Sounds like that's just beginning to take off and it's doing very well,

Sean:

Dude. I appreciate you saying that. I'm just trying to get 10 episodes in a row where everybody shows up on time, audio works, and we have all four of us there, so

Brett:

Everybody's so busy running nine figure businesses and stuff. So I'm sure that is a nightmare to try to get everybody there. So keep with the good work. I'm going to keep tuning in there as well. So Sean, thanks for your time, brother. Super fun as always.

Sean:

Thank you Brett. Talk to you

Brett:

Later. Alright man, and thank you for tuning in. We really appreciate it. Hey, let us know what you'd like to hear more of on the pod and if you've not done it, we'd love to get that review on iTunes, helps other people discover the show. And with that, until next time, thank you for listening.

Episode 270
:
Matt Slaymaker - OMG Commerce

Grow on Google Like Never Before in 2024 (Trends, Tips and New Stuff)

If Google isn’t within your top 2 channels for new customer acquisition - 2024 should be the year you change that.

In this episode, I interview Matt Slaymaker on the latest and greatest from Google.

Here’s a look at what we cover:

  • What are the best brands doing on Google that others aren’t?
  • What are the keys to a better, more productive relationship with your agency?
  • How has PMax evolved, and how can you fully leverage it?
  • What about Demand Gen - Google’s newest campaign type? Spoiler alert: it’s not great... yet. But we see potential. 
  • How should we think about AI with Google ads?

Transcript

Brett:

Well, hello and welcome to another edition of the eCommerce Evolution Podcast. I'm your host, Brett Curry, CEO OMG Commerce, and today we are laying the groundwork to have a very successful 2024 with Google Ads. Now, I'm a believer if Google Ads and the Google Ads ecosystem is not a top driver of new customers for your brand and profitable growth at that, then something is wrong. We still know a lot of D2C brands that get most of their new customers from Meta and Instagram, but we're also seeing a lot of brands that this combination of Google plus YouTube equals that or exceeds that. If that's not you, then you have work to do. Now, what are some of the trends happening on Google? Well, Google is competing on a lot of different fronts, right? They're competing with chat GPT on the generative AI side of things.

They're competing with meta on the best ad solutions. And how do we make it easier for advertisers to attract new customers at a profitable rate? They're competing with Amazon, right? So how can we get e-commerce search and e-commerce activity to start with, or at least touch Google at some point in that process? So we're going to talk about that. We're going to talk about Performance Max and how it's evolved over the last couple of years and what to expect this year. We're going to talk about Demand Gen, the newest campaign type on Google. We're going to talk about Google and AI and what you need to know there. I've got on the show again for the fourth or fifth time, Matt Slaymaker, senior Google strategist and specialists here at OMG Commerce. We're going to break it down for you, talk about what the best brands do that the rest don't, and talk about the latest and greatest to help you crush it in 2024. So please enjoy my chat on Google Ads with Matt Slaymaker.

So I've got Matt Slaymaker here, AKA Slaymaker, the Playmaker, talking about Google Ads and what we can expect this year. How do we get the most from this channel, or better said this collection of channels that is the Google Ads ecosystem. It's likely your number two source of new customers or your number one source of new customers, but our belief is wherever it falls, it can be better, and that's what we're going to talk about. And so Matt, to kick things off, let's look, I want your perspective on what do the best brands do as it pertains to the Google Ads ecosystem that other brands do not do?

Matt:

Yeah, I work with a lot of brands, as you know, and I love all the brands that I work with, but some are definitely more successful than others, and it's a lot of times it's because of the things that they have control over themselves. So the things that come to mind for me, let's start with the brand owner and the marketing manager themselves. So first of all, as a brand owner, you have to have a very clear understanding of what your goals need to be and what you're telling your marketing agency that those goals should be. So that needs to come from things like your profit margin and also what's your goal in terms of profitability, is it more about scale? All that kind of stuff feeds into what we need to know. They also need to be great communicators of what those goals are, and they also need to very early on establish what their source of truth is going to be.

Very often we get to a point where we're three months down the road and the client will tell us, Hey, we don't trust Google Ads data when it comes to reporting. Facebook's telling me I made a million dollars. Google's telling me I made a million dollars, but I only made 1.2 million in total. So having some sort of source of truth so that we can know are we hitting goals or not? Are we successful or not? That kind of stuff is super important. The other thing I've also noticed is a lot of times brand owners are super busy. You're focusing on supply chain, branding, website stuff, marketing. That's a lot. The best brands that we work with oftentimes have a dedicated marketing point person that can handle that whole relationship and everything marketing related. And to me, some of the elements that make for a really successful marketing manager are people who are really willing to try and test new things.

They're not stagnant. They want to learn and they want to break things and figure out what's going to work well. And so there's that willingness to test and take a little bit of a risk, but at the same time, they're not micromanagers and they're also not completely disconnected. So if you're as a marketing manager telling your Google Ads person, pause that campaign, we need to scale up this campaign. At that point, we're not doing much. We're just pushing the buttons at that point. But at the same time, being completely disconnected and not checking in, not asking, Hey, what do you need to be more successful? That is also a problem. So those are the kinds of things I think of from a personality and client perspective. What are your thoughts on some of that?

Brett:

Yeah, really well said Matt. And it's kind of difficult to strike the balance of how can I be engaged either as a marketing manager, marketing director on the brand side, or how can I be really engaged and effective as a brand CEO or brand owner, but also allow my team, allow my agencies to do what they're best at? And so a couple of thoughts there, and you're right there. You can either be, and these are the tendencies, either I'm too engage and so then I'm just embarking out orders, and now the whole team is just an order taker and their skills and talents and creative ideas aren't coming to the surface, or you're so hands off that nobody really knows what they should be doing. And so there's a couple of concepts that I really like. I like this idea of commander's intent. It's a military term, but it's where a commander comes in and says, Hey, we need to have control of this hill by this date.

That's very clear. That's my commander's intent, this hill by this date. I'm not telling you how to do it. I'm telling you I need this hill by this date. I'm also saying, Hey, the way we're going to measure the standards of measuring, if we have that hill, and this is our standard, we all agree on this is how we're measuring, this is how we're communicating. We're using the same language. We're not confusing each other by communicating with different language. And so that kind of creates that unified source of truth like you talked about. And then the marketing managers, I think one of their job is to protect the core. So the core of the brand, how do we protect existing customers? How do we protect the brand message, how to protect the integrity of the brand, but how do we also stimulate progress? How are we also looking at some of the new things and what are we testing? What are we trying, what am I allowing and empowering my agency to bring ideas to me that will allow us to really grow our agency? And so it's not easy. I think once you learn kind of how to do it, it becomes a lot more fun and a lot more effective and a lot more productive, but it's really easy to get in either micromanage or to be laissez-faire and hands-off and not paying attention. And really that middle ground is where you need to be.

Matt:

One of the brands we work with that I think does this really well, what we do, we meet with them biweekly, but we also have a monthly agency Roundtable where we meet with their Facebook ads agency and every month he gives us a status report. Here's how we did this month and here's what our goals are for next month and the quarter as a whole. And he is very specific in terms of this is what our CPA needs to be, and for new customers, here's the number of new customers we need to see. And we're measuring this using a third party tool called North Beam. So that's our source of truth that checks every box. We have a dedicated marketing person who's, like you said, take that hill giving us very specific orders, and at that point they allow us to be the specialist and go get it done,

Brett:

Which is perfect. And you kind of need that update from the brand because there's pieces that your agencies don't see potentially unless you give them access to everything. And so you got to say, here's how we did globally, here's how we did retail and everything all combined, and here's where we need to go really, really effective. I mean, when you do that, then you've got everybody rowing in the right direction, everybody using their strengths to the to full capacity. And Matt, you and I are both sports fans, and so here comes

Matt:

The sports analogy. Yeah,

Brett:

Yeah. Sports analogy. You knew it was coming at some point, right? But you could take a quarterback, let's say, and you take someone like Patrick Mahomes, I think he's going to be great no matter where he plays. He's just going to be great. But there's something special about when he is in that system with Andy Reed. And I would even argue before when he had his old offensive coordinator, Eric Pmy, things were really shiny. It was just like perfect. Everything was perfect This year, get a new offensive coordinator, it's maybe not quite the same. Patrick Mahomes is still awesome, but there's some things that are not fully clicking. And so it's just a reminder that we need the right structure. And I think that's your role as a brand owner, marketing manager, brand manager, is assembling the right team and giving them the right structure and the right information and the right kind of framework to be successful. And then let them do their thing, and you'll likely be very pleased with the results. Yeah, well put. So love that. Super, super great. Matt, any closing thoughts on that piece?

Matt:

No, I mean, the only other thing I would say is what makes for a great client relationship as well is their ability to take our feedback and input. So if we are telling them, Hey, everything on the targeting side of things, bidding side, everything's looking good on our end, but we really need new creative. We really need new landing pages. The willingness to invest in that kind of stuff is huge because those are the next big elements in terms of what's going to drive success for you and being willing to make that investment. It does cost money and time to develop that kind of stuff, but makes a huge difference as well.

Brett:

And so we're about to move into some new things that we're seeing on Google. We're talking about performance max and demand gen and AI and a number of other really cool things. But one of the things we're talking about a lot at OMG is a little bit higher level. What is our approach to Google ads and to growing e-commerce brand in general? And so we talk about brand demand amplifier and how do we create consistent growing demand for your brand? And so this is where I think we're moving away from the era of just where I've got little hacks and little tricks, and I'm deploying this little tactic here and that little tactic there and just kind of seeing what happens. Those days I think are over now we look at this brand demand amplifier approach. It's really got three parts. One is strategy. So this is where we're finding the right balance of demand capture, capturing existing demand, people that are actively searching either for a problem you solve or they're searching for a product in your category.

So how are we capturing that existing demand? How are we generating new demand? So how are we effectively running campaigns that are attracting ideal customers, but maybe they're not shopping yet? And you can get wildly inefficient there if you're not careful, but you need some element of demand generation. And then how are we just using all the pieces and all the channels strategically that we have at our disposal? So there's a strategy piece. Then you've got the creative piece. What are we saying? What story are we telling? How are we telling this story? Is it resonating? Is it landing? And are we telling it in lots of different ways because some people consume better by reading or some people need an image and then a landing page. Some people need a short form video, some people need a long form video, but how are we telling the story in a compelling way and from lots of different angles?

So how are we nailing that creative side of things? And while AI is really helping to kind of fuel growth and speed things up from a creative testing standpoint, we still need that creativity. And that usually comes from the brand or from a great agency, but you got to have creative and then execution. So then what's the campaign structure? What are our bids and budgets and all the mechanics that then can just multiply everything else. So write strategy, write creative, write execution, that's what allows things to take off. And so it is more than just little hacks and tactics, and it always will be more. And even as AI develops, you still need those pieces. And so that's what we're seeing on this end. Let's talk a little bit, Matt, about performance max or P max as they like to say in the biz. How has that shifted, changed, evolved here over the last year or so?

Matt:

So for those who don't know exactly what PAX is or have heard it around the grapevine, what Max is, it was developed about two years ago in Google ads. And the goal of it is to create a consolidated AI driven campaign type that essentially houses every ad type available to us in Google ads. So performance max ads can show as a search ad can show as a shopping ad. They were actually an upgraded version of what was previously called smart shopping. So people typically think that it's going to show mostly as a shopping ad, but it can also show as a display ad, YouTube ad, that kind of stuff. When it was first released, we were apprehensive in a lot of ways. I think the biggest concerns when it came to Performance Max were the issues that we had in terms of a lack of control in terms of campaign structures, lack of transparency, reporting, all that kind of stuff, made it difficult not only to structure these campaigns, but also to learn even if we are seeing success from Performance Max, why is that?

What is truly driving that success? So Google has actually made some really good updates on the Performance Max side, especially in the way of reporting that has allowed us to see that and think about how we should structure these campaigns. So in the past how performance max campaigns are structured as you have a campaign and then within that you have asset groups. And previously we weren't able to see performance at the asset group level. So if you were trying to test in different asset groups, different audience signals or creative, you could test all that stuff, but you're not going to know which one's doing better than others. You'd have

Brett:

Limited data points. You could see like, hey, this asset is good or above average, this asset is performing poor. But if you had a thousand conversions in a campaign, you couldn't see where those thousand conversions were coming from very

Matt:

Clearly. And in the early stages, the only metric that it would give you is saying that this asset is good or best or low. It didn't give you actual numbers to go along with that. So now we do get data at the asset level that's not just best good low, it's also conversion numbers, click-through rates, stuff like that. So now in the past when we were testing this kind of stuff, we had to think maybe every element that we're going to test has to be its own campaign. So different audience signals for bottom of funnel top, it was a mess, but at this point, we're at a point where we can now consolidate that into singular performance max campaigns and learn a lot better. So that stuff is also great. We also used to have to submit all negative keywords. So the stuff we don't want to show for in performance Max to your Google rep who would then submit that on the backend.

And that's a lot of work. Now you can in some ways add some negative keywords in the form of brand list. So if you don't want to show up for your competitor terms or for your own brand name, that kind of stuff you can do in platform. And another huge one that I think is worth mentioning is in the past you weren't able to see not only the search terms that P Max was showing for, but you couldn't see any historical search terms. So I had a client come through recently where last year, last September, their performance Max was crushing it. They were doing really, really well and this year it wasn't doing as well. And they were wondering what happened, why was it doing so well last year, but not this year. And because historical data wasn't available for last year, it's really hard to analyze that and say what happened and what led to that decrease in performance. But now starting in March, 2023, Google has made that historical data available all the way back to that date, March, 2023. So from a reporting perspective, transparency, a little bit greater control, it's gotten a lot better in a lot of ways, and they're continuing to make good strides in that direction.

Brett:

And we're kind of at a point now where if Performance Max isn't a top campaign for you in terms of driving new customer acquisition while hitting your goal, whether that's a CAC goal, cac, CPA, or it's a ROAS goal, if it's not performing at that level, then there's probably some work you need to do. Either it's a restructuring or a reconfiguration of the campaigns, or it has to do with your creatives and what you've deployed and way that's set up, or it could be audience targeting and all those things. But we're big believers in P max. Obviously we've created courses. Matt, you and I did a full course, you and I in Savannah with Smart Marketer, and we got a Max Blueprint that I did. And so we are big believers in P max. I think it also really underscores, and this is something we were talking about when it first came out, like, hey, this is the future of Google Ads. How does Max inform, or what else have we just seen in terms of how is Google ads shifting in 2024?

Matt:

In general, Google Ads is shifting more towards AI and a more consolidated approach where rather than getting so granular where you have a campaign for every different type of ad where you really have to understand every single one of those campaigns and what those ads are used for, max and demand gen campaigns, which we'll probably talk about here shortly, are all focused about just give us your assets, tell us what your goal is and we'll get you there. There's things to know about that. Obviously you really need to do a good job of guiding it. So for your max campaigns, for example, if you want it to be going after non-branded searches and you only want it pursuing new customers, then you need to tell it that you need to apply all that stuff in the form of those brand exclusions, not new customer bidding, that kind of stuff.

If you don't, then it's usually going to start with the easiest conversions possible to get. So Brett, one thing you were mentioning I think earlier was how does it play with shopping, for example? What we've actually seen honestly is that there's more overlap with search campaigns than there is with shopping. And the reason for that is because when you launch a PAX campaign, like I said, it's going to go after those easy to get conversions, which are typically branded searches. So that's where it first starts to play, and then it works its way up from there. Then it gets to those non-branded search and shopping searches, remarketing top of funnel. But if you want it to start at top of funnel, there's ways you can do that. You just have to know how to structure it.

Brett:

And that's where I think it really bleeds back or really it goes back to the strategy, creative and execution. And now on the execution piece, it's less about pulling small levers and doing little tweaks and changes and kind of worried about every minute detail, but it's more about how do we structure this to fan the flame that the campaign structure the campaign has, and how do we feed the ai, the right data and the right information? How are we allowing the AI to succeed and how are we getting the right combination of campaigns to really take us to next level? And so it's certainly not hands off, it's just maybe a little higher level now than it used to be, which is super interesting. So Matt, did you have a thought on that? I

Matt:

Was just going to say, in talking about the way to work with AI in general, I think a lot of people are apprehensive about AI and the role that it can play in advertising. What AI is really, really good at is finding new customers and bidding appropriately for those new customers.

Brett:

That part it is absolutely nailed. Yeah,

Matt:

There was a point I would say even as shortly three, four years ago where we heavily used manual bidding strategies where we were trying to outsmart the computers and outsmart all of our competitors. Let's set a specific bid. I'm going to pay $1 for this keyword, but if they're a female, I'm going to pay 25% more. If they're in the top 20% incomes on their desktop, I'm going to pay 50% more and really try to get super granular with it. That is not only super time consuming and a bad use of your time, but even if you spend all your time doing that and you're making all the right decisions, you're probably still not going to do as well of a job at that as the computers going to do totally. So instead of using your time on stuff that the computers can take care of and do better than you anyway, spend your time on things like creative developing messaging. That's kind of stuff that AI is working on and trying to get better about, develop messaging, ideas, things like that, but it's still not there. So in terms of how we can work together with ai, let AI find new customers, bid for those new customers, and you speak to those new customers in the form of creative landing pages and messaging.

Brett:

So good. So good. Let's talk then. You mentioned demand generation campaigns or demand gen campaigns. So what are those? Those are the newest campaign, that is the newest campaign type that Google offers, but what is it? Why is it there and what do we need to know about it?

Matt:

So demand Gen campaigns are formerly called discovery campaigns. So discovery campaigns in the past, these are image ads that could show on Google feed placements. So YouTube feed, if you're scrolling on the YouTube homepage and you see an image ad up there at the top, that was a discovery ad gmail, the Google Discover feed, which if you're on the Google app, you scroll down, you see some image ads there as well. So those were discovery ads, demand gen ads are showing in all the same placements, but now a video ad placement is also available. So in addition to just image ads that were only available through discovery, now, you can run some video through there. So I kind of think of it like Performance Max in the sense of it's a more consolidated approach, but for those demand generation focused ad types. So it's chopping out things like search shopping that's more focused on middle of funnel, capturing search and search demand that's already there. This is all about generating that demand. So that's the biggest change in terms of how it's evolving from discovery. What I will say is this started rolling out in September where people could start beta testing it in the early stages. It was definitely not ready for prime time. It had a lot of bugs, which is

Brett:

Usually the case, right? Google is really good at let's launch something while it's incomplete and imperfect and we're going to get lots of data and lots of testing and lots of feedback, and it's going to become something pretty great or we'll shutter it, but hopefully it'll become something.

Matt:

So at this point though, you're getting upgraded. I like when they say it's upgraded. It's a more positive way of saying being forcibly transitioned to demand gen campaigns from January to March of this year. So if you've got discovery campaigns rolling right now, those will get automatically transitioned into Demand Gen. You'll notice some differences, but if you're just using image ads for your discovery campaigns, those will continue to run as is essentially you'll just be at a point where you can add new creatives into there, such as video ads.

Brett:

Yeah, it's super interesting and I think the way, and you talked about this, I'll riff on it just a little bit. The way to compare P max and Demand Gen and the way these fit together, performance Max is really great at finding new customers, new to brand customers. It is full funnel in that you can run video ads inside a performance max. It will lean into search. And like Matt, like you said, for a lot of clients, a lot of campaigns, it may lean into search in the very beginning, it still kind of has as a centerpiece this shopping component. And depending on the way your brand is oriented, maybe Performance Max is going to lean mostly into Google shopping or the shopping placements, but it's designed to be full funnel, new customer acquisition, but in general it does lean mid funnel and thereabouts. We've been able to creatively based on the nature of a product and the right creatives, we did this with Lawn Care and we did this with a supplement brand and a few others where you can get Max to actually lean into YouTube and lean into some of those demand gen type channels.

But it's designed to be more full funnel where demand gen is really just like the name implies. This is more the demand generation channels that are available on Google. And so more of product discovery awareness, things like that, it can all be tied back to trying to hit performance goals and drive a certain CAC or ROAS goal, but more on the demand gen side. So ideally, once demand gen gets a little bit better and Google improves it, it could provide a pretty powerful combination max and demand gen.

Matt:

Yeah. Brett, I have a question for you. Yeah, please. We've been talking about the shift in terms of just the Google Ads landscape and with all these different campaign types, are we shifting more towards Performance Max? What's working, what's not? Let's see how plugged in you are. Let Google Ads and OMG clients in 2022. What was the top spending channel for OMG clients?

Brett:

20 22, 20 22, 2

Matt:

Years ago,

Brett:

Almost certainly it was Google Shopping.

Matt:

It was actually Google search, which made up 44% of overall ads spend 44% shopping was actually at 11%. Interesting, that obviously smart

Brett:

Shopping, I wonder if you check out branded search what that would do, but that's a pretty big gap. Okay.

Matt:

Interesting. Search, huge part. And then in 2023, what do you think was the top spending channel? Well,

Brett:

I mean I think that the right answer should be Performance Max, but based on those percentages, maybe P max and search kind of there pretty close.

Matt:

Yeah, yeah, exactly right. What do you thinks first?

Brett:

I'm going to go P max.

Matt:

P max at 35%. So year over year from 2022 to 2023 p max went from 19% of overall ad spend to 35%. Wow. So that just kind goes to show all the different things that Max can do. And then search went from 44% to 32%. So it's still huge. And that's where one thing that I'll say for people, because there's a lot of things that are changing in Google ads, and if you've been seeing success with YouTube and search and shopping, one thing I'll say is if you've been seeing success with that, you'll probably continue to see success with that. Just because there's new things coming along doesn't mean that search is going away or that it's not going to work for you anymore. If anything, you just have more options available to you in order to hit your goals and ways of approaching it. That might be easier for some brands to accomplish than others. If you don't know the proper way to segment and structure a search campaign, a Performance Max campaign can accomplish all that for you.

Brett:

Yeah, really well said. Where really, we still run a lot of individual just search campaigns. If you're going to scale on YouTube, we run specific YouTube campaigns. We don't just allow YouTube to live inside a Performance Max or Demand Gen, although it can do that and there can be new opportunities that are there. Being very specific with specific campaigns is still important. And now that you said you talked about 2022 and 2023, makes sense. 2022 p max was huge at that time. Shopping probably would've been the biggest platform back in 21 or something, or 2020, somewhere in that neighborhood really, if you look at 2022, you said 19%, 19% p max, and 11% shopping. So you kind of combine those two together. But anyway, super, super interesting. And yeah, I think it's just one of those scenarios where I think the way Google Ads is going is if you want to be really hands-off and you don't really want to do much and maybe you don't have huge aspirations with the platform, there's going to be some tools where you can be pretty hands off and it's just going to work.

Okay. If you've got big goals and you really want to grow and you really want to expand, then that's where you're going to need to have either hire some real Google expertise, work with an agency with real Google expertise and get the full benefit, the full horsepower. Totally agree that the Google provides. And so really cool. You kind of talked about Max, you talked about AI and how it powers Google ads. Anything else that we should be aware of with ai? I know it is nailing all of the targeting, bidding some of those things. There's some though help that we're getting, and we're starting to see this with the generative AI experience inside of Google Ads. And we want to talk about Bard in just a second very briefly, but any other thoughts how AI is helping on the generative AI side of things?

Matt:

Yeah, I mean it's getting better in terms coming up with ideas for you based on the messaging that you've been testing in Google ads and in addition to what it sees on the website, what it sees just out in the ether of the Google Ads landing state, what are your competitors saying on their ads and supplying those as ideas, at least for headlines and descriptions as you're writing them. So those are getting better and better, and I appreciate that. I enjoyed those. But in general, the things that I touched on earlier, finding new customers and bidding for those new customers is still what AI does the best. And you could set it up, talk about Bard and the generative AI experience in Google search and what that looks like.

Brett:

And so before we into that, I want just highlight one thing. We talk about this a lot where AI plus smart humans, that's the present, that's the future. People that understand marketing and understand data and understand how things work paired with ai, that's where it's headed. And that's actually where it is right now. And I think you can make parallels or comparisons. I remember hearing about when Google was first launching search or in the early days, they had mountains and mountains of data, but it was so early. And they'd go to big ad agencies and big ad agencies would be like, we know advertising, you don't know advertising Google. And they're like, well, we got millions and millions of search touchpoints, and we know the ads people click on and we know the ads people don't click on. And so the interesting thing about that is actually if there was this way to marry both of those worlds, which did happen where you got all the click data and the insights from Google plus people that understand human psychology and how to write creatively and effectively and things like that, you combine that, that's really powerful.

I think that's what's happening now too, where there's data behind like, Hey, why did this image outperformed that image? This headline outperformed that headline. And so now AI is going to riff on that and give you suggestions. You're still probably going to need to polish it. You're still going to need to touch it and make it human and make it good and understand that, hey, this does line up with who we're trying to be as a brand, or this doesn't line up who we're trying to be as a brand, but you combine those two things and man, you really got something powerful that you can harness. And so then related to that is kind of the AI experience of Bard, and this is kind of Google's solution or counter to chat GPT. I've got some podcasts I listen to that are not Google base, they're just tech type podcasts. Some of them are saying Bard is way better than chat GPT. I know more people using chat GPT than Bard. Bard's going to have a really integrated search component. So Matt, I know you've played around with it a little bit and probably not a ton of takeaways at this stage, it's very early, but any insights as you've used Bard or used the AI search experience that Google offers?

Matt:

Yeah, I really like chat, GPT and Bard. I think what it does a really good job of is giving some ideas and inspiration. That's chat, GBT in particular, what I think Bard does well is giving a more concise view for the user of the information that they're searching for. So as opposed to needing to into individual articles and dig around for that information, Bard gives you a quicker answer. And then the ability to ask follow-ups there. So to drive in a little bit deeper and what it's doing is not just looking at one article, it's looking across all the content that's available on Google search, for example, and then compiling that into the answer that it provides. So I think from a user perspective, it's a really cool step in innovation and moving us into the future. So I think it's really cool. I don't think necessarily it's going to fundamentally change the way people search.

I still do think people are going to engage more just with regular Google search than they will with the chatbot. But that said, I was looking before this, just chat GBT, how popular is it? Is it still as popular as it was a couple months ago? And it is, there's still a lot of search interest and people visiting chat, GBT, especially with some of the updates that they've been making to it. So I do think it's here to stay, but I am not convinced that it's going to fundamentally change the way that Google search engines are structured.

Brett:

Yeah, I'm really, really curious and really interested to see how Google further integrates and develops it. And I've heard some people talk about this is going to completely upend Google's revenue model. Google is 80% of their revenue is from ads and a lot of that driven by search. And so, hey, this new AI experience is going to totally upend that. I don't actually think that's true. So I would totally agree with what you just said. Especially right now, if I'm looking for a product, if I'm looking for a new jacket or a new pair of gloves or new shoes or whatever, a new tool, new gadget, I'm going to regularly Google search. I want to see all the listings, I want to see ads and other things. Maybe I ask the AI experience, Hey, what's the best gloves for working outside and subzero temperatures or whatever, which I try not to do if I'm outside in Sub-Zero temperatures, it's I'm sledding or walking from my truck to the house or whatever.

But maybe I ask that specific of a question. But here's the thing. I believe Google's going to figure it out to be able to, if you do ask a very specific question, you're more like having this conversation with the AI about a product that you want to buy or about a problem you're trying to solve. I think they're going to be able to surface ads in that. I think they're going to be able to say, Hey, the best experience probably for you based on the question you had based on your shopping behavior, is you need to see a product listing ad or Google Shopping ad, or you need to see a search ad because you like to read or you need to see a video because of the way you like to interact with things. And so they're showing that, and I think that's going to happen.

And one of the trends that I see happening in the future and we're already kind of prepping for and discussing here at OMG is there's going to be this kind of blending probably of paid ads and organic type efforts and not like organic SEO. And we did SEO way back in the game, and I know you're very familiar with SE O2, Matt, where we were writing tons of articles and trying to get back links and doing other stuff. Not that per se, but more like do we have clean data? Can Google really make sense of what is on our product detail page? What are reviews? What are the prices? What is this about? What are the reviews about? Are the reviews about this pair of gloves? Are they more for working? Are they more for skiing? Are they more for other things? Google being able to make sense of that and then to provide the recommendations.

And so I think it's going to be kind of the understanding how to use these new campaign types as they come out, but also having really clean data and a really clean structure and then really clear messaging and some of these things. And so I'm excited about it. I'm optimistic. I'm pretty bullish on Google being able to figure this out, and I'm not too concerned about chat GPT running away with the show and leaving Google in the dust because I think Google's working on it. Google also has, they have access to more data than anyone else does, and they've just proven, they usually are able to figure things

Matt:

Out well, and they just have a natural headstart when more people are visiting Google than chat GPT. And when you visit Google, the very first thing you see is a Let's Chat option. There's naturally going to become a point where more people are using that than chat GBT. And like you said about the advertising being blended into there, it has to be, why would Google want to invest shifting people towards this chatbot if it means ads aren't going to be sprinkled in there? Yeah,

Brett:

It's going to have to be

Matt:

Right. So it's going to have to be, the question you just asked though is what's that going to look like? And you gave a few examples what I think it's definitely going to look like. There's going to be search ads in there, there's going to be shopping ads, some YouTube ads as well. I don't know how they're going to put display and discovery ads in there. I think that'll be a little more interesting. Maybe you make it kind of a feed that you scroll through and some of 'em are ads. But yeah, it'll be really interesting.

Brett:

It'll be very interesting. And I think we just, all we have to do is really look at the Google experience now and are people searching more on Google now or less than they did five or 10 years ago, way more than they did before. Are there now more ads shown on Google searches or less? There's actually more ads. And so as Google becomes better at rewarding advertisers for creating great ads, as Google becomes better, or as they have become better of the recent history of just providing really relevant ads, it's a great experience for users. I get my question answered through an ad. I solve problem through an ad. I find the product I'm looking for through an ad all delivered based on a search. And so yeah, I'm excited about seeing where this goes and seeing how it develops. But Matt, if you were to give some advice to a brand as they get into 2024, how should I be thinking about Google Ads and maybe how should I know if there's a problem inside of Google Ads? Any practical advice or takeaways you'd leave people with?

Matt:

Yeah, the main things I would say is from the very beginning, make sure measurement is locked in. And that what we were talking about at the very beginning was having some form of a source of truth. If you have that source of truth, whether it's Google Ads or North Beam, if your performance isn't there, it'll tell you that it's not there. And your backend numbers will also verify that we're not growing or we're bleeding money that will be obvious to you. So from there, we could have a whole conversation and encourage you to check out our course on Smart Marketer about how to troubleshoot your Google Ads if it's not working. But there's so many metrics to look at. The main two though, if I were to say there's only two metrics that you should pay attention to all the time would be conversion rate and CPC, because those are the two numbers.

And then I'd throw in one more, which is a OV. Those three metrics together are what's going to determine what your CPA is going to be and what your ROAS is going to be. If you can find any sort of ways to improve your conversion rate, which is typically going to be by improving your creative testing, new audiences, testing new landing pages, that's going to be the most impactful thing you can do in Google Ads to see better performance. If you can find ways to reduce that CPC by delivering higher quality scores, which are a score rating for keywords and Google search that can pull down your CPCs. And then what are some ways you can increase your A OV? Is it something on the website, some popups, some bundling or cross-selling that's going to boost your roas? So those would be at a very high level, the three metrics I'd say to really focus on with conversion rate being the one you really have a lot of control over.

Brett:

Yeah, really good, Matt. And a couple things I would say is if you're a brand owner and you're trying to evaluate, do I need to do something different with my Google ad strategy? And again, when I'm talking Google ads, I'm talking about the whole ecosystem. So display, search, shopping, YouTube, and all of it. I would say if it's not growing and if it's not growing at a healthy clip, if it's not growing at about the same pace as your other channels, then there's probably a problem. We still know a lot of D two C brands that meta is their number one source of new customers, but if Google is not a close second, or if it's not beginning to rival meta, then there's potentially an issue that needs to be looked at. And hey, we're running into now and we work with D two C brands where this Google YouTube combination is as big or bigger than meta.

And so a couple of things you can look at there to understand, Hey, do I need a different strategy? Do I need a different approach here to make this work? And with that shameless plug, we would love to chat with you. If you're spending over a hundred thousand a month on ads then, and you're a D two C brand that's growing, might be a good time to talk to OMG commerce because you could end up working with somebody like Matt Slaymaker driving the ship on Google Ads and helping you make more money and generate consistent demand for your brand. So if you want to chat, go to mg commerce.com, click on the Let's Talk button, you can request a strategy session. We'd love to chat with you. And with that, I think that does it slaymaker, any parting thoughts? Any new things? If you've got any more Google thoughts out there, if not any goals or specific things you're trying to do in this new-ish year? We're a little ways in now, I guess, but that you're trying to do to better yourself or to grow this year?

Matt:

Oh gosh. One last Google thing I'll throw out there is I'll say Google is improving privacy standards across the board. One of the biggest things happening in 2024 is the deprecation of third party cookies on Google Chrome. It sounds scary. I wouldn't panic too much. Google is putting out solutions to mitigate the impacts of this. But biggest piece of advice I'd give you for that is make sure you're collecting first party data. So email list, customer list, that's going to be stuff that you own that you can continue to use into the future in terms.

Brett:

So good. I don't want to just key in on that, Matt. Yeah, a couple things to that. I know the privacy changes that that's a big fear that people have. A couple things to think about there. Third party cookies have been deprecated for a long time on Safari and Firefox and every other browser that's not Chrome. Chrome does have the biggest market share, but yeah, we believe this shift is not going to be as big as it may sounds or as potentially detrimental as it sounds. Google's been working on solutions and they were not going to make a move until they were confident in their solutions. But this is where you need to have enhanced conversions set up. You need to have the first party data, and if you have those things going, you'll still be able to make sense. You'll still be able to engage in remarketing and you'll still be able to grow.

Things will go well for you. And if you look at Google, Google can still target based on interest and based on search data, based on behavior and stuff like that because it's third party trackings go away, not first party. And if you think about as you're conducting a search on Google, that's first party data you're giving directly to Google. If you're watching videos on YouTube, that's first party data that YouTube has now because it's you interacting with their platform. And so there's still going to be a lot of data at our disposal. We are not suddenly going to go back to the early two thousands or anything like that. But you do need first party data. You do need to understand the changes so you can really make the most of it. Yeah. And then on the personal side, Matt, what do you got?

Matt:

So I'll give you two. One a more vanity. One Avis of mine is anytime I go to a gas station to get gas, I always go inside and get a sugary drink or some snack, gardetto or Takis, whatever. I am giving that up. And if anything, I'll go outside and get a water and cut out all the sodium that I get from Gardetto's and

Brett:

Those shit. Love it. Love it. So that little tweak and man, it's so interesting as you look at, we can even tie this back to ads if you want to, right? This is just finding little areas of waste where, okay, you make this cut, does it make a big difference today? Maybe not a huge difference today, although you probably feel better if you don't eat a full bag of goos. But over time, over the course of the year, think about how less sodium and garbage and stuff you're putting into your body. And the same is true with ads. We make these little cuts of waste over the course of the year that really adds up. So good on you for that. Snacking less at the gas station. What else?

Matt:

The other one is just to be bold, and I think this was something that was huge for me in 2022 and 2023, honestly, where in the past growing up, I was always very shy and I was afraid to do things that I know I would enjoy. If someone invited you to an event, oftentimes I would say no because I was too shy or I love to play basketball, but I was always too shy to go to the court and actually play with people. And I got to a point in the last year and a half where I was like, if I am 40, 50, 60 years old and I can no longer play basketball at a high level, I'm going to look back on my twenties and regret that I didn't put myself out there more. And it's the same with all sorts of different situations, whether it's work related or in your personal life. Just be bold, live life to the fullest and try to make the most of ever experience.

Brett:

Dude, it's so good, so good. Yeah, you'll always remember positively the times you were bold, even if something crashed and burned, you'll remember with fond memories, mostly times you were bold. You'll probably always regret the times you pulled back or were too afraid to do something right. I do believe the biggest regrets we'll have in life will be the things we didn't do, not the things we did do. And I do want to push back a little bit, Matt, as someone who just turned 44, we can still play basketball in our forties. You'll still be able, if you do the right things, give up the guards and soda. You'll be playing basketball at age 40 as well. And for me, as far as that goes, I'm like, dude, I'm not slowing down. So I'm hitting the gym in a little bit different way and try to do some strength training. Not try to bulk up majorly, but I want to be able to move things around. I want to be able to have energy and to be able to continue to go, and so love that. But it takes bold action, man, and to be successful in business, the D two C world and life, it takes bold action. I'm really glad you mentioned that. What's your

Matt:

Resolution for this year?

Brett:

So I don't really do resolutions per se. I look at how do I set goals and intentions for the year, where do I want to go? Almost thinking about that commander's intent to a certain degree, and then what are the habits I need to build to get me there? And so then it's more like looking at my life in buckets from a relational family standpoint, what are some of the habits that need to be tweaked or adjusted there? And so one little thing there that my wife and I are doing, we have eight kids who we're very, very busy and they're involved in sports and all kinds of stuff. We're doing a weekly date night, and so we've got a great relationship, good marriage, we really like each other and stuff, but we're going to do a weekly date night, so that's on the Google calendar.

It's scheduled, it's there, right. That's great. Yeah. On the personal side, I've got some different diet things I'm doing. I do not believe in really strict diets or fad diets. I think all that's unsustainable, but there's some little things that I'm doing there to make things easier. My breakfast is consistent. Lunch is usually just a handful of things that I choose from, and then I'm hitting the gym four days a week, minimum four days a week, sometimes five, just doing that. I'm trying to regulate sleep a little bit, although I'm a really high energy guy, and so sometimes I don't sleep well, but try to regulate that as well. I know there's big benefits, mental health, physical health and stuff right now, but I'll into the future. So I'm more thinking about overall direction of goals and what are the habits that need to help me get there.

Matt:

Yeah. Love it, man.

Brett:

Awesome. Matt Slaymaker, ladies and gentlemen, Matt, this was awesome. We'll have to make this a little more regular in the new year talking Google ads with you. So thank you so much. Thank you for your bold actions as it pertains to Google and OMG and our clients and keep with the good work.

Matt:

Yes, sir. Thank you. And happy birthday.

Brett:

Thank you. Thank you. Thank you. Yes, the recording on my birthday, fun times. But as always, thank you for tuning in. We'd love to hear from you. What would you like to hear more of on the show if you have not done so? We'd love that review on iTunes or wherever you consume this podcast. That helps other people discover the podcast as well. If you found this valuable, share it with somebody that you think would enjoy it. And with that, until next time, thank you for this.

Episode 269
:
Trenton Bodenbach - OMG Commerce

Winning on Amazon in 2024: Better Ads, Better Branding, Better Strategy

So much has changed on Amazon since we started helping sellers on the platform in 2016 (I can’t believe we’ve been in the Amazon game for 8 years).

In this episode, I chat with Trenton Bodenbach, OMG Amazon Strategist. 

We discuss some new potential game-changers on Amazon for 2024, strategy, and who’s winning and who’s not on the platform.

Here’s a quick look at a few of our topics:

  • Vertical Video for Sponsored Brand Video. Sponsored Brand Video is one of our favorite Amazon ad types. It’s usually in the top 2-3 most effective ad types for the brands we work with. Now, it supports vertical video. Likely, you have more vertical video than anything else. Now, you can use it on Amazon. 
  • Shop on Facebook. Amazon controls this for now, but likely there’s more to come. This will allow shoppers on Facebook to buy products directly from Amazon without leaving the Facebook app. 
  • Amazon’s continued growth and dominance and what it means.
  • Amazon storefronts, posts, and other tools for branding. We believe that building your BRAND on Amazon is the ultimate key to success. Not just selling stuff. And Amazon has more tools than ever to help you build your brand.

Show Notes:

Transcript:

Well, hello and welcome to another edition of the e-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce, and on this episode, we're breaking down the trends and what to expect in 2024 from Amazon and how to set your brand up for success. My guest is Trenton Bodenbach. He's a longtime OMG or Amazon strategist, and we talk about what are the components of success, what has shifted, what is shifting and what to do this year on Amazon. We talked about the fact that it really all comes down to brand building. Yes, there's merchandising, and yes, there's ad strategies, and yes, we're looking at SEO, but really all of this is to facilitate brand building and more specifically brand demand. I think Amazon recognizes that top brands recognize that. We'll talk about some good case studies and the way to look at that. Let's talk about a couple new things that are here or coming for the Amazon ecosystem.

One is vertical video ads for sponsor brand video. We actually believe that's kind of a big deal. We'll unpack that, walk through that with you. We'll also look at a new integration between Amazon and Facebook that allows shoppers to buy something on Amazon without leaving Facebook. This is not the first time Facebook has kind of tried something like this, but it is the first time Facebook and Amazon have come together. So we'll talk about what that could mean and what to expect and what to look at there. We also talk about some fun stuff like, hey, running 36 miles to the woods and ice baths and how that ties to growth on Amazon. And so we want to gear you up and set you up for success. Please enjoy my interview with Trenton Boden bch and helping you succeed on Amazon.

I've got Trenton Bodenbach with me here, Amazon strategist, longtime, OMG. Going to talk about trends and what to expect on Amazon this year and how do we set ourselves up to really maximize opportunities on Amazon. Trent, how's it going? It's going well. I just got a haircut. I feel fresh. Dude, you did get a haircut. So you always live as a wild man. You go on these long runs. In fact, I think people will be interested in this. The most recent run that you and Bill Coover did, what was the distance? What was the location? What was that like? So we did the 36 miles on the Buffalo River Trail through the Buffalo River National Forest in northwest Arkansas, northwest Arkansas, close to the home of Walmart and whatnot in that area, about an hour and a half from Bentonville ish, somewhere in there.

And so 36 miles, how long does it take to run 36 miles through the rivers and forests the longer than it should have? Well, I feel we've done it before, so is we try to do it once a year. I was not as prepared this year as I should be. We had unexpected twins that came and my running is not as where it should be, but it took us, what time did we start? Right, about 12 hours to finish the whole thing. So 12 hours of basically constant running. Maybe you're taking a few breaks to walk or whatnot, but you're running essentially for 12 hours. Yeah, yeah. That's a good run. That's insane. I do think there's some interesting parallels there though. If you, and this wasn't planned, but I think it just worked out. If you're going to grow on Amazon, it's a bit of a marathon, not a sprint, and it's not one of those marathons just on clearly paved roads and everything is smooth and yeah, we got to find our way.

Yeah, you got to find your way stuff's broken. You're going to twist an ankle or break something, and so it gets a little bit gnarly and to really set the stage that you're a glutton for punishment. You and I are also doing, so I did not participate in any 36 mile runs at all. I think two, three miles as far as I want to go, but we're both doing something else. It's a little bit challenging, a little bit painful, but with a purpose. So talk about your cold plunge routine. I haven't talked to you about this. I recorded this yesterday. I don't record cold plunges. I don't like to talk about cold plunges because I feel like everyone, everyone is talking about cold plunges. So we'll keep this brief, but it's so fun. But it was negative seven degrees on Monday and I did the coldest cold plunge I have ever done and I got out and my feet froze to the ground and I went to open the back door to get back in and my hand, I couldn't open it, and so I'm banging on the door screaming for my wife to open the door, and so she finally did and I had to yank my feet from it.

So it's been fun. That's amazing. I've enjoyed it. It's amazing. And we won't go into all the benefits. You can easily Google that or you've heard it on the interwebs or whatnot, but I did not cold plunge yesterday, but I did over the weekend. It was like 16 degrees outside, water was 34. Took me a while to break through the ice, honestly. But it felt amazing, but also very, very cold. I've got this cold plunge though that kind of the sides are more of a rubber. It's a pretty small cold plunge. Whole thing's frozen right now. Yeah, it's been like negatives overnight. The whole thing is, I went to break it yesterday and I was, I don't think I can actually do this. And so we need to get into the upper thirties. We can get in this again. So anyway, hey, there are tons of rewards from being on Amazon.

We love the platform. We don't believe it's slowing down. We believe the opportunities are just as good now as they were before, but it could be a little bit dicey. You maybe need to have a little bit inside of you or inside of your team of like, Hey, we're going to do whatever it takes. We're going to trudge through this and make this work. So this isn't necessarily a predictions episode, this is more of a what to expect and how to succeed this year episode. But let's talk about some trends. What are the trends you're excited about? And actually, let's frame it this way. I think some people are like, oh, maybe I missed the boat on Amazon. Maybe I should do something else with Amazon. Is it too late? What kind of growth are you seeing as an Amazon strategist on the Amazon platform?

Yeah, we've seen a lot of people come in who are either new sellers and we're trying to figure out and navigate what it's like to be newly on Amazon. And they're excited, but they're also nervous that they have gotten on too late. And so I will say it is harder now to launch on Amazon, and that's just the truth of at one point, I feel like it was kind of, we called it the gold rush the other day we were talking is where you could just launch and everything would sell and it was kind of like you couldn't lose. And so I would say you have to be way more strategic with how you're positioning yourself, what you're selling and thinking through when you're first getting on Amazon and adding new products onto Amazon. But I will say what we are seeing a lot more, and the proof is in the pudding on Amazon, is that it's all about brands and it's about creating opportunities not just to sell a single off product, one product, but to create a cohesive amount of products that can sell under a brand.

And so I think through Amazon, they've released a lot of tools over the last three to four years where traditionally they didn't really care about brands, they just cared about selling stuff, selling products, but they realized that for them, the long game is about creating opportunities for sellers. And so they've been investing heavily in the ability to push brands. And so we're seeing that a lot more. And if you just look at the growth of Amazon, right? Amazon is still at a size that's kind of hard to wrap our minds around. They are so far ahead of anybody else in terms of online sales. It's scary and they continue to grow at a breakneck pace. So we're just looking Q3 of last year, Q4 data's not out yet, but Q3 was up 12 point a 5% year over year at $143 billion and then total 12 months trailing at the end of Q3, $554 billion, 10% increase year over year.

And that's even as we consider the covid wave and how e-commerce took off over that time period. Also, some interesting things about Amazon, if you look at the way they count revenue, they now sell more products to their third party marketplace, which is where OMG really comes in. As we're working with brands and sellers that have their products on Amazon, it's mostly through the third party marketplace. What's interesting is the way Amazon has to count that revenue according to Gap, the generally accepted accounting principles, they can only count their take of that revenue. So if I sell a hundred dollars widget on Amazon through the marketplace, Amazon's take is say 10%, they count $10 of that towards their total sales. The other 90 does not get counted towards Amazon sales, but that's still a hundred dollars sale that no other retailer got. Amazon. Got it.

So that's one of those interesting things where the numbers and Amazon's something like 50, 60% third party marketplace, those numbers are an order of magnitude bigger than what they look like because of those accounting principles. I'm going to be honest, I didn't know that. Yeah, yeah, it's interesting. It's pretty crazy. So Amazon continues to grow, so the opportunities are there more tools like Trent said, it's just that you got to be better right now, right? You've got to move into that area where you are thinking a brand like a merchandiser, like the old school product developers like your p and gs and stuff. Even on a small scale, how do we build this brand experience even though we're going to leverage retailers, we got to think like a brand. And so really nothing is slowing down for Amazon. Also, it's kind of talking about some of the new online retailers that are popping up, some of the Chinese retailers like Shein and Temu, anybody using Shein and Temu, you hear people talking about that.

My wife has dabbled. You have younger kids not buying stuff online necessarily. Our stocking stuffers were kind of sponsored by Tbu this year, if I'm very honest. It was our first purchase from there and we did one and we haven't done anything since then. But we got a lot of modeling, clay modeling clay. Kids love art supplies, and we got a lot of art supplies. So we're on sort of different ends of the spectrum, but also overlapping. So you've got five kids now, which is insane. All under the age of oldest just turned seven. Wow. Five kids under the age of seven, so that's insane. My wife and I have eight from a pretty broad range, seven to 21. So our older kids are teenagers. They like to shop on Shein, right? I've never been on Shein cheap prices and interesting, a lot of fashion related stuff.

Temu is also a lot of fashion. Co-founder Chris Brewer is buying some stuff on Temu and showing it's just for fun. And what's interesting though, and I saw an expert talk about this recently, they're not so much concerned about, those brands probably aren't eating into Amazon's market share. They're probably eating more into market share of other apparel focused retailers. So maybe even some of the traditional brick and mortar retailers that continue to struggle or other online retailers, but likely they're not eating into Amazon's market share too much. Or if they are, it is imperceivable, you can't see it in the data, which is interesting. My take on not Temu is their shipping is interesting because it all comes just shoved in a bag and half of it's kind of damaged. It takes a while too. It takes a while a little longer. And so I think there will always be more growth in Amazon in the sense of the quality control is there that actually, I mean we were looking at the numbers earlier and was it Amazon is now bigger by parcel number than FedEx and US, PSPS and UPS.

Yeah. So I mean they deliver more packages than the delivery companies, which is crazy. So that gives them a real edge moving forward as well. And then just anecdotally, this holiday season, we host a small group at our church, and so I was just talking to a lot of younger couples and we were just talking to 'em about, Hey, what's your shopping pattern? I have a hard time turning off the marketer in me, and so I'm always doing market research. Yeah, I dunno. So I'm like, Hey, did you buy online or in store? Most everybody bought online and there were so many people, even younger couples in their twenties that said, I just bought everything on Amazon. I didn't ask them. They just made a point of saying that I bought everything on Amazon. That's where my parents work. A lot of people, they just shop.

Everything's on Amazon. Yeah, I think, well one, did you actually buy your gifts or did you have someone buy your gifts for Yeah, I outsourced that. Actually, no, my wife Brittany, she loves to buy gifts and so I just buy for her and I did not buy for her from Amazon. I bought from the retailers knight, from Nike and from Birkenstock and a couple other things. But yeah, I did not actually, you know what? All our kids' gifts came from Amazon and I would say I think we did one, my son got a electric dirt bike that came from Walmart, but mine for my wife all came also. I did not all from actually the stores. Interesting. We did some pans. Shout out to Caraway. Caraway. Dude, that is an awesome brand. They're doing some amazing things. We did some caraway pans and then also a jacket for her and those came from directly from the D two C.

Super interesting. And so kind of last point on all of this is just you need to be thinking thoughtfully, thinking thoughtfully. You need to be thoughtful about your approach to Amazon in that if you're doing really well from a branding standpoint and you're selling products D two C, someone is going to be profiting off your brand on Amazon and that should be you. But other people are going to be popping up. We saw this with Boom by Cindy Joseph. Someone's either going to buy your actual products and try to sell it on Amazon, even if you try to squash that it's going to happen some or they're going to build a knockoff and try to cap and bid on your brand name and stuff like that on Amazon, they're going to try to capitalize on that. So you got to have an Amazon strategy of some sort.

And I would also say some people think just because the same strategy doesn't have to be applied to your TTC to Amazon. And so what we see is a lot of companies will come in and they just put every product they have from their store on their Amazon store and they're like, eh. And for me, like, okay, you know what? You want to focus on D two C, that's fine, but there's a lot of branded search on Amazon. Okay, let's capture it with, let's get some of your bestsellers on there. We're not going to capitalize on everything you have from your D two C, but let's make sure that your customers who are going to be searching for you on Amazon are able to find your product and it's going towards you and not one of your competitors. Yeah, I love that. And so having that merchandising strategy, and that's ultimately what it comes down to is success on Amazon is part advertised.

We're going to talk about that in a second. You really can't grow on Amazon in any meaningful way without some advertising strategy. If you think about the way the search engine results pages look in Amazon, a lot of those are 30, 40, 50% ads. Those placements are ads. So really got to pay to play as far as that goes. It is merchandising. So how is my product showing up on the shelf from product photography to can I make sense of this product to the actual product detail page and understanding who it's for, what it does, why I should want it. And then it's also, it's part branding and storytelling that goes into that product detail page as well. And some on ads, which we'll talk about some formats that lend themselves well to storytelling. And then it's a little bit SEO, we're doing some things to try to get our products to show up to the right people at the right time.

I would say a lot of SEO, it's a lot of SEO. Yeah. And that all that work can be done in the fourth. Usually that work is done when you're building those brands out and you're building those product detail pages out. But I think a lot of people, they get excited about launching products and the work in the back backend of making sure you even go into your storefront or your a plus content, taking those keywords, putting those on the backend of the images just so that relevancy score for Amazon gets connected to those products. I think again, some of it's not as sexy as getting in and advertising. I'm talking about how advertising is. My wife would be like, what are you talking about? For us, advertising is fun, is sexy, but the SEO is so important, especially because Amazon is trying to really connect that product to the right customer.

They want to make a sale, they make more money. And really, to clarify my point of view on that, SEO is extremely important. Cool thing is some of those other pieces all feed into it. So the right ad strategy increases the volume and that can help with SEO, the right merchandising and storytelling that's going to increase your conversion rate, which feeds into SEO, but you have to think about it all strategically and you got to execute on all of it or you're going to be hitting some snags. And really, let's actually pivot to advertising real quick and we'll talk more about branding potentially in a minute. So some new things coming out, there's a vertical video on sponsored brand video that's coming out right now. And so for those that don't know what sponsored brand video is, it used to be called video in search ads because as you perform a search on Amazon, whether it's on a mobile device or desktop, you're going to see ads that are video based.

Usually they've got a listing next to it, under it, beside it, whatever, and a video with the sound off. Great experience for customers. I see this a lot in the pet space, but now it's really prolific across all categories, good shopping experience. It's one of those ways to like, hey, this would be kind of cool if I was in a store, if I was looking at these products, can I see this one in action? Can I see a demonstration here? But those have historically been more wide screen or whatever, or 16 by nine or whatever. If you had a vertical video, which for me, I've always was conditioned, never take a vertical video, but now everything's viewed on a phone, so vertical videos are not bad. Historically you'd have to take it and reformat it and you would have pillars on the right and left side.

It just didn't look as clean. But now what they're doing is they've kind of stacked it in such a way where your vertical video shows on the left and then you have the option to put one or two products on the right. So it looks very clean. And for me, what I'm really excited about is a lot of what you get from your users, so your user generated content is going to be vertical video. They pull out their iPhone, they shoot their little video, say, Hey, this product's great, I just got it in. Or they do their unboxing. You can now use that content really easy. Totally. And yeah, vertical video, I would argue most brands have more vertical video content than anything else. If you look at, we're trying to scale on tiktoks to a certain degree, but also Instagram reels and YouTube shorts.

And so vertical video is kind of the flavor of the day. It is funny though, I noticed this the other day too, just a little side note, I was shooting video. When we do family get togethers and stuff, I take pictures, a lot of video. I took photography in high school. I always been kind of passionate about photography, amateur level stuff, but I would always shoot video in landscape mode. Always. Yeah, always. And I remember hearing my sister-in-law was like, you don't ever do vertical videos, do you? And I was like, well, why should, that's wrong, isn't it? I didn't actually think about that out loud, but that's just the way I've been conditioned. That's the way you shoot video. But yeah, it's, we all have vertical video and it's the flavor of the day. And so now we can put that to use in sponsor brand video.

And what's cool is that if we look at what ads work the best on Amazon sponsored product ads, those are the listing ads. The ads, the normal shopper doesn't even know their ads. I talk to people when people ask me what I do and stuff I show them, I dunno if it still makes sense or not, but a lot of times you see the sponsored product ads in the search results, you don't even know it's an ad. So those are the most effective, but a really close second in a lot of cases, a sponsored brand video, those ads just crush it. They're often good at attracting new customers to your brand. They're a disruptor, they're a disruptor. You get in and you're looking through, say we're searching for, I dunno shoes, and you're looking through all these listings and all of a sudden there's something that, there's movement to it, there's sound.

It just captures a client's customer's attention. Just way easier than a historical gist sponsored. Yeah, if I know what I'm looking for, I know exactly what I'm looking for. I may not need the video. If I know the brand, I know the style, that's what I'm looking for, then kind of get out of my way. Let me find it. But if I'm kind of browsing, I want a moccasin or I want this type of button up shirt, whatever, and I don't really know what I want. Those videos, they're really helpful and that's why they're good new to brand. But what are we seeing with, or what are we hearing through our reps and through some connections vertical videos, how are they working? Well, honestly, I haven't seen one in the wild yet. Yeah, I was looking really hard for, I was looking too. I want to see these in action.

It's a limited use case, but our prediction is we're going to see a lot more of these this year. You're going to see a lot. And so I mean we're talking within the last, I think 30 days that these became available. And so I reached out to our Amazon specialist and said, Hey, have we seen any or have we implemented them? And so we've had two clients who have content that we are starting to implement, but we have not got to the point where they're actually live. But what they're claiming on Amazon, and again, everything's taken with a grain of salt. We're seeing about a 9% increase in click-through rate on average for these videos. And again, that's probably through their beta testing. So if you're at a one and then just to translate that, if you're at a 1% click-through rate, that's make you a 1.09, which is not insignificant, no, that can really help, especially if it's a high volume product, a lot of search volume there, then that can make a real difference.

And tie this back into the brand building again, this is another opportunity for someone to either land on your storefront, you can, if they click on a product, going to take to the product detail page just like your classic brand video or sponsor brand ad, but also it can lead to your storefront if they just click on the general ad itself. And so all of these opportunities are to send people to your storefront, which we can spend a day talking about the importance of a storefront because it's the only place that on Amazon that you're going to have where you're not competing against other people for ad space, there's no other competitors showing on your storefront. So you get somebody there and you have the ability to show them your whole catalog. And that's where that brand is really important. You have other products you can cross promote, you can show them what you have.

You can put a video content in there, you can talk about who you are, why you're selling. So it's super important that you're disrupting that list of just generic Amazon. You get that video, people click on it and hopefully they're going to be able to see and discover your brand as a whole. Yeah, and that's, again, you're kind of thinking about this from a, what was this, back in the old days when we were just shopping in store only and that experience by looking at the shelf, this allows you to bring some of that to life and allows you to really differentiate who you are. And as we look at storefront, and so you have to have an Amazon storefront. I have to be brand registered to use this, but one thing that, one of the myths we like to bust as we're looking at, hey, you need an Amazon strategy, is a lot of people say, Hey, when you saw an Amazon, it's not your customer, Amazon's customer.

And while there's a degree of truth to that scenario, I go to Best Buy some not that much, but I like to browse it. I like tech, I like gadgets, I like to walk around and stuff. I don't know the last time I've been to Best Buy, really? Yeah, it's been a long time. So if I go into the Apple store within a store, the Apple experience inside of Best Buy, whose customer am I at that point? If I buy some Apple stuff, my Apple's customer or my Best Buy's customer, the real answer is both, right? I, I'm buying from both, but I specifically want to buy Apple because of what Apple has done with their branding and the experience and I've got all Apple products. And so I'm an Apple customer, I bought it at Best Buy, but I'm an Apple customer. The same can be true inside of Amazon.

We were talking about a couple brands earlier that have done this really, really well. Anchor A-N-K-E-R really launched on Amazon. So if you need a charger, you need some of those peripheral things to help charge all your devices. They're certified, they're safe, they're really, really good. So I always tell people, Hey, if you're going to buy a replacement charger, either buy Apple Brand or buy Anchor, but anchors really, they're built on Amazon, largely a simple, modern is another one, Tumblrs and different drinkware and some of it's sports related and stuff. Awesome, awesome brand here in the Midwest, based in Oklahoma City, basically launched on Amazon. But they've got a real brand as you look at it. That's something you want to tell people, Hey, this is a simple modern mug, or Hey, I buy Anchor products. And I think one of the differences, you know, have a real brand when someone says, Hey, I buy Anchor, just buy Anchor when you don't have a brand is when someone's like, I bought this thing.

It's on Amazon. You go on Amazon, where Amazon is more important than the brand, that's when you know really don't have a brand. You're just selling on Amazon for sure. And so sponsor brand video, vertical video plays into this allows you to leverage all those video assets that you have and really lead into what we believe is that the overarching trend over the last several years. And it's going to continue. Those that win those really succeed are building brands on Amazon. This is going to help you do that. Now, this next thing I'm really geeking out about, we'll see, we'll see what happens is very early, we can't even test this yet, but Trenton talk about the shop in Facebook, and I don't even know actually what the real name is there. We saw our buddy Jeffrey Cohen from Amazon talking this, where now there's the integration between Facebook and Amazon.

But what does this allow Trenton? Well, I'll say this. When I first started working on the Amazon platform, their main goal was to never let anybody ever leave Amazon or do anything connected to any data, nothing, just all self-contained within Amazon. What walled Garden to the extreme. Yeah. But over the years we've seen more and more like Buy With Prime is being used on D two C sites. And so what this is is it's the ability to stay within either Facebook or Instagram and you can buy utilizing, you connect your Amazon account to your social media platform. And so if I'm scrolling on Instagram and I see that anchor or simple model bottom, that Tumblr that I really, I was like, ah, thinking about it, I can purchase that Tumblr straight through Instagram by just clicking on it and it'll give you your basic information.

It gives you price, it gives you your relative shipping date. I think there's some information that they're trying to figure out there. It's still very early in beta, but I can literally just click on it, buy it, and never leave the Instagram app, which is for me mind blowing that they're doing this because I never thought that was going to be the case. But this is going to hopefully, again, we're very early in on this, it's going to enable a lot of our client or a lot of our clients to be able to, one, to utilize and Instagram utilize meta to be able to push their products into such a new way into new customers. Well, new customers in the sense of they have maybe a following on Instagram that not connecting to their Amazon account, but you know what? They see 'em discover and they never have to leave that app to make that purchase.

So you're just taking that barrier down. So it's pretty exciting. And Facebook and some of the platforms, similar to what you just said about Amazon, they don't want you to leave either. They want you to stay within that platform, spend more time on Facebook and Instagram. And so this is going to lower friction and make it really easy just to buy stuff as you discover it, as you see it on the social platforms and connect it to Amazon. What's really interesting about this is what are the modes we like to shop in? Well, if I know either exactly the product I'm looking for, so I know that I need to buy, it's super cold here right now. I was looking at gloves, swimming on a ski trip and some other things. So I'm looking for gloves. If I know what I'm looking for or I know the problem I'm trying to solve, I'm probably searching, right?

I'm searching on Amazon, I'm searching on Google, I'm searching and trying to find it if I don't really know, but I'm kind of like I'm itching to buy some new clothes or whatever. I'm more like in this exploration type mode. And that's when Amazon or other social platform, I'm sorry, Facebook or other social platforms, they know like, Hey, I'm going to start showing you stuff and start suggesting stuff. And so if I can discover it and buy it right away on Facebook through Amazon where I trust Amazon, I trust the return policy, all of that is established. It's going to be a game changer. Now, whether this iteration actually works or not is TBD, but it seems like a lot of things are in the right place because this whole buy on social, social shopping is not new. Facebook tried to do something similar to this a few years ago where you could just buy and check out on Facebook, but it wasn't with Amazon.

And so I think this will be really interesting to see how this plays out. Yeah, it's going to be, I think, well, one, we don't have access to this yet. We don't sure how it's going to work, but it's something to continue to watch for because I do think as soon as this is available, testing just straight off for our clients will be super interesting. And those data points will be for me, and I don't know how they're going to report on it yet or anything like that, but I'm interested to see how well it does. And right now it's all one P, meaning it's all products that Amazon has purchased wholesale and they're selling directly. So sold by Amazon, not third party marketplace products. But you got to believe, and I say this with a pretty high degree of confidence, even though I didn't hear this, is that if it goes well, this is going to be opened up to a broader audience.

They want to make more sales. Yeah, absolutely. They're going to open that up for sure. Facebook wants the ad revenue. Amazon wants to make sales. So what are a couple of the other trends here as we're kind of running out of time trend, but what are a few of the other trends you're excited about on Amazon or excited to see released or really gained steam this year? Yeah, I think we come back again to that brand building experience. And what they're doing is more and more self-serve ads are being released on Seller Central. And so for me, sponsored TV ads historically, what was it, 30 grand? I think Amazon, when they first released sponsored TV ads, you had a minimum of 15 KA month was what we'd always heard. But for a certain number of months, that's what you had to spend to even test it.

And we had clients testing that and was, they never had a great experience. It's not bad. That's a chunk. You're trying something new. You're like, I don't really know how this is going to report. I don't really know how this is going to play out, but I got to spend a minimum of say, 30 to 45 grand. That's a lot. Yeah. So the commitment barrier is down. You can literally get on seller central now you can pick your, it's all CPM, your bids for CPM. And so the ability, what I'm seeing on Amazon is saying, Hey, do you know what? We can push this brand and we can push it through at higher levels. And so get people more in that discovery phase and bring them, because Amazon, again, it was always just, you went to Amazon, you were ready to buy. Yep, yep. You weren't necessarily, I know what I'm looking for, I'm searching, I'm getting ready to search.

Yep. Amazon's in a tremendous product search engine. You might have a couple options that you're thinking through, but you know what you're buying. And now we have the ability to say, you know what? We can reach customers before they even know what our product is and start pushing this at a higher level. And so really excited for the opportunities to come in the next couple of years of not necessarily just the demand side, but let's grow our brand. It's awareness through the opportunities, because historically we've to do that through YouTube, and then we'd have to do that also through Google to Amazon. But then again, that was always just kind of, it works, but again, those always don't jive. And so the ability not a direct connection. And those are still two areas like Google and Amazon, and a couple interesting things there. One, Amazon is Google's biggest advertiser, and nobody spends more money on pay-per-click than Amazon.

And Google is Amazon's number one source of traffic, but they don't like to share data with each. It's a catch each. It's a catch between two frenemies. Sure, frenemies. But yeah, it's so well put, right? The tried and true with Amazon is all demand capture where we're dependent on some other external factors driving demand for our product or demand for our category. And then we're just capturing that demand where really I think the brands as they grow and move into the future, and what Amazon certainly wants is some demand generation. Now there's a limit there. There's a point where demand generation can get wildly inefficient and wildly unproductive. And so that is one mindset you got to bring to this. If I'm doing sponsored TV ads or if I'm doing Amazon DSP or I'm trying to grow, go a little bit higher in the funnel to more that awareness stage.

You got to be careful. You got to experiment. You got to test with small budgets small enough to not be worried about losses not as easy, it's not like sponsored product ads, but Amazon is motivated to do this. You as a branch be motivated to do this. How can we get the right mix of demand generation and demand capture? That's where we're going to build this constantly growing demand for our brand and this flywheel that's going to really propel us into the future. It's definitely a balancing act. And so I think also for looking at that, for me also understanding Amazon posts. And so they've invested, I mean when posts first came out, what is an Amazon post for those? No, no. So it's like a brand, think of Instagram, it's like a brand feed. So you go there, you can make a post, connect your products to it.

It has an image, but also just a caption. And so you go there and you can discover it. It's more about the social side of your products and you can go to the storefront and the last option on that storefront usually is post, you click on it and you'll go to that brand feed. But when they first released this, it was really limited data, little more information. I was like, this isn't going to last. But over the last two years, they've released more information, they've released more options. And so what we're seeing is like, okay, the posts are not going away. They're still free. At some point they'll probably be some paid aspect of posts, but we were also ability to push video on post now or have the ability to really utilize these in such a way to grow a brand. And so utilizing that sponsor TV post, making sure your a plus content is connected to your brand in a cohesive way where again, we're not selling just a single off product, but we're really building a brand following here.

Yeah, yeah. It's so good. And so looking at all this, we'll kind of wrap a bow on this, but I think that the larger trend is Amazon is coming up with more tools, more ways to increase the amount of products that people are willing to buy, but they're also seeing that they're really supporting and helping good brands is how they succeed. And one analogy to maybe think about, we go to trade shows, some in our industry and we display and put up a booth and stuff like that. It's one thing to kind of have a booth at a trade show because there's demand and there's traffic there that the trade show has generated, but there's so much more you can do than just have a booth. And I think that's the way a lot of people are on Amazon. They have a product listing, so they've got a booth, but they need to be doing other things.

So what we try to do or what we see other people do successfully is like, okay, we got our booth. We're sending people out to talk and mingle. So we got people out to bring 'em in, reps and other people to bring people in. We're putting stuff in trade show bags, we're putting up displays and banners and we're showing videos. We're doing all kinds of stuff to find the right person who's there to come in and become interested in our services. And so I think there's going to be more ways to do that all contained within Amazon. So more tools to attract people to our products within Amazon. And we got to go beyond that some as well. And that's where we look at things like Google to Amazon and YouTube to Amazon and Facebook to Amazon. All of that is going to be getting better and there's going to be some new developments there as well.

So going to be exciting year. Amazon not slowing down anytime soon. Any parting words of wisdom? Trenton? I have a very, very important parting word. Awesome. And it's Happy Birthday. Oh, happy. A little birdie told me that it might be Brett Curry's birthday. That's true. On the day of recording, it is my birthday. 72. Yeah, my kids did these balloons for me. And the kids always like to exaggerate like you're 5,127 years old today, which is a fun number. So that was really cool. But I'm actually 44 today. So 44 today. Alright, feeling great man. Feeling great. Feeling full of energy. 44 and thriving. Thanks dude. And so I hope you enjoyed this. Hey, if you do need help with Amazon, you're looking at like, Hey, my strategy on Amazon is probably not what it should be, but you do have some traction, you have a brand and you're doing multiple seven figures. We would love to talk to you at OMG Commerce and if you're looking at that Amazon strategy, it's probably going to be this guy helping you map that out and at least talk through that. So with that, Trenton, thanks for coming on, man. We'll have to do this a little more consistently, but excited about Amazon this year. I'm excited. Awesome. Thanks man. Looking forward to next time

I.

Episode 268
:
Rabah Rahil - FERMAT Commerce

A Better Framework for Using AI + Leveling Up the Customer Journey

I love this episode. 

Not just because my guest, Rabah Rahil, is a super smart dude with an eye for fashion.

I love it because we tackle two of the biggest issues facing brands, agencies, and developers in the DTC space:

  • How to think about and utilize AI for better results (especially if you’ve resisted it a bit).
  • How to evolve the customer shopping experience to wow customers and drive better conversion rates.

If you’ve been somewhat bearish on AI or maybe just slow to experiment with it, perhaps you need a better framework.

Rabah lays out his framework by comparing AI to oil companies and how oil companies find land, drill for oil, and refine it for profit-producing products. 

It might not be clear right now, but this is a pretty accurate analogy for getting the most from AI.

We also talk about the social dilemmas of using AI in our daily lives. 

For example, if I use AI to write my wife a poem, does that count, or is it cheating? If I use AI to help me craft answers for a job interview, is that a sign I shouldn’t be hired or that I know how to utilize tools? Or does it depend? 

We also talk about a few of his favorite tools:

  • Gong(.io): A tool that Fermat now uses to analyze sales performance and run sales meetings. It’s a game changer in taking data from your CRM and delivering actionable insights and talking points. 
  • Riverside: The podcast recording tool that now has AI features that are awesome (and getting better all the time). 

Plus, we discuss some AI features masquerading as businesses. These will undoubtedly come crashing back to reality. 

On the customer journey side, we talk about how creating a cohesive experience that’s also customized at scale is the future of the DTC industry.

3 things have to be in alignment:

  1. The ad
  2. The post-click experience
  3. The offer

We talk about when and how this goes wrong and what to do.

And we throw in some fun 80s/90s references. 

Super fun. I hope you enjoy listening as much as I enjoyed recording.

Show Notes:

Transcript:

Rabah:

I realized the way that AI fits into my life and I think into most people's life in its current iteration is that it's a multiplicative function. And so people think it's just going to build houses by itself. That's not how it works. But a way, if you find the data, so either you find the land or you have access to that land and you can put the right drill and analysis and framework over that land and then have a refinement mechanism to then generate value for the business, it is it all systems go

Brett:

Well. Hello and welcome to another edition of the e-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce, and today we've got a returning guest. This man is a legend in the DTC space. He knows data, he knows brands, he knows good fashion, he knows how to wear a killer ball cap, killer hat. I want to talk to him about his hat game in just a minute for those that are watching the video. And so we're going to talk about a couple of really big topics and I'm super excited about, we're going to talk about customer journey and where things are broken in the D two C industry and some thoughts, maybe a thesis you should adopt on how to improve the customer journey. We're also going to talk about AI because hey, everybody's talking about ai, right? But the reason we're going to talk about AI is because there's maybe a new or maybe some clarity we can bring to you that Robba can bring to you on that topic. And so my guest is we go way back. Love this guy. He is now the CMO of Vermont, which is a customer journey optimization platform that transforms clicks into conversions, which is a killer line. And I bet Robba had something to do with that. So my man, Robba, how you doing? Welcome to the show,

Rabah:

Brett. Thank you so much. And what a man, I need you to walk around with me all the time for those kinds of intros. I'm all pumped up, man.

Brett:

I think in another time, if I was a medieval Times guy, I could be a Harold. I think that's what they were called. They just walk around and talk like just here's Rob Ray Hill and he's the man. Anyway, I think I could do that. I can

Rabah:

Could totally definitely pull off the fit for sure, man. So great. Obviously a big fan of the show second time. So Achievement unlocked M just one of my favorite humans to jam with.

Brett:

Sweet. And so I teed it up so we can't leave people hanging. You're wearing a killer hat. I think I've seen another, maybe I saw saw Shaq, Nick Shaq wearing that hat too, but carte blanche on the hat. Tell me the scoop one. It's like an orange. It's got a real good vibe going

Rabah:

Here. This is my orange heater. I have another one back there. I just shout out Shaq. He put me onto the brand and I've just really loved what they've done. They're a little bit of a drop kind of vibe where they'll do drops and stuff like that. So there's a little bit of a scarcity vector and just Adam and Louis have been building, it's kind of one of those old jokes of 10 years in the making of an overnight success type of thing. They've been grinding, grinding, grinding, and now they're really seeing a lot of awesomeness from just great product, great branding, great customer experience. Yeah, so I actually just now, what was that? Yeah, black Friday, cyber Monday made the first actual apparel perch, so they, they're dipping into apparel now as well. So yeah, super, super fun. Super fun brand, great vibe, great experience.

Brett:

Carte blanche, and I'm saying that right? I've heard French, so check that out. Not a sponsor for the show, but doing cool things. And man, I tip my hat, no real pun intended there to anybody that's on it, anyone can work in the apparel space. The hats be like, it's just so hard. It's so hard to nail fashion and to get people to wear your stuff. And so they're doing it and that is pretty cool. So we're going to talk about customer journey in a minute. Really excited to dive into that. I'm a big fan of the way people shop and why they shop and how do we influence that and make that better. Let's talk AI a little bit because obviously this is not a new topic, but I think the real key is how are we going to use it and how do we make sense of this and how does this practically apply to our lives and to our businesses?

I think still everybody's still figuring it out, even those that really know, it's still figuring it out. And so I know for you, you kind told me before we hit record, you're not anti AI by any means, but just trying to figure it out and you feel like you had a pretty good working thesis. I was definitely in the same boat always watching and interested, but how much am I using it? I feel like I'm a little bit behind the curve there, but talk us through just a little bit of your AI perspective and then how you landed on this thesis.

Rabah:

So we actually got to do a little company hackathon, which is super awesome, I highly recommend, and there's a tweet on my feed in how we structured it. I think it can probably go sideways pretty quickly, but ours went really well. And so this hackathon, the whole point was to figure out ways to leverage chat GPT in the business. This got me to thinking, okay, how am I thinking of ai? Because like you said, I wasn't necessarily bearish on it, I just haven't figured, I hadn't figured out where it landed in the toolkit, what type of tool it was, et cetera. And so where I kind of ended up after pontificating a little bit landed on was almost like an analogy to an oil company. So the first thing you need is the data. And so the data being the land, so you need to find the land that's rich in resources or the ocean spot that's rich in resources.

And then the second stage is the actual analysis or framework. And that's again analogous to whether you're using a little drill, whether you're using fracking deep sea, how are you going to extract that value from the actual land? And then the third phase for me is kind of this refinement, okay, now that I have this crude value and resource, how do I refine it into actual gasoline or petrol to put it in the engine in my business to make impact? And yeah, what was really interesting is it kind of lines up as well if you think of that as well in terms of a value chain, right? So do I own the land? What is the frameworks or analysis or the drills that I can put on this land? And then do I have the ability to refine it to make business impact? And if you think back in, so I'm old, but back in the day when they found all this oil in Saudi Arabia, Saudi Arabia just had the land.

They didn't have the actual way to get the oil out of the land, out of the ground, and they didn't have the ability to refine that oil. And so you can think of yourself as kind of if you're a company, you're sitting on all this data, but how do I extract it? And so what I've been really interested in is I think a lot of the AI hype was actually a head fake and pretty deteriorative to a lot of company's value because it just didn't, people were just shiny object syndrome, I need to have ai, I need to have ai. However. And so with that, I think there's a lot of, I don't mean this in a derogatory way, just in is where I think there's just a lot of features masquerading as businesses right now. So I think one of two things are going to happen.

One, those people are going to get rolled up into, so HubSpot just bought Clearbit. I think you're going to see kind of a rolling up of these features masquerading as businesses or you're going to see the businesses that have the land and the extraction tools actually use AI as the refinement mechanism. And so a perfect example of this for people that don't know, there's a really awesome, it's very expensive but super awesome called Gong, and basically your sales team is taking calls, blah, blah, blah. And Gong is internalizing all this data and using AI to surface either win rates or how much did one person talk then the other, it's almost grading calls. And so our VP of sales is actually now running our pipeline meetings from Gong, not Salesforce, not to say Salesforce will ever get abstracted away. Salesforce is kind of that the VCs love the term of system of record, super, super important, super valuable, but Gong is actually abstracting away Salesforce in that sense of we don't have to be in Salesforce anymore.

Our VP of sales is running the whole thing from Gong, which I find is absolutely incredible. Another one which we're actually using right now, Riverside, where Riverside has all this data because you're recording in it and now you get AI notes, you get chapter notes, you get AI clips, you get all these things that now it's becoming not only this refinement mechanism, well it's not only extracting the data from me, but now it's refining it. So now I can have all these little magic clips, I can edit the podcast in ways that is just super easy. And so the too long didn't read for me was I realized the way that AI fits into my life and I think into most people's life in its current iteration is that it's a multiplicative function. And so people think it's just going to build houses by itself.

That's not how it works. But a way, if you find the data, so either you find the land or you have access to that land and you can put the right drill and analysis and framework over that land and then have a refinement mechanism to then generate value for the business. It is, it's all systems go. And I've just been, when you find those prompts and those things, it can be a religious experience where you're like, holy crap, that is absolutely insane. But I don't think it replaces people. The person that's going to get replaced is going to get replaced by somebody that uses ai, not by ai.

Brett:

I really like that. And well said, I love that analogy of drilling for oil. And I think a lot of times we start with what can AI do for me? And that's not a bad place to start. Then you can work backwards. But then I think we don't work backwards sometimes. And so thinking about each of those steps, I would really love for AI to do this or what can AI do for me? But then we got to understand, okay, well where do I have data and what do I need to analyze and things like that. And so yeah, really powerful. And for me, I've just been experimenting with it more and finding even simple things. I love that gong example. I'm going to check that out. That's pretty crazy. But I think even just looking like I'm leading our sales group through the book Pitch Anything by Orrin KCL and really great book.

And so even looking at, instead I took good notes on the book, but just querying Chad GPT, I'm like, Hey, what were the points on this? Or what were the two chemicals in the brain that he talks about that are triggered that need to be triggered in a good sales process? And it's like it knows it and it spits back out and it's like, okay, cool. It's like my assistant right now is I'm working on these notes and of course is my ideas in terms of where I want it to go. And it's Warren klas you book, but chat GPT is kind of pulling things together, which is pretty sweet. So

Rabah:

Super spot on.

Brett:

Any insights from the hackathon? What came out of that and how did that work? So when I hear Hackathon, I think the movie, the Social Network where you're doing shots and staying up until 4:00 AM or all night,

Rabah:

Not that you got to remember, I'm old now, maybe my younger years. But yeah, so ultimately we had a few people or a few hubs. So we had San Francisco where we're headquartered people came to Austin, we had an Austin hub, we had an LA hub, we had a East coast hub in New York. And then we had a India hub where we have a lot of, so our VP of engineering and product is in the states and we have a few core engineers, but we're building out a pretty big engineering team in India. And then everybody would basically pitch their idea what's going to be the business impact, what's going to be the thesis, how did it work, show it off, and then what are the next steps for it? And so we originally, because this was where the thesis came from where it's like we have all of our clients in a Slack channel and then we have all of our sales calls and gong, how could we extract this data and then run whether it's a sentiment analysis stuff of, and so we ran into some headwinds in terms of some data extraction and stuff like that.

So then we ended up pivoting into an ad coherent score. And so what you can do is we built something and we can drop it actually in the show notes, it's on the chat GPT store, but ultimately you just upload a screenshot of the ad and then you upload a screenshot of the post-click experience, and then it'll just analyze the coherence score just based on six or seven different factors. It'll give you a coherence score on top of, it'll tell you a few things to improve here or there and something like that. So that's kind of where we landed, where it was actually pretty awesome. And again, when using the AI in a way that's very direct and meaningful, it becomes again that multiplicative function where it was like, man, this is actually a really awesome deliverable that you could take to either a client or a prospect saying, Hey, I looked at a few of your ads. The coherent score isn't really high that could be hurting your performance if this isn't on purpose, et cetera, et cetera. And so one of the ads actually we did was a favorite. So Sean Frank over at Ridge, huge, huge fans of the Ridge guys,

Brett:

Shout out. Shout out to Sean Frank and the crew. He is like my favorite follow on Twitter also about to record an episode with him. So legend,

Rabah:

I'm so jealous. He's a legend. He's in Austin, he won't ever hang out with me, Sean, if you were this hang out with me. He actually just launched luggage too. He's the consummate entrepreneur, man, doubt. He really gets it doubt. But they had a really beautiful Twitter ad with the Miami Dolphins Ridge, so they did an NFL collection, but when you click on it, it goes to the whole NFL collection, which is a gorgeous page, don't get me wrong, beautiful. There's no notes on the page. But my thesis was if that wasn't on purpose, there's definitely a reason. Maybe you have this showcase team and oh, you have NFL wallets and then I go and I have it, but I wonder how much better it would convert if you went from a Miami Dolphins ad to an actual Miami Dolphins homepage where it has the wallet front and center, maybe some upsells around that wallet that are peripherally related to the Miami Dolphins, et cetera.

And so that was kind of the thesis around the coherent score. We think of the customer journey essentially in three parts where you have the content or the creative or the ad, you have the post-click experience and you have the offer. And those are kind of the three pieces of anatomy, if you will, of the customer journey. And sometimes you can have an incredible ad, but it just doesn't get a ton of support from the post-click experience because it's a PDP maybe or you're sending 'em to the homepage. And so there can be either a disjointed experience or you just don't have the continuation in the storytelling and at best, the augmentation of the said storytelling where you got somebody to the party, but now there's nickelback playing, the beer is flat, the people aren't as attractive as you were hoping, and it becomes this very mismatched expectation to reality.

Brett:

Love that Nick is your landing page the equivalent of a party playing Nickelback. By the way, this is a quick side that we won't dwell here along, but why is Nickelback so hated? I don't actually know many Nickelback songs, but it's one of those things where you hear a couple rifts and you're like, I mean that's not that terrible man. Everybody loves to hate on Nickelback. So any idea, where did this vitriol towards Nickelback come from? It

Rabah:

Bubbled up in the zeitgeist. They just kind of became a bit of a cliche and they almost hit the pop music too on the nose where you're just like, I don't like it because you're a musician. I like it because you're using these psychological and biological kind of rhythms. So

Brett:

Maybe they're drifting away from the art and the passion. They're just falling a formula or something. It's a

Rabah:

Perfect almost analog to what we're talking about with the AI where it just didn't feel like they had character or passion or they weren't an artist. It was like a Milli Vanilli, but they actually made their music. The kids won't get that reference.

Brett:

It's so good. Milli Vanilli, man, I was a kid, but I was around in the Milli Vanilli age. They had some bangers when it came to light, man, they had some bangers. Yeah, blame it on the rain. Come on, look that up on YouTube. That still speaks. But they didn't sing it, they just, somebody else did.

Rabah:

I think that for me is where, especially in music, when you have insincere artists, it feels it's hard to get behind them. Dude,

Brett:

That's such a good example. And I honestly didn't know, I didn't know enough or care enough to research it, but I was like, why does everybody hate Nickelback? It's just funny to hate on Nickelback, but that totally

Rabah:

Makes sense. I think that definitely did happen. The impetus was I think the in sincerity and then they just became a mean, very similar to greed when you have a little bit of the cringe of the lead singers and stuff like that. But

Brett:

Yeah, that's awesome. Okay, cool. Which leads us to some interesting side notes on ai. And we were talking about this before we hit record. If we're going to lean into AI a little bit more, there almost has to be some renewed social contracts, so to speak. There's some agreements we make if we know that now AI is powering some of the things we do. So you want to kind of lay that out, what your thoughts are there and then lay out that specific scenario.

Rabah:

Yeah, so this is one I haven't yet landed on. I've landed on the problem space, but I have yet to suss it out because I can make compelling arguments on both sides. So ultimately the too long didn't read is one of the use cases I was thinking of. So I went to school for economics. In economics there's a term called utility. You can just think of it like positive outcome of the thing, which is a catchall phrase. And so if you were writing a poem to your partner, and the goal of that poem was to incite as much happiness and joy and love and excitement from these words, but you suck at writing poems, but you put a bunch of effort into it, but it still sucks. And you give it to your partner, your partner's like, oh, awesome, this is really bumbly, blah, blah, blah, blah, but you put a bunch of effort into it.

Thank you so much for doing this. However, you could put the same amount of effort. So again, economists love to say all things being equal. So all things being equal, you put the same amount of effort into that because you know exactly what your partner likes when you first met your anniversary, their heritage, their favorite song, and you feed all these really meaningful data points that you have collected using effort and thought and things of that nature into chat, GPT and then chat. GPT writes you this absolutely just tear jerking emotional meltdown style poem that you then give to your partner and they love you, they hug you, they kiss you, blah, blah, blah. But then you tell them that that was written or augmented by chat GBT, that would instantly take away from that feeling. And so I think there's just some things that need to happen in terms of the renegotiation of, again, those social contracts.

Because the two ways I see it, one, you don't pay people for, or the top paid people don't get paid for essentially output. They essentially get paid for the things they know that can generate set output. And so you don't compensate people at the highest level for time. You compensate them for output, and that output could take them a minute, you know what I mean? Because they have all this previous knowledge, whereas people that are on the lower end of the skillset or at a different part of their career, you're going to compensate them on time. And so that's the dichotomy where at what point, there's also a really good Greek mythology fable of thesis' ship. And so at what point is it not that ship anymore, but it is in thought but not in actual resources and stuff. And so that's where I'm landing where I don't know, because at the same time, if you even flip it to a business context, if you came to me and you're like, Hey, I have Brett Curry's awesome store and we sell these incredible gummies, Raba, I want you to create an annual plan for me.

I want you to do all this stuff, and I use chat GPT to create this incredible annual plan. I'm putting the nuance in it, I'm doing this, and then I give it to you and you're paying me $20,000 for it. And I'm like, oh, but I actually, I created it in AI and you would instantly be pissed off, even though that

Brett:

Was, I'm totally pissed. I want to refund it at some point,

Rabah:

Even though agnostic of the outcome, which is bananas because you should be indexed on the outcome, not necessarily the way you get there. And so it feels a bit like magic. I don't know if anybody's ever, any of your listeners ever done magic, but the worst thing you can do is reveal the trick.

Brett:

Absolutely. That's it. Then you feel that's

Rabah:

All. Then you

Brett:

Feel gypped. Yeah, then it's no longer fun. Such a good example.

Rabah:

So I don't know where it lands, but you said something really interesting as well where it's almost that almost every person that's written a book has an editor. So at what point does the editor take ownership of, does that make sense? Totally makes

Brett:

Sense.

Rabah:

Yeah. If there's more than 51% of edits, does that editor now become the author? And so it just gets into these very interesting quagmires intellectually that candidly, I don't have the answer to, but I find very invigorating to talk about because they are so complex but simple. It's

Brett:

Super interesting and it's something we're going to have to figure out as we go. But I love that example of the poem for your significant other because what's more emotional or what has strikes that chord? And there may be some people that are like, Hey, you put in a ton of effort to this, and yes, you get a little help from Chad g pt, so I'm thrilled you remembered our anniversary and you remember where we met and you remember all these details. That's enough for me. Other people are going to be like, Ew, ai. Should I fall in love with chat GPT now? Should I be going on a date with them? Or it reminds me of the movie, I dunno if you ever saw it, but it's called Roxanne with Steve Martin. It's like an eighties movie.

Rabah:

Oh, I love Steve Martin. No, it's so good.

Brett:

So it's a great movie. So Steve Martin, he's this character with, he's got a giant nose, and so he's not super attractive, but he's in love with Darryl H, but he's super good with words. And then there's this guy who plays slider, I think in the movie Top Guns, like real buff rip guy or whatever. And so Steve Martin's giving slider, whatever his character's name is in Roxane, he's given him all the words to say, giving him poems and stuff. So he's reciting that to Darryl, Hannah's character, and she falls in love with him, but then she realize it's Steve Martin and then they fall anyway, but it's like, okay, yeah, there's some elements of that maybe I don't want you as either a spouse or an employee, maybe I just want you at gpt. Anyway, I noticed this too. We were talking about this, but we hire a Google specialists and Amazon specialists, and one of the steps in the hiring process is we give them an exercise where we say, Hey, this is a fake brand. These are some fake problems and opportunities for this brand. What would you do? And two came through my desk in pretty rapid extinction. I was like, this is chat GPT, right?

You look at the answers to those questions and it's like every answer was three paragraphs. Every answer was like, first paragraph was firstly this, secondly, thirdly, and using words, we'd have to rectify this. I'm like, there's no way. There's no way this person wrote that. And so then I didn't want to read the rest of it. I was angry. But if someone had put their own personality into it and they needed help with a specific sentence or a specific thing that I'm okay with, I even had someone on our team who was like, I'm having trouble articulating this thing. So I had chat GBT help me, and I didn't want to read it. I was like, was this you? Is this the machine? Anyway, so it definitely creates some conundrums for sure.

Rabah:

Yeah, it's so interesting because I feel like it gets to such a core part of the human experience where we say we care about outcomes and we index on outcomes rightfully, but there's also a certain aspect of the paths you take to get to that outcome really matter. And so it is just such a fascinating for me because candidly, I don't know the answer. If delight in making my partner super happy is really what I'm indexed on, then why wouldn't I? For example, I did 30 days in Europe, a big vision quest in Europe, and I used 90%, 90 to 95% of chat GPT to plan that whole trip for me where I said, Hey, I am leaving, leaving from Austin, Texas on X date. I want to be back on Y date. I care about history, I care about culture, food, nice hotels, et cetera.

You put in all your parameters and stuff, and I want you to make me the easiest, most efficient pathway. And it basically made me this beautiful loop across Europe that would've taken me forever. And then you can also have these knock on effects of like, okay, cool. And then by city, I was like, what are the best hotels? What's the best areas? What are the best restaurants? What are photographic spots? I should go see? What are points of interest, blah, blah, blah. And you get all this and it's man, it's incredibly, incredibly compelling. And so I think the only big worry I have is there is a huge opportunity for manipulative arbitrage. And I think that is something that is a little bit societally scary for me, where you can get people that have usually needed to acquire X or Y or Z skills that have been previously constrained by time, where it's like you just had to put in the time to get these skills and now you can get to a matrix level where now I know iris junk boxing and jiujitsu and stuff.

So that's the only thing that, but at the end of the day, I don't know, the only thing you can do is be a good person and hopefully you can put the good karma in the balance of beating out the bad karma. But that is one thing that worries me a little bit, where you're seeing some crazy scamming stuff, especially with kind of older people where they're able to kind of spoof the voices of their, that's terrible, man. Still old people, people and stuff. It's horrible. But again, technology more or less is agnostic where it's amoral totally. You can take a PR hammer and build a house or you can hurt somebody with it.

Brett:

And I do think we'll figure it out. And maybe a quick takeaway that just came out this discussion is use ai, but don't be nickelback with ai, right? Use AI to be authentic, to bring out your authentic self, to just enhance your work, multiply to make your work better. Don't use AI just to do the work for you because then you're going to be the nickelback in your industry and nobody wants that. And so because I think this works, if you use physical products, would my wife want me to go make her a purse or go make her a ring or just wants me to buy one? She's want me to buy one, right? I'm actually good with words. I like words, and so I would want to write her something, but if she found out that, man, I was stuck with this thing and so I had AI kind of help me, she'd probably be okay with it. So it's like, we'll figure this out as we go, but if we're just using AI to multiply and bring out our authentic self, then I think we're moving on the right path. So interesting stuff. Appreciate you bringing your perspective, love talking about ai. Any final thoughts on that? Otherwise I want to transfer to the shopper journey.

Rabah:

No, I will just say though, again, not to beat a dead horse, but the people that are not embracing AI and finding ways to integrate it into their workflows will get replaced by people that do. Because what you're finding is really smart, people can use ai. So for example, going back to that consulting analogy, creating that annual plan used to be a huge lift, monumental. And now if you're a charismatic, awesome person, and you can deploy this, you can sit across three to five clients, especially if there's not even any executional work. And it's not like you're misrepresenting anything because like you said, if you're just having this multiplicative function and now I can build out this whole annual plan, nuance it to the client, yada, yada, yada, now you're really, again, augmenting your output in ways that it's pretty transformative. Because Brett, I also fancy myself a little bit of a wordsmith, and every time I put it into ai, it is better. It never goes zero to one. I can't ever say, write me this article and it is better than what I wrote, but I can take a 90 to 95% done essay and put it into ai, and every time it's beat me, it's better, it's

Brett:

Better. It's a little

Rabah:

Scary. It's a little scary.

Brett:

It is. But that's a really good way to put it. Awesome. So I totally agree. You got to be using ai, experiment with it. You'll get better over time. You'll figure it out over time. So you just got to dive in. Let's talk about customer journey. This is something that we're both passionate about. I'm more on the ad side. You're kind of on the customer experience side, but where do you think as an industry, the D two C world is missing the boat? Where are we failing our customers and our shoppers with the shopper journey? I know you kind of laid out three things, the ad, the post-click experience and the offer, but any specifics there on where are we failing?

Rabah:

Yeah, I wouldn't say necessarily failing, but I think as stores get larger, you want to become more sophisticated in your offerings. And so being able to offer that, again, create a more cohesive customer journey, I think net is just going to be a better experience and generate more, not only value for the consumer, but also business impact, whether that be revenue, more retention, et cetera, et cetera. And so I think it's almost like corduroy, right? What's old is new again. And so you're seeing that, I don't want to use the P word like personalization. I'm not super into the quote personalization. I like to use the C word more of customization of, okay, we can use these data sets to then make a more customized journey that's going to allow for people to not only surface the products they want, but by doing that, by merchandising better, by putting the messaging in a way that's meaningful to them at their part, at their specific place.

In that journey, you're just going to get better results. And so I think what you're going to see, or at least that's the thesis at format and personally my thesis is you're going to see these bigger stores abstract away, kind of the main Shopify site. And so the way I've been explaining it to people is almost like a solar system where you have earth, earth being your Shopify store, your sales commerce store, what have you have a ton of returning revenue, you have a ton of brand equity, you don't want to mess with any of that. And now you can build these constellation sites around earth when people want to go explore. Because what we were talking about where I kind of bifurcate the customers into connoisseurs and explorers and a connoisseurs, I know my local pub, I know what the drink I like, I know the seat I, I know where the jukebox is and the music on the jukebox just get out of my way and let me give you money, which is great. But then you also have this explorer mindset, which is more of the growth and retention teams re-engagement teams. And this is more of like a tourist or traveler, I just landed in Vienna or Budapest,

Brett:

Prague, tell me about the neighborhood. Tell me about the bar. Tell me about this drink. Tell me what should I listen to on the jukebox guide me. I want the experience. Yeah,

Rabah:

Precisely. And so for the most part, these bigger stores are essentially handcuffed to either a PDP, A lander that takes forever to get built or a homepage. And I think you're going to see some unshackling of that where there's going to be some more sophistication, especially again when you overlay AI where one of the things that we're really interested in for kind of like a Q3 Q4 launch is being able to ingest, whether it's Klaviyo data or what have you, and be able to not send everybody to the same page where you can actually get almost like an Amazon homepage experience where everybody's Amazon homepage is different or the Facebook feed, like everybody's Facebook feed is totally customized to them. And so I think that's where it can get really interesting where you can start to ingest all this data, then you refine it, this customer, we want to either get more LTV out of this customer or a OV out of this customer, or we want them to get down this certain product path. How can we get them down that path? And you can have this more, I guess, set a different way. I think we're going to transition from broad soar to scalpel, and you're still going to have your broad soars, don't get me wrong, but totally

Brett:

Useful tool. Never get away from it.

Rabah:

Yeah, exactly. It's heavy to swing and it's very crude, right? You're just taking these big hacks where this scalpel, I can start to have these really precise surgeries to then unlock this customer value that I can then materialize in the business.

Brett:

Love that. And the analogy of the regular at the pub versus the tourist is such a good mental picture, but we have that all the time with new shoppers versus returning shoppers to our stores. And so Vermont's helping solve that. Can you give some use cases, some examples that, I know we can't talk about specific brands and things like that because we want to keep a close guard on what they're doing, but walk us through a couple of use cases that will bring this to life a little bit.

Rabah:

Yeah, definitely. So a few of 'em, one are kind of the high skew set, but also high segmentation kind of stores. So think of ball caps or a big clothing retail that have men, women, kids, things of that nature. And so being able to segment and filter that merchandising and that SKU set to the actual people, so you don't get the kind of department store vibe. You get more of this concierge feel of like, oh, Brett, I know you're this size. I know you like these colors and I know you like these cuts. Here's the merchandise that we can show for you. So almost that concierge curation shop that look kind of style. We also have really cool, we have a bunch of beauty brands that are really heavily leveraging quizzes, which isn't anything super, super new, but it's just really nice to again, have that filtration function where you can start to have that self merchandising in a way.

And then a lot of subscription. So being able to do things to push first order subscriptions, which is super holy grail. I don't even buy first order subscriptions. And so that's something where being able to give that testing velocity, we not only have the experiences, but we have experiments as well where you can test these different experiences against whether it's an advertorial, a quiz, a video shop, a hero shop, things of that nature. And so we've seen a ton of just really awesome stuff and really in supplements and apparel have been our biggest really home run hitting vectors. And then we're starting to expand out into other areas like, geez, not health and beauty, UPSs, health and beauty apparel, and I'm spacing on the other categories that we're penetrating. But yeah, so I mean ultimately either high SKU set or the ability to unshackle your growth team from the actual main Shopify site are really the big value vectors that we are currently pounding down. And then obviously the experimentation vector where being able to test whether it's shipping thresholds offers, et cetera, et cetera, at not only low lift in terms of expense to the company, but also the high velocity as well

Brett:

And protecting the core

Rabah:

Side of a hundred percent. Yeah, that's the main thing. You don't want to touch any of the brand equity or returning revenue for

Brett:

Sure. So I love that concierge angle and kind of that picture there. So in that environment, so it's a high skew count apparel brand. So I come in, I land on one of these satellite sites rather than on the core Shopify or BigCommerce or whatever site. So then I'm kind of led through a quiz where they find out my size and my preferences and things like that. And then now it's a curated shopping experience. Is that sort of how that goes?

Rabah:

Exactly. So that's one pathway. The other thing is being able to use your past purchases to then generate that shop or whether it's a Klaviyo, SMS, what have you, so almost like merge tags on steroids, but instead of merge tags, you're actually using the MER to identify different types of merchandising. That's going to be ideal for almost like dynamic product ads in a way where how they merchandise that ad inventory for you. That's what we're trying to do on the backend for a lot of these, especially again, that high skew count. And then there's also just the self kind of selection where the media buyer has X or Y or Z in the actual creative, and then being able to show those products on the post click experience. And then the tertiary thing is influencers. So you have the influencer ad and then the influencer now has this dedicated lander with their face, their recommendations, et cetera.

Again, you see the macro concept of coherence where I see this influencer, but then I don't see 'em on the page. What? That's weird. Or I see this product and purse on the page or handbag on the page, but now I'm on the homepage and all this is showing me is jackets or something. And so that disjointed journey I think is going to go away as people get more and more sophisticated. Because before it was just hard. You either had to either spin up a landing page, which again, if you're a smaller store, it's not a big deal. But as you get these bigger stores, again, nobody's allowed to touch the Shopify site or it takes two or three weeks because you're on Salesforce commerce or something. Nothing against Salesforce commerce. Tons of big people on there, but it's not configurable by any stretch of the imagination. You're submitting a sprint ticket or something like, can you change this color or this headline like it's 2024. You can't have your growth teams operating in a way that is, your website almost has hours type of thing.

Brett:

Super interesting. Yeah, I'm excited to continue to see use cases and see this work because it sounds like this is great for the first time shopper to really help give them a customized experience. It's great for different ad experiences and influencer. So there is that cohesion. And when I click on this ad and I land on the page, I feel like I'm in the right place. Exactly.

Rabah:

It

Brett:

Makes sense. I feel like, hey, this was designed for me, so that's great. But then it also sounds like then you can, returning customers could be like the pub visitor that's like, Hey, get out of my way. I know where I'm going, so I'll just use the main site. Or you could configure something custom for them too where it's like, Hey, I'm clicking on this Klaviyo link and now I'm going to my little shop. Almost. That's built for me, configured for me. Which would

Rabah:

Cool. Exactly. So that's the big thesis. That was the pitch that got me to come where we want to be that connected tissue between the content and the commerce. And then what gets really exciting is because right now we're really upmarket, but the kind of expansion plans for the TAM is essentially going down market where we can almost play in that ClickFunnels area where you're selling an info product or something where you just don't need can to kill a mosquito. I don't need this huge website. I just want landers that I can send people to. I hook up my Stripe account, blah, blah, blah. And so now we have this nice kind of barbell effect where we're eating the market from both sides.

Brett:

It's really cool, man. Really cool. Excited to watch the journey and the progress unfold. So people are listening to this, they're like, I got to check this out. I got to find out more. Where can they go to learn more? Yeah,

Rabah:

Just firm@commerce.com, F-E-R-M-A-T commerce.com. And then book a demo on there or just ping me on the Twitters if you have any questions. Me, Rashab Andress. I'm the two co-founders, super, super active on social. So you'll see us out in the streets

Brett:

And I'll link to your Twitter profile in the show notes, but for those that are listener on the go, they just want to check it out. What's your handle? Yeah, it's

Rabah:

Just my first and last name. So at Robert Rayhill. R-A-B-A-H-R-A-H-I-L. Yeah, just hit me up at me. Send me a dmm. If you feel like writing the lightning, chances of you getting a response are very, very low. But I try and respond. Let me rephrase that. The chances of you getting a timely response are very low, but I try and I'm actually going through right now a batch reply, so I appreciate all the love. I just, you're

Brett:

A popular guy, man. People are hitting you up on the social,

Rabah:

It's a jungle. My dms and dms and emails not my strong seat. I need some ai. There

Brett:

Got to be something there. So check him out on the socials, reach out on the website for the demo. But Rob, super fun, man. I think you've earned round three whenever that is.

Rabah:

Let's go

Brett:

Whenever that makes sense.

Rabah:

And then I got to do the shameless plug. We just started Equation of excellence. So you have to come on now. This is the arm

Brett:

Twisting a new pod and it's equation of excellence. Yes.

Rabah:

So everything will be kind of math puns because of the company was named after a super famous mathematician. So you know how I like my puns.

Brett:

I'm not sure that super famous and mathematician go together. Super famous in the math world. But anyway, I actually love math too. So equation of excellence. I'm there, man. Just let me know when. But yeah, brother, appreciate it. You killed it and can't wait to see what's next for you.

Rabah:

You're the best, Brett. You are just not only one of the best humans but incredible hosts. And I need to work on my sultry radio voice. I feel. Dude, you good voice. Whatever you're doing over there. I need the secrets, man. You sounding good. N NPR R voice over there, killing

Brett:

It. NPR. Hopefully not putting people to sleep, but yeah, it's good. So hey man, we covered a wide range of topics from AI to Nickelback to eighties pop culture movies and stuff. This was super good. So

Rabah:

Even snuck in a Milli Vanilli reference. Milli

Brett:

Vanil man, that was the first on the show and I'm so excited. So awesome, Rob. Thanks man. Looking forward to next time. You're the

Rabah:

Best, Brett. Thanks so much, brother.

Brett:

Absolutely. And as always, thank you for tuning in. We love to hear your feedback on the show. Love that review on iTunes or wherever you listen. And with that, until next time, thank you for listening.

Episode 267
:
Aaron Nosbisch - Brez / Lucyd

Building a Brand In Public, Twitter Ads and Dealing with Fierce Headwinds

In the DTC space, there are always headwinds.

Supply chain issues. Amazon account shutdowns. Meta or Google ad account issues. 

And new headwinds pop up daily.

That's why I love this conversation with Aaron Nosbisch so much. Aaron and my buddy Nick Shackelford run Lucyd - a social ad agency that focuses on CBD and Cannabis products, and now Brez, a very tasty THC drink that's legal in all 50 states.

At Lucyd, Aaron and the team grew from nothing to one of the largest CBD agencies in the world. And the road was anything but easy. The story is a crazy one and even involved Aaron emailing Mark Zuckerberg directly when he was getting nowhere with Facebook support.

At Brez, they're building a THC brand publicly. The wins and losses are right there for everyone to see. 

This interview is fun, inspiring, and insightful. Here's a look at what we cover:

  • Why "hacking" your way to solving difficult problems isn't the answer. Being really, really good at the fundamentals is the answer.
  • Why building in public is more fun and likely less risky than building in private. 
  • What being "mission-driven" looks like for a CBD/THC brand.
  • What's working on with X (Twitter) advertising, and what should we expect next year?
  • The two ways to innovate. 
  • Plus more!

Show Notes:

Transcript:

Brett:

It is time for another Spicy Curry Hot Take. The part of the show when I get just a little bit spicy. Here's my advice to you and my advice to me. When things get a little bit tough, when things get a little bit dicey, when we're facing some headwinds, stop complaining and go back to the fundamentals. Now in this episode, I'm interviewing Aaron Nasbisch. He is the founder of Lucyd, an agency that works with CBD and cannabis brands. He and my buddy Nick Shackleford launched Brez, which is a THC drink product. It's fabulous. So I still hear merchants complaining about iOS updates and how that's been unfair and they've never been able to recover. Or I hear people complaining about supply chain issues or other things that are unfairly preventing them from growing. But what we uncover in this episode is that when things get tough and they will get tough, this will be business.

We have to go back to the fundamentals. Now, Aaron and his team did some really cool things back in the day, even emailing directly Mark Zuckerberg, which you got to hear the whole story there when he just could not get ad accounts to stay approved and operating. But ultimately, there are no hacks. There are no shortcuts, right? We've got to focus on the fundamentals and just be better, just be better than really anybody else out there doing what we're doing. And so stop complaining doesn't help, right? Focus on the fundamentals and enjoy this interview with Aaron Pic. You'll hear lots of great stories. There'll be some nuggets in there that you can apply to your ad account and growing your company, whether you're selling skin cream or widgets or apparel or something hemp or cannabis related. And so with that spicy Curry hot takeover, enjoy the show.

Well, hello and welcome to another edition of the e-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce. And today we have a fascinating topic. We're going to talk about conscious compounds. This is a subject that I've never talked about on this show. We're going to talk about CBDA little bit, but from the perspective of marketing and advertising and growing your e-commerce business because there are lessons in this story that we're going to look at here that will apply to you whether you sell widgets or supplements or anything online. And so really excited. I first met my guest at the Blue Ribbon Mastermind in San Diego, California. We were both speaking at Ezra Firestone's event. And so my guest is Mr. Aaron Nspi, and Aaron is the founder and CSO former CEO of Lucyd, which is an agency that we know actually quite well that helps CBD companies grow online. But he's also the founder and CEO of Brez, which he partners with my buddy Nick Shackleford on. And so we're going to talk about that story. It's a fascinating, fascinating story. The story Brez, also a very tasty beverage. So we'll get into that. But Aaron, man, welcome to the show. How's it going? And thanks for coming on.

Aaron:

Absolutely, man. It's going great. I'm very glad to be here. I'm excited and flow and feeling good, and I'm grateful to be on the show. Man. It was cool to be together at Blue Ribbon Mastermind recently and it's going to be really cool to chat through everything today. I

Brett:

Was super excited to sample Brez. Of course, I've been hearing from Nick and watching what you guys have been doing but had not tried it yet. So I got to try in San Diego is fantastic. So we're recording in the morning. How many cans of Brez are you in at this point? Are you all coffee in the morning and Brez in the afternoon?

Aaron:

That's a great question.

Brett:

Actually, let's back up. What is Brez first and then answer that question?

Aaron:

Yeah, absolutely. So Brez is a microdosed cannabis and mushrooms and a can. It's a social tonic. So we've essentially created a feelgood tonic that uses no alcohol, no tobacco, nothing harmful. It's only hemp-derived Delta nine T HC cbd and then Lion's, Maine mushrooms. And so we put those all into one beverage and it created a very fun non-alcoholic feelgood drink that people have been really loving. Man. We just launched it on four 20, which is the national cannabis holiday. So that was kind of fun. But what what's really interesting about Brez is Brez is a t HC Seltzer. And most people when they hear T HC Seltzer in that regard, they think, oh, that's illegal. They can't have that on my state or don't now able to buy that or ship that. And the thing is, because we extract the TC from him, and because it's below 0.3% TC by weight, it's actually legal in all 50 states. And so that allows us to be one of the first people to sell weed in a can and ship it to people's doors legally. Kind of cool.

Brett:

Yeah, such a cool story. So then answer the question, we're recording in the morning. How many cans of Brez in are you or is that the afternoon and the morning is coffee?

Aaron:

Yeah, for me it's an afternoon thing for the most part in afternoon to the evening. I think anytime you would drink alcohol, I think Brez is a great alternative. All the fun without the poison, the hangovers or the regrets. So I think it's great for that. We're actually working on a Lion's Mane only version, which by the time we publish the show might be released where we launch it next week. And so that one I would probably have one in the morning. I'm definitely around noon for sure, but these days I'm a cappuccino. Cappuccino in the morning guy to get it going.

Brett:

Cappuccino. And I'm assuming, because you seem like a pretty clean eaten guy, are you like no sugars, no additives, just espresso and milk most

Aaron:

Days. Most days. But today I did a cappuccino that was a little seasonal and even had a donut with it as well. So that's really off my record today.

Brett:

No judgment here. You got to enjoy a donut every now and then

Aaron:

Went in the Midwest.

Brett:

It is the right thing to do. Exactly. Win in the Midwest. Yeah, so true. Yeah, I love cappuccinos, love lattes. Usually I keep 'em pure. I do kind of a coffee with a creamer is my go-to cool. But dude, I'm a big fan of Lion's Mane, so I love functional mushrooms. I've been experimenting with different functional mushrooms. That sounds kind of wild. Got to be careful what group you say that in. Experimenting with mushrooms, but functional kind and lion's mane is excellent I think for brain function and alertness and cognition, and so I'm a big fan of that. So I do want to get in, this is going to be practical. We're going to talk about ad strategies. We're going to talk about what do you do when you market something as challenging as CB, D, because there are lessons for all of us. We're going to get into some of those things, but I want to get more into the story of why, because you're really passionate about this, what you call conscious compounds, very passionate about it. So kind of give us the story, why start Brez and why is this such a passion project rather than just something you want to do to make money? Yeah,

Aaron:

Great question. Okay, so I'm going to back up a little bit and then I'll tell a little bit of the story, but I'll do my best to make it quick. Long story short is I originally got into the eCommerce game when I was 13. So I've been doing it for quite a while now. I'm 29, so 16 years of a traditional experience. I started on MySpace and big Cartel and yeah, I loved it, man. Just like being able to build stuff and then put it on the internet and people buy it. What a concept. And I liked the happiness that it drove it. It's like getting a Christmas present when something arrives that you bought online. It's magical. It was a very special experience. Absolutely. So I was doing that and long story short, I'd really cut my teeth with a brand called Monk, o and Q.

It was the first portable of aromatherapy diffuser. So we essentially took the vaporizer technology, we stripped the nicotine and tobacco out of it. We added only essential oils. And for those who don't know, essential oils have terpenes in them, which comes from all plants. All plants have these terpenes in them or terpenoids. When you smell the terpenes go past Alf factory bulb, which signals to your brain that promotes an effect. And so this is where the concept of aromatherapy comes from, which is a multi-billion dollar industry in itself. So I really cut my teeth with this brand called Monk. We tried to advertise it. Well, first off, I loved what I was doing. We were giving an alternative to smoking. We were giving an alternative to your aromatherapy ritual, something you could take with you. It's a natural non-harmful thing that will help you feel better without causing any harm.

So I really liked that energy and I think that was something I was personally looking for a long time. It's like, how can I have fun? How can I feel better? How can I cope and have a good time without causing myself harm? Most of the things that society pushes on us to feel better, they're actually really harmful for us, and they ultimately just leave you to feeling worse. The most notorious and obvious probably is alcohol. That's the one that everyone knows of. But it's not just alcohol, it's tobacco and it's overeating. It's eating unhealthy things or binge watching TV or it's all of it. So if Monk, it was, I was looking for personally something that would help me feel better without making me feel worse, something that would help me. So we scaled bunk and it did really well. We became top 50 fastest growing companies in America, two years in a row, top 1% of fastest growing advertisers on the meta platform.

And just a little precursor to that. So if you can imagine, this is vaporizer technology. So it's like a portable aromatherapy diffuser. If you've ever seen aromatherapy diffuser, you've got a little basin of water, you put essential oils in it and it breathes out. It diffuses the essential oils. So we essentially made that portable in this pen. So I tried to advertise it and medic kept saying, no, you can't advertise e-cigarettes, you can't advertise vaporizers, all this stuff. So I wrote a letter to Zuckerberg and I said, this is pure innovation. This is not an e-cigarette, this is not a vaporizer. This is not used tobacco or nicotine or anything like it, which is how you define it in your policy and you need to let us advertise or you have forgotten what innovation is. And I sent that over to Zuckerberg and no one had responded, but the next day our ad account was unlocked, and so we became the first non vaporizer.

Brett:

You sent an email to Zuckerberg or you sent a letter letter like email licking a stamp and put it in the mail?

Aaron:

Yeah, I'm not even sure how the post office works. I told you e-commerce since 13, you're too young for that. That's awesome.

Brett:

Yeah. So message, you're like, I'm not going to just go to the top. Lemme talk to your supervisor. I'm sending a message to Zuck. And something about that resonated and

Aaron:

Voila, I didn't think he was going to answer. I didn't really know what was going to happen, but I just googled and I'm like, Facebook support, it's not worth a damn. So I was like, I better just go. I just better find an email and send it to someone. So I sent it and this was now what actually happened that made all that work. I don't know, maybe he got it, maybe he forwarded on. Maybe it was that I called out this innovation thing, I don't know. But our ad account was unlocked and that was incredible because at the time there was no products anywhere similar to a vaporizer product that was on this platform being the first type of product on this, it taught me a lot. It taught me mainly that there's two ways to innovate. The first is the obvious. The way to innovate that most people do is that they either don't know the rules or they throw out the rules and they build something new.

That's traditional innovation. Let's just start from scratch, a pin and a white piece of paper, or don't even use a white piece of paper draw on the walls. That's innovation. Now there's another form of innovation though, which is learning the rules really, really well and then building new rules on top of them. So this is what you see politicians do on a regular basis. So this is where you can build new innovation through laws or bureaucracy or democracy. And you can do this in a lot of different areas. So essentially the innovation idea was here is if I understood the policies really well, which is that you could only not advertise e-cigarettes or vaporizer due to them being nicotine devices, then this is not a nicotine device, so I should be able to advertise it. And so it allowed us to innovate upon that policy. So we took that same level of that same principle that I was using to innovate in that realm. I got into C, B, D and hemp. I actually first started my own CBD brand, tried to advertise it on meta. I don't know if you've ever tried to advertise CBD before Brett, but it's a pain in the ass and you get shut down every which way possible.

Brett:

It is the least compliance friendly type of product. Even CBD products for pets or like you mentioned CBD, it just throws up major roadblocks, lots of headwinds. You're constantly fighting disapprovals and stuff. And so yes, it is a challenge.

Aaron:

It's terrible. It's terrible. You get shut down. And then that's the thing. It's like, it's not just can you get an ad live or can you keep an ad live? It's not like the ad just gets rejected, your ad accounts gets shut down and then your business manager gets shut down and then your profile gets restricted from advertising. And so these are not simple fixes for someone who doesn't do it or doesn't know how to do it. So it becomes very, very challenging. So I gone to cbd, I tried to advertise my own stuff. I did it for a while and I was like, oh my gosh, I figured out this is great. And then we got royally shut down and then I started, I actually got out of the CBD game for a minute there, started consulting brands. And when I started consulting CBD and hemp brands and cannabis brands on how to build scale and exit, which is something I was just personally passionate about, which co-related to aromatherapy, it's interesting about cannabis and aromatherapy as they both use terpene technology, the terpenes and the plants is what is a part of what influences the effect of cannabis.

And so it was an easy jump. So when I started consulting these people, they all wanted to know how to advertise, how can we advertise our CBD brand? How could we, I had more experience than most anyone in this space or even in the space of new age or edgy product advertising in this realm. So I kept working on it and kept working on, kept working on it, and I kept running into walls left and right. I reached out to my friends at Facebook. So Munk became one of the fastest growing advertisers, the platform. So we got invited to headquarters a few times and met some cool people like OMG Commerce and others and that kind of era. And so I kept trying to do it. My friends at Meta sent me this internal policy of what was allowed and what wasn't allowed. And they essentially said, you could educate consumers about cbd.

You could drive to hemp topical products or you could drive to news about cbd. And I thought, holy cow, I'm on top of the world. I got the internal policy from Meta. I'm going to be able to advertise this stuff. It's going to be great. And I tried it and I just kept getting shut down left and right every which way. And it worked for a little bit, but then it would just all get shut down. It got to head during the 2020 election, which was the Trump election, and during election periods they turn up the sensitivity of the platform. So they want to try to prevent misinformation so everything gets shut down in that period. So all my accounts went shut down all at the same time. And I was like, man, I'm out. There's no more CBD advertising. This thing's dead. It's impossible if I can't do it with all this time energy, no one can do it.

It's not going to work. And I decided I'm going to give it one more shot. And I called my buddy Chase Diamond, who's an amazing guy, and he was close friends with Nick Shackleford. And I thought if I was going to pull this off, I would need high level relationships at Meta that I could speak with regularly to find out the nuance necessary in order to keep my ads live and compliant. And so I called Nick, I called Chase, chase connected me to Nick, and I told Nick, I'm like, Hey dude, I dunno if this is going to work or not, but I'm telling you, if have the highest level support, which you have to have million in monthly spend or quarterly spend in order to get that level of support, if you have that high level support, I think I can talk to Meta and get a deal and get on the same page about how to do compliant advertising.

And I think they'd agree with me. And so Nick said, well, why don't we do this? Let's try it and if it works, we'll make a deal. And so he let me try it first by just speaking with his rep, which was very generous of him, very kind to even invest the time, energy or resources. And I just made this a lawyer level case to meta about why my ads were compliant, how I'm following all the rules laid out in the policy, how I'm creating new things and gave examples of other products. And to both my surprise and Nicks, they agreed and said that our ads were compliant. And so then we started advertising compliantly for Metter and then Charlotte's Web and every big major CBD and hemp brand in the world after that very quickly. So then Lucyd quickly grew to the largest cannabis social advertising firm in the world. And it's not that hard to grow to the biggest quickly when you're the only one who can do it.

Brett:

You're the only one that can actually run ads that stacks the deck in your favor. But something really important that I want to kind of underscore here, and we'll get into some ad strategies and stuff in a minute, but I think it is really good for all of us to hear this because I was just on a call yesterday with a brand who is still bemoaning, and this is 2023, moving into 2024 bemoaning iOS 14.5, and they're like, we've never recovered. And they're just this defeat us mindset. And I'm like, man, if we're still locked in that mindset, there are guys out here. There are people out here like Aaron that are advertising illegal products and they're not illegal, but I mean viewed as illegal in the mind of these platforms, but they've found a way to get approval. And from emailing Zuck to talking to people that have the highest level of support to putting forth a lawyer level case, you weren't going to be stopped by this until every nail was in the coffin.

And so really good entrepreneurial lessons there. And I think just a reminder, business is not going to be easy. And so you've got to be willing to do whatever it takes to get there. And so kudos to you for continuing to fight. And we got to support loose a little bit on the Google side. And so we got to see kind of the inside of that and love your business partners. And of course Nick, we go way back. And so that's awesome. So you became the biggest agency helping CBD products, and then where did Brez, how did that Yeah,

Aaron:

Totally. And you're so right. It's challenging across the board. And I'll tell you honestly, if we were an agency doing anything else other than C bd, it would not have made sense. And I think I told you this back when, or we talked about it a little bit back then. It's like if I was an agency advertising for other clients or having other clients, it would've been a really dumb move to try to focus on CBD like this. It just took such a level of energy that it took everything to be able to pull it off and then keep pulling it off and then iterating with it. The thing about CBD and him, it's an evolving policy. It's an evolving legal landscape. And so you got to constantly be on top of them. Fact that if we were in another agency trying to get into space versus building agency around the hemp, it allowed us to pull all of our resources towards one objective, which is just not a responsible mover for anyone else. And so that's why it worked. It was that. And just like any business success, it's not a single variable. It's 15 variables that should never have aligned that happened to align, that made it work and stuff,

Brett:

And the ability to go all in on to solve a really complex problem. And you're right, and that's why as an agency, we were just like, we're not doing CBD. We may consult with you guys or whatever, but we're not doing cbd.

Aaron:

I would never either, if I had another agency, it would generally be a bad idea. I mean, it's a little easier now, but it still takes a lot of resources. So anyway, so we started doing that and started doing that for a while. And so we caught the whole CBD boom. So the CBD boom was kind of like 2020 between 2020 and 2022. So people realize, hey, there's a legal version of cannabis. This helps you with your sleep, it helps you with your stress, it can make you less worried and give you a little bit more pain relief. So all these beautiful, amazing things. And so people loved it. So people were buying it off the wazoo and all these brands were scaling and the industry was scaling. It was really exciting and it was federally legal. So you have none of the scalability challenges that you have with cannabis in traditional cannabis regulated markets.

You can't open, sometimes you can't open bank accounts, you can't do interstate commerce, you can't ship across state lines, you can't do e-commerce, really. And so there's all these challenges that prevent the cannabis industry from existing successfully in the cpgc world, and we have access to those with cbd, with the exception of advertising. So anyway, so did that for a while and then we started hearing about Delta eight. I don't know if you've heard about Delta eight very much, but I have not. So Delta eight, a lot of people started seeing it at smoke shops or your local gas station. It's like, Hey, this is a cannabinoid, which cannabinoids are part of the active ingredients of cannabis. And it was, oh, it comes from hemp. And because it comes from hemp, this Delta eight cannabinoid is legal, and they say it's like THC, but it's a little different.

So it was kind of this weird thing. You kind had this synthetic vibe to it, but you just heard about people selling it and they were starting to scale. And so we started seeing the CBD industry trying to tail off and wind down a little bit. Yet this Delta eight industry was starting to pick up. And so WALL started looking into and essentially as a psychoactive, natural cannabinoid found in hemp and cannabis, but many people haven't really heard of, but it gets you high, you'll feel it. So there was a couple lawsuits around it like, Hey y'all, you guys can't sell this. This is a psychoactive compound. And they were justifying against saying it's legal because it's below 0.3% thc, which is what the law says for C BD and hemp extracts. And so it went to court and it ruled in favor of the Delta eight brands saying that they were in the legal right.

And so that was a huge deal. So then they're like, oh, holy shit. So then people realized at the same time, well Delta nine T hc, which is the same THC, if you had a marijuana or a joint, that's Delta nine T hc, you can extract it from hemp. And the law says actually, if it's below 0.3% T HC by weight that it's legal. And so long story short, it became apparent that you could actually make Delta nine T HC products if they came from hemp and if the weight ratio was correctly correct. And that would be legal in all 50 states. And that's a huge deal because that essentially means that we've wrote into law that THC is legal, and I think that gets confusing for a lot of people because the little nuances there, but that's the same T HC you'd get in an edible or a marijuana or whatever.

And so there became the whole legal market for TC that just popped up overnight. So I had a few people come to me and ask, Hey, do you think you could advertise for this on Meta and Google and some of these others? And I said, I don't know. It's a hemp product and we do a lot for hemp products, so probably I could. And so I kept trying it and it was working and we started doing it and we started scaling a lot of hemp brands on the Delta hc, and it became clear that this is what people were actually looking for when they were buying cbd. The thing is, people when they went to cbd, they were looking for a light cannabis or a diet weeded, a minor buzz, something that's not going to put them on their ass, but they're going to feel good from it. And they weren't really getting that from cbd. They might've been getting stress relief versus sleep.

Brett:

CBD is too mild, right? It's too tam. It's too tam. But CBDs actually has a great impact, though I'd use CBD gummies and it got a little bit of a softens the edge just a little bit like you're feeling a little bit amped up, it's going to be good, but it's not. I mean it's kind of miles apart right from T

Aaron:

Hc if you're looking for a little bit of a buzz if you're looking for a light cannabis, it's not really that. It's not that. And I think that's what the reality is. I think the majority of people that we're going to it we're actually looking for that when the steal nine movement, it's all of a sudden it had the same excitement of C bd, but it had the stickiness of T hc and that's what you need. Because the thing CBD might try once, like okay, it's nice, but I don't have that feedback loop. If something's working really clearly and effectively or a lot of people they don't get that T hc definitely get that. So I had some people come to me asked if we could advertise it, tried to advertise it, and it worked. We were able to do it for a handful of brands.

I'm like, holy cow, this is game changing. We're the first people to advertise TC products on social media and that's a whole nother league above cbd. And so then there's a couple brands. There's a brand called Can, I Dunno if you've heard of that before, CA, not it's a beverage, they make a TC beverage similar but different. And I started drinking their beverage. I'm like, holy cow, this is the medium that cannabis has been looking for forever. The ability to drink your weeded or you don't have to smoke it. It's not offensive to other people. It's culturally acceptable because we're already in a drinking culture. We already have bars and lounges, people already drinking social events and it was low dose, so it was a fast acting because a small molecule and low dose. And so I started drinking them and I was like, this is just the future, fundamentally the future.

And so both those guys came to me and asked if I thought we could advertise and if we could make it work. And so we started advertising and it worked and it was doing really well. And I realized that this is the of drinking, that this is the future of cannabis and that I to get the game that I could take this industry for pretty far and that myself and my team and my partners that we could do some really great work. So then it was just a lot of luck after that, man, I went to a cannabis and psychedelic conference and I just spread the word that I was looking to start this and that I was looking for the right people. I had a guy came up to me and he brought me this nano emulsified lions mane, which was the first of its kind extract of Lion's, Maine mushroom.

A lot of people have tried Lion's, Maine. It's a nice product, but it's not very concentrate. It depends on how concentrated you get it. So we make a concentrated form of it, an extract of it, and then we nano it, which creates a very potent and fast acting version of Lion's Maine. And you feel it, you feel instantly within just minutes of drinking it. And that combined with the T HC creates a very social happy buzz that gives you a very similar experience to drinking a cocktail but without the poison or the negative side effects. And so when sometimes you just meet projects that make you build them, and this was one of those,

Brett:

You almost couldn't not do this, right? Everything lined up. Your passion, your experience, your background, the connections, you almost couldn't not do it.

Aaron:

That's exactly, dude, that was exactly the closest thing to a calling that I've ever felt in my life, honestly. And when I felt that, I was just like, in fact, I tried not to do it. I was like, oh, this is a distraction from Lucyd. We got so many good things going, I just can't do this. It's a bad idea. And I just let go and went for it. And so then I came up with the idea on January 16th, and then we launched the brand on April 20th. So that was three months. It's insane, man. It's the fastest I've ever done anything in my life and it took a lot of energy, but we moved quickly. And then it's one thing to build something and hope it does great, but it's another thing when people love it and people loved it. We had really, really good responses right out of the gate. And then we went scaled from doing batches of 1500 cans around then four 20 to we just finished our first batch of 400,000 cans. Wow. Yeah, man,

Brett:

Kudos to you, man. It's a great product. I got to try it in San Diego. Really enjoyed it. And one thing I kind of want to double click on really quickly, and then we're going to dive into some ad stuff and some strategies there, but it seems like there's this movement, obviously the younger generations are more cannabis than ever before, but there also seems to be maybe less of a desire to consume alcohol too for younger ages. And Huberman who love his podcast, he's not anti alcohol fully or anything like that ethically, but he's just like, yeah, it's kind of poison. You should really limit it. I had told you before he hit record, I've basically stopped consuming alcohol altogether. I was more of a couple times a month social type drinker. Anyway, I enjoy wine and bourbon and stuff, but I noticed it just was wrecking my sleep. And so I've pretty much backed off on it altogether. But when I had Brez, I felt good. And so yeah. Is that a trend? It seems like it is, and it seems like you guys are just at the right time for it.

Aaron:

Yeah, great question. I don't have the exact date off the top of my head, but I know that the decline in alcohol consumption assumption is higher than it's been in a very long time, especially with younger people. But it's across the board actually too. And what's interesting about that is trends typically go up not down, meaning your grandson or your kid tells you what's cool typically. Usually grandpa or grandma doesn't tell you what's cool. So the fact that the younger generation is changing is kind of like, wow, if the younger generation has tolerance, discernment or whatever, this temperance to not drink, then I think parents are starting to check themselves a little bit. And I think this is a thing about alcohol, man. Everyone knows it's bad for us. There's no one that's like, yeah, that's good stuff. I'm going to drink some more of that.

So I feel happier and stronger tomorrow. It's a net negative. I'm not saying it's not fun. I used to drink a lot. I don't drink anymore. And it was as much fun as I had with it though. And I had some great memories on alcohol. The juice was never worth the squeeze when you saw it holistically. And that's the thing, I think what's actually happening is it's not just that kids are just raking less, humans are becoming more conscious, information is spreading easier. We're becoming more intelligent as a society. And this has already happened before we were all smoking tobacco, doctors were smoking cigarettes in the emergency room by delivering a baby. It's crazy. And then we all realized, hey, that's probably a bad idea and causing cancer and killing us. We should probably stop doing that. And now we all look at tobacco, it's the worst thing since whatever is arsenic.

And I think that that's coming for alcohol as well. I know alcohol's been around for thousands of years and people have been drinking forever, but we used to cut our legs off when we got shot before as well. We used to put leches on our skin to suck out sicknesses. Society just evolves. And so the reality is that alcohol is poisonous no matter which way you look at it. And as fun as it can be in the moment, it always takes more than it gets. And there's also funny things about alcohol, man, now that you drink less or you don't drink, if you go up to someone and tell them you don't drink, the first thing that they do is justify their drinking behavior, which is like a funny thing. Yeah, yeah. You don't do that with orange juice. If I'm like, oh, I don't have any orange juice. No one's like,

Brett:

No, it helps me.

Aaron:

It

Brett:

Improves nicely. Really Does it? Yeah. Yeah. And just super interesting. I love following trends and where things are headed. And so I would agree with you to a large degree that I do think alcohol consumption is likely to continue going down. Will it disappear? I don't think so, probably. And there's something that would make the case that wine is good for you and things like that. And I'm not here to debate either side of that. I just know for me, consuming very much at all, wreck the way I felt, and so pretty much stopped. Let's pivot a little bit and talk ads. So you guys have had to be very creative in keeping ad accounts up and running. And this is something that we see a lot. We help companies on Amazon, we help companies with Google and YouTube and on Amazon we got skin cream getting disapproved and we get warnings that, hey, this is a toxic compound or this is an illegal substance, and we're like, it's skin cream. And so we got to fight these battles with that on occasion. And so what are some of the things you've learned in the journey of growing CB, D and now THC products that you think apply to any business?

Aaron:

Yeah, good question. I think that truth is typically simpler than most are willing to accept. And so that's where I'd start with it is a lot of the advice I give will be kind of like, oh, that's obvious, but it's because people, I forget who said the quote. Maybe Hermo is like experts always do the fundamentals or something like that. Always. So I'd say first and foremost, you need to have a healthy ad account. That's just the key. That's the magic. If you know how to, most people when they try to do things that they think that they're not allowed to do or that they're concerned they're not allowed to do, they try to hide or pretend or they try to break the rules in a way that the machine won't tell. And you got to remember, this is a trillion dollar company who is really inclined to make sure the right stuff is on the site and the wrong stuff is not on the site.

So if you're trying to break the rules, they've probably thought through it to a degree or they have some type of system put in place. And so I say my first piece of feedback on how to advertise anything is make sure your ad account is healthy. Reduce the number of rejected ads in your account, make sure you set up your verification, install the copy, do the things that meta recommends, put some ad spend behind a few very safe ads and warm the account up. Get a few transactions on the credit card just so it knows that it's a healthy account. These are basic things, but a lot of people when they say, Hey, I want to advertise Ccpd, or I want to advertise a sexual wellness product, or I want to advertise maybe a skin product that uses some whatever, it's, they try to just brute force it.

And that's where most people mess up is if you go in there hot and heavy trying to do things that either you're not allowed to do or you think you're not allowed, so you're acting kind of fishy, then the system, it's a pattern recognition machine. It's going to find those patterns that other people have done before you, it's going to see them and it's going to shut you down. So first and foremost, got to keep your ad account healthy. The best thing you can do is reduce the number of rejected ads. Start with safe ads that are just clearly and obviously compliant. Warm up the accountant a bit, do the thing that recommends that a quality advertiser would do, and that gives you a good baseline to even start exploring what's possible. Yeah,

Brett:

I love that so much. And I think it's one of those things where it's like, yeah, hacking is not really the way, it's being better at the fundamentals. I was using this analogy the other day, a good football team, I love the NFL, I love the Kansas City Chiefs. A team never gets to the point where, well, we're so good, we don't need the fundamentals anymore. And if you were to look at, you compare the chiefs to the Panthers or something the best versus the worst or whatever, and you're like, oh, the Panthers are garbage and this, but if you looked at it though, they both have billion dollar facilities. If you were to talk to the coaches on the Panthers, you'd be like, these are the smartest football people I've ever talked to. World-class athletes, all these things are amazing, but one executes the fundamentals and one doesn't. Of course, one has Patrick Mahome and the other doesn't a thing as well. But yeah, you got to have the fundamentals. And I think that's where people have to focus as we move into 2024, you've got to be really, really good, really buttoned up at everything because that scales hacking, getting around things that does not scale. It does not scale whether you're stealing skincare or something with legal THC, it doesn't scale if the fundamentals aren't there.

Aaron:

We call it finesse at Lucyd. The thing that we have that other people don't have, we have finesse. We just know how to do it well, we've been doing it well for a long time. And that's, see me and Nick and other people, we don't hold any secrets in our companies. We're very loud and proud about what we do and how we do it. And this goes on to Brez where we build the company entirely in the open and share it with the world while we're doing it. But it's finesse. Gary V talks about this a lot. You can tell someone how to do something a thousand times, but it doesn't mean they're going to do it. And so I think that it's key. There's other tactics in the CBD and hemp world which apply other places, which is like we drive to hemp meta.

You can advertise hemp products. So we drive to ads and landing pages that say hemp or don't mention hemp. We've kind of gone from the very compliant agency to now we're a little bit more of activist and what we think, we kind of think that some of these policies are a little archaic, so we try to evolve them a little internally as well. You've got players like XX allows you to do any type of advertising for any cannabis product, for example, so you can do hemp advertising. So that's more of a tactic of how we do it, but those things evolve. We also do CBD education. So if you educate the consumer about cbd, so what does CBD feel like? Driving to an article that says, what does CBD feel like? That clicks over to your homepage, that's considered an educational article, and that is a compliant way to literally use the word CBD in your ads.

So those are more of the tactics, but those are things you can find anywhere. You can watch my videos online, you can just Google around and find some tactics, or you can just go find ads from people like us who are running them and replicate those tactics. But the real things that people need to be focused on is how to be a healthy advertiser in the first place. And this applies whether you're doing cbd, tc or if you're selling skincare or sunglasses. If you're not taking the time to treat your account with the respect it deserves, which is keeping it clean, keeping it healthy, not just rotating and rolling through rejected ads, not ignoring policy or feedback source, but addressing those things, then you can keep your account in a very healthy and happy place where meta is going to support your efforts rather than push

Brett:

Against them. Just really quickly, any insights on advertising on X or are you guys advertising on Twitter slash x or you not really gone there yet? Yeah, we

Aaron:

Do. It's great. So this is my insights with this. It's traditionally built for big awareness-based advertisers, and now it's going through a transition into more direct response advertising. The ads used to be very Addy and now they're not so Addy, they're becoming much more native to the feed. I'll tell you my big secret in X advertising is I think they're going to become a leader in direct response sooner later. They allow for most types of cannabis advertising, which is very unique and special of them. And I'd say, so this is the secret. I don't think advertising on X is a direct response funnel like you see with Meta and like you see with Instagram, I think advertising on X is contextual conversational advertising, which means that you listen to the conversation that's occurring and then you advertise into the conversation that's occurring with relevant information and they're more time sensitive, so they won't last a long time, but they'll be more time sensitive, relevant.

So for example, open AI's, CEO gets fired and you run an AI startup launch an ad that's topical to the moment that's happening and then spend behind that, and now you're just amplifying a boost, a post in a very relevant conversation. I think that type of advertising is future of X advertising, and I actually think it's going to shift the entire model of consumer advertising in general because it's more real. It's less of me like, Hey, buy my shed. And it's more like, Hey, what do you care about? Let's have a conversation about it and here's some added value, and if you want to hear more from me, click over

Brett:

Kind of thing. Yeah, contextual, conversational advertising. And that's why people are on Twitter, right? They're on Twitter to have a take or to read other people's take on a hot topic. And so I've always been a huge fan of the advice to join the conversation taking place in someone's head. I love that marketing advice. What are the thoughts in someone's had? Speak to those thoughts, join that conversation. But on Twitter, on X, you're joining that conversation that's happening there. And so yeah, that maybe more shortlived is maybe in the moment, but yeah, what's my riff on Sam Altman being fired and rehired and all that stuff, and what's this take on CB, D? And so really smart, and so maybe less of a true DR funnel, but you're contextually relevant. And then that does lead to engagements.

Aaron:

And the people who figure that out, Brett, I think are going to make so much fucking money so quickly, whatever their project is, people who figure out how to do that first. There's moments in advertising this because been in the game a long time. I've been in the game a long time. There's moments of switch, and in that switch moment, there's a lot of opportunities. TikTok shops could be one of those. Instagram, there's been different ones throughout the past, but I think one that's happening is Twitter has to become a viable advertising channel, and it's not going to work the same way that the past ones have. So the question is how does it work? And when you have people like Elon Musk owns it, you have innovation on your side and they want people to innovate and figure it out and support them in that journey. So we have some really good friends at X that help us. We work closely with Alexa over there who runs sushi, wrote the cannabis policy for their advertising platform. And so these guys are very, very smart and fun, innovative people. And so we we're advertising on X currently for many of our clients, we're planning do more and we're planning to bring it in, roll it out for Brez as well in the very near future and kind of experiment with that. But it's easier when you have a bigger budgets that makes it easier to

Brett:

Experiment because it was kind of still designed for large advertisers in the beginning. So you got to kind of keep that in mind. Well, we're nearing the end of our time, but I do want to talk briefly about this decision to build in public versus build in private. And you kind of referenced Gary V and I know both you and Shaq are very, and Nick Shackleford are very well-spoken and you've got followings online, so it kind of made sense from that perspective, but why build in public versus building in private?

Aaron:

I think it's more fun as the short answer. People are so fear mode driven most of the time, and it's a shitty

Brett:

Protecting, darting.

Aaron:

It doesn't actually lead to anything more or generative. It leads to less. And I'd say taking your bag of gold or your good fortune and go hiding in the corner leads to decay and rot. It doesn't lead to growth. Miserable life. Yeah, miserable life. So I think the beautiful part of both my journey up to Brez and Nick's journey and VINs journey, we had a little bit of experience about doing things privately and a little bit publicly and solve the pros and cons. Anyway, long story short, our thought process is if we build in the public, we'll be able to community source feedback, we'll be able to community source support, we'll be able to give Brez just momentum under its wings and that that would ultimately help us achieve more quickly and more effectively and solve mistakes and problems quickly. Iteration is the name of the game, no matter what business you're in.

And so by building in the public, it's nothing to hide people. If we're doing something wrong people or we're doing something that could be better, people let us know pretty quickly and then we iterate and people come out of the woodwork to support people. They want to support the American Dream. The idea of an idea of a business becoming a successful business is a fun story to be part of, so that's why we did it. So the cons are like, why shouldn't you build them public? Well, people are going to rip you off. People are going to copy what you're doing and take your sauce and go run their own stuff. That's all. It can happen anyway. It can happen anyway in the first place, but in the second on, second off, it's one thing if it happens and no one knows who you are.

And then those people get popular. It's another thing if you're the namesake in this space and then someone else comes up and it's like, oh, like Brez. Oh, you're doing something like Brez. Isn't that what Brez is doing? And so you kind of have some momentum on your side already and some support on your side already. So for us, I think there's pros and cons no matter what you do in life, but for us, we thought it would just be more fun, more productive. We'd be able to help more people in a furthers mission. At Brez, we're on potential through cid, by spreading these conscious compounds, building in the open, it teaches people, it teaches people how to do it and how hard it's, and the challenges and the bullshit that we run into and the great things that we run into and how we resolve them. It furthers the idea of reducing suffering and maximizing potential by giving people education and training them with skills and resources on how to build and start their own businesses and suggesting to them that building in the public would probably be a good idea for them as well. Awesome.

Brett:

Yeah, I think even if you just look at it from the, yeah, we're getting feedback sooner. We're building this army of people that support us and they're rooting for us and they're buying our stuff, and it makes a lot of sense. I'm rooting for you guys. I love watching things unfold. Love the product you guys are doing good work, man. Doing good work at the agency, doing good work at Brez. And so people are watching this and they're like, all right, I got to try this Brez out. It is legal in my state. How can they check it out or just follow the journey?

Aaron:

Absolutely. Drink Brez.com. So drink BRE z.com is where you can check it out. It's also at Drink Brez on any social, and my social is in here. It's at Aaron j Noch, N os, BSC h. Feel free to tag along and follow us. And there's, you can use the code euphoria and I'll give you $5 off for store if you want to give it a shot. Sweet.

Brett:

Give it a go. And again, that's Brez. BREZ. And then also Lucyd the agency. So Lucyd the agency. And that's L-U-C-Y-D, correct? That's

Aaron:

Right. We are Lucyd.com.

Brett:

Yep. And you guys help exclusively with CCB D and related products?

Aaron:

Yeah, at this point, cannabis, the whole thing's collapsing between hemp and cannabis to just one thing. So cannabis, adaptogens, and even some psychedelic brands. That's kind of our specialty there. Nice.

Brett:

Keep up with the good work, man. I'm going to keep following you. Keep rooting for you. So Aaron nasb, ladies and gentlemen, Aaron, thanks for the time, man. This was super fun.

Aaron:

Absolutely, man. Thanks for having me. This is a blast. See you

Brett:

Later. Absolutely. And as always, thank you for tuning in. We'd love to hear your feedback. If you found this podcast helpful or inspiring or informational, share it with somebody else. Let's get the word out. Go support Brez as well. And with that, until next time, thank you. Listen.

Episode 266
:
Cody Wittick - Kynship

Influencer Marketing and How to Create a Creative Flywheel in 2024

Cody Wittick is the man. College hoops player. Agency owner. Podcast host. And, now, new dad!


Most important for this discussion: Cody knows how to scale DTC brands with influencer marketing.


In this episode, we discuss the right and wrong ways to build an influencer marketing program. We talk about winning creatives and who's smarter: media buyers or the machine. And highlight the parallels between running a business and being a father.


What was my favorite part of the conversation, you ask...?


How to use influencers to build a creative flywheel.


I'm convinced you need enough quantity and quality of creative on a weekly basis to scale on all of your most important platforms.


And in the episode, we talk about how. Enjoy!

Show Notes:

Transcript:

Hey, Brett Curry here. It's time for another spicy curry hot. Take the part of the show when I get just a little bit spicy. So I believe you don't just need a creative approach. You need to build a creative flywheel. You need enough quantity and enough quality of creatives for all of your platforms. TikTok, Facebook, Instagram, YouTube, YouTube shorts. And then this flywheel needs to get better over time so you can test, iterate, improve, and keep the flywheel going. It's not just about one or two hits, it's about finding repeated hits. Because I believe that success as a marketer, as a D two C brand really comes down to three things. Strategy. How are we going to utilize platforms, whether that's Amazon or Meadow or YouTube or Google, to build our brand and attract new customers and grow profitably. And that strategy is going to have to be kind of refined as we go and see results. Then what is our creative? So what are we saying and how are we saying it? And really everything depends on how good your creative is. And it's about execution. How are we calling the right plays and how are we using platforms to their fullest? And what are the mechanics of bids and budgets and campaigns and all these things that go into success? All the little details that make you successful, but you got to have good creatives, and I believe you need a creative flywheel to really be able to scale and scale profitably

Well. Hello and welcome to another edition of the e-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce. And today we are talking about creative flywheels. We're talking about influencer marketing, and we're just getting you locked and loaded to crush it this new year with your marketing. And my guest is a returning guest. He's a friend of mine. He is a guy that I admire and just love hanging out with, but I've got Cody Whittick here. He's the co-founder and CO CEO of kinship. Cody, what's up my man? How's it going? And welcome back to the show. Thank you. Thank you. You made that CEO of OMG very clean. Those were back-to-back o's, and I was pretty proud listening. Nice. Well, you must, you're a podcaster now. So you see these things. You hear these things. Did not even notice that I did that, but I will accept that compliment gladly. And that you have to enunciate is the key. There are times when I find myself slipping into more podcast or voice at home, and my daughter's usually like, what are you doing right now? I'm like, I'm just excited. I don't know. I'm just talking in an excited fashion. So some new stuff going on in the world of Cody recently since we last talked on the podcast, but one, you are a podcaster and two, you're a new dad. So which of those would you like to tell us about first?

Well, the podcast game has been like a year. It's been a year. Okay. The new dad game. It's been four months. So any tips? Four months. I got 'em. I got four months of knowledge for everybody out there. Four months, nothing left to learn. You've mastered the role of being a dad and now you're like, next challenge. I've got this. Yeah, I took all that stupid advice that told me to get sleep before the child comes, as if you could over index and build up a pool of sleep to stockpile. But yeah, no, I'm ready. If only were that easy. Just sleep for months before baby comes. Before baby comes. Yeah. Yeah. That does not work. Which by the way, you look well rested, you look good. Are you getting sleep at night or is this just because you're still young and fit and you can fake it?

Actually, baby girl has been sleeping pretty decent at night. Terrible napper at this point. But yeah, I'm getting rest and I'll take the daytime struggle versus the nighttime struggle. Oh man. Yeah, so wild story here. So we have, my wife and I have eight kids that most listeners know that we are officially done. So no more kids. All of our kids, all eight of them slept through the night. They were terrors by day. We had insanity and chaos, and it still is insanity and chaos during the day. But we could sleep at night and if you could sleep at night, I believe you can handle just about anything. So glad to hear. We'll take the no naps if they're sleeping at night for sure. That's good. Are we drawing any parallels between fatherhood and entrepreneurship? Are we too early? That probably is actually the best advice that I got.

Well, I wouldn't call it advice. It was basically, Hey, it's just starting a business. You never really know what you're doing until you just jump in. And I thought that was a perfect analogy because actually it's probably even harder. It definitely is even harder. It is. You're not taking any previous chops of marketing or, oh, I did email at X, Y, and Z brand and into this you just, it's just sink or swim, man, keep this baby alive, sink or swim. And yeah, there's really no advice to fully prepare you for being a parent or being an entrepreneur. You just got to do it. You just got to jump in the pool and swim, try to keep your head above water. And what's also interesting about kids is every kid is different. So even if you were to master how to parent this one kid, the next kid's going to be different and then you got to start over again to a certain degree.

And so yeah, lots of parallels between being a parent and being an entrepreneur and so Awesome. Any cool takeaways from the pods? You're about a year into the podcast. Any cool lessons or takeaways or you feel like you've grown through that process? Yeah, I guess it's actually been a year and a half. I think it was June of 22 we started. Yeah, man, it's just repetition. It's just like anything else you just get, it's more fun to riff. You don't have to prep every single question. You can ask spontaneous questions based on what the listener said. I think I'm getting better at explaining my 2 cents and rolling that into a question, which you do very well. And a lot of great podcasts have been doing this a while. They add context and then roll that into a question. So yeah, I'm enjoying it. I like it.

I generally love asking people questions, so it's very natural, especially once we started doing guests over the past year and there's just so many interesting founders doing cool stuff that have awesome brands for sure. And I think the key to being a great podcaster is really the key to being just a great marketer in general. And that's being curious, being curious, asking good questions, hearing something or seeing something and saying, wait a minute, let's dig into that just a little bit more. And really, I think that's the key to coming up with great marketing ideas or business ideas is being curious and being thoughtful. I love that. And so really glad you're doing that. I thoroughly enjoy it as well. And you talked about reps. I think it's really important that we talk about that for just a minute. Related to anything business, I'm helping our sales team refine our pitch and refine some things internally.

And just been reminded as I've been going through that and going through some resources and listening to Alex Ramzi and a few other people, it takes way more than just a few reps. You may get, Hey, I'm six or 10 podcast episodes in, why am I not Tim Ferriss by now? Why am I not just this? It takes a lot of reps, it takes probably hundreds of reps, it takes years of reps, and you're still getting better even as you're going through those hundreds of reps. And so I think that's something important to keep in mind for us as we develop in our leadership and in our marketing prowess or product design prowess or whatever, or our podcasting abilities. But also it's important to keep in mind with our team as we're coaching and training our team, like, Hey, Tim, you've been on six sales calls.

I would not expect you to be crushing it yet, right? You got to get dozens and then even hundreds of reps. So kudos to you guys for putting in the work. Appreciate it, man. Yeah, that's a great call out. It's the old outage, right? 10,000 hours. Yes. And it just applies to so many things. Almost everything really. Yeah. So awesome, man. Well, let's dive in. I want to talk about influencer marketing. I'll talk about creative flywheels and I think we'll probably spend most of our time talking about creative flywheels, and I have my thoughts there, but your perspective is unique and I really value it. Let's talk about this concept of seeding. And I've heard you guys, and I've heard a few other pros in the social media ad space talk about seeding. What is that? How is that going to make our social ads better?

Yeah, seeding comes from the old farmer like terminology where you're seeding out a bunch of seed and you throw it all across the ground. Some sprouts up as crop and some does not. But the more that you seed, the more crop that you have. So same parallel. Usually when people talk about seeding, they talk about when it comes to influencers, what's an influencer? People with social media following who have influence, for lack of a better word, over a certain audience in a certain category or persona type. And so we're doing that at scale. When you're talking about product seating, you're getting your product, that jacket that Brett's wearing or your hat brand or your consumable brand, all that stuff. You're seeding that out to influencers. And the way that we define it, the caveat, we define it as no strings attached. So there's no expectations for that person to do anything in return.

And that's what I would say is the true definition of seating, not how would delineate it from gifting, which is usually it's a product for post, there's some sort of transactional nature to it. We're very much over-indexing into the relationship. And so that means that no, there is no guarantee of a post in return or some sort of metric that you're analyzing on the backend. But of course, we've created a business out of this doing this. We service brands doing this. So we have certain expectations, and I'm sure we can get into that. But the principle is really build the relationship. Let the person or influencer rally around the brand and product, which is what you want ultimately anyways. And the only way to do that authentically is to just simply give them the product and let the cream rise to the top, if you will.

So let the people that love it reveal themselves. And usually they do that by actually end up posting. So yeah, it is really good. And I love the analogy, and we can look at the principle of sowing and the harvest and you reap what you sow and stuff. There's the biblical component and there's all kinds of agriculture imagery, and it's been used business for a long time. You got to plant, you got to water, you got to cultivate. And there's something really powerful about as we plant these seeds, that's not the thing we want, but you want to just put the seed out there enough times because you really don't know what's going to grow. Where's it going to find a good place to put in roots and where is it not? And really just putting kindness out there, putting a great product out there, connected with the right people, and the cream will rise at the top.

Good things will happen. There will be a harvest, there'll be a return on this if you do it correctly. So yeah. Well, anything you want to say on that? And then I want to get into how do you determine who you're giving stuff to? Yeah, founders are just too impatient, right? It's like we would a lot be better. I planted the seed yesterday, where is the crop? Where, yeah, exactly. Yeah. So yeah, I remember talking to one of our sales guys and he is like, I don't know what to do. This prospect's not getting back to me. And I'm like, cool, when did you email them? And they were Monday. And I'm like, it's Wednesday. We're just going to need to give a little bit of time. They're busy. We are going to follow up, we're going to do the things. But yeah, this is a big deal too.

It's not going to happen in one day. So we we're okay. Yeah, that's awesome. So then if we're going to go through this process of seeding and we're not really asking for anything in return, which I think is a great way to do this, how are we choosing who are we sending our products to? Where are we casting these seeds? That's important. Yeah, it's not spray and prey. Most people confuse it with. So there is a very targeted and documented, and you should have a very methodical approach to how you identify people. One just quantitatively and qualitatively matching it to your brand and product. But also you need to be able to identify people based on what you're hoping to get out of it, which is, for us, we're very much a performance marketing mindset. We're a performance marketing agency. We're thinking the end game of Facebook in mind.

What is going to help convert? So we want content, we want organic posts to happen. So we prioritize video content creation ability. We prioritize how good is Brett on camera and does he talk clean? Is he nervous? All these different things. Has he separated his O'S and back to back words and things like that. Great call out. Yeah. So those things are what we're taking into consideration. It's not, oh, seeding, I'm just going to spray and pray and spread it out to anybody and everybody. I mean, you're going to get a very fractional return based on if you're very targeted. And obviously it's kind of like no, duh, if you're a coffee brand, reach out to people that love coffee. There's basic things that you should just be doing. But you'd be surprised how many people, like this is the step that most people screw up, which is the train.

It goes into the wrong direction. It doesn't matter how good the service is, you're going to end up at the wrong destination. So same thing with this or how fast you go. If you're going in the wrong direction, you're going in the wrong direction. Yeah, exactly. Yeah. So you got to nail identification. Yeah, it makes a ton of sense. And so both quantitatively and qualitatively, is this the type of influencer that one would have the right audience, the two would really likely my product and want to talk about it? And then have they proven that they can do this? What we want is video content if they've proven that they're great on video, and do we think that our audience would resonate with their video content? Because if they haven't done it yet, you shouldn't expect them to do it just because you give them your product.

And so yeah. Very good. Any tips or tricks or things you would add to that? How do we make that manageable? Aside from hiring kinship, which I think is a great idea, and I do encourage that, but aside from that, how do we make this process manageable? Yeah, I mean, if you Google influencer marketing software tools, platforms, it's actually probably going to be overwhelming. And that's just because there's so many resources. I mean, you can use free tools at your disposal. One of 'em being Instagram, one of them being TikTok creator marketplace, those are free and they're on platform. Meta has one called Meta for Creators or something like Instagram for creators. So use those tools. I mean, obviously you need to hire against how important this is to your business and just back out from that. But there's the low level overseas contractors to a full-time employee.

And how most start is they give it to their organic social person, and it's a fractional thing. Hey dmm, some influencers, but you also have to be realistic about the return on that as well. It's going to be a fractional return because it's, it's going to be a fractional thing. You're going to get fractional results. And so yeah, just how important is it? And yeah, my belief is, and obviously I run an agency like you, although we do different things, it's hard to hire the same talent you're going to get in an agency unless you've got a really big budget in a big department and you have multiple people you can hire. So yeah, it makes a lot of sense. Let's talk a little bit, I want to get into this creative flywheel concept here pretty quickly, but talk to me about macro versus micro influencers.

I think the name alone probably allows most people to know what we're talking about here, but define that for us, and then why is it important to make that distinction? Well, the general recommendation and what I would advise is that you start micro, however you define micro, we define it sub 150 K. That's probably broader than what most people 150 K followers. Yeah, exactly. And then I would start there because I think you can get a 10 to one return over starting with a million followers and the investment leap that you're making on that one person, you're putting all your eggs in that one basket versus spreading your investments out. It's kind of like one stock versus diversified portfolio. That's how I would put it. And think about it, you're going to have a diversified portfolio, not in potentially, it could be in different categories if it's applicable to your product and brand, but you'd want to spread it out to a number of different people with 10, 25, 50,000 followers, a hundred thousand followers.

And that's where you're identifying people, a pool of people to pick from, but more engagement. They've built their following on the content, not because they're on the Bachelor or they're a pro athlete or all these different things, and they kind of just got hundreds of thousands of followers overnight. So that's also why you're looking at it better engagement rate overall, if you're looking at organic metrics, I think very few brands earn the right to entertain macro talent, and there's a stepping stool process actually getting to that point, whether it be an annual revenue that you're actually getting to or just you as a brand have established that credibility and you're just kind of looking for that next thing, think Hex glad and Gordon Ramsey, all these different things. So yeah, makes a ton of sense and this part way better than I do. But the shift with most social platforms, it seems is kind of away from or less dependent on this follower model and more dependent on content.

And so great content can just go off. I know that's especially true on TikTok, but it seems like it's true on reels and YouTube shorts and things like that. The right content can take off whether someone's got a thousand followers, 10,000 or 150 or a million. So yeah, one want to know your thoughts on that, but I also love that you said, Hey, with some of these micro influencers, they built that off their content, not off of sports or something else that happened in their life. This was about content. And what we're talking about here is influence. So you can take the million followers and their influence over their audiences, a fraction of a fraction in terms of the people that actually see the content, let alone engage with it, versus the 10,000 followers that might have a smaller audience to pick from. But they're highly, highly engaged.

Food recipes, mommy blogger, how they're raising their kids. That's been proven at this point. So I would go from a micro to macro approach. If you're trying to go up the influencer pyramid, which is the terminology that we use, that there's stepping stones actually getting to that capstone. So that's how I think about it. Nice. And it really allows you to kind of perfect the game and understand what do I do with this content and how do I make the most of this content? And start with micro influencers where you're likely have a lot of quantity of content and influencers. And then as you work your way up, now you're maybe ready for those macro influencers. Any other insights that you would want to share on that influencer pyramid and how you help guide companies through that? Well, I mean the pyramid real quickly goes from seeding to organic posts to content, which all handles kind of in the seeding process.

And then there's affiliate where there's no upfront payment even at this step, but you're rewarding. Folks that love you are ambassador of your brand, and then you're going into more an ambassador level where they're may be more on longer term contracts. And then you have that capstone, which is what we call flag bearer, but it's a macro level person, the Gordon Ramsey of hela and I brought up again, kind of just the face of the brand, they're sticking the flag in the ground and saying, Hey, I represent this company. I'm a part owner, or I have equity or what have you. That's a name recognition type of deal. Got it. It's the Rob Gronkowski and built apparel. It's the peak, it's LeBron James and Nike, and then that sort of thing. Right. That's awesome. Well, I think that this is a good transition. Let's talk about building a creative flywheel.

And I want to kind of set this up a little bit and then I know we will riff on this for a while, but I'm a believer that really success as an agency, success as a brand comes down to a few things. One is strategy, and then we talk about this a lot thinking about strategy of the platforms that we work with at OMG, it's Amazon. So how are we using Amazon to build our client's brand, to generate sales, to position it long-term? How are we using Google and YouTube to build full funnel growth and new customer acquisition at affordable cost? I know you guys are using influencer and the socials to do the same thing. Then how are we using email to retain that revenue and grow that existing those customers? And then it's really creative. So the strategy and strategy is going to change as we go based on results.

You got creative and really creative drives everything. And the difference between mediocre creatives and creatives that just crush is 10 to one, a hundred to one sometimes, or getting the right creative is essential. And so I want to dig into that. And then it comes down to execution. It's like running the plays well, running the campaigns well and managing our budgets well and getting them proper media mix. And so that execution piece is really key. But let's dive into creative confident. If creative's not there, you're just sunk. You're wasting your time. Well, first of all, anything you would add to that, the strategy, creative and execution piece, any interesting? No, I think that's a great framework. I love that. Awesome. So then we're looking at creative, and I know every platform is different where tiktoks super creative, hungry, that's my understanding. And Facebook and Instagram are pretty creative hungry.

YouTube is not as creative hungry, but it is with YouTube shorts. And so we've got to create a lot of creative and it's got to be good. So talk about how you guys use influencer marketing to build a creative flywheel. Yeah, I mean it comes down from seating. So generally what our agency is getting a minimum of is 150 assets that come from organic posts, from influencers, no strings attached. We turn that organic posts into ad creative and we get usage rights to it, and then we launch it within meta. So I'm going to give you a very meta focused answer because that's how we think and that's where we're servicing our clients. I still think that's, even though I'm a Google guy and I love YouTube and I love Amazon, most D two C brands, Facebook is the largest share of the budget and that's it.

And so meta will tell you, and this comes straight from them, that you need two creative refreshes a month minimum. Got it. So we're doing once a week, so that's every two weeks. They're recommending minimum to get greater efficiency within your ads. We're doing it every week, so we're beating their minimum recommendation, but that means you need a lot of content. What you just said, that is the bottleneck that every brand, for the most part, 99% of the people that I get on the phone with that is the bottleneck that they are experiencing. It's very hard to keep up. It was what Gary V was preaching 10 years ago. It was just like content, content, content. Absolutely. So you need volume. And then what also meta recommends is create a variety. So you need a variety of different content. So what typically people do is they see, okay, product on white background, let's put on black background, different ad, but it's our best performer, so we should just rinse and repeat Facebook.

And the auction sees that as the same ad. So if you do that over and over again, what I just shared as an example, you end up in creative fatigue a lot quicker. What seeding does is it lends itself to volume and variety. And also just because you need volume and variety doesn't mean that you can't spend lots of money on each asset. So you also need to keep your costs down. So you need volume, but you need to keep your costs down. Seeding obviously for the right cogs of your product and unit economics, it can be very cost effective. And once your cost of goods start going above a hundred, it can be very astronomical, especially for the scale of which we work, right? A hundred creators getting product every month times your cogs is $10,000. Both of those things are very important and that's what sets us up well to have a creative flywheel for brands, and maybe people have heard this creative is the new targeting, 2018, 17, all the button clickers on the backend that Facebook media buyer gurus back in the day, those days are long gone in terms of all the manipulation that you could because Facebook's a business too.

And they saw all these button clickers that were making stupid decisions because the machine was smarter than the human. And so they've made it very simple with something called advanced shopping campaigns, a SC plus, those sorts of things that make it very simple to launch a campaign. And the main thing that leverages that new campaign structure is creative. So that's what I talk about with creative is the new targeting. You're removing all those buttons, things that you can move on the backend, but creative is that variety and volume that you can really manipulate to get better performance and efficiency. And I totally agree. I think there are still some cases, and I think with YouTube, especially in the beginning, you really need to guide the algorithm and there are some targeting things you can change, but I still fully agree that creative is the new targeting.

Without the right creative, none of the rest of it matters. And really then we begin looking as media buyers, we're looking at how do we feed the algorithm good data, how do we feed a good content, read the performance, make more great content, and then continue expanding and building on what we've got. But yeah, it becomes really hard, especially for these platforms that are creative hungry on the YouTube side, it can be easier. We can run the same two to three ads for months and months, but not necessarily with shorts. So it can become very expensive. How do we build all of this creative and it can't just be the same thing, but let's just tweak this one component or tweak the color or whatever. That's not enough. It's got to be seen in Facebook's algorithms, eyes as unique. So yeah, then what does that look like?

So you are refreshing, creative about every two weeks, every week. Then how long are you letting winners ride? How long does that, and I'm sure it's different for every account. It is very different. Independent winners never leave. So let's just take an example. We launch a hundred assets. You could typically see a third of those tops get actual spend, but if you think about it, it's just a numbers game. If I launch a campaign with a hundred assets, you launch a campaign with 10, I just have more at bats than you. It's just pure math. I'm just leveraging the machine so much more and giving it so many more at bats compared to you. So that's where creative is just crucial to being able to launch. And this gets into, well, if I launch a hundred creatives, Cody, how much budget should I get into?

And this gets into kind of cost controls and cost caps, and that's a huge hot topic on Twitter and the Twitter share. It's we are big proponents of controls. The ddcs Twitter space is blown up with cost cap discussions and whatnot. So if you don't know what that is, essentially we're telling Facebook we're willing to spend X and no more than that to acquire a customer. And so when you match that with your actual unit economics, whether you're on a subscribe and save model and you want to break even, or you want to actually go into the red to acquire a customer, your LTV is very strong. You can make those decisions because meta is motivated to spend your money. And so when you give it a daily budget, it's going to spend that money baby, but it's created something where you can actually mitigate that risk and only acquire customers at a target that you're comfortable with.

And meta doesn't have any insight into your unit economics. So they're going to spend, but you do so you can dictate the machine to spend accordingly. And how good is meta at that? So you give it a cost cap of what we're trying to hit 50 CPA or whatever. Are they going to kind fudge with that and go over that for a little bit and then bring it down? Or are they just pretty good about they'll hit it or just stop spending? What does that look like? Yeah, so this gets in the difference between cost controls or cost per result versus bid cap. So bid cap is going to actually be more strict and say it's not going to spend over $50. The cost control is going to take the average or the cost cap is going to take the average. So we'll spend not astronomically above, not even a lot, but it's going to spend above and I'll get to that average CPA that you want.

So there's a little bit more wiggle room to unlock spend, but whether you do have it cost capped or big cap, people need to understand it. It's also not perfect. We're talking about an advertising platform, you're in the game totally, so it's not going to be perfect. There's days where it's like, wait, it overspent. Yeah, you need to be monitoring your account. And that's our job with all of our clients is daily monetization of the cost controls adjusting up and down. Yeah, totally makes sense. And so then I want to key on something you said a minute ago. So you said this, I know it's all hypothetical, but I'm sure this is likely based in reality, got a hundred creatives, you put 'em in and you're testing them, only a third of them get spend. What if some of the two thirds that don't get spend, you're like, I think there's some winners in here.

I think there's some potential gold in here. Do you do something else to try to get those creatives to have spend or do you say, Nope, algorithm knows best, we're just going to move on? There was something about those creatives that the algo did not like. We definitely lean into we're dumber than the machine just transparently. The machine is smarter than all of us. But yeah, there's something to be said about there's definitely investment that brands make in certain creative that they want to give more legs to. So we definitely give more opportunities sometimes to people and to creatives that we see could be successful. But again, we're getting so much creative if it doesn't get spend. And Facebook also will tell you that spend is the leaning indicator of predictive results that you're trying to achieve. So if it's spending Facebook's basically saying, we believe in this content spending, we believe in this, we believe this has got something, there's something to this.

Yep. Great. Great. Yeah, totally makes sense. So then, okay, so we're seeding, we're getting kind of that initial batch of content. Now we're a third of those, maybe more get some spend. How many of those then end up kind of being winners? And then when do we go to round two of creatives or how do we keep the flywheel turning? Yeah, so we're just doing this every single month. I mean, you're just constantly seeding out product and getting new fresh content weekly. And we're not waiting for all 150 assets to launch in a campaign, for example, we're just implementing new content weekly. So even a campaign that I was just looking at recently, 93 ads, three of the pieces of content got 85% of the spend.

So that's even less than a third, which is what I just said. But again, that's what we want. That's not the 80 20, that's like the 95 5 rule. Yeah. So yeah, it just becomes really effective in launching as much creative as you can. And as we're launching creative into that account, we're simultaneously seeding out new product. And again, it goes into greater efficiency because that variety and volume is there. That's awesome, man. That's awesome. What are some of your favorite examples or favorite case studies for how this influencer driven, influencer powered creative flywheel has helped brands grow? Some of our favorite case studies, I mean for the lower tier people, I would say we've launched a couple brands that have gone from zero to 15 million, zero to 2 million within six months. 15 million was over 18 months off the backs of this. Now, again, I say this context too, it's like agencies I think get a bad rap because they want to take credit for the whole business.

It's definitely not true. Obviously there's a product, there's a brand, there's manufacturing, there's inventory, there's all these different things. We're servicing a great brand at the end of the day that has great legs and we're just throwing gasoline on the fire. Totally. You can't market your way out of bad unit economics. You can't market your way out of a broken sales process or lack of cashflow or lack of capital management or it's got to be a good business. And that's why we talk about we're here to accelerate growth. We can't, we're not turnaround artists. We can't save something that's fundamentally broken, but if you're growing, we can pour fuel on that fire. So love that. So yeah, so those are pretty impressive growth levers for sure. What else can you say about case studies or examples? Yeah, and then there's other examples of, we worked with M and msms of the world a couple of years ago.

We might've talked about it on the first podcast. We worked with them for over a year and saw incredible results. And then I would say predominantly the brands that we find ourselves working with are in that five to 20 million. They're kind of looking for that upper echelon of scale. And so one brand in particular, we've had him on our podcast as well, Jack Rubin and his brother Charlie at Purdy and Fig Natural Cleaning Supplies. You'd never think it's the most viral product, but man, I mean crazy post rates, crazy amount of assets that we're, again, numbers game. We're able to leverage that within that account. And just usually as you scale ad spend, and I'm sure you see the same thing on Google, CPAs just generally rise with more spend generally except the low hanging fruit, and then it gets harder to acquire customers. We've seen Inverse where it's like we're scaling ad spend and CPAs are going down, and sometimes we're taking over something that's kind of fairly easy to make changes and improve.

But that is our proposition is that we can reduce your CAC while scaling ad spend. And that comes from just the volume of creative ad target. And I think the reason that works, the reason that's possible within platforms is you got to think about what is the motivation of Meta or Facebook or YouTube or whoever. It's to deliver ads that people want to watch and want to click on. And so as you create better creatives, and often it takes quite a bit of iteration to get there, but as you create better ads, the platforms will reward you and they'll show your ad more, and Google will drive down your CPC on search and they'll potentially drive down your CPM on YouTube where your cost per view is going to go down as your ads improve. So then as you continue to tweak and dial that in, and as you improve your landing pages, then at scale you can maybe lower your CPAs.

I think usually the principles apply where, okay, but yeah, you hit some sort of scale, you 10 x that, 20 x that, whatever, you're probably going to get diminishing returns. But yeah, there's a level that most brands have not experienced where you're like, Hey, we could achieve more scale and better CPAs because there's just a lot of things broken here in what's going on. And that's another huge point that you just brought up about what is the point of diminishing returns. That is something that we're really as an agency over the past three to six months, we've helped people understand is how much can I spend at this target before I actually spend too much money and my incremental row is actually bad for my business? And that just comes through forecasting. That just comes through historical data. And we're really getting better at helping people understand that because I think a lot of founders just generally don't know, and their forecast is kind of some black magic out there.

And so it's like, well, let's just spend a hundred thousand dollars next month and then 200, I guess it should go up. What number feels right now? What number did I hear someone say on a podcast? Or what number did this guy say on, yeah, I heard two row eyes is good. Yeah, that sounds I want to be smart. Yeah. Yeah, really insightful. And this is one of those things where I think sometimes when you hit points of diminishing returns, you hit a cap, then that's often a time when you need another channel. So to give you an example, a couple of examples actually. One is with a long time client and friend, true Earth laundry detergent strips, shout out to my boy Ryan McKinsey. We helped them launch in the early days. We ran all their Google search and shopping and stuff. Once they started YouTube, it did fine for a little while, once we got to like 50,000 a month and spent on YouTube and then beyond, we saw Search Grow by 30 or 40% branded search went up more than that, their Google shopping results grew like 300%.

Remarketing grew. So you introduce this new channel, which makes sense, you're feeding the funnel, you introduce this new channel and it unlocks new growth. We've seen the same thing with Facebook, and we had this auto client where we just could feel it and see it in the search and YouTube or search and shopping accounts if they had to pull back on Facebook. We saw it. And I think there's also this area where Facebook can hit a cap and the introduction of YouTube strategically can help both spend more at affordable CACs. And so yeah, that's where you're like, Hey, if we're hitting a cap, we probably need to introduce a new channel and create some synergies with these channels to be able to unlock the next level of scale. I'm glad you brought that up too, because that's actually the other half of the value. I know a lot of my responses have been very focused on Facebook, but when you're talking about 60 to 90 organic posts going live from influencers organically, there's no paid distribution.

We're not whitelisting. We're not paying them to post. They're posting organically. And I had Matt Tuli from Pela case and Lumi, one of nine operators guys on the podcast. I had him on our podcast. And one thing that I said that has really stuck with me, and I've even used it in sales calls, is the two things that you're optimizing for, because they're huge on seeding, they seed out 3000 creators a month. So it's not just me preaching this folks, people have been doing this. He was like, two things. You're optimizing for trust with an audience, mass amounts of people communicating product and brand, you're optimizing for trust. Then two is signal because of iOS, 14 off-platform, signal went away, but Facebook still really loves Signal. So when you see all these organic posts, that makes your ad more efficient because you're getting all this signal into the platform, whether it's organic or paid, which you're already running paid.

So when you talk about unlocking new channels, that's one thing that's just happening. When you're doing seeding, you're unlocking a new channel, whether you admit to it or not, you could be doing this, no strings attached relationship focus, but it is a new channel that you're unlocking and helping your other channels. You just brought up great call out. So we're building trust. And it makes sense if you see something in the wild two or three times, especially when you get that, that the third time I've seen someone post about something, I'm like, there's something going on here. There's something going on about this product or this thing, and I got to check it out. So yeah, that trust is really built, and then the algorithms need signal. And so this is a way to provide that signal. It's brilliant. I really like it, and it makes a ton of sense.

And that's where I also look at any opportunity we can create like this. And I think a lot of these platforms do offer it, whether it's TikTok, meta, YouTube or whatever, where we can drive direct measurable conversions, but then there's a halo effect or some other benefit that comes with it, then all the better. And influencer marketing has that in spades because now you get all this organic lift as well. Totally. You're optimizing for word of mouth as well, which is untrackable, but so important. Everybody admits to it, but they are too impatient to work for it. Yeah. What's the most valuable form of advertising? The most trusted form of advertising? It's word of mouth, but it's a little bit slow, and you can encourage it and you can kind of guide it, but you can't control it fully. And so most of us are too impatient, but influencer marketing helps fuel that.

So really, really good. Cody, this has been fantastic. I'm all fired up about influencer marketing. So if someone's listening to this and they're like, all right, I need to get Cody and Taylor and the gang at Kinship working for me, how can they learn more about you and how can they connect with you? Yeah, connect with me on Twitter, LinkedIn at Cody Whittick, W-I-T-T-I-C-K. I think there's an underscore on my Twitter in between Cody and Whittick, and then LinkedIn. I think it's just straight. So whoever the real Cody out there on Twitter is Twitter pulled up. And then our agency, K-Y-N-S-H-I p.co. And if you book a call, you'll talk with me. Yours truly, if you book a call, you'll talk with the one, the only, the podcast, hope Podcast host, and hope. Yeah, you'll provide new hope for your business, for your creative flywheel.

You'll be filled with hope after. That's call, no doubt. So Cody Whittick, ladies and gentlemen, Cody been a ton of fun, man. Thank you so much. We will have to schedule round three, and we should probably not make it like a year and a half or two years from now. There we go. I like it. Always enjoy talking to you, Brett. Thanks for having me. Absolutely. And as always, thank you for tuning in. My ask of you is, Hey, if you found this valuable, if this was inspiring or interesting to you, share it with another D two C professional, a store owner, a professional in the space. That's how we get the word out. We'd love to impact and help more people in this community, and hopefully we're having fun doing it as well. And so with that, until next time, thank you for listening.

Episode 265
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Brett Curry - OMG Commerce

Million Dollar Insights: Top 12 Takeaways from a Year of Amazing Guests

This year was an AMAZING year of podcast guests.

Today, I wanted to reflect on and recap 12 of my favorite lessons from this year.

1. Creative Thinking as a Competitive Advantage - Million Dollar Mindset (Ep 231)

This episode was the most shared episode of the year. It ended up in a few forums and got a lot of love. 

What helped Will and the team grow Organifi from $18M annually to over $100M? It wasn’t just hard work. It was creative thinking and problem-solving.

Learn the secrets of Moneyball, the Hollywood Black List, and more!

2. You Can 13X Through Creative, Data-Driven Marketing - Brendan Bannister (Ep 221)

In a similar vein to the podcast with Will Hughes, this interview with Brendan Bannister was a banger. Brendan ran paid media for William Painter during their years of meteoric growth. We talk about the power of design and simplicity. 

3. What You Don’t Know About Your Customer Is Costing You. The Missing Piece to Your Attribution, CRO, and Marketing Is Customer Insights - Trevor Crump (Ep 250) / Jeremiah Prummer (Ep 262) 

I’m completely sold on the idea that when done properly, customer surveys uncover tremendous insights that will shift how you advertise, position, and optimize your products. I cover my 4 favorite questions to ask in post-purchase surveys. 

4. Why Your Price Is Likely Wrong and What to Do About It - Byron Myers (Ep 255)

The way you set your initial price is not the way you determine your optimal price. There’s an optimal price for rev maximization and one for profit maximization. 

How does demand and conversion rate shift when price increases or decreases? After you get some data, you need to get scientific. Chart out your demand curve and conversion rate to find your ideal price. 

This isn’t static, though. You should be testing at least 2 times per year or likely every quarter. 

5. Customer Value Optimization Trumps CRO Every Time. And It Informs CRO. - Drew Sanocki (Ep 245)

Not all customers are created equally. You have some whales (your most valuable) and some minnows (your least valuable). 

What’s more important than almost anything else you do is identifying whales and attracting more of them. 

This is a key part of understanding that there are only 3 ways to grow your business:

  1. Get more new customers
  2. Get each customer to spend more (raise your AOV) 
  3. Get customers to buy more often (increase LTV) 

6. Organic Growth on YouTube. 3 Types of Content. - Liz Germain (Ep 234)

YouTube is the 2nd most visited site on the planet. 

Users spend a TON of time on the platform. If you’re good at creating content, you can build a large following and drive awareness and traffic for your brand. 

In this episode, I talk to YouTube pro, Liz Germain, about the 3 types of content you must create to build an organic following.

7. Brand is Everything - Person Rutherford (Ep 260)

Want a huge exit? Want all of your advertising efforts to improve? Want greater retention and higher LTVs? Want to charge a premium? You need to focus on brand building.

The good news is you can do this profitably.

If you want customers to seek you out by name, tell others about you, and feel pride in associating with your products, you need a BRAND. 

Preston Rutherford, one of the co-founders of Chubbies who had a 9 figure IPO, knows all about this. Brand building can’t be done overnight. It’s a long play, but it compounds over time. 

8. You Can Achieve Exit Velocity on YouTube - Jacques Spitzer (Ep 243)

This was the episode I personally heard the most comments about. It’s PACKED with ideas on how to think about YouTube and how to make it work for your brand. We discussed a bunch of important concepts. One is “People don’t have short attention spans; they have short consideration spans.”

9. Amazon Is Trying to Go Beyond Search for Product Discovery. Maybe They’re Making Modest Strides. - Liz Saunders (Ep 253) / Brandon Young (Ep 251) / Gracey Ryback (Ep 249) 

Product discovery is still primarily driven by search. With the Amazon influencer program and initiatives like the Inspire tab on the Amazon Mobile app, Amazon is trying to “inspire” new product discovery. It seems to be going OK, but just how much new product discovery this generates is TBD. 

10. Stop Obsessing Over Vanity Metrics. Focus on Core Metrics. - Rabah Rahill (Ep 222) / Preston Rutherford (Ep 260)

What are vanity metrics? How about ROAS and Revenue? Both important to be sure. We look at both metrics all the time. But they aren’t CORE. So, what is the core of your brand? Well, Preston Rutherford lays it out! 

11. Retention Marketing Is Your Key to Stability and Profitability. - Nick Flint (Ep 248)

Few things can impact your brand as much as email and SMS. In this episode, we covered 8 email tests to make, plus one of our favorite all-time emails that a client ran. 

12. Are you experimenting with AI? - Steve Chou (Ep 233) / Fred Vallaeys (Ep 256) 

AI likely isn’t replacing members of your team. It shouldn’t be replacing you. But it should be assisting you. 

  • Writing better email subject lines
  • Working on better SEO titles and bullet points
  • Transcribing and summarizing meetings and more

Transcript:

Brett:

Well, hello, I'm Brett Curry and it's time for another Spicy Curry Hot Take the part of the show when I get just a little bit spicy. Now, if you are not reviewing and reflecting, I believe you're wasting time. I believe this applies as we wrap up a year like we are right now in 2023 if we're not reviewing and reflecting on what we learned, how we've grown, what lessons we want to take into the new year, and what lessons we want to reject. But I think this also applies to things like books as an example. I'm a big believer that it's more valuable to key in on a handful of really impactful business books and review, reflect, and implement than it is to hit some kind of unnatural one book a week pace or something like that. So reviewing and reflecting and hey, this has been a unique year, right?

I think 2023 has exceeded most expectations from a business standpoint. I know the vast majority of our clients had great years, strong years record, black Friday and Cyber Monday events. There was always that recession that was right around the corner that just never really materialized. Inflation was still there, but maybe was kind of a lid was put on it, so to speak. Interest rates kept going up, but the consumer was resilient and for the most part, D two c e-Commerce and Amazon grew this year. But now it's time to reflect, and that's what we're going to do on this podcast. We're going to look at 12 ideas, one for each month of 2023. And these are million dollar insights because I believe that just one or two of these insights can unlock seven figures of growth for you. And so with that in mind, let's get after it.

First lesson comes from an episode with my buddy Will Hughes. We met when he was the head of growth at Organify, and he took Organify from 18 or so million a year to a hundred million dollars a year run rate, and he did it in just 18 months. And so his episode, this was episode 2 31, this was the most shared, the most talked about episode of the year. I saw this in forums. Lots of people were talking about it. And basically we looked at is million dollar mindsets. So using creative thinking as a competitive edge, because if you're going to grow from 18 million a year to a hundred million a year in 18 months, that doesn't just take working harder. It doesn't just take more effort. It takes creative thinking, it takes breaking some molds that exist. And so on this episode, we talk about several things, but a few things I want to key on.

One is finding undervalued and overvalued assets. Think Billy Bean and the Oakland a's popularized by the movie Moneyball with Brad Pitt as Billy Bean. But the Oakland A has had one of the lowest payrolls in all of baseball, and yet they were able to go on one of the largest winning streaks in MLB history because they found players who were undervalued and therefore affordable. So knowing where to look to find undervalued assets. Another great example, the Hollywood Blacklist started by Franklin Leonard. And what Leonard did was he approached all the major studios because he believed that there were some things broken about Hollywood. So he approached all the major studios and said, Hey, what are the top 10 movies that you had to reject? And of course, all the producers had ideas. And so from that, then Franklin Leonard is like, Hey, I'm going to start finding a way to produce some of these movies.

And you could Google it, Hollywood Blacklist, Franklin Leonard, and see all of the movies that were rejected by everybody else but ended up being produced because of the Hollywood Blacklist. And the list is a doozy. I would do a disservice to try to name them all, but movies like 21, which I love that movie, three 10 Te Yuma, the Bucket List, lots and lots of movies that won Oscars and brought in a boatload of money at the box office. But that was looking at, Hey, what are I think the model's broken here? I'm going to do the opposite of what everybody else is doing. And that's what Franklin Leonard did. And so using creative thinking as a strategic advantage. And one of the other things he talks about is, Hey, look at problems from different angles and different altitudes and different directions. And when you do that, you'll be able to solve problems in a unique way because hey, it's not easy to scale and to scale profitably, but that's exactly what Will did.

And so highly recommend this episode. There's so many things to quote and unpack, but go back and listen to that episode, episode 2 31, next episode 2 21 with my boy Brendan Banister. This is kind of related to the first one, but you can 13 x your growth through creative data-driven marketing. Now, I met Brendan when he was the head of marketing at William Painter. Brendan went through my Google and YouTube course, and that's kind of how he taught himself how to run traffic on Google and YouTube, and they scaled William Painter kind to the moon. And so what Brendan and I talked about though was a couple of cool concepts that I think are really, really valuable. One of those is the idea that design is hack. And what that means is really elegant, really thoughtful design is often more powerful and has a greater impact than any kind of hack that you could create.

And so if we think about this from a product standpoint, pr no one has done better than Apple, right? The simplicity and the beauty of the design and the ease of use of an Apple product. But we can also think about some of our favorite e-commerce websites to shop and explore those that are just simple and easy to dig into and buy. I think even Amazon. And while no one would say that the Amazon site is necessarily beautiful or artfully designed, there's some breakthroughs and there's some design elements that just make it really easy to shop. Now, one of the other concepts that he brought up related is that simplicity is the ultimate sophistication. So as humans, as marketers, as business owners, we want to make things more complicated, but making things simple, that is the ultimate sophistication. There was a Leonardo da Vinci quote.

An example there is, think about Yahoo in the early days, and think about Google when they first started, Yahoo was the leader in search marketing and one of the most valuable online companies at the time. And if you looked at the homepage, it's similar to kind of the way it's now. Lots of stuff, lots of banners, lots of articles, lots of places to click. It was completely full. What did Google do? Google said, well, hey, what if a good ad is really just the answer to a question? And so instead of all the stuff on the homepage, our homepage is going to have a search bar and our name and that's it. And then we're going to be wicked good at delivering you exactly what you're looking for and freakishly understanding based on your keyword, exactly what you're looking for. And so that was simple.

There was a lot of sophistication on the backend, but simple for the user. So simplicity is the ultimate sophistication. Moving on now, I love the two episodes I'm going to talk about. These are closely related episode two 50 with Trevor Crump and he is from Bestie, and basically they run customer surveys. So post-purchase surveys, and then a related episode, Jeremiah Brummer from No Commerce, similar service, episode 2 62. And so understanding that, hey, probably the missing piece in your attribution, the missing piece in how you need to refine your marketing, the missing piece in what you need to do with CRO is data that's coming from your customers and insights coming directly from your customers. And so three of the questions that I love that both of these guys talked about are one, where did you first hear about us? So trying to understand, hey, what channel, what type of ad allowed you to hear about us first?

Maybe it was word of mouth, maybe it was Facebook ads. What brought you here today? So what did you click on? What motivated the visit today? And then how long have you known about us? And what's really interesting is that on that, how long have you known about us question. What both platforms have found is that a lot of people knew about the brand for months before they took action, and this was going to run contrary to what you see in platform and what you may see in Google Analytics and other places. And that just illustrates some of the deficiencies that exist with pixel tracking and other forms of tracking. And so Jeremiah Brummer from, no, they did a breakdown, a couple of different breakdowns where they look at, Hey, over 50% of purchases come after a month of hearing about a brand. And actually the biggest segment was in the one to three month category, but 30% are in that three to 12 month category.

And we've even seen this to be true. I heard one of the guys, the CEO of classic tees talking about this great T-shirts, just a T-shirt, right? But a lot of people see it for a year before they purchase. Since this was a reminder that hey, investing in organic growth, investing in top of funnel efforts, that's likely playing a bigger role in your success than you think. Next one, from the same episodes from Trevor, this was a question of, Hey, what are the main reasons you bought? Why did you buy and use the example of a brand called Pajamas? It's training pajamas for kids when they're potty training. And the owner of the business thought, Hey, you know what? The main reasons people buy our pajamas is one, cost savings because diapers are expensive. And two, I'd say the planet because it's environmentally friendly, and now you're not filling landfills with diapers.

Well, when they ran the survey and asked their customers, they found out that those in fact were not the top two, not even close. The top two reasons were one shorter potty training window. And all of us parents can testify, yes, if we can shorten that window and get this kid potty trained faster, my life will be easier, their life will be easier, it will be magical. And then two, improve a child's confidence because it's embarrassing, right? When kids wet the bed and stuff like that, we hate it as parents, we want them to get more confidence. And so those are the reasons people actually spent money. Yes, being saving the environment important. People don't want to not do that, and people don't want to not save money, but those were not the reasons they were buying. Next up from episode 2 55 with Byron Myers, your price is likely wrong.

And in this episode we talk about how we're always optimizing our ad performance and we're optimizing for CRO on our landing pages, and we're optimizing our email subject lines for open rates, but we're not really optimizing our price. How do we think about price? Well, often we'll just price based on what is the competition charging or we'll do cost plus is what it costs me to make it. And so I'll work to get this certain margin. So that's how I'll price my product. And there's nothing wrong with either of those methods. And then in fact, those are often great when you're first starting to price your product, but not once you have data. Once you have sales data, now you need to look to optimize for price, and there's actually a price you can optimize for to maximize revenue. So if you want to get the most revenue, there's a price for you if you want to get the most profit, which that's what we all want.

We want to maximize for profit. So there's also an exact right price for that. Ultimately, this is based on a couple of things. This is based on your demand curve and think price elasticity of demand. So how elastic is your demand? If I raise my prices, does demand stay the same or is it elastic? Does it fluctuate? We use the example on the pod of, and I actually got this wrong to begin with, but then I corrected myself. But if you look at gasoline, right, that demand is very elastic. If price moves a little bit, I'm driving across the street to save a couple cents a gallon heart surgery, you could make the price anything you want if I need it, the demand's going to be the same. That demand is inelastic as it comes to price. So understanding your demand curve, but then also understanding conversion rate.

So how does conversion rate change as we impact the price? And so what Byron talks about is, Hey, you have your control price, and this is the price you set in the beginning, but then test something higher, test something lower for 30 days, and ideally 10 to 15 to 20% higher and lower. And then you'll be able to kind of chart the demand curve. And there's some formulas you can run. And again, you can go back to episode 2 55 and you can determine the right price. Now, this is not something that's static. Byron recommends, Hey, do this and then re-look at this quarterly if at all possible. But hey, this is another thing that if we want to maximize profits, this can be absolutely a million dollar unlock for you if you start to optimize price. Next up, customer value optimization is more important than CRO or conversion rate optimization.

This was episode 2 45 with the famous Drew Sinski of post pilot, but he's also the turnaround start has helped turnaround multiple nine figure brands. And so he talks about a couple of things, but he talks about looking at how do we identify whales? How do we identify those customers in our business that are delivering 80%, 90% of the overall value in the company? And so as we can identify those whales and create cohorts and segments of those whales, and we better understand how can we go find more? And we really unpacking this episode, this concept from J Abraham that there's only only three ways to grow your business, get more new customers, raise your A OV or get them to buy more every time they purchase, and then increase the frequency of repurchase or think LTV. And so the cool thing is to double your business, you don't need to double any one of those things.

You don't need to get twice as many new customers. You don't need to double your A OV, you don't need to double your LTV, but if you just create a 30% increase in each of those three areas or 33% increase, that will double your business. And so thinking about how do I optimize for customer value, that can really speed up and enhance your CRO as well. And overall really rapidly expand your business. Next up, we're talking about organic growth from YouTube. And I interviewed Liz Germaine, episode 2 34, and she talks about three types of content to start with on YouTube, and I believe YouTube is still one of the largest untapped growth opportunities. We'll talk about YouTube ads in a minute. This is specifically though about YouTube organic. And one great recent example of this is Alex Orey. If you're in the entrepreneur space, which I'm sure you are, you can't miss Alex Orey and he's gone to millions and millions of followers on YouTube in short order.

Not that we can necessarily all achieve that type of success, but it just shows the power of great content and on that platform. But the three types of content that Liz recommends first is help. And this is kind of some of the old school type of content that YouTube is known for. So it's FAQs, it's listicles, it's how to do this, it's how to build this type of ad campaign. It's how to increase your average order value in Shopify. It's how to fix your dryer, your washing machine or whatever. It's how to. It's help articles, and those are going to be largely driven by search on YouTube. Then there's hub. So think about episodes. These are interviews series. It's basically a never ending series of content. So some people put their podcast on YouTube, some people have a show on YouTube. That's kind of what hub content is.

It's just never ending, and it can attract people to come back to your content again and again. The third type is what's called hero. This is deeper dive into more personal information. It's a deeper dive into more of a personal look, but this is where you get emotional, you form an emotional connection, an emotional reaction. This is something you need to do less often potentially on your channel, but it can have a huge impact. So help hub and hero. You need to get the right combination of that. Listen to episode 2 34, Liz Germaine to hear more. Next up brand is everything. And this is episode two 60 with Preston Rutherford. He's one of the founders of Chubby nine figure IPO from Chubby. And this episode was so great, so great in both the product design discussions and some of the discussions around ad performance, but also around brand being everything.

And if you think about it, we all want to build a brand that people search for, that people go out of their way to find that a brand that people love being associated with and a brand that people love recommending to others and a brand that people buy because it says something about who they are. And if you really want something valuable, if you want to have a valuable exit one day, if you want your ads to work better, if you want everything to be multiplied, then focus on building brand. And that's what Chubby did. And they did this with their content, this with their website. They did this with the design of the product, but brand is everything, and brand is what ultimately led to that nine figure IPO. Next up, one of my favorite episodes of the year to record, and I think this was the episode I got the most comments directly on.

So episode 2 43 was Jacques Spitzer achieving Exit Velocity with YouTube ads. And a couple of real highlights here. We talk about how consumers have short attention spans, but that's not actually true. Consumers have short consideration spans. So think about it from this perspective. If we have a Netflix series that we love, or there's a YouTube video that we love, we'll binge watch that thing for hours, right? We will binge watch 15 episodes in a row on Netflix. So attention span is not the issue, it's just what holds our attention is more difficult. So that's where consideration comes into play. So you've got less time to win someone's attention, and you got to work harder to keep someone's attention. So our consideration spans are much shorter, but attention spans, they're fine. And the other key takeaway from this episode is that brands that really crushed it, brands like Dr.

Squat and Manscaped and Organify and many others, they knew that direct conversions were only part of the story. Fewer people click on YouTube ads and click on Facebook ads. A lot of people will view a YouTube ad and then search later. So with YouTube, the nature of the way people interact with it, it does drive more brand lift than it does direct conversion. So you got to understand that and measure that properly. So check out more episode 2 43 with Sha Spitzer. Next up three episodes about Amazon. And I believe Amazon is really trying, desperately trying to move beyond just search for product discovery because that's how most people anything on Amazon is through searching, but Amazon's trying. So a couple episodes to check out episode 2 53 with Liz Saunders. We talk about Amazon influencers and how she is creating content that lives on Amazon that helps sell products.

We also talked in episode 2 49 to Gracie Ryback also about Amazon influencers. But there's a couple of features, a couple of things that Amazon is doing. One is called the Inspire app, and basically it almost looks like TikTok, but it's from Amazon influencers, and it's a way to discover products that influencers love. Now, I think Amazon's probably only making a very small dent in this, trying to move beyond just a search platform. And of course, Amazon loves search, but they want you to be able to discover and find new things and increase your consumption on Amazon. Another episode that related to Amazon is 2 51, Brandon Young from DataDive. When we talk about doubling your traffic and conversions on Amazon, and this goes back to the tried and true, this goes back to merchandising. So how do we make the product fly off that digital shelf, so to speak?

How do you make the product really attractive on that Amazon shelf? But then what are kind of the methods to optimize for greater search traffic? And so Amazon, as we look at our brands, our D two C brands that are also on Amazon, Amazon was the fastest growing channel for a lot of them this year, and we anticipate that will be the same next year. This one strikes me to my core passionate about this one. This comes from Robba Rayhill, episode 2 23, but also Preston Rutherford from Chubby talks about this too in episode two 60. Stop obsessing over vanity metrics and instead obsess over core metrics. So what are vanity metrics? Well, revenue is a vanity metric. It's something we pay attention to, we should all pay attention to, but it's vanity roas return on ad spend. It is a vanity metric. Of course, it does inform some things, and we look at it all the time, but it's still a vanity metric.

So what should you be focusing on? Well, according to Preston Rutherford, you should focus on contribution margin. How much profit are we contributing to with the sale of this item? And the way to look at contribution margin, it is the price minus all of your variable costs. So cost of goods sold, this includes your ad costs, any variable cost. So what is the contribution margin for this product? Also, profits slash ebitda, right? How are we optimizing for profits? Goes back to the pricing discussion as well. How are we thinking about LTV and how are we maximizing LTV through subscriptions or through repurchase programs or loyalty programs, email and SMS and things like that. And then also, how are we looking at brand search growth? And this is actually one of the clearest ways to understand, is my brand growing? Is my brand gaining traction? You'll know if branded search is increasing, so stop obsessing over vanity metrics and instead, obsess over core metrics.

10 down two to go. Next up, retention marketing is the key to stability and profitability. Episode 2 48 with Nick Flint, resident email expert here at OMG. He's our lead email strategist. And so we talk about eight of the top email tests that you should run to improve your email marketing efforts. And hey, this is one of the easiest, fastest ways to unlock new revenue growth. Profitable revenue growth is by enhancing what you do with email and SMS. But a couple of things is one, maybe it's time to drop that spinning wheel thing on the homepage to try to get people to opt in. Maybe it does increase your opt-in rate a little bit. But the question is, does this increase the value of the flow of people when they opt in there? And you'll probably find that the spinning wheel is not doing that. If it is great, but probably it's time to test something else, and maybe it shouldn't be a 20% off discount there either, right?

So what can we do to increase opt-ins but not give away the farm and increase opt-ins in a way that maximizes the revenue from that flow? Let's talk about, hey, test making someone work for a discount. Make them opt in for something and then when they get an email, click on something and then go from there. Because if we actually put in a little bit of work to get a discount, we'll appreciate it more and we'll be more likely once we start taking action to complete the process and continue and actually purchase. One of our favorite email campaigns of the year came from a client everyday California. They launched a brand new website and they wanted to get people to test it and use it and look for bugs or look for issues on the site. And so they sent an email saying, Hey, break our site and you'll get 50% off.

So find a bug, find any kind of flaw, find any kind of issue on the website. We'll give you a 50% off coupon. Now, this was extremely fun. This got people fired up. It was one of the most successful emails they sent all year. They got tons and tons of people shopping the new site, giving them feedback. Actually, they found out that the new site was pretty good. There wasn't a whole lot of negative feedback, but some people were actually disappointed. They wanted that 50% off discount. But anybody that responded, they still got some kind of discount, even if it wasn't 50% off. And so be creative with your email marketing. Alright, and then finally, and I would be remiss if we wrapped up 2023 and didn't talk about ai. Now I'm a big believer that AI is very much in the augment, the support, the enhance the speed up type of thing.

It's a help. It's not really replacement only. You can go fire your staff and just use ai, but I think AI can make a lot of things better. So a couple episodes I'll recommend episode 2 33 with Steve Chu from my wife Quit her job, one of the top podcasts in our space. He's also founder of Seller Summit. He talks about how he uses AI to write subject lines and even to come up with some SEO content, you got to be careful. Can't just let AI do all your SEO content, but how to make that work. Then also, if you really want to go next level and take your AI game to the extreme, listen to episode 2 56. Frederick Valets, founder of Optimizer, one of the original 500 employees at Google, but he talks about all the ways he uses AI in his business. And this dude, he's so smart and he knows how to leverage ai.

But a couple of the tools that come up, of course, open ai, but also fireflies, notetaking app tactic, notetaking and transcription app, Claude, CAUD, ai and Frederick talks about that, how he will, as he's looking to create content, he'll walk his dog, dictate stuff on his phone, upload that audio to Claude, then he'll get summaries and text versions and all kinds of cool stuff. He really unpacks that in that episode. But what I'm committing to and what I encourage you to commit to as well, is experiment with ai. Use it on a weekly basis. Some stuff's going to work for you, some stuff isn't. But begin to use it because I think those that don't will likely get left behind. So that does it for the year in review 2023. Thank you so much for listening. Thank you for coming in and week out. Thank you for sharing.

If you share this podcast regularly, thank you. If you don't, hey, if you know somebody that would find this episode or another episode interesting, please share it. It grows the community, it helps people out, and hey, you'll get a hearty thank you from those that you share with. If you've not left a review on iTunes, we'd love that as well. It helps other people discover the show, makes our day, makes me feel good, and our producers feel good. And so with that, here's to an amazing 2024. And with that, thank you so much for listening.

Episode 264
:
Bill D'Alessandro - Element Brands

Optimize Your Finance Stack or Risk Going Broke

How is your finance stack?

We all love to talk about our tech or marketing stacks, but the financial side gets less attention.

Heck, you might not even know for sure what your finance stack is! 

My guest today is an eComm legend, Bill D'Alessandro. Bill is the founder and CEO of Elements Brands. He's built or acquired 8 brands and sold 7. 

Before his time in eComm, he spent 5 years in the investment banking and private equity world. 

Talking about ad creativity or the latest case studies on scaling with Facebook ads is more of a dopamine hit than talking about finance. BUT, knowing what levers to pull, what to do, and what NOT to do as it relates to your finance stack can instantly add $100s or thousands to your bank account. 

Here are the 4 components of your finance stack that Bill and I dive into today. Trust me, this interview is fast-paced, interesting and guaranteed to put more cash in your bank account.

  1. Banking
  2. Credit Cards
  3. Working Capital
  4. Debt

You don't need to be a CFO or a CPA to get value here. You just need the 80/20 of how to optimize your finances. Here's a look at what we cover in this episode:

  • Why it's not always best to maximize assets and reduce liabilities; for example, accounts receivable are an asset, but they're also NOT cash in your bank.
  • When it's "OK" to use Debt and when you shouldn't.
  • What's essential and what's not when it comes to a bank?
  • How 2 simple shifts in credit card usage can add $10s or $100s of thousands in your pocket…money you will NOT receive a 1099 for.
  • Why working capital is the blood of your business. 
  • A few simple tips for accounts payable - when you do this right, this is the cheapest form of "debt" you can use
  • Why Merchant Cash Advances so commonly start a death spiral and what to do if you're in this trap.

Show Notes:

Transcript:

Brett:

Hey, Brett Curry here. It's time for another Spicy Curry Hot Take. the part of the show when I get just a little bit spicy. Now this tip is for you and it's for me, but here's the deal. We've got to stop saying about important financing things. I've got an accountant for that, right? It's time to start optimizing our finance stack. It's a lot more interesting sometimes to talk about our tech stack or our marketing stack or new ad creative or a new way to scale on Facebook or on YouTube that feels like the juice that drives our business. But hey, we got to remember we're doing all of this to drive a financial outcome. And while you don't need to be a CPA and you should still use a CPA, and while you don't have to be a part-time, CFO, you do need to understand finance and you need to know what shifts you need to make because optimizing your finance stack is the difference between you making a lot of money or a little money or potentially going broke.

And all three of those scenarios can happen even if you're rapidly scaling and growing. So just a couple of things we talk about and I bring on my boy Bill D'Alessandro. He's a legend in the e-commerce space. He's acquired eight brands, sold, seven, been tremendously successful, used to be an investment banker and in the PE world. And so he knows this stuff and he explains this in an easy to understand way in a way that's kind of fun. And I think you'll get fired up about optimizing your finance stack. But here's things we talk about. We talk about bank account, we talk about credit cards, we talk about working capital, and we talk about debt. And just a few shifts, a few changes here can really unlock a lot more money that will go into your bank account and it can also help you avoid some tremendously painful pitfalls. So here's the deal. We've got to optimize our finance stack.

Well, hello and welcome to another edition of the e-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce. And today we are talking about optimizing your finance stack. This is not a topic that we really dive into a whole lot on the show, but I think it's extremely important because really none of the rest of the stuff matters that we talk about CRO and running great ads and great creatives and all the fun marketing stuff, consumer psychology, all that. None of it matters if you're not making money and if you're not being smart about the way your business operates. And so my guest, I go way back with my guests. We've known each other for years and years now. We've worked together OMG partnered with one of his brands. I've got to hear him speak on stage. We've shared stages before and this dude is just really, really smart when it comes to all things, but especially finance. And so my guest today is Mr. Bill D'Alessandro, CEO of Elements Brands. Bill, how you doing man? Welcome to the show and how's it going? I'm so

Bill:

Glad to here, Brett. I think it's been, would've been on the pod once before, but I think it's been a couple years.

Brett:

It's been a while. It's been at least once, possibly twice. This could be round three, but yet it has been a hot minute. But we still run into each other at you Darien stuff and Steve Chu's events in Miami, which is where I heard this presentation that we're about to kind of dissect a little bit on the pod today. But you've been busy, man. Lemme just read this bio here. Acquired eight brands, sold seven, borrowed 15 million, sold 125 million, and then prior to all that, spent five years in investment banking and private equity. That's a world I've gotten to know a little bit over the last couple of years for a few different reasons we've been investing and things like that. But yeah, man, what a fun path you've been on. And this has kind of spanned what the last 13 years or so

Bill:

Fun's one word for it. Yeah. Yeah, it's been

Brett:

Trial by fire, the ins and outs, the pain, the agony, the triumph of victory, all that. Well,

Bill:

Everyone listening is in e-commerce, so they know what I mean. Especially as we were recording this on Tuesday before Black Friday. Yeah, we

Brett:

Were recording the Tuesday before Black Friday. I was amazed. You were like, no, I got time. And I'm like, I got time. Let's do it.

Bill:

Let's do it. Yeah, man, we're locked and loaded. It's either going to fly or it ain't at this point.

Brett:

Absolutely. At this point, if you're still pulling stuff together, you're in trouble. Your plan's better been in place for a couple of months, likely now. Now we're just ready for game time.

Bill:

Yeah, so my journey has really been, I got an e-commerce in 2010. Before that I had worked in investment banking, private equity, have a finance degree. I was like your typical finance nerd, maybe not so typical because here I am and I got an e-commerce in 2010 and between 2010 and now 2023, the last 13 years, just kind of the summary is started one brand and then kind of came up with the idea of what is now called an e-commerce aggregator way back in 2010, which has

Brett:

Become kind of trendy. But when you started it, it was not trendy.

Bill:

No, I was, to my knowledge, I'm one of the first, if not the first, to kind of do this business model. We did our first act, I started the first brand in 2010, did our first acquisition in 2012, and then we did seven total acquisitions. So we had eight brands in the portfolio by 2018 just in time for kind of covid to hit in 2020, which was a good time to be an e-comm, right? So luckily,

Brett:

Yeah,

Bill:

Had bought kind of before all the aggregator money came into the space in 2018, 2019. So we kind of built the portfolio before that Covid happens, aggregator money comes in, all of the multiples explode. Everybody listening probably lived through this, right? Multiples for even terrible e-comm businesses were quite high in 20 20, 20 21. And at the same time, we had this one brand in our portfolio natural dog company that was doing really well. And so we made the decision in 2021 to sell all the other seven and to go all in on natural dogs. So we spent the back half of 2021 and the first half of 2022 liquidating the whole rest of the portfolio, which in retrospect has turned out to be a great decision because by mid 2022, the markets were kind of in shambles. And I think the now Raio filed for bankruptcy a week ago as we reported

Brett:

It. Yeah, it just happened. Yeah. Valuations are down, investments are drying up in a lot of cases. So you sold for time

Bill:

It. Yeah. So I don't think we top ticked it, but we definitely sold on the down slope, not at the bottom. Yes. So we were very glad to have done that. And so since 2022 have been focused 100% on growing natural dog company,

Brett:

Super exciting man and love watching you operate. Of course, love your investment mindset and love what you're doing in Natural Dog Company. We OMG partnered with you guys for a while. So we got an inside look at that brand, awesome product, awesome business. So keep crushing it there and I'm excited to see how that goes. Let's dive in. Let's dive into finance. And again, if this isn't right, then nothing else matters. If the fundamentals of the business are not sound, you will not be able to scale, you will not be able to get a good exit. It will all be for naught. And so I want to talk first about mindset. What are some of the mindset shifts that brand owners need to make as it relates to finance?

Bill:

So there's one big one, and I want to say this at the top. You owning a business and saying, oh, I'm not a finance guy.

It's like you owning an e-commerce business and saying, oh, I'm not a marketing guy. You don't get to say that, right? You are running a business, you don't get to abdicate the finance part. Finance and accounting is the language of business. It is required reading. It is required execution. You don't get to not do it. You don't get to go, oh, I have an accountant. The finance stuff is covered. You need to be savvy as the CEO about the levers and the metrics that move your business. And if you're not, you're going to have a bad time.

Brett:

It's so good. And I would kind of relate to that statement though, especially when I was early in my business, I didn't want to do accounting stuff. I like numbers, I like money, I like business, but I didn't want to get into the accounting stuff. But you quickly realized this is the life of the business. And if you can't speak the language you don't know when s of poor, you're going to get in trouble. It's like a professional athlete saying, I don't really get hung up on how the body works. I'm not really interested in health. Really, that's you are going to be shortchange, you're going to make mistakes if you don't get into some of those key things. And so love that. Yeah, let's get away from the, I have an accountant for that. You should have an accountant, right? For sure. But you need to think strategically about finance. You need to know what leverageable you need to optimize your finance stack. And so that's what we're going to kind of dive into here. Any other mindset shifts that you've noticed that are worth mentioning?

Bill:

And the other thing is it's not that hard just because you don't have an MBA. What we're going to try to do in this podcast is give you 30 minutes of the 80 20 places to start. You don't need to get an MBA. You need to understand enough to pilot your business and understand the output from your accountant. And that's what we're going to try to do here today.

Brett:

Yeah, no need to become a CPA or a managerial accountant. That's not the point. We need to understand the strategy behind finance what we're doing, and we want to make you more money. It's money in your pocket. It's not some of the other vanity metrics that we talk about. And so let's talk about some of the mistakes you see people make, bill, and this will probably set us up a little bit here as we get into optimizing the finance stack, but what mistakes are most common?

Bill:

Well, maybe even, let's just start, what the heck do I mean when I say optimize your finance stack, right? Let's do that. So what is that, right? It's very easy for us to think what's our digital marketing stack? Maybe it's Canva and it's Facebook ads and it's Shopify and it's Klaviyo, and you kind of like the tools that make this all work. When I think about the things that make the financial plumbing of your business work, it's basically four things. It's banking, it's credit cards, it's working capital and it's debt. These are kind of the four big buckets. So when we go through, let's talk about optimizing each of these four things to just get the plumbing working well, and they all talk to each other, they're all connected. Your bank, your credit card, your working capital and your debt, they're all connected. These are typically balance sheet type items. Income statement tells you how much money you made yesterday. Balance sheet tells you all of the assets and liabilities of your

Brett:

Business. And why is it important to understand the balance sheet? And I will admit, I've been a p and l guy for a long time, know how to read a p and l, love the p and l, but I think a lot of people just kind of avoid the balance sheet that's real, just accounting, nerdy stuff. But why is it important that we understand our balance sheet?

Bill:

The balance sheet is where all the money is made, and it does take a very simple thing, which is that if you're not paying attention to your balance sheet, you're not paying attention to your inventory level, you're not paying attention to how much inventory you have. You think about your income statement where, oh, I sold one. I sold something for 10 bucks. It cost me two bucks to make it. I made eight bucks. But that's not actually what happened because that two bucks is fake what's called accrual. It's a non-cash expense. You didn't actually buy that one unit. You bought 10,000 units three months ago and one just went out the door. So you actually took in the full $10 today, but you're going to have to buy another 10,000 units in a couple months. And if you are not aware of how much cash you have on the balance sheet, how much inventory you have on the balance sheet when you're going need to reorder, you can very easily go, oh, I'm growing really, really fast.

My income statement looks really, really good. But then suddenly you find yourself out of money and you can't buy more inventory. Raise your hand if you've had this experience in e-commerce. Everybody. Why is my income statement look great, but my bank balance is not going up. And it is generally because of a failure to understand and plan for changes in your balance. Sheet accounts, inventory is the big one, but accounts receivable, if you sell something to a retailer, you're going to recognize that 10 bucks of revenue. But instead of getting 10 bucks today like you would from a dotcom customer, you're going to get zero bucks today and then 60 days later you're going to get 10 bucks. So that accounts receivable is a use of cash also. So not understanding the balance sheet is a great way to go broke. It's a great way to need a merchant cash advance loan at the last minute, which is also a great way to go broke,

Brett:

Which we'll get into that a little bit when we talk about debt. That's not the method of debt that you want. And so I really like the fact that we're going to kind of break down the 80 20 of these areas. And so let's talk banking and credit cards first. So what advice would you give to someone? What do they need to understand to optimize the banking situation?

Bill:

So this is very easy. We'll just cut to the chase things that don't matter. National brand and number of branch locations, things that do matter, great software, no fees and interest rate. So I'll give you guys two choices for banking. They're both good for different reasons. mercury.com is fantastic, is a modern bank. It's built for digital businesses, great for SaaS, great for e-comm. They have no wire fees, no a CH fees, great software, great app. They have 5 million bucks of FDIC insurance because they spread your money around multiple different banks on the backend. You will really enjoy banking with Merck. They will also give you four and a half to 5% interest on your money, which means if you're sitting on a million bucks, then you are not getting 5% interest from Bank of America or whoever you're banking with. That's 50 grand a year of just free money.

You're leaving on the table by banking with Bank of America and not banking with one of these two banks. So use Mercury or a newer bank called High Beam. High Beam is super cool because they're, especially for e-comm brands. So the partnership with Shopify where you get your money same day, like when Shopify disperses it, instead of it crediting your account two or three days later, you get it same day. They also have a built in true interest line of credit, which is just, I love them for this Highly ethical people. It's not this merchant Cash advance charge you a fixed fee of 10% upfront, but which is really a 50% a PR with high beam when they tell you it's a 14% a PR or whatever. That's really what it's, and it's built in to the high beam banking product where you can just click it and borrow.

You can just transfer right over from your line of credit to your high Beam account. They also offer you 4% interest. They also have, I think two and a half million dollars of FDIC insurance newer than Mercury, but good software designed for e-comm, use one of these two. There's no fees. I think it's basically a toss up. I think Mercury, their software is a little nicer. High beam wins on the instant Shopify payouts and the built-in line of credit, but they both offer no fees. They both offer good interest. Pick one of those two and ditch Bank of America

Brett:

Reducing fees, increasing interest that we are earning. Ease of use the logo, the brand, doesn't matter. Brand's, locations. When was the last time you want to do a bank who caress? So think about banking in a different way. Let's talk credit cards and credit cards. I think this is probably an exciting area for some people, and it does seem to me, I don't hear as many merchants or other agency owners talking about banks as much as I do credit cards. I think there's a little more education here on optimizing for credit card points, but what's the 80 20 of credit cards?

Bill:

Okay, so 80 20 of credit cards. Of course you can read a zillion articles about this. Here is the 80 20. If you don't want to be like a major credit card points nerd, here's what you do. I assume if you're listening to this, you are an e-commerce. So the minimum viable e-commerce credit card stack is get an American Express business gold because it earns four x points or 4% a k, a 4% on all advertising spend up to $150,000 a year. That includes Facebook ads, that includes Google Ads, that includes Amazon ads. Also, if you're running Amazon ads, do not let Amazon debit your seller account for the ads. Choose the setting where they charge your credit card so you can get points or cashback. So get an Amex business gold. And the interesting thing about this is you can have more than one.

You can have up to 10 Amex Business Gold, which people don't know. The reason you need up to 10 is because the four X only applies on the first 150 KA year of spend. But if you get 10, and of course you rotate the spend through them, right? Every month you can earn four x on the first 1.5 million of spend every year. So four x on 1.5 million is 6 million Amex points, which will fly you around the world 20 times in first class suites, or you can convert it into cash. And 6 million credit card points is approximately 60 grand in cash.

Brett:

That's awesome. So Amex Business Gold, I do know a lot of business owners that use that. So that's the first piece of your credit card stack. What's next?

Bill:

So put ads on your MX Business Gold and then go get a Capital One Spark Business cash, which is 2% cash back on everything and put everything else on that. So this is your 80 20 ads on as many MX Business Gold as you can get. And everything else on a Capital One Spark business, you get 2% cashback. It also supports employee cards. So you can give your employees Spark cards as well. So Amex for ads, all types of ads, capital One, spark business for everything else, and employee cards, boom, you're done.

Brett:

And we used the Capital One Spark card for years and years. We just recently switched to ramp, which is essentially the same as actually started by some people that I think defected from Capital One if I understood correctly. But same concept, 2% cash back on everything. And man, that adds up, right? You're spending this money anyway. You have these expenses on a monthly basis anyway, load it up on a card, get that free. It's essentially free money, right? Free.

Bill:

I talked to a business owner this morning who was putting everything on debit cards. I spoke to him for 15 minutes total miss, and it made him a hundred grand. So hopefully someone is listening and just made a hundred grand.

Brett:

And I think sometimes we have aversions to credit cards, whatever, because of credit cards are bad from a consumer standpoint and all these things. But this is a tool. This is a tool that you should be using. And if you're not using it and using it, well then you are leaving money to the tune of tens of thousands, hundreds of thousands of dollars on the table every year. So optimize your credit cards. Awesome. Anything else on banking and credit cards?

Bill:

Nope. I mean you can optimize them to the hilt even a little bit more, but this is 98% good. Do these things and move on to other things.

Brett:

Do these things and you'll be happy. And so feel good about that. Let's talk working capital. Next. This is the next component of optimizing your finance stack. So talk about what is working capital and then how do we start to optimize?

Bill:

Okay, so what is working capital? This sounds very scary if you're not an accountant. Every business has working capital. My friend Brent Beshore describes working capital as the blood of the business. It is the money that you need to keep the business alive. What does that mean in practice? It means how much inventory do you have, how much accounts receivable do you have? Those are assets, right? Accounts receivables an asset. It's money that you are owed. Inventory is an asset. You paid money for it, right? It's worth money. Accounts payable is also working capital. So that is money you owe someone else. So here's the weird thing about working capital. You might think, well, assets are good, liabilities are bad. So inventory and accounts receivable are good, accounts payable is bad sort of. But the other way around is that the more your asset accounts go up, your inventory and your accounts receivable need less cash you have on your balance sheet because increases in asset accounts are uses of cash.

And an easy way to illustrate that is if I buy something from you and you give me net 60 terms that is a hundred bucks or whatever that you don't have, you have a hundred bucks of accounts receivable, but you don't have a hundred bucks of cash, and now someone else walks through the door and you sell them a hundred bucks of stuff, now you have 200 bucks of accounts receivable, right? And that's 200 bucks of cash you don't have. So the higher your accounts receivable goes, the less cash that's cash. That's not yet on your balance sheet. And the weird thing is by the time I pay you the a hundred bucks, someone else has come along who you've also given net 62. So it's basically, it's like a Python, right? Yes, the cash comes out the other end of the python, but you've probably made more sales in the meantime that have refilled the Python. So the perpetual, the cash that is in the Python is cash that you don't have. And yes, you can turn the accounts receivable into cash if you stop giving people, if you stop selling, but that's not what's going to happen, right? You've always got sales running through the accounts receivable pipeline. So it's always a use of cash. So the short answer there is don't give people terms, get cash upfront, which will improve the amount of cash you have in your bank account.

Brett:

And practically speaking, how do we go about doing that? Now, I run an agency, it's actually quite easy for us. We've done this from the beginning where we start a project, we're requiring cash upfront. We don't really do extended terms on stuff, so we're pretty good about that. But if I own an e-commerce company, how am I getting cash upfront and not allowing any net 15, 30, 60, whatever.

Bill:

Well, the beautiful part about e-comm is it's almost all a cash up upfront business. Yeah, exactly. Through Shopify. It gets harder when you start selling to retailers because they're always going to want net 30, net 60, net 90, et cetera. The way you prevent that, now if you're dealing with Walmart, they're going to get net 90 deal

Brett:

With it. They're going to get what they get

Bill:

For sure. But if you're dealing with Brett Curry's pet store in my case and Brett Curry's pet store says, I want net 30, your response should be, I'm sorry, we don't do that because first of all, you don't want to chase Brett Curry's pet store down for $400 when they don't pay. So what you will tell Brett Curry's pet store is we don't offer terms, but I would be glad to take your credit card. And you might go, well wait, but then I'll pay a credit card fee. Yes, you will, but you will not be chasing Brett Curry's pet store down for $400 because a lot of these small retailers will default. And what's your default rate? I bet it's about 3%. And then you also won't have to do all the collections, you won't have all the accounts receivable, and you'll probably, and you'll just pay the credit card fee instead and the credit card fee, you can then tell your customer, you can go, we'll take your credit card gladly, and that's functionally net 45 for you because you have some time until your statement closes and then you have 30 days to pay the statement.

So you've functionally gotten net 45, we'd be glad to take your credit card. So that's the best advice for keeping AR down,

Brett:

And I think explaining it that way makes all the difference. We're basically by accepting your credit card and we're taking the hit on the fees, we're giving you 45 day terms in effect and kind of explaining that. And that's often all anybody needs, and without a doubt eating that 3% fee, that's going to be your write-offs for delinquencies or whatever, but then getting cash on hand sooner, not chasing people down. It just makes a ton of sense. So reduce your accounts receivable. That is a good thing. Even though that is an asset, it means that cash is not in the bank.

Bill:

It means cash is higher. If you've reduced accounts receivable, cash is higher. So there are tiers of assets. I like having accounts receivable. I really like having cash. That's better. Let's talk about the liability side. So accounts payable, a lot of people are very afraid of debt accounts payable though the more you owe other people, that's just money. You didn't have to pay them yet. So that's money that stayed in your business. So more accounts receivable, as long as you're on time, more accounts payable is better because you have borrowed money from your suppliers functionally and you have borrowed it at 0% interest because your suppliers do not charge you interest on the net 30 or net 60 that they give you. What is very, very hard when you're running an e-comm business is every supplier will start a young e-comm business on the worst terms ever, which are 50% when you place the order and 50% when it ships, which is devastating because you've got to lay out half the order three months before you get it, and then you've got to lay out the other half of the order before you get it, and then you've got to try to sell it and turn it into cash.

If you can move from half down, half at ship, even to all at ship, that's great. If you can then move from all at ship to half at ship, half net 30, then maybe all net 30, then maybe half net 30, half net 60 every six to 12 months, go back to your supplier and stretch them. This will keep more cash in your business.

Brett:

And that's the key, right? You're probably going to have to start at whatever terms you're given. Maybe you can negotiate at the outset, but be on time on your payments, and then every six to 12 months you're going back and you're asking for more, for more favorable terms. Because yeah, this is cash in your business and this is the cheapest debt that you could have.

Bill:

Because a lot of times people get into trouble on debt where they need to buy inventory, and so they got to go borrow from a bank or something, just borrow from your supplier, say, Hey, supplier, can I pay you later? That's what accounts payable is. It's 0% loans from your supplier. Now don't be late on them because that's a great way to wreck your whole business because they own you, they're your supplier, they'll stop shipping you, but it's free financing. You should really take advantage of it.

Brett:

And what's been your experience there, bill? Have you found that most suppliers are willing to work with you? And if so, how long does that take and what's been your experience?

Bill:

Yeah, so I think by the time you've been in business with a supplier for a year, you should be able to have a reasonable conversation about net 30. Or even a lot of times they'll want something down because they have to take risk to buy the raw materials. So maybe they'll say 30% down, 70%, net 30 or something like that. So basically this is you're paying the 30% upfront, so if you bail on them, at least they're not out the raw materials and then they're trusting you. This 30% is trust. They're basically going to take all their profit on trust net 30. So getting to that is pretty good. I have found it is a reach to get beyond net 30 with most suppliers. If you have been with someone for a very long time, you may be able to push 'em into net 60. Net 60 is about the best you're going to get. But if you can get net 30 even to a hundred percent net 30, that is a big win.

Brett:

No doubt, no doubt. So we want to keep accounts receivable low, as low as possible. We want to try to keep accounts payable a little higher as long as you're paying on time. What else do we need to be thinking about then as it pertains to working capital?

Bill:

So I mean that's the thing that will get you is your inventory, right? A growing e-commerce business sucks cash, right? Because will all that time happen is a business owner will have half a million bucks in their bank account at the beginning of the year. They'll double year over year, right? They'll crush it and they'll go, my income statement says I made a million dollars this year. Why is there still half a million dollars in my bank account? And the reason for that is there is an incremental million dollars on the shelf at your three pl, that's what happened. You're carrying more inventory because if you have to carry, say 20% of revenue as inventory, well if revenue doubles, the dollar value of 20% of revenue is now double as well. So that was more inventory that you had to hold. And so that's where all of your cash is going. So the key challenge in growing an e-commerce business is trying to finance the growth in your asset accounts, the inventory and the accounts receivable, because as you get bigger, those accounts usually get bigger too. So having either generating enough free cashflow or bringing enough external debt and equity capital into the business to finance the growth in your asset accounts is kind of the key balancing act.

Brett:

Awesome. So that's probably a good transition then to start talking about debt because we're going to use debt often, right? To finance inventory. And I guess one quick note on debt, because again, a lot of times we hear debt as a negative and it's a dirty word when it comes to your personal finances and stuff, but debt is often key to most businesses, and the right debt is going to be the cheapest partner you ever have in business and things like that. When is it okay? When is it a good time to use debt in your business and when is it not a good time to use debt in your business?

Bill:

So let's, the thing about good and bad debt, everybody kind of knows, oh, a mortgage is good debt, but oh, a car loan or credit card debt is bad debt. Well, why is that? A mortgage loan is good debt because it's associated with an asset account. The asset being the home credit card debt is bad debt because it's not associated with an asset, it is associated with expenses. You had too many expenses and so you ran up credit card debt, right? Functionally the same principle applies in a business. Good debt is usually attached to an asset inventory, accounts receivable, right? Bad debt is usually attached to a loss on the income statement. So the time that it is okay to use debt is to time shift cashflow. So what do I mean by time shifting? Cashflow? I have to lay out cash for inventory now, but I know that it's going to come back in exactly three months.

That's a time shift. I have an outlay now and an inflow in three months. I just need to bridge that gap. That's what debt is for. What debt is not for is to fix a business model problem. Lemme describe a business model problem. I never have enough cash to buy inventory ever. I would say that your margins are too low. Your business is not generating enough cash to pay for its own inventory. Now, if you're growing six x year over year, your margins, you can't have that good margins to pay for that growth in inventory. But if you're growing less than 50% a year and you can't pay for inventory out of cashflow, you have a business model problem, not a time shifting problem.

Brett:

Got it. So you're growing less than 50% a year and you're not able to pay for inventory, then likely your margins are not

Bill:

Right. Your margins are probably too low. Rule of thumb, if you're growing more than 50% a year, it's possible that your margins are fine and you still are going to need some debt capital to pay for your inventory growing so

Brett:

Fast. Yeah, makes sense. Makes sense. So what are your favorite types of debt? How are we optimizing our debt element of the finance stack?

Bill:

So maybe let's work from bottom to top. So we already talked about accounts payable terms with your vendors. That's the best debt there is. It's free, it's the best. So that's the first place you should look to try to borrow is try to borrow from your vendors. And the way you borrow is by paying them later, which is functionally the same as borrowing. The next best thing would be an SBA seven A loan. The SBA program that we have in the United States here is pretty unique globally. It will be personally guaranteed debt, but it's going to be, I think they're running about 10% interest right now on an SBA loan. So it's about five points above treasuries. It's a 10 year loan, which means the pay down of the principle is very, very slow. So you can cover the payments very easily because there's not a lot of principle in each payment because it's spread over 10 years. So an SBA loan is some of the best debt that you will ever get. The only downsides, there's two of 'em. One, the personal guarantee two is the freaking paperwork. It's just going to take you three months to put it in place. But you can get an SBA seven, a line of credit at any major bank. Any bank will do SBA and you'll be able to draw on that at 10%. So

Brett:

Yeah, I was just looking at this recently for $1.25 million SBA loan, monthly payments are going to be like 16 K, 16 to 18 K, right when you factor in interest and stuff. And so that's pretty easy to absorb. And so yeah, it's good financing, but that personal guarantee, you better be sure, but they're always trade-offs. Okay, so we got accounts payable, free debt, SBA pretty low interest debt, reasonable, pretty

Bill:

Reasonable, a little bit more expensive than SBI probably in the low teens right now will be like a standard line of credit from any of your local banks or credit unions, high beam, their debt product. I would put in this bucket a standard line of credit where it's going to charge you true interest based on the money you have outstanding. If you borrow a whole bunch of money today, pay it all back tomorrow, you'll pay only one day of interest. So you won't pay 15% on that money. You'll pay 15% divided by 365 days is some tiny fraction of a fraction percent, right? So you borrow a million bucks at 15%, you pay it back tomorrow, you'll pay them back like 1,000,100 bucks from small amount of interest. We're going to get into different types of debt where it doesn't work that way in the future. But then I would look at a local banker, credit union line of credit. I would look at High Beam or on Amazon, they are partnered with a lender called Marcus. And so if you qualify for an Amazon Marcus loan, this is a good kind of Amazon loan with lower true interest. So that's the line of credit. And

Brett:

So with the line of credit then what are you trying to optimize? Are you trying to pay that off in 30 or 60 days? I know it probably depends on the way the interest is structured,

Bill:

But yeah, back to time shifting. So a line of credit is basically a big credit card you can draw on and pay it back whenever you want. It has a limit just like a credit card. So when you're time shifting cashflow, you say, okay, I need to draw a hundred thousand dollars on my line of credit based on the sales of the inventory, the asset that I'm using this a hundred thousand dollars to buy, I think it will sell through in three months and then I will be able to pay it down. They're not going to make you pay it down. They will let you keep revolving it to a point. But you as a business owner should have the discipline to say, I'm drawing a hundred grand now. I'm going to sell through this inventory in three to four months. In three to four months, this is going to be paid to zero with the cash that comes through the business and now that's it. Now that line of credit is a super flexible tool for you. That's great. Right Now you've time shifted that cashflow, but what you don't want is at the end of three to four months, you've only paid down half of it and you don't have any more cash. Now you see that you have a business model problem, your margins are not good enough.

Brett:

Totally makes sense. So line of credit, what's next?

Bill:

A credit card, believe it or not, and I haven't even gotten to the worst thing in the world, which the merchant cash advance even better than that is a credit card. Just use your Capital One spark or whatever it is and use a service called lio or plastic, which will basically charge you a 3% fee and put it on your credit card. Your typical business credit card is going to be like 24% interest or something. If you revolve a balance and everybody gas at home revolve a balance on your credit card, yes, it's expensive, it's 24%, it's not great. This is danger will Robinson don't do this a lot, but it's 24, it's roughly 20 low to mid 20% money, something on your credit card, which brings us to the horseman of the apocalypse of debt, which is the merchant cash advance loan, which is the worst type of debt that is out there.

It should be your absolute last resort because when most people get these, the next thing they do is go bankrupt. In my experience, especially in 2023, I have seen so many people crushed by these go by names like way flyer eight, fig Clearco, Shopify Capital, Stripe Capital, all of these ones that they pitch themselves this way, pay only a 9% fixed fee and pay back 12% of sales until it's all paid back. I have a calculator. If you go to my website, bill da.com/debt, I have a very in-depth explainer of why that 9% fee on the front end actually pencils out to

Brett:

Usually because you're like, wait, that's way better than 24% interest on my credit card

Bill:

Because it's not interest, it's a fee. There's a very specific reason. They call it a fee. The actually pencils out to between 40 and 70% true interest. Double your credit card, dude. It's double your credit card as fault. And when you think about it, if someone will loan you a hundred grand knowing almost nothing about you, of course the terms are going to be terrible. A lot of people are going to default on them. So they need to charge you enough interest to cover for all the people that are going to default on them. And that there is a very high default rate on all these loans, the Shopify capitals, because they don't really underwrite. You press a button, get a hundred grand tomorrow versus you get a hundred grand SBA loan, they're going to background check you. I mean they're going to look at three years your business financials, they're going to give you a Proctology exam, right? And because they're going to de-risk it, they can charge you less because they have a lower default rate. Now of course, it's going to take three months, but the merchant cash advance ones are brutal. It's a treadmill. I see people take one and then they've got to take another one to pay off the first one. And I've seen people buried under three and four of 'em, and each one's taking 17% of sales, they're losing 60%, 70% of their cashflow every day, just straight to debt service, and they're bankrupt and they lose their business,

Brett:

Then you've got no way. You got no way to crawl out of that, right? Increasing sales doesn't fix that. You can only increase margins to a certain degree. That's just a death spiral.

Bill:

It's a death spiral. Be very, very, very careful with those loans. And the last thing I'll say is if you are buried, if you're listening and you're buried under those loans, you can negotiate, just go to them and say, I know I owe you a hundred grand, but how about 20 grand? And we go, our separate ways you can negotiate for a payment holiday. I've helped people go to all these guys and take 50% haircuts and get 'em out of their life. Like negotiate. Just don't let them crush. If you're really screwed, they will work with you. It's not going to be fun. They will make you feel like a terrible person

Brett:

Because all their math is built around default rates. All their math is built around people defaulting. And so if you come to them with not a default, but something less than what they're going to get, then they'll probably take it.

Bill:

Yes, that is baked into their model. You don't have to feel like a bad person, like some fraction of people not paying them back is in their model.

Brett:

Yeah, totally makes sense. Bill, this has been awesome. I'm like inspired and motivated and I started really enjoying the balance sheet a couple of years ago, partially thanks to you. And so if people want to dive into this, you kind of mentioned your website, but where can they learn more from you? How can they follow you? I think you host a podcast now as

Bill:

Well. Yeah. So if you like this content, I do a lot of it on Twitter at bill DA B-I-L-L-D-A. You can also go to my website, bill da.com. If you do bill da.com/debt, I'll expand a lot on the topics that we talked about. And there's a free calculator for how to calculate a true interest rate on a merchant cash advance loan on there. And then if you want to listen to my voice more, I have a podcast called Acquisitions Anonymous, where we break down businesses that are for sale twice a week. Myself, Michael Glee, mill Snell and Heather Anderson publish twice, two businesses for sale each week. And we kind of break 'em down what questions we would ask if we were going to buy 'em.

Brett:

Super great resource. So if you're looking to buy businesses, you're planning on selling a business, which probably every entrepreneur is going to be doing one or both of those activities at some point in time, this will get you in the mind of buyers and sellers. So check out that podcast as well. Bill's been a ton of fun, man. Thank you so much for taking the time and we'll have to do this again and then not wait two or three years or whatever it's been.

Bill:

Thanks for having me, Brett. Good seeing you.

Brett:

Awesome. Absolutely. Bill D Sand, ladies and gentlemen. And hey, if you enjoyed this content, we'd love to hear about that. We'd love your review on iTunes. Share this content to somebody that you know is going to need it. And hey, I'm getting pretty active on the socials now, so follow me on LinkedIn and Instagram and elsewhere. And with that, until next time, thank you for listening.

Episode 263
:
Anthony Mink - Live Bearded

Cut Your CPA in Half by Asking Better Questions

What do you do when you grow 25% YoY but realize you’re losing money? 

How do you adjust when what has always worked in the past stops working? 

What steps do you take when your cost to acquire a new customer is skyrocketing, and nothing is bringing it down?

If you’re like some brand owners, you keep doing the same stuff but try to do it better. 

Sometimes, you need a larger shift that starts with asking better questions and understanding what problem you’re trying to solve. 

This interview with Anthony Mink, CEO and Co-Founder of Live Bearded, was super fun and energizing to record. 

Live Bearded is an 8-figure brand that experienced something pretty dramatic but also not uncommon in eCommerce. Their new customer acquisition ads stopped working across ALL ad platforms. 

We know the brand well; we’ve been running Google and YouTube ads for them for years. Seeing their CPA skyrocket across all channels (Facebook, IG, YouTube) and then helping it come down to the lowest it’s ever been was inspiring and insightful. Especially while spending more than ever on top-of-funnel efforts. 

Ultimately, they discovered they had a fundamental positioning and messaging problem. Their offer was good (basically a free sample), but the way they positioned their product had taken them as far as possible. They needed to reposition! 

In this episode, we uncover that journey, and it’s PACKED with valuable lessons.

Here’s a quick look at some of what we cover:

  • How you first have to clearly define the problem before you can solve it. (This is a step entrepreneurs usually want to skip.)
  • How positioning is likely the most powerful lever you can pull in your business.
  • The power of Stories, States, and Identities in your marketing
  • The power of Brand and how Nike has it, but Hyatt doesn’t.
  • The concept of Better Your Best (and NOT Better Your Meh).
  • The messaging that cut Live Bearded’s CPAs in half.
  • Plus more!

Mentioned In This Episode:

Transcript:

Anthony:

I know in our business, and this is I think one of the things that we want to talk about today is like oftentimes the most difficult thing is actually solving the right problem. And there's a lot of surface level problems that come up in business that don't actually address the underlying problem. That's what you actually need to solve for. And I know for us so far this year, we're up 25, 26% year over year, which candidly is down for us.

Brett:

Well, hello and welcome to another edition of the eCommerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce, and I am so excited about the podcast episode today. My guest is a legend. This topic is going to be insightful, inspirational, it's going to be really, really good. And so I just want to dive right in. And my guest today is the co-founder and CEO of Live Bearded. He's one of the most fit guys in the business, one of the best beards in the business, and just really a genuine guy. He knows business, he knows people, he knows leadership. You're going to love learning from him. And we go way back. Anthony Mink is my guest. So Anthony, welcome to the show. And how's it going, man?

Anthony:

Thanks for the intro, man. I'll try to live up to that one. I appreciate the kind words. Things are going really well. We were talking just before we hit go live. It's November 8th. We're two and a half weeks away from Black Friday, so we're just right in the middle of all of it, but really, really excited. The team's doing amazing and just feel like the e-commerce world has been crazy over the last 12 to 24 months, if you will, with the highs and then kind of like the drop off and the turbulence. And I just feel very fortunate. Our team has done an incredible job and we're still having a lot of fun and enjoying the process.

Brett:

That's amazing, man. And I get to see your team a lot, obviously get to see you at least a couple times a year, blue Ribbon and other events. And then you get to see your team too. And you mentioned that they have fun and they genuinely do. I see your team, they're smart, they're engaged, collaborative, but they're also, you guys are having fun, having fun doing this, which really, if we're not having fun, then why do it? Right? Why not do something?

Anthony:

Yeah, I mean, I started my first business because I didn't want to work for a stuffy boss and I didn't want to work in a shitty office, and I wanted to be able to kind of do things my own way. And when we go through the interview process, one of the things I say is we have a very politically non correct environment. I'm going to say fuck a lot and we're just going to be ourselves and have fun. And if you're not comfortable in that environment, that's totally okay. But I wanted to create the environment that I wanted for my company or for myself within my company. And so to that degree, we respect each other, we try to challenge each other to get a lot of work done, but also we just give each other the grace to be flexible and do what they got to do. So we've tried to find that good balance between kicking ass and driving results and then also giving people the space to still do what they need to do in their personal lives and professionally. And so far it's worked out well.

Brett:

Yeah, I really tip my hat to you guys the way you've struck that balance of getting after it, but also caring and having fun is really admirable and it's working and that's amazing. And also thanks for joining me right now because as you said, as we record this, we're all prepping for Black Friday. And so when I invite my e-commerce merchant buddies to come on the show or friends to come on the show, I don't expect 'em to come on this time of year, but you're like, I'll do it. I'm in. So thank you for doing that. And yeah, I just want to kind of dive in, and I think this would be a good segue into how would you view the state of e-commerce? Yeah, we had the highest of highs, maybe not the lowest of lows. We had the highest of highs, and then all kinds of craziness. Yeah, has ensued after that, but how would you describe the state of e-comm?

Anthony:

Yeah, I think it's highly industry dependent based on all the different people that we know from Blue Ribbon. You talk to some guys and they're doing very well. Other guys, they're struggling. I think when we were at the last Blue ribbon a couple of weeks ago, I gave some stats and one of the things that was really shocking to me is the quarter over quarter growth rate in e-commerce is the lowest it's been since they've been tracking it from 2010, 2011, they tracked quarter over quarter e-commerce growth rates, and it was double digits 12, 14, 15, 20, and it was just consistent year over year. And then during Covid, there was a quarter that was 50, 60% quarter over quarter growth rates. And so we had this tremendous wave that we've been riding for the last 12 years and over the last four quarters we're in the single digits for the first time ever.

What's also very interesting about that correlation is during the whole covid kind of lockdown stuff, the number of e-commerce stores doubled. So you've got twice the amount of competition, the slowest amount of growth rate that's been possible, pair that with inflation and credit card debt has reached a trillion dollars for the first time in the history of our country. So also advertising rates and CPMs, as you guys know at OMG, are as high as they've ever been. So you have all of these factors that honestly don't create a good environment for e-commerce. And I think a lot of people are feeling that. But at the end of the day, one of the things that we talk a lot about is it's just the ordinary things practiced consistently. One of my favorite coaches of all time is John Wooden, and he's famous for the fundamentals. You're going to do form shots every day.

You're going to do dribble drills, you're going to do passing drills. And I think there's fundamentals in e-commerce that if we stick to them, we're going to have more success. And honestly, I think the fundamentals are the most difficult thing to do, but they're the most basic and that's why they're the most difficult because people want to try to find the new whizzbang thing or the new strategy that they can use to really take things to the next level. And oftentimes it's just great email marketing, great ad creative, great customer, great follow up. There's just a few core channels that if we just do very well at, we can build a very defensible business. And for us, our plan through tough times is to just do everything we can to personalize the experience to customers, make sure they know that we truly care about them and we're here to support them.

And if that means that they're going through tough times and they can't buy, that's totally fine. We're going to be here when they do have some flexibility and when they can. And in the meantime, we're still going to try to provide content that's going to support and meet them where they are. So for us, I think in any environment, there's an opportunity to maximize the current state. Right now, I think we're seeing a lot of people that maybe they didn't build a business based on fundamentals and it was tactics or strategies that were working in the time covid wave, the excitement, whatever, and just right

Brett:

In the wave

Anthony:

For sure. Now the wave is gone and those businesses start to fall away as well. And so I think on the other side of that, if you practice good fundamentals, you build a business on strong financial optics and good metrics, then I think on the other side of this is going to be a tremendous growth wave, and that's definitely what we're focusing on.

Brett:

Yeah, it's so good. And I'm a huge John Wooden fan. I love basketball, college basketball especially. And he was famous for when a new class of freshmen would join UCLA and they won 10 national championships in 11 years or whatever the crazy stat was. And he would begin practice by showing players how to put their socks and shoes on. Players were like, yeah, I'm playing division one basketball coach, I don't need to. But he was like, no, no. This is how you don't get blisters and we don't want your shoe to come untied during a key moment in the game just really thinking about, and it's almost more of a mindset thing than anything. We're going to focus on the little things and get really good at the little things so that they don't trip us up literally, literally or figuratively. And what's also interesting too, you talk about the state of e-commerce and really some kind of scary numbers.

The covid wave has gone and costs up and all this stuff, but then there's also just some weird mixed data too, right? I just saw the Q3 earnings reports came out from Amazon and they were pretty good. Amazon's ad business is off the charts good. Facebook's Q3 was good. Google's was a little more kind of middle of the road, but it was okay. Shopify did pretty good. But yeah, there's a lot of e-comm businesses that are, some are up, some are down, some are sideways. It's just kind of a confusing time as well. But I think that's another reason to go back to the fundamentals because they will not change. And if we get really, really good at that, we can weather whatever storm is ahead.

Anthony:

Yeah, I think the most critical thing to do is to really dissect what problems you need to solve or what fundamentals do you need to focus on. I think I know in our business, and this is I think one of the things that we want to talk about today is oftentimes the most difficult thing is actually solving the right problem. And there's a lot of surface level problems that come up in business that don't actually address the underlying problem. That's what you actually need to solve for. And I know for us so far this year, we're up 25, 20 6% year over year, which candidly is down for us. We've been growing somewhere around like 35 to 40% year over year for the last five years. All things considered. We feel great about where we're at throughout the year, but that being said, our profitability is down.

We've ran into some efficiency issues in our marketing, and we actually lost about a hundred thousand dollars in June and July. So we went through a really interesting summer stretch for us, which it's usually a little slower in the beard market. There's just less search volume, there's less people online guys like to grow their beards out in the winter. So we've had a little bit of seasonality, but we had to take a step back from that moment and be like, okay, this is the most money we've ever lost. We've literally never had a down couple months like this. Our marketing's way out of whack. Where are we missing the mark here? And are we solving the right problem or are we not? And we just went through this process to dissect why our advertising wasn't working, we were how we were languaging things, how we were positioning ourselves.

And through that process, I think one of the things we uncovered is the way that we position our brand may just be, or individual products or individual sales funnels. It's likely one of the greatest leverage points that we have. And through going through a process, we were able to take our CPA from it Rose is high as 30, $35. And to give the audience some context, we have a sample offer funnel that we use to basically get our different fragrances in the hands of potential consumers. We found in our buying process, one of the biggest challenges was understanding what fragrance they wanted and what products they needed. So we put 'em all together in a sample pack, we sell it for 10 bucks, we lose money on the first purchase. We go pretty negative on it, but the theory is if the product is good enough and we deliver the desired end result, then they'll come back and we know our repeat purchase rate.

The funnel is optimized, it works great for us, but at that rate, we can only afford to spend about $20 on a CPA, anything more than that. We start to lose too much. It takes too long to get the cash back, et cetera. In the summer, our CPA got like 32, 30 $5 and we were getting our ass kicked. That's part of the reason why we lost so much money over the summer. And so we took a step back and we're like, okay, all the ad creative we're throwing up is not working. We are just really regurgitating a lot of the same copy, a lot of the same messaging, trying to repackage it if you will, but the underlying kind of hook angle positioning, it was all the same.

Brett:

And one thing I want to kind of underscore there, Anthony, because a few things that CPA, some people may hear that and think, wow, that's really low, or that's really high depending on someone's perspective. But this was for a free sample offer and live bearded. It's a consumable. You guys have very loyal customers once they kind of get started on a product 10, they stick. And so that sample offer makes a lot of sense for you. But yeah, when you're going in the hole on that first order, you can have a really high CPA. So just to put a little more context there. And then, yeah, you guys, when did you start noticing CPAs rising around what time?

Anthony:

Yeah, I would say May, June, maybe even as early as April. But May and June, they started to get really bad and we started testing more to try to optimize, find new winning creative. And it was like the more that we spent the higher our CPA went, and there was this perfect correlation between spend and CPA just going in the wrong direction. And so it was an indicator that we were solving for the wrong problem. And so we took a step back and just with my creative team and my marketing team, we tried to dissect what problem are we really solving here? And there's a lot of great training out there on how to solve problems and benefits, solutions, desires, problems, et cetera. One of the things I really love is in StoryBrand, they talk about people buy external problems for internal solutions or internal challenges.

And so we were just thinking what the external problem is, like beard issue. They don't like the way it looks grooming, et cetera, but why are guys really buying products in the first place? And so we really just started to dig into this and we actually came up with entirely new hooks, entirely new angles. We're able to do some kind of testing and surveying of our customer base to prove some of those angles were working and relaunched a whole new creative set and dropped our CPA from $35 down to as low as 12 to $15,

Brett:

Which is just insane. And it's awesome. And so there's really two sides of this, and you guys kind nailed both of them. One, they're solving your business problem, and then there's the angle of what problem am I solving for my customer? And I think from the overall business perspective, this is difficult. We run into issues where we're not as profitable as we used to be. And we ran, had two quarters at OMG Q4 of last year, Q1 of this year where we still made money, but our lowest profitability ever. And so you look at that and you're like, we got to fix it. We got to fix profitability. But then you really have to understand, but what's the problem? What is the problem? And I remember hearing a buddy of mine talk about this story. He was doing a college, it was a college project, and he had this professor, and so they were working through this project and they were stuck.

And so they went to the professor for help, and the professor just kept asking, what's the problem? And so they'd go through the whole thing, well, we got this and we got that, we got, and he's like, no, no, no. What's the problem? Eventually started getting animated and throwing stuff and saying, what's the problem? And then ultimately it was they had a variable cost issue that they had to solve, but they were not defining the problem. And if you don't define the problem, you can't solve it. And so for you guys, it was understanding, hey, the CPA is way off and it's off because you don't have the right offer. You're not using the right offer, the right ads, and they're not connecting.

Anthony:

Yeah, I think I did this creative thinking. It was like a creative strategy mastermind or masterclass with our buddy Will Hughes if love Will Hughes.

Brett:

Hughes, yeah, liquid Mind, really good stuff.

Anthony:

He has this masterclass and I went through it and in one of the trainings there is a picture of a train track and it goes like the train tracks go into a tunnel and you can't see on the other side of the tunnel. And his question was simply, where do the train tracks lead? And I was like, to the train station. And he's like, he's like, well, maybe they do. Yeah, that's like a logical answer. That's a surface level answer, but what's deeper than that? And then he's like, I knew at that point what he was signaling for me to do. He is like, what's beyond the train station? I was on the other side of this tunnel. It opens up and there's this miraculous vista of mountains and snowcap peaks and eagle soaring and herds of animals. And he's like, yes, that's what you want.

You want to go to the next level deeper than the most basic surface level thing. And I think when solving a problem, the first answer that we come to is typically the easiest one, which is why it's the worst one, or it's like it's the symptom, not the actual problem, if you will. And so just using us as an example, we were like, our CPA's broken. Okay, new ad creative, new ad creative. Let's find a new character to play this role. Let's rewrite the script. But our positioning of the offering and of the product was the same the entire time. It was just repackaging it, repackaging it. Fast forward six, seven months, we couldn't make any progress. And it felt like we were spinning our wheels. We were running in a million different directions, but we were producing no results. And that's when I realized, okay, we're solving the surface level issue of ad creative, not the actual problem of messaging, of positioning.

And so then we brought everybody together and we started to really ask, why do our guys buy products? What are they trying to create or accomplish? Not the surface level, like, oh, well, they need to groom their beards or they have beard itch or all of these different things they wanted to grow better. Those are all the surface level things. And then there's this moment where I was like, someone was like, well, we want to give people confidence. What does a guy really want? He wants to feel confident. It's like, okay, but how do you make a guy feel confident? You put a hot girl in an ad, say you buy this and you're going to get the girl or whatever. And oftentimes, I really believe that questions are the answer. So whenever we're solving a problem, we just need to ask better questions. And oftentimes,

Brett:

What a better solution. You got to ask better questions. Absolutely.

Anthony:

Yeah. I will literally at times go through a journaling process, but all I'm doing is asking myself different variations of the same question, and I'm trying to come up with a question that when I write it, I'm like, oh, I know how to answer that. And you're almost trying to find that thread for you to just take. And so I was like, well, how do we create confidence? And I didn't know. And so we kind of brainstormed about it, and then I asked the opposite question, well, what makes guys lack confidence or feel embarrassed? And I was like, I know the answer to this one, right? It's like having a beard that you don't, not liking the way you look in the mirror, not feeling good about the way that you look. And then ultimately, we went down that road and came up with this concept of my beard sucks.

I feel embarrassed by my beard. And the solution to that is better grooming routines, trying the sample pack, et cetera, et cetera. And we definitely hit on the pain point of guys feeling embarrassed. And what we uncovered through this process of asking better questions, we uncovered that one of the challenges that our consumer has is feeling embarrassed by their beard or being dissatisfied with it or wishing that it looked better. And so rather than saying, Hey, we're going to give you this sample pack that's amazing, that didn't work, saying, Hey, we're going to make you look and feel your best. That didn't work either. We said, if your beard sucks, then do this, this, and this, and we'll take care of it. And we did that in a funny playful way where we had a scene of three guys sitting at a bar and one guy's like, oh, my beard sucks.

And the other guy backhand him and is like, your beard doesn't suck. You just suck at taking care of it. But it delivers the point of, Hey, if you don't feel like your beard looks good or it doesn't look the way you want it to, then maybe you just aren't good at doing something and oh, by the way, we can help you. So to relate this back to the consumer, I think ultimately finding what that unlock is, I mean, there's a saying in marketing that's as old as marketing itself. It's like if you can enter the conversation that the customer's already having in their mind and you can demonstrate that the problem as good or better than they can, they're automatically going to trust you. And so what we uncovered is the conversation that guys were having was they felt embarrassed by their beard. They didn't want to say it out loud, but when you brought it up to them, they're like, oh yeah, I resonate with that in this example.

So finding what that real emotional hot button was for them or what that conversation they were having with themself was and being able to tap into that, that cut our CPA in half, and it literally did it in the matter of three days once we launched that new ad. And here we are three, four months later, and our CPA's still extremely good on Facebook, Instagram, it's doing very well where we are acquiring more customers a day than we ever has as a company, and we're spending more at the top of funnel than we ever have. And we've been doing this for seven years. So the positioning for us was a major unlock. And now it's like I know that whenever we have marketing and efficiencies, we need to really go back to visiting how we're positioning ourselves or what problems we're speaking to specifically with our customers.

Brett:

And just thinking about, I was reading this David Ogilvy quote the other day, Ogilvy on advertising and just one of the legends in the space, he was the guy behind Dove soap and Rolls Royce and Hathaway shirts and lots of other iconic brands. And he said, all good ads are fueled by a big idea, not just a discount or something, but a big idea. But all those big are pretty simple, not complicated. We always want to make things complicated about that. Fundamentals. Fundamentals. But going back to this and understanding, okay, why does someone buy beard products? They don't want their beard ditch. Sure, they want it to be moisturizer to smell good. Sure. But that's all surface level stuff. That's not a big idea. The big idea is I want to feel great about my beard, I want to have confidence, and then in relationship to the conversation taking place in the customer's head, my beard sucks. That's like the language that would be going on in someone's head. Not my beard needs to be better, but my beard sucks. And so you guys really tapped into that, which was cool. And so yeah, walk us through. You talked about that process of, okay, they want to feel confident. That's kind of harder to define, but we know when they don't feel confident. So let's define that then. How did you kind get to the creative application of guys in a bar kind of playing that out or any other insights into the creative process?

Anthony:

Yeah, candidly, my team handles most of that. We've got a couple of great guys on our team that kind of just sat down. They've went through a lot of training courses and have gotten pretty good at doing script writing. And then we hired someone who has done a lot of hero style videos. So I've got four full-time creatives in-house, plus two marketing guys that are great at script writing and copy. So internally, we've really optimized to build creative like this and to be able to do it efficiently, we knew that this was an unlock for us. So to answer the question specifically, I think the writing team sat down and to your point said, okay, if people are embarrassed by their beard or if they're dissatisfied or unhappy, that's not the language that they're going to use in their head. What do they actually say to themselves?

And you're a hundred percent right. They're going to say, damn, my beard sucks. Right? Then we wanted to come up with a fun environment where bros would be having a conversation and it's like, well, where do guys meet and hang out and have a conversation? What's relatable to our audience having a happy hour meet for a drink at a bar, et cetera. So we just found a local location that we could rent out for the day and put 'em in a bar setting and record it, and the rest is history, just stuck to the script and did the things there. But I think for us, what we always try to do is write creative and come up with sets and locations that we believe are most aligned and congruent to who our customer is

Brett:

Most authentic.

Anthony:

Yeah, exactly. To us as a brand too, our brand positioning is very much, we're just regular guys. I started live bearded with one of my best friends seven years ago. We started it in my living room for the first four or five years. It was just him on camera, him and I on camera, and we were just really trying to create this brotherly ball busting, have a good time vibe. And so that's always just been the culture and the ethos of live bearded. So with all of our creative, we really try to make that be consistent.

Brett:

That's awesome. So I want to go back to the problem solving question and kind of look at how you decided to start with the ad creative, right? Because the CPAs go up and there's several things you can consider there. Well, it's just ad costs going up or my ads ineffective or do my landing pages need to be fixed? And ultimately, I think you guys have made improvements all along that journey, right? You guys did CRO work as well, landing page work, which has worked very, very well. But how did you land on ad creative? That's the piece we need to fix right now.

Anthony:

Well, to your point, I have spent a year and a half optimizing our funnel post click. So our landing page is super dialed in, converts at 12, 13% on cold traffic, so we're good there. Our email funnel, everything backend is optimized. Our repurchase rate on the offer is upwards of 35% when everything is dialed in and working correctly. So I knew everything post-click was dialed in because none of those metrics had changed. The only thing that had changed was our front end CPA, our cost to acquire. And it wasn't just on one platform, but it was on YouTube working with you guys at OMG. It was on Facebook, it was on TikTok. Every ad we are running, it was going up. And so I've been running ads and doing this thing full time for 12 years now. I remember setting up my first Facebook ads in 2011.

So we've been at this a long time, and I think when you're at it a long time, you just get a general sense of things. You kind have an intuition that's maybe the part of business and marketing that's not necessarily teachable. You just get it after playing the game for long enough. And I just have this theory that's like we're just one ad away, one sales funnel away, one funnel away, one optimization away from the next level of growth. And since everything downstream was optimized, I was like, well, I think the only place we have left to try to optimize is creative. And you always hear these crazy stories of like, oh my gosh, our buddy jock at Raindrop, oh, Dr. Squatch came to us at 3 million and we were able to get him to 300 million with different ads in the Super Bowl and the most YouTube spend ever. You hear these crazy stories and I think a lot of times they're very hard to believe. Even I doubt it in times in my business like, man, we've never really had that one ad that just was a moonshot. We've just always hit base hits. And again, it's allowed us to grow at 35, 40% year over year for five years in a row now. So we've never been the company that's tried to hockey stick growth partially, we couldn't afford it. We just were self-funded and we like the slow and steady approach.

But with that, it's like I know creative always fatigues. Again, everything post click was optimized. So for me it was like, well, maybe this is just where our new CPA is going to live, maybe everything else downstream, maybe we have to change the dynamics of the business. And I think at times there's inflection points where what we were working fundamentally changes, and we do have to re-engineer our business, change our approach, and if we weren't able to get our CPA down with this particular sample offer, we would've had to look at maybe acquiring customers in a new way. But I just believe in the process of bettering your best. That's what I tell my team all the time. It's like our goal, once we get a new winning ad, our immediate goal is to beat it, and we try to create a fun competition and we tease each other about it, but I really just live by the idea of bettering your best.

And that's really what it just came down to. And if I'm honest, bro, there was a period there where we were in it multiple months in a row with no winners and no breakthroughs, and I thought to myself, I don't fucking know if this is going to turn around. Maybe this just is what our ad costs are going to be and maybe the economy and some of the, maybe there's just a lot of factors here and I'm not going to be able to break through, but that doesn't mean that I don't consistently show up every day and do everything that I can that's in my control. And I guess I just believe that if we continue to show up, continue to take action, continue to work to solve the right problems, ultimately we're going to find an unlock somewhere along the way and that's going to lead to that next level of opportunity.

Brett:

And you said you believe in bettering your best, and I think some brands though try to better their meh, this is something that's not really working we'll just get a little bit better. Well, that doesn't work, right? Sometimes you need that breakthrough idea, and you guys went through that where these ads weren't working well, let's just try to do 'em a little bit better. Let's just try to do the same concept but a little bit better. And sometimes you just need that different positioning and that different angle altogether.

Anthony:

Yeah. I don't know where I read it. I actually think Spencer told me about it or someone on the team did. I think it was Nathan actually. They listened to a podcast and the podcast was like, it's easier to grow 10 times than it is 10%. And it was this very interesting kind of philosophical approach. And they said, because if you're going to grow 10% more, you basically just have to do what you're doing a little bit better. You just have to better the me, right? But if you're going to 10 times, you have to totally change your approach. You are. So we're in the eight figure range, and what we've done has gotten us here. If we want to go to nine figures, we have to totally change what we're going to do. What gets you to where you are isn't going to take you to where you want to go.

And so that whole idea of, yeah, you can grow 10%, 10%, 10%, but if you want to go grow three times, five times, 10 times, you have to actually fundamentally change the way that you're approaching things and solve a totally different problem in a different way. And in some ways, that's kind of the approach that we took is like, Hey, we've been trying to solve the ad creative this whole time, but let's go a layer deeper in a layer deeper and solve for positioning, solve for emotion, what emotions do we really want to hit and what conversations can we have in a different way? And that allowed us to get to the next level

Brett:

Fundamentally, what is someone buying when they buy your product, and why are they choosing you over someone else? Because yeah, to look at the Dr. Squa example, going from 3 million a year to 300 million a year is just because better soap. I mean, that doesn't seem very likely better positioning what we feel something when we watch that doctor squat ad and we want what they offer, and we're willing to pay $12 a bar or whatever it is, more than we pay for something, a Walmart brand or something like that. And actually, I just saw we were traveling, driving through Oklahoma City to go to a football game and Dr. Squat and a truck stop, this whole section of Dr. Squat. I'm like, they made it, man. They're in a truck stop. So that should be your goal. Anthony Mink, I want to see a live bearded. There's a lot of

Anthony:

Bearded truckers

Brett:

Out there. There's a lot of bearded truckers out there for sure. But yeah, does come down to positioning and it does come down to brand. And sometimes we're missing the Mark A. Little bit. We've done okay, but we're bettering our meh instead of bettering our best. And that's where we need to shift,

Anthony:

I think said in a different way maybe to try to connect the dots maybe to those people that are like, okay, I get it, but how do I really drive this point? Home? People buy stories, states and identities. They don't buy products, right? And so if you're selling a product, if I'm selling you a bar of soap or a beard oil, okay, cool, maybe I'm interested if I actually need that in that moment. But if you sell a story or an emotional state confidence, the cool kid, the be a man, whatever, some of these ads sell or you sell an identity, right? There's a certain type of an identity that people are selling if they buy a certain car or if a woman buys a certain handbag or whatever. And I think, again, if we step back from the product and try to sit down with our customer and really get inside of their wants, their needs, their desires, what stories do they want to buy, what emotional states do they want to buy, and then what identities do they want to buy so they can signal who they are. And I think just that framework will help us, at least here with us. It helps me kind of dissect or not dissect, but step away from the actual tangible product. Because easy when you're just selling the same thing over and over. We've been selling men's grooming for seven years. You get in a vacuum, and so oftentimes you have to pull yourself out and get perspective. So I think stories, states and identities, that has really, really helped me get a different vantage point or try to find a different way to connect with the audience.

Brett:

Yeah, it's so good because stories really evoke a different set of emotions and really make something come to life and understanding what state are we trying to create? That's really important. I think most people don't think about that, but the deepest level or the highest level, whichever way you want to look at it, is that identity, right? Why do I buy Nike instead of Adidas? Or why do I want to drive this over that car? It's how I want to identify. I want to be a great athlete, I want to be associated with great athletes. Or for me, I first started liking Nike. I was a huge Michael Jordan fan, and so I grew up absolutely in the glory days of mj. And so I still like Nike the best today. And it's not like they got better shoes than Aida. I mean, it's totally subjective, but yeah, really likely they still

Anthony:

Have to screw it up for you at this point. They just don't have to screw up and they've got your business because the identity that they've created. And it's very interesting. I saw this graph a while back, and it was talking about influencer led brands and the importance of a brand having a forward facing founder or someone that they can basically connect with the brand as an identity. And it said basically the question was, how important is it for you to buy from a brand that the founders and the baby boomers, it was like nil, like 10, 20% of people were maybe like, oh, it's important, but when you go to Gen Z in the 18, 20, 25, 30 year olds in that range, it was like 60 70% of people said it was very important. And you pair that with just, I think I have this philosophy in life, and I think just because you don't like the messenger doesn't mean the message is any less valid. Totally,

Brett:

Totally.

Anthony:

And I've trained myself to just observe. I think most people get caught in a reaction to different things, and I like to just observe. And so there's been some interesting observations in the business community with Target, with Bud Light, with several different brands where they have made a move and then the market has reacted in a certain way. And I bring that up because I think now more than ever, customers want to spend their money with brands who they like have similar values or ideals or identities. And so I think that final identity piece, when you really can speak to the identity of someone as a brand and it's authentic and it's genuine and it's who you are as a brand, I think that's one of the biggest unlocks that we can have. And I think now people are more intentional with voting with their dollars than ever before, or maybe at least ever in my lifetime as an adult, as a consumer, I see a lot of the different sways in commerce based on different moves, good or bad, that companies are making. So I just think it's a very timely time for everybody to sit down and dissect how are we positioning our brand? What stories are we telling? What emotions are we creating and what identities do we connect with or do we stand with? And I think a lot of the ads that we know so well in D two C, whether it's Squatty Potty or Poopourri or Dr. Squat, why did they do so well? They made someone feel something. They gave them an emotional state change. And I think,

Brett:

Yeah, and it wasn't just that they told great jokes, they did, but the jokes were relevant to those story states identities. And one thing I want to underscore there, I think that you've got a good brand when you can define those or talk about those, what stories you should be telling and your customers probably know what stories you should be telling, what states you're trying to create and your customers probably do too, and the identity that your customers want to have as it relates to you. I heard Seth Godin say this recently, and I thought it was brilliant. He said, if you take Nike, Nike's got a great brand. Obviously if Nike was going to build a hotel, we could probably guess what that hotel would be like. It would pay homage to great athletics and to sports. And we could probably even picture what that experience would be like if we've been in the Nike stores or whatever. But then you flip that and you say, but what if somebody like Hyatt started making products? You'd have no idea. What does Hyatt even mean? I don't know. It's a hotel. They have bed. I I get no mental picture. I get no story in my head when it comes to Hyatt, no state, no identity. It's just like, it's fine. Hyatt is fine. And so I think that's a really clear picture. Do I have a brand or am I just selling? Well,

Anthony:

Think about Virgin. Virgin has airlines, they have hotels, they have cruise ships. They're one of those rare brands who have transcended these crazy different industries and they've, you

Brett:

Get a picture in your mind when you think

Anthony:

Virgin, you know exactly what it is. It's going to be a freaking rocking good time. I mean, it's like, I think having the vision to invest into brand, especially when things are a little bit turbulent and a little bit uneasy. No doubt. I was actually recording a video earlier today with my team for a YouTube video that we're putting out kind of titled the number one investment you'll ever Make, and it's about investing into yourself. And we were talking about how there's just, I totally lost my train of thought. What the hell was I talking about?

Brett:

All good investing in yourself.

Anthony:

Yeah, there was a point that I was going to make about Virgin and about different brands, but I legitimately lost my train of thought, so we'll just keep it moving.

Brett:

Dude, I've done that so many times that I just ended up making something up. Yeah, I'd like to blame it on age, but you're younger than me, and so I don't know. That's amazing. So I do want to talk a little bit about your leadership content and where you're headed with that. So I got to hear you speak obviously at Blue Ribbon San Diego. The presentation was fantastic. Anybody listening to this I'm sure has that expectation that it'll be amazing, but had visuals and stuff, it was awesome. But you also had somebody kind of following you around with a camera and you're creating some content. And I know you're getting into personal developmental leadership, going to start a podcast called Entitled to Nothing, which I love that title. So talk to me about that. Why start podcasting? Why get into this self-improvement content and what's the goal?

Anthony:

Yeah, it's a very interesting question. I appreciate you asking it. I think for me, my only model of success is just going out and learning from people who are smarter than me and who kind of know the road ahead. I come from very humble beginnings. My dad was a logger. He literally cut trees down for a living. My mom was a stay-at-home mom. I had no reference point for success growing up. And I've got

Brett:

No entrepreneurs

Anthony:

In your family, no entrepreneurs. No, I mean, it was very humble beginnings. And because of all the financial difficulty and pain growing up, I knew that I never wanted to experience that. So I knew I needed to figure this thing out. And to make a long story short, I am a product of a lot of other people's knowledge information. I've been to so many conferences and books, and obviously that's how we met. So I think I've got to a place in my career where I feel like I've created some successful businesses. As I was getting ready for the podcast and I was trying to figure out how I was going to frame everything, I just did a quick calculation. And my companies over the last 12 years have done over 50 million in sales, which seems crazy to me. I don't know how it's that much, but I bonafide 50 million in sales.

And so I was like, man, I know I have something to share. And I know I've overcome a lot of experiences from bankruptcy and broke to eight figure company, CEO, 50 million plus in sales. The greatest gift I've ever been given was knowledge and information and ideas from other people. And I feel like one of the best gifts that we can give is breathing life, breathing inspiration, breathing courage or compassion or confidence into other people. And I just, through the process of covid and through the process of all the craziness that's happened, I just honestly felt it on my heart that I needed to share some of my journey in the hopes that it inspires other people along the way. And it's an interesting process, man. We've had a couple recording sessions where at the end of the day, I'm like, just trash all of it. It sucks. I don't like any of it. And then having someone follow me around, it's

Brett:

Painful when you do that, but sometimes

Anthony:

Having someone follow me around with a camera seems so awkward and uncomfortable at times. But also I think anytime you learn how to do something for the first time, it's going to be awkward and uncomfortable. And I don't know what will come of it, but I just felt like in order to have the impact I want as an entrepreneur and just as an individual, I need to share more of my experiences and some of the lessons that I've learned. And I think one of the things that I've finally clicked for me is there are certain people that say things in a way that I really connect with. And then there's other people that say the same things in their own voice and it doesn't connect with me. I can't get into it. And for me, the guy has always been Tony Robbins. I love him. His content has always connected with me, his passion, his language, his curse words, it fires me up. And

Brett:

Strategic, by the way, I heard him talk about this one time he curses strategically and now maybe he couldn't shut it off even if he wanted to, but he's like, he believes it jolts you into paying attention. You remember better, you learn better when someone is swearing

Anthony:

And he says, your mom said, Hey, Brett, get in here. It would have one emotional response if she said, Hey, Brett, get your butt in here. It'd be like, okay, Brett, get your ass in here right now. It's just the different language evokes different emotions. So to make a long story short, I've got to a place in my career where I feel like I have something valuable to share, and I feel like it's my responsibility to share that because all of my knowledge is just accumulated from other people. And in a lot of ways, I just want to pay that forward to the next generation of people or to anybody who resonates with my message or my story or kind of my experiences.

Brett:

And I'm really glad you're doing it. I get to hear you speak on stage a few times and been on a podcast with you. You're very articulate and your story is going to resonate, and you've got a unique perspective and the way you've learned and grown and become an entrepreneur with really no family example. And I was kind of the same way. Nobody in my family was an entrepreneur. I just felt called to do it. Your message is going to resonate. And so I'm super excited, man, I can't wait for the pod. I'm going to consume it. Thank you. And I know it's going to touch some people and encourage some people, and it's going to be a lot of people.

Anthony:

Yeah, I think one of my biggest business failures happened because I started to kind of drink my own. I felt like I had had some success and I knew what I was doing, and I got a little bit complacent and a little bit entitled, and then I lost everything. And I just had this come to Jesus moment with myself where I was like, I'm entitled to nothing. And I started to realize that when we take complete responsibility for all of our results, that gives us the power to dictate the direction that we go. We're hardly ever in control of outside circumstances and things that are taking place, but we're always in control of how we react and respond to them. And that's where this whole idea,

Brett:

That's what really moved the

Anthony:

Needle. Yeah, this whole idea of I'm entitled to nothing and my life is my fault. And I actually think in some ways we're living in probably the most entitled time in history. There's an easy button and an app for everything, and people just want shit now. And so I just felt like this message of your life is your fault. You're entitled to nothing. I really felt like it was timely, and I felt like I was someone that could really lead the charge with it and share from experience, not just ideas or perspectives, if that makes

Brett:

Sense. That's awesome, man. And so depending on when someone's listening to this, that may not be out yet, but it's coming soon. So how can people,

Anthony:

January 1st is the goal. Awesome.

Brett:

How can people start to connect with you, follow you now so that they're ready? Whether the pod is launched at the time they're listening or not, how can they connect with you? Yeah,

Anthony:

The best way right now is just Anthony Mink on Instagram at Anthony Mink. You can search me and I would love to have you follow along. I'm posting content on a pretty frequent basis now. We're playing around with different videos and different ideas and getting ready to launch the podcast in January. So it would mean the world if someone came and followed along and shared their feedback. I would really appreciate it.

Brett:

That's awesome. And for the bearded brothers out there, or for anybody who's special, someone is bearded, how can they learn more about live bearded Entra, your amazing products? Yeah,

Anthony:

Live bearded.com. If you have any questions, we've got a team of customer service reps just in the room next door. You can reach out to us and let us know. But yeah, for any men's grooming stuff, we'd love to take care of you specifically for the

Brett:

Beards. That's awesome, man. And I can vouch for both the brand and for the team. We've had kind of a front row seat. We get to work with you guys now for years and years on the Google and YouTube side, and it's just been fun to watch you grow, man, love your team. Love the energy you bring, and love the products and so long live bearded. So good

Anthony:

Work. Thank you. I mean, it means a lot.

Brett:

Awesome. Well, thanks for coming on, Anthony. This was fantastic, and I can't wait for that pod.

Anthony:

Absolutely, brother. Thank you so much. I'll talk to you soon.

Brett:

Sounds good. And as always, thank you for tuning in. Love to hear from you. What would you like to hear more of on the show? Give us some ideas and Hey, I'm getting more active on the social, so primarily LinkedIn, but also on Instagram and YouTube and YouTube shorts. So check that out. And with that, until next time, thank you for listening.

Episode 262
:
Jeremiah Prummer - KnoCommerce

The Missing Piece to Your Attribution & CRO

In some ways, we know everything and nothing about our customers at the same time. 

We have mountains of data at our fingertips for every customer interaction. 

But we can’t see our customers. 

We don’t really know what they love, why they buy, or what they’re into—even insights into why they bought from us or how they first learned about us are muddy. 

Even when we think we know, our view is incomplete. 

That’s where KnoCommerce comes in. 

Sure, you have a few different attribution tools. They can be helpful but also confusing. 

And they have biases. 

Sure, you know conversion rate optimization best practices, but every brand and every customer is slightly different. 

Getting customer insights through post-purchase or abandon cart surveys can provide clarity into what your attribution or CRO data is telling you…or, more importantly, what it’s NOT telling you. 

The good news is you don’t have to use Kno to get great customer insights. Any survey tool can work. 

In this episode with Kno Founder and CEO Jeremiah Prummer, we discuss the following:

  • 40% of your shoppers buy in less than 1 week of learning about your brand. 60% take longer than 1 week. (This probably contradicts what GA and your attribution tools tell you).
  • The biases in surveys and how to work around them?
  • The biases in the attribution model.
  • How abandoned cart surveys can be a game changer in addition to email flows.
  • What questions to ask your customers for the most actionable insights
  • And More!

Transcript:

Jeremiah:

And so the number one use case on our platform is attribution. It's 80 to 90% of the usage of our platform, to be honest. Well, 80 to 90% of the brands on our platform are using that use case. A lot of them also have other use cases they're addressing too. But I would say that almost all the brands that use our product are doing are addressing attribution in some form or not.

Brett:

Well, hello and welcome to another edition of the e-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce, and I am super excited about today's guest and today's topic. This is one of those guests that I met on the LinkedIn. I started following this guy's content. A lot of my friends were commenting on his posts and I'm like, this is a super smart dude. So we connected and then we were talking. I'm like, how do we not know each other already? And so delighted to Welcome to the show, Jeremiah Prummer. Jeremiah, how's it going man? And welcome to the show and thanks for taking the time.

Jeremiah:

Yeah, thanks man. It's really good to be here. Hopefully you didn't oversell it too much, but yeah, it's good to chat. I know we've been chatting for a while on LinkedIn. I don't know, probably like six months. So anyway, it's good to finally get to actually meet, and there's something always different. There's three layers. You've got the text chat layer and then you've got the video chat layer, and then you've got the in real life layer and each one feels pretty different.

Brett:

It does. And you get maybe even before that is the comment layer I'm commenting and sending you different emojis about your posts and things like that. Yeah, exactly. And so where we got to the video chat level in person's going to be next, and so we'll just have to wait for that. But for those that don't know, Jeremiah is the CEO and founder of no KNO commerce and used by a lot of the fastest growing D2C brands. Everybody that uses it loves it, knows it, no pun intended, talked about a lot. And so we're going to dig into some really interesting topics around customer insights and we'll talk a little bit about attribution and talk about just what are the things you need to know to be able to improve your marketing, your product, your customer relationships, and should be a ton of fun. I'm super excited. And so we'll dive right in. For those that don't familiar with the story, tell us kind of the quick background of no, why did you start it? What was the original mission? Yeah,

Jeremiah:

Absolutely. So I'm going to go back a little bit earlier to just kind of give a little bit of context and then start with the actual founding of the business. So I've been in the e-commerce space in some capacity since 2012. I started building WooCommerce extensions, so that was kind of woo

Brett:

Nice. Yeah,

Jeremiah:

Back in the day it was WooCommerce, Shopify, Magento were all kind competing. It's kind of a different story now, but at the time WooCommerce was really hot and it was open source software. So really cool experience. Honestly, it's very different than what I'm doing now I'd say. But I loved that and it was just, there's something about getting to build something that you just are browsing a random website and you see the technology you created being used. It's pretty cool. So I kind of got my first taste of that in that time and then did a few different things. I had my own brand for a little bit, did agency work, and then in 2020 pandemic hits. And one of my good friends, Pearson kras is his name runs an agency called Lunar Solar Group. And Pearson and I had been talking for years about building a tech companies together and I, he'd been a merchant using my WooCommerce extensions back in the day and I'd helped him with website builds at his agency.

So we'd worked together in some capacity for a long time. And so it just made sense. So we actually launched no commerce from within his agency. They had some internal tools. We basically just revamped into a really lightweight surveys product that was kind of our pilot application. And then we started building our platform on the side. So we launched that just so I could get some experience in the Shopify ecosystem and learned a lot over that first year while we were building the main platform. And then we launched that main platform in September, 2021. We split the company out into a separate entity and that was kind of the genesis of everything. So it's really been just over two years since we actually launched the full platform. That

Brett:

Is wild.

Jeremiah:

So yeah, it's been kind of fast, I dunno. So days I'm like, I just want this to slow down a little bit, just get some rest. But it's also fun. So there's that trade off, right?

Brett:

Totally. And no rest for the weary, especially not in this environment, but really, man, I would so much rather do something that I love than to be bored. And so absolutely, as long as you can find little bits of rest in the chaos and speed, then you can probably keep going, which you guys have done. That's wild. I actually did not know that it was just in 2021 really that you started to gain traction. So that's even faster than I expected and pretty amazing. So what was the original mission and the idea? So start with a lightweight survey tool then. How has it progressed since then?

Jeremiah:

The problem ultimately is that it's really hard for brands to understand who their customers are, what motivates 'em. I like to look at it from a standpoint of in-person retail versus online and how different they are. So I grew up in a small business. My parents owned a health food store and I worked in that from the time I was, well every summer from the time I was 10 years old on. But even before that as a kid I was around a lot. And so you see the same people walking in the door and at the time it was nothing was digital, so it was literally just punching the numbers. So we actually didn't know what people were buying necessarily, but

Brett:

You knew a lot about them. You knew what they were interested in and why they were there and you could see them and interact with them. And that's such a valuable data set that we

Jeremiah:

Don't have. You knew about their dietary preferences, you knew about the type of vehicle they drove sometimes, what kind of clothing they wore, what their style was, all these kinds of things that you just cannot see in a digital context. And I don't know that you can honestly ever replicate that, right? It's just different. It's a different context, but is there a way to bring some of that context into the digital world? And that's really been the mission. And I would say, honestly, I actually posted something about this earlier today, but we started with surveys as the foundation of that because the reality is you have to ask people. That's the only way you can actually get some of that data. But the real vision goes much beyond surveys and I'm excited to dive into that more. I think honestly it's just been getting to the point of we got to build a foundation. We have about 3000 brands we work with now, so kind of got to get the foundation in place, you got to know what you're doing and then you can build on top of that. And that's really been the entire approach.

Brett:

That's so awesome. And you really talked about, I read a post recently that you made on LinkedIn, that first ever customer insight platform. We have data, we have attribution tools, we have different analytics, but customer insight platform, I think you've already talked about it, but anything else you would add to that or any other ways you would explain that to kind of shed light on what you guys are trying to accomplish?

Jeremiah:

So there's a lot of really great products out there that are focused around understanding things like lifetime value of your customer. What types of products cross-sell well together? If somebody buys product, if they buy a pair of shorts on order, number one, they're likely to buy a pair of socks on order number three, that kind of stuff, which is all really great information and there's some amazing tools that do that. And so we're not really trying to replicate that. That's not our goal. Our goal is to build a layer of data that enhances that. And so we are, it's honestly a really hard problem. The reality is that if you have every order exactly what somebody bought, the timing of the purchase when their last purchase was, you can see all of that data. There's no question about the accuracy of that data. There's no question about the completeness of that data.

It just exists. Collecting survey data about those same people is a lot harder because you're never going to get a hundred percent response rate. You're never going to know exactly what to ask that person until you have a little bit more context about them. There's so much more nuance there that I think it becomes a really challenging problem. And so we do a decent job right now of helping with that, but I think there's so much more that we need to do in the future to actually fully, we'll probably never fully solve that problem, but actually get to the point where it's significantly more meaningful than what it's

Brett:

Today. Yeah, it's so interesting when you look at a tool like this that really uncovers some customer insights or even attribution tools or analytics, it can seem simple on the outset, like, oh, we're just asking questions. But then as you dig a little bit deeper, it's pretty complex and it's nuanced, and the way you ask a question is important. How do you collect the data and how you analyze it and what did this actually mean? And so yeah, lots to unpack there. I do want to dive in and just understand what are some of your favorite questions to ask, because I think this is one of those things that we talked to a lot of merchants as an agency and everybody's got some sort of attribution tool and they're measuring in platform and things like that, but still, we know a lot of companies that are not serving their customers or not running anything like no in their tech stack. So what are some of your favorite questions to ask and why?

Jeremiah:

Well, so just one step higher level than that. I think the use cases can differ quite a bit, right? And that's one of the beautiful things about surveys is you can kind of do whatever you want to with it. And so the number one use case on our platform is attribution. It's 80 to 90% of the usage of our platform, to be honest. Well, 80%, 80 to 90% of the brands on our platform are using that use case. A lot of them also have other use cases they're addressing too. But I would say that almost all the brands that use our product are addressing attribution in some form or another,

Brett:

Meaning they're asking an attribution related question in addition to maybe other questions, 80, 90% are asking attribution questions.

Jeremiah:

Exactly, and there's some that aren't, but most of 'em are. And so in that context, there's some really great questions and I'll dive into those a little bit more, the set of questions that I feel the best about because we see so much of that, right? Beyond that though, conversion rate optimization is a really cool use case. So asking questions like what motivate not what motivated you? Sorry, what about this product made you want to buy it today? That's a really interesting question. And so brands will ask that kind of a question and that can give you a ton of insight into things like ad copy and what kinds of angles somebody may be interested in looking at. The negative side can be really interesting too. So asking somebody a question, how was your shopping experience today? If they gave you excellent or great, maybe ask them to leave a review if they're a repeat customer or push them to some other thing that they may be interested.

Hey, join our Facebook community, whatever it is, give them some sort of additional way to engage with you positively. And then if it's a negative response, then asking them what about their experience today was not a good experience and just let them give you that open-ended feedback. Those kinds of things are really, really valuable, especially for brands that are having problems with their conversion rate brands that are just getting started and don't quite know if you haven't found product market fit yet and you're not able to just scale ads, there's levels to this game for sure. I mean, some of the brands we work with are spending a hundred million a year on paid ads and they'd consider that a success and others are spending a hundred thousand a year on paid ads, and that's a success for them. So no, I can't give you a specific of what that looks like in terms of product market fit, but once you feel like you're at that point where you can just kind of scale your ads, I think that's when you start looking at attribution.

And prior to that, you're looking at those kinds, purchase motivations, those kinds of questions. So that's all really interesting. Demographic type data can be really interesting too, especially if you're trying to understand personas, who's buying what products, what kind of messaging is resonating with different demographics, that all can be really valuable. So a good example of that, just broadly speaking, we see that men between the ages of 25 and 44 spend a lot of time on YouTube and high rating and reviews of products has a major impact in their purchasing behavior. So if you're showing ads on YouTube, that's probably a good thing to have in the back of your pocket. Okay, if men in this demographic are typically the best audience and they're looking for this type of product, they're spending a ton of time on YouTube, maybe that's where I should start and then iterate from there.

So that kind of stuff can be really, really valuable. And then on the attribution front, so I'll dive into a set of questions that we really like to see brands ask. So question number one, how did you first hear about us? And we actually have a survey template that we recommend here, which gets that question alone, sees about 1.3 million responses per month on our platform, people using that specific question. So question number one, how did you first hear about us? Then usually some follow-up questions. For example, if somebody said that they found you on Google, ask them what they searched for, that can be a really valuable way to get some keywords that you can then go target maybe some longer tail stuff you weren't thinking about. What you find that's super interesting in that context is people will literally type in what they typed into Google.

You can tell just based on the response, you look at that and you would never type that unless you were doing a Google search. So it's kind of cool to see that data. So we'll usually suggest some follow-up questions to that. How did you first hear about us? And then ask, what brought you to our site today? And what we're looking for is the difference between a discovery channel and a purchase driving channel in those two. So discovery channels are the places where somebody is going to find your brand for the first time, Google, Facebook, Instagram, TikTok, word of mouth, retail store. Those are the kinds of things that are driving that top level discovery. But then the purchase driving channels are more focused on, I saw an ad, I searched on Google, I received an email, I received a text message, those kinds of things because your email is not actually a discovery channel unless you're doing email swap stuff, which then add that to your top level question.

But otherwise, that's actually a purchase driving channel and it's a nurture channel. It should not be part of your, how did you hear about us question. And so I think where a lot of brands go wrong in the attribution side is they ask, how did you hear about us? And they don't get specific into those different touch points and it muddies the data a little bit. And so it becomes harder to understand. You're asking the customer to interpret the question when you ask that specific question of how did you hear about us? And the reality is a lot of customers have multiple touch points. So if you split them out, then you're actually going to get a clear better view. And then the last one that we like to layer in there is how long did you know about us before placing your first purchase? And that gives you some really incredible stuff. I think you were saying something about this post that I put out there where we were looking at time to basically the contribution to Black Friday, cyber Monday revenue based on how long a customer knew about a brand before making their first purchase. And this is really fascinating information.

Brett:

Let's dig into a few of those things really quickly and then let's go right to the Black Friday seller money. I love that data. What's so interesting is I remember when I first saw this study as a user and as a shopper, I'm also a marketer, so I get a little different lens here as I look at this stuff, but I'm confident it was a no commerce survey because I remember I looked because I was very interested. I was buying, I think it was a shirt. What I have on here is a shirt brand that I've been following or seeing on social media forever, but just hadn't purchased. And I went through the survey and I thought, when did I first hear about it? Because such an important question. It's all the quality of the answer you get is directly tied to the quality of the question you ask.

And so yeah, when did I first hear about it? So I went back and I'm pretty sure it was Instagram in this case. And then how long ago? How has it been since you heard about it for this one? And we're talking about a T-shirt here. I didn't need to deliberate over this a long time, but as I thought about it, I was confident it was months, it was like three or six months, maybe a year. I was like, I don't know, just didn't need a shirt, wasn't really motivated, but I know that I've been seeing stuff forever. And as I posted that, I was like, man, I'm a marketer. I talk about YouTube ads, Google ads all the time, but this's just a different lens. And it flipped it for me and I was like, dang, look at my own behavior. I had to learn about this brand months ago T-shirt brand before I actually purchased. And so yeah, super interesting

Jeremiah:

Insights. I think, and I don't mean this to be negative at all, but I think of in the marketing world, the platforms have kind of trained marketers to think of things on a seven day conversion

Brett:

Window, right? Yes.

Jeremiah:

Some of that's

Brett:

Being generous. Sometimes people are like, well, I really want a one or three day, but we'll loosen things. We're looking at seven day now.

Jeremiah:

Exactly. And I see we were just talking about Taylor earlier Taylor Holiday, so give shout,

Brett:

Shout out to Taylor Holiday. What's up buddy?

Jeremiah:

So Taylor, I love Taylor and one of the things he's talking about, and actually before I say this, I want to say I really, really appreciate the way he's always talking about profitability first, right? Yes.

Brett:

Contribution margin profitability, dude. It's like it's what people need to hear. Yes,

Jeremiah:

For sure. So coming from that lens, a hundred percent respect to what he talks about in terms of optimizing on one day click. And so I get that angle and that side of things, but at the same time, what we know from the data that we see is that the people who you are getting to convert in a day are either already warmed up to your brands or they're in market for the product that you're selling. Those are the only people who are buying the same day and there's nothing wrong with that for sure. But the risk that if you are in a small category and you are at scale, the risk that you run of optimizing for that is that you're not actually feeding the funnel and looking at the longer tail. And you probably always are to some extent. The reality is that if it shows, if Facebook shows an ad to a thousand people and one of them buys, you're warming those thousand people to some extent.

But this is where we see, I think Connor from Hex Cloud was on a podcast actually with Taylor and I listened to this one, and Hex Cloud's a customer of ours, they're awesome. And they asked these questions and so they look at, I don't want to misquote Connor, but I believe what he was saying is that for TV specifically, they were looking at time to first purchase for people who found them on TV, and they saw that that's months. And so in that context, Connor was saying they know Black Friday, cyber Monday is November, so they started spending heavier on TV in August, September, October gearing up for those purchases that they know are going to come through in November because they have the data to show that it takes people months to purchase. The other thing that we know about asking survey questions is that it's not a hundred percent accurate, and you compare that against Qlik data.

Qlik data is also not a hundred percent accurate. There's problems in every type of data, but it's about understanding the bias of the data. And so the bias of the data in surveys is memory, and that's the thing that impacts most of it. And we've done some studies around accuracy and just looking at the way that people respond. The reality is the vast majority of people try to answer these surveys accurately. And there's ways to help with that too. Don't force 'em to take it, those kinds of things. So we are not so worried about the accuracy. What we're worried about is the memory. And so what we're doing when you ask somebody how did you first hear about us is we're asking them to tell you what they remember as the first touchpoint may not actually be the first touchpoint, but it's the one they remember and that has tremendous, it's the one they remember.

Yes. And so for you, you said Instagram, maybe it was Facebook, maybe it was an article on some website somewhere, but you remember Instagram, and so Instagram had some sort of impact on that purchase. And then what we also know is that people think time is shorter than it actually is. And so there's this idea of I think about something I'll be like, oh yeah, that was last week and it actually was three weeks ago because life is busy and things go fast. And so what we also know to be true is that if somebody tells you, if they say, I discovered your brand and I bought today, that's probably true. They probably remember that they know it was today, not yesterday. If they said it was less than a week, they're probably pretty accurate on that. They say it was less than a month.

Well, it could have actually been two months ago, but they think it was less than a month. If they say it was one to three months, it may have been six months ago, but they thought it was three. And so that time what we actually report to our customers and that the responses that their customers are giving them, we know that the reality is even longer than that. And so that's something that I always try to communicate to brands too is that you're looking at this and you're less than a week bucket. People that say they found your brand and bought in less than a week is probably pretty accurate, but the others are actually going to be a little bit longer. And so it's just about, yeah, surveys are not perfect, but if you understand the bias and the data, then it actually helps you really understand and lean into it more than you would be able to by just saying it's worthless.

Brett:

Yeah, it's so good. And I think we get hung up, and I made a post on LinkedIn about this not long ago where really the obsession about getting accurate attribution is a bit misleading and it is kind of a false aim that should not be your goal. You want data and attribution insights that are actionable that will help you make decisions because it's all going to be flawed and it's all going to be biased, and that's okay, that's just the nature of it. But if you can learn things that give insight and then you make decisions on those insights that make you more money, that's what you want. I love the way you frame that. Yeah, we do often forget what we do or win or whatever, but understanding that it still sheds tremendous insight because yeah, maybe in this case I did see an Instagram ad in an article and maybe I saw a friend wearing the shirt, but I forgot what I remember is Instagram.

And so we should give more credit to Instagram in that case because that's what I remember. So that's accurate. And then knowing the biases towards the way we view timelines also helps. But yeah, I think that the big eyeopener here is I remember seeing data because we report through a lot of Google analytics and Google ad reports and Amazon and things, seeing this report for fairly expensive, relatively speaking, it was like an aftermarket auto part, but it was kind of expensive for the average consumer. And I remember seeing the report that most of the purchases were in seven days and I'm like, I don't buy it. I just don't buy it. I think this is something you would have to see and see again and talk to somebody maybe and research before you bought it. And I really think it was kind of the bias towards click data and recency and cookies dropping off and other things that led to that insight. I would love to have seen that company run surveys because I bet it would've confirmed what you already see that the timeline is much longer.

Jeremiah:

Well, and I think that's one of the things that I don't know that people know about or can start with Google Analytics is that it's session based data. So Google is telling you based on the session data that they have that this took a day or I mean usually if you look at Google Analytics, it's telling you that most your purchases are happening in 48 hours, which is true for some brands, but it's actually very rare. In aggregate, we see about 40% of people saying that they discovered and bought from a brand in less than a week, and 60% say that that journey took longer than a week. And so again, going back to what I was saying earlier about that timeline, that time, the actuality of that timeline gets longer and longer the further away that person is from the actual discovery event. And so I've seen it where a brand has 70% of people buying a day.

That does happen for sure, and that's where it is actually valuable to ask those questions for yourself. You don't know unless you ask, but a lot of times what they're doing in that is it's usually a commodity sort of product. It's usually trendy and it's usually something that has a viral sort of appeal. That's what allows it to be bought in that sort of timeline. And most companies, that is not the reality for your product or your market or you're not following a trend. And so outside of those types of companies, it's pretty rare that most of your people are actually buying less than a day.

Brett:

And I think the point about it being trendy and that can help feed into an impulse purchase because back to what you said before where really the only people that are buying very quickly are those that know your brand and know you, or they're actively shopping, so they've got education. This has been in their mind or at least in the back of their mind for a while that they want a product like yours. Otherwise it doesn't. It just takes more time. It just takes more time than a week.

Jeremiah:

Absolutely, and this is one of the things about Google that I think is really interesting, and I think we're going to see a lot of this with AI soon too. I just was talking to somebody about this yesterday, but with Google, you are in active problem solving mode. And so when you are searching for something on Google, it's because you're trying to solve a problem. If you're trying to solve a problem, you're likely to buy a product or buy some sort of solution to that problem. And so really at that point, you're just looking for the right fit to solve your problem. I think that's really, really compelling about each channel has its advantages and disadvantages. Something like TikTok, even YouTube actually, if you want to split Google search and YouTube is completely the opposite. If I'm on YouTube, sure, show me that ad, but I'm not going to click on your ad and go buy something.

Right now I'm in the middle of watching my sports commentary video or this gaming thing or whatever it is, listening to my favorite podcast. I'm not going to stop what I'm doing. I may not even be looking at it. Sometimes that behavior's pretty common on Google too. And so in that context, it's very different than somebody searching and clicking and buying and we see the data that we see backs that up. If you look at, I haven't published this yet, but I actually will soon. Cool information. We looked at TikTok specifically, so same set of orders that have a survey response of how did you first hear about us? The percentage that are attributed to TikTok by a survey response is five times higher than the first click data, first survey data response data and YouTube is the same as our behavior. And then as you go, those are somebody called me out on this on social, and this is a fair call out that channels are not necessarily high versus low of funnel, and that's true, but there are channels that lend themselves more towards top of funnel versus bottom of funnel.

And so in the context of TikTok, YouTube, connected TV, even those are usually more of a top of funnel orientation. You're usually oftentimes showing your ad to somebody who isn't familiar with your brand. And actually it's even less about that. It's about the intent of the person at the time that they're being shown the ad that actually is really what matters the most. What is the behavior of that person at that moment? And so at that moment they're in entertainment mode and then you look at that versus a channel like a Twitter or Instagram or Meta, I actually think part of this is just META'S algorithms. They've figured out how to get the ad in front of the right person at the right time better than anybody else, but those are, when you look at those, the click and the response are more closely aligned. And then you look at something like Google and it's actually the complete opposite. Google gets a lot more clicks than the responses indicate, and so they all have their advantages and disadvantages. It's just really about understanding the behavior of each and the people that are on each and looking at survey responses and click data in light of that. And that's kind of what we try to educate people on,

Brett:

And this is really good insight that there's no top of funnel medium per se and bottom of funnel medium, right? Users just use platforms. I don't choose to get on TikTok when I'm at the top of the funnel. That's not a thought. I'm just going to consume content, but the mode that someone's in the messaging and kind of the way we view it as marketers does shift. And I love that data from TikTok because yeah, 100% YouTube is in the same boat and we spend millions a month on YouTube for our clients and it's one of our favorite channels, but people don't click that much. We even saw this report that showed that the click-through rates on Facebook ads are more than double what they are on YouTube because I'm not on YouTube to click your ad, I'm on YouTube to watch a specific thing where on Facebook, maybe I'm just kind of hanging out and so I'm more likely to click and explore and wander and things like that.

I know the same is true for TikTok. And so yeah, we can't measure, and I was just on a call the other day with this really nice brand and they're big and they were talking about last click attribution, and I'm like, guys, so let's unpack this a little bit. How can we hold every channel to the same standard? How do we do that? Yeah, one click works great. Then I'm all searching performance max and shopping, which I know that world really well. So if I'm all last clicked and let's stop Facebook and let's stop YouTube, but then you don't grow. You

Jeremiah:

Can make that look really good too. You

Brett:

Can make, I can shine man, and I'm a Google guy, so I can make that look really good. Yeah. But eventually you dry up, so really good stuff. So let's then kind of click into that Black Friday Cyber Monday data. And I know when folks are watching this, it's past Black Friday, so Monday, but it's either in IT or analyzing it the holiday or we're prepping for the next one. So this is still good data. So yeah, what did you guys learn in the correlation on how much people spent around the holidays related to how aware they were of a brand, how long that relationship had been going?

Jeremiah:

Yeah, for sure. So what's really interesting there is that we saw, so we looked at the data for, we looked at a bunch of different things, but what I thought was most compelling was looking at what we call the consideration window. So asking the question, how long did you know about us before placing your first purchase? And then looking at that by average order value. And so for the week of Black Friday, cyber Monday, I want to say it's 225,000 people answered this question during that week. And so looking at their data, so it's statistically significant and we didn't necessarily break down industry that's going to have an impact. There's some things there that the data's going to look a little different for every brand, and this is why it does help to ask this for your brand and understand Hex CLA looks different than Ali Pop as an example of one of our other customers we work with, right? It's just different. One of 'em is a thousand dollars cookware set and the other one is a, I don't know, I think it's like 35 or 40 bucks to buy a case of soda off of a website. So it's just different. Ali Pop

Brett:

Is, it's the gut healthy soda, right? Or whatever. It's got some probiotics and stuff in

Jeremiah:

It. Yeah, exactly. So it's just different and consideration windows are different. And so what we saw is that the people who said that they knew about a brand for less than a day had basically about a 25% lower average order value than the average of all people who bought for Black Friday Cyber Monday. And then it climbs up pretty well from there. But basically what you see is that from the lowest A OV is that less than a day, second lowest is less than a week, then you got less than a month, it just trickles down. And basically once you get to call it three plus months, there's really no meaningful difference in a OV. And actually honestly from one month plus there wasn't a whole lot of difference. It's really that less than a month bucket. But what's interesting about that is that your, and this is to be clear, this is first time buyers, which is really cool data too.

So it's people that have bought from your website for the first time and how long they knew about your brand. Those people who had a longer relationship with the brands were more likely to spend a larger amount of money, which I think is really interesting data. There was that there was also just the total percentage breakdown, largest bucket of buyers was people who knew about the brand for one to three months and the second largest, and they're almost equal, was people who knew about the brand for less than a day. But when you look at all of it, the bucket that contributed the highest amount of total revenue was people who knew about a brand for one to three months. And so I think that's just really compelling and it makes, if you think about consumer behavior, again, it makes sense. Let's say I find something really cool in September and I'm thinking about it for myself or as a gift for someone else, I might wait to buy that until November because I know that it's likely going to be on sale. I'm actually doing this right now with a mattress. I need a new mattress. I'm not buying it right now. I've wanted to buy it for the last couple of weeks.

Brett:

Are you going memory foam? Are you going high tech adjustable cooling those things, or what are you thinking here? I'm just interested.

Jeremiah:

I don't know. So I actually haven't figured out exactly which one yet, but I know that we're making our decision over the next week or so and then we're going to look to buy in November and we maybe won't actually buy too. That's the other thing is there will be if we decide the price isn't right, and turns out we actually swapped out our mattress with another one that we had from our guest room and it's a few days ago, and we're both sleeping way better. So we might just stick with that. You're

Brett:

Like, maybe this is good, maybe this is enough,

Jeremiah:

Maybe this is fine. But regardless, we're doing our research now. We are looking into all of this now, but we're definitely not buying before Black Friday. That's when we're going to buy. And so that is normal behavior for this time of year. And so you're actually, you're just prepping people. That's the downside of something like a Black Friday is one of the things we don't really know for sure is how much of the demand are we just delaying and then discounting as an entire industry. That's hard to say, but I do think that that's an angle we didn't look at with this research, but we actually should.

Brett:

We've trained people to wait for Black Friday, cyber Monday. It's not going to change. It's ingrained in our minds, our behavior as consumers who will keep doing it. But what's so interesting is looking at those two major categories of people that spent money on Black Friday cyber Monday for first time customers, it was about equal number of people that had known about it. You said less than a day or less than seven days. What was that first

Jeremiah:

Bucket? Yeah, reported less than a day versus reporting one to three months,

Brett:

One to three months, but the one to three month category produced more revenue, more valuable customers, higher A OV and then would likely lead to, I'm assuming, and I'm guessing you didn't really break this down, but probably better and other things like that.

Jeremiah:

And that's actually a good follow-up research on this too. And I actually was just thinking about this morning, I need to talk to a couple of brands we work with and say, Hey, let's study the LTV of your Black Friday Cyber Monday customers based on how long they knew about your brand. I think that's pretty compelling. But yeah, that's not something we have data on right now. And I think it's really interesting, and this is off the top of my head, so it may not be exactly accurate, but I want to say that one to three month bucket was about 35% more revenue than less than a decade and total significant.

Brett:

I think when you understand that, then you're willing to make the right decisions that feed overall profitability and healthy revenue and good customer acquisition where if we get too obsessed with the one day click, we may be tempted to go down a path we shouldn't go down. Where if we realize that a little bit of cultivation of that one to three months actually leads to higher AOVs and probably more valuable customers, it at least shifts the perspective. It shifts our patients for sure it, but it's likely going to shift our media mix just a little bit and may even shift our discounting approach and several other things, but we got to see this data to be able to have that

Jeremiah:

Insight. Yeah, absolutely. And what I hope with sharing these kinds of things too is that a marketer can go to their, especially with the brands we're working with that are say 50 million a year plus in revenue, you got your marketing team, you got your finance team, and they don't always agree on how you should be spending the money. And so I'm always hopeful a marketer can go to the finance union and say like, Hey, check this out. There is an impact in feeding this. You're still making a bet at the end of the day. Maybe it doesn't pay out the way that you expected it to, but usually it helps in being able to make those kinds of betts when you have that kind of data to be able to show.

Brett:

For sure. You also brought up questions around CRO or conversion rate optimization, and I do think this is something that brands are going to continue to lean more into, especially as they grow and especially as the economy remains uncertain or we get into a recession or other difficulties, then we know we got to get the most out of every opportunity we create, every person we get to visit the site, we got to get more from them. Ideally, what are some of your favorite questions or insights from CRO related

Jeremiah:

Questions? So there's kind of a couple different categories of insight that I see come out of there. There's really three, there's the obvious. So you see things like price, so I'll use Ali Pop as an example. Somebody will buying, I think it's like $35 for a 12 pack that's significantly more expensive than a 12 pack of Pepsi off the shelf at Safeway. So when they see somebody, if a brand like that, I actually don't even know what they asked those questions, but in a context like that, a brand will look and they see people saying price was a reason that they almost didn't buy. That makes sense. So there's the obvious category and most of what you see is going to come through as obvious. And then you've got the technology problem category, which I think is really interesting. I see things like your Affirm and I clicked to pay with Affirm and then I couldn't get back and I decided I didn't want to pay in four installments and I couldn't find a way to get back to only pay one off.

So that in a single response maybe doesn't make you change your behavior. When you start to see patterns and things like that, then you look at it and say, okay, people are having problems with navigation or people are having problems with a specific tool we're using, we should make some changes here. So that's sort of the technology side. And then the last piece is the messaging side of things, and I think that's probably the most, it's the one that takes the most research and understanding, but it's also probably the most impactful one. And looking at what is it about your, are people confused about the value propositions? Are they confused about why your product is compelling versus other products in the market? Those kinds of questions I think are probably where the greatest value comes in, or not questions, but those kinds of responses that you see come through are where the greatest value comes in my opinion.

But again, it just takes a little bit more dissecting understanding. One thing that can be great is just throw that into something like chat GBT and just have it help you analyze it, ask chat GBT questions with that data. And we see some really cool stuff with that. So hopefully that answered the question. But yeah, from a CRO side, that's the three categories I look for. And then obviously you can have pretty open-ended questions to get that data, but you can also start to dive deeper into specifics around that if you feel the need to.

Brett:

And you can have follow-up questions too, right? Ask an open-ended question or ask a relatively vague question, then have some follow-ups then based on that answer.

Jeremiah:

Yeah, exactly. You can do text base is a little bit harder. You basically are searching for a keyword and then asking a question based on the keyword, but that's possible. And then starting it off with a, we actually do this a lot with abandoned cart surveys where we'll ask a question, just ask somebody, Hey, is there a reason you didn't buy today? And you give them a few preset options, and that is a really nice one because then you can guide them down a specific path based on what they answer. So you may, one brand we work with, they have to do hazmat shipping, which I think starts at $40 and that's their number one. It's their number one. They're literally selling a $15 product and it's $40 shipping. And so that's the number one issue for them. And they know that's the issue. They communicate it everywhere, but people still have problems with it.

And so what was really interesting for them is they ran an abandoned cart survey. I think they're still doing this, but basically they have that as one of the options of why somebody didn't buy. And then when they click on it, all they do is educate them about why the shipping is the way, and they don't give 'em a discount or anything. They just educate them and then take them back to the website. And that's one thing that you can do with surveys too that I think is really powerful is just find out why somebody isn't buying, find out what it is that's holding them up and then give them an actual solution to their problem. Don't just assume everybody's not buying because the price was too high because that that's only the issue for a fraction of your customers. Yeah,

Brett:

It's so interesting. Sometimes that solution may be offering a discount or offering something to the customer, but sometimes it's not. Maybe it's not really that 40 bucks is a deal breaker. It's that I was not expecting $40 in shipping and that just feels wrong and it will crazy and shocking and it didn't meet my expectations. But if you educate me and show me why you have to do that, why that's required, because it's hazmat or whatever, then maybe I'm like, okay, that's fine. Yeah, now that you explained it, I'll do it. I really want the thing. And 40 bucks isn't a big deal, but it is when my frame of references free shipping or $5 or $10 or something, not 40.

Jeremiah:

And so for that brand specifically, one of the big use cases is gender reveal parties. And so you can go on Amazon, you can find for 15, 20 bucks, you can find a gender reveal smoke bomb, but it's not actually a smoke bomb. It's a powder thing, like a shoot powder in the air. And so that's a good opportunity to be like, Hey, look, this is a real smoke bomb, this is a hazmat, it has to be shipped in a certain way, and there's just nothing I can do about that with my brand. They do a lot of founder forward messaging, which I think is really powerful in that context too. But yeah, that's one of

Brett:

Those environments too where we were doing a gender or a gender reveal, and I don't know if you probably know this about me, Jeremiah, but I've got eight kids, my wife and I have eight kids, which is shocking. A lot of gender reveals. And that's one of those things where usually you invite people and people are there, and so would I be willing to upgrade and of spending 15 bucks, spend 65 if it was really going to make a difference, yeah, that'd be fine. This is a big deal, but I wouldn't do it unless you really educated me. And so that's so powerful about being able to automate that and one, get the answer to why they didn't buy, and then two, either educate or provide some kind of solution. Super smart

Jeremiah:

If that has to go through customer service, they've already bought the thing off of Amazon by the time you get back,

Brett:

Right? Yeah, really good point. So yeah, I think all of those are really great, and I love the use case of using AI to unpack, okay, here's all our results. Let's make sense of this and categorize this and synthesize it and whatnot. But yeah, some of these you're just not going to know unless you ask. And once you ask and get these insights, it's going to trigger all kinds of solutions and ideas in your brain. And so you got to ask, you just got to do it. We are coming up against time, so I want to be mindful of that, respectful of that. What is next for no commerce? And I know some of that may have to be kind of hush hush or closed lip, but what are you excited about?

Jeremiah:

One of the things I really focus on a lot is the problems in our way of solving the problem we're trying to solve. So what are the ways in which we fall short in solving the problem we're trying to solve? And there are a couple of big props using surveys. Number one is you've got a response rate issue. You're never going to get a hundred percent of the people to answer a question. So you've got that issue. You also have the issue of you're limited on collecting data by when you started asking it. So if you want to know about your customers from three years ago and you want to know something specific, even if it's something like demographics, right? It's really hard to go back in time and ask that question. And so there's those. And then the last piece is really it's most brands just don't have the resources internally to be able to put a lot of time and attention into what to ask, how to break down the data, all of those kinds of things.

And so that is really, we've been working on this kind of behind the scenes for over a year now, this new concept called Automated Insights, which is going to be coming out here shortly. By the time this episode's out, it should be available for beta for some of our customers, public beta. It's been in private beta for basically most of this year. So I'm pretty excited about that. The idea is that basically we manage the questions that are run. It's not AI powered. I think there's some pretty big flaws still in ai. And being able to actually, AI doesn't know what to ask and actually have it be meaningful. That's just my honest opinion on that.

Brett:

Yep, totally

Jeremiah:

Agree. So there's nothing wrong with using AI to try to tune questions and do all those things, but we're just not going to go open season on ai. It's just not going to happen in our business. Not anytime soon anyway. But we know based on the data that we have, we have 1.3 million responses a month to how did you first hear about us? That's just one question on our platform in total, we see over 8 million responses a month. And so with all of that insight that we have, we can build a pretty good structured system around collecting data that we can do at scale for brands, and that's really what's coming next. So yeah, I've been keeping it kind of close to the chest. It's still not fully out today, but it should be in a couple of weeks. So I'm excited about that.

Brett:

Automated insights, check it out. And so what are the best ways for people to connect with you? Obviously they can follow you on LinkedIn and I highly recommend that that's how we met, but then how else can they learn more about, no.

Jeremiah:

Yeah, so LinkedIn, myself slash Jeremy Prime, I forget what they all are, but it's just my first last name together. Same with Twitter now X and then no commerce is the same thing. Just K-N-O-C-O-M-M-E-R-C-E. Yeah, so follow me. We also have a bunch of team members in different roles in our company who like to talk about things and share cool findings on LinkedIn and Twitter. So I feel like they're more LinkedIn usually, and I'm more on the Twitter side, so we've got both going on. But yeah, definitely would love to connect with you there. You can send me an email too, just jeremiah@nocommerce.com if you have any questions. I'll be honest, my email is the last thing I'd check every day, so

Brett:

Stick to the socials, be respectful of the inbox. Stick to the socials you get.

Jeremiah:

Yeah, socials and slack is kind of where most of my communication actually happens, and then I get once a day email check, so

Brett:

Yeah, totally get it. Jeremiah primer. Ladies and gentlemen, Jeremiah, this was super fun, very insightful. We'll definitely have to do it again sometime. Really appreciate it. Yeah,

Jeremiah:

Man, really appreciate you. Thanks.

Brett:

Awesome. And as always, thank you for tuning in. We'd love to hear your feedback. What would you like to hear more of on the podcast? And hey, check out no commerce, check out Jeremiah Worth the follow. You got to dig in. I believe this was one of those next phases, next steps of growth for D two C brands is getting these deep customer insights that I think only surveys can unlock. So check it out. And with that, until next time, thank you for listening.

Episode 261
:
Brett Curry - OMG Commerce

11 YouTube Success Factors

Download The YouTube Ads Checklist HERE!

11 Reasons YouTube isn’t Working for You

YouTube offers TREMENDOUS scale opportunities.

Just ask Dr. Squatch, Purple Mattress, Organifi and Masncapped.

But it’s NOT the easiest platform to scale with. We’re one of the top spenders on YouTube ads. We’ve spend more than almost any agency our size on the platform and we’ve leaned what works and what doesn’t.

In this episode I breakdown the 11 factors that determine YouTube success. 

Here’s a sneak peak:

- What has to be true about your landing pages before you can fully accelerate on YouTube

- When to launch a YouTube ad campaign

- How to approach YouTube ad performance measurement

- What creative elements need to be in place

- What role do email, search, and shopping play in your YouTube success

- How to think about remarketing and YouTube

Plus, much, much more.

Transcript:

Brett:

It is time for another spicy curry hot. Take the part of the show when I get just a little bit spicy. If you tried YouTube ads and they have not worked, then I would dare to say that it might not be YouTube's fault. It might not be that YouTube ads just don't work for my brand. It could be your fault. Or more specifically, it could be that you're missing these 11 success factors. Scale on YouTube is possible. It's even probable, but you have to have these 11 things in place. If video ads on Facebook are working for your brand, then YouTube ads should work as well. I'm going to give you the formula. I'm going to break down those 11 things that need to be in place before YouTube works. It's not the easiest to scale on, but it does provide tremendous opportunities to build a brand. So let's dive in to these 11 success factors.

So as we look at YouTube ads, I think we need to first step back and say, is it really true that hey, YouTube just doesn't work for some brands. YouTube doesn't work for my brand. I think that can be true if you sell a commodity item, if you sell a lower ticket item, if you can't absorb CACs or CPAs and the $50 plus range, then YouTube may not be your number one vehicle, but likely if you're a DTC brand and you're driving new customer acquisition on Facebook through Facebook video, then YouTube should work as well. And what we found is for those that are spending 10,000, 20,000, $50,000 a day on Facebook, you should be able to spend about the same or at least half as much on YouTube as you're spending on Facebook. And let's take a look at some of the brands that have really succeeded on YouTube.

Purple Mattress primarily grew initially from YouTube. Dr. Squash grew on other channels, but YouTube was a huge part of their success. Organify, we worked with that brand for a while, and during some of their rapid growth years, they weren't on Facebook, they were advertising on YouTube, and the list goes on and on. And so YouTube is very powerful. Scale is very possible. In fact, there's maybe more scale opportunities available on YouTube than any other platform. It's the second most visited site on the web. It has more scale than even Facebook or any other social platform, but it's not the easiest. And I'll even say, and I'm a YouTube guy, a Google guy, it's not the best place to start to launch a brand unless maybe you're running YouTube organic, then that's a great place to start. YouTube ads, though they're a great accelerator of growth, so you have traction.

YouTube is a great way to accelerate that growth. So let me break down really quickly these 11 success factors, and then we're going to go into detail on each one. This is going to be fast paced, it's going to be inspirational, and at the end you're going to be hopefully motivated to crush it on YouTube. So here we go. What are the 11 success factors? Number one, product market fit. Number two, a site that converts and landing pages designed for cold traffic. Number three, the right creative. You have to be running ads that are designed or optimized for YouTube. Number four, email follow-ups. Do you have email marketing in place? Number five, solid Google search shopping and or performance max campaigns. Number six, remarketing campaigns. Number seven, a full funnel mindset. Number eight, useful reporting. So are we reporting in a way that's accurate enough and is it useful?

Number nine, proper budget. Number 10, adequate patience. And number 11, a marketplace. Read Amazon, but a marketplace strategy that works. Okay, let's dive in. This is not rocket science, it's not incredibly complex, but there's a lot. And you do need to have these in place before you can get really full leverage out of YouTube. So number one, there has to be product market fit. What I mean here is if you're still testing a product, you still dunno exactly who you're trying to reach. You still don't know exactly the best offers, the best angles, the things, the reasons why someone buys. Then YouTube is probably not your first bet, right? YouTube is an accelerant. YouTube is a place to really hit the gas pedal and take something that's good and make it great in terms of scale. So how do we know we've got good product market fit?

Well, I think one of the surest signs is do we have repeat purchases for a specific product? So are we getting repeat purchases? Are people buying again and again? And are they telling their friends? Do we have good reviews on this product? Are people reviewing it and showing that they love it? And then is branded search growing? And this is one of those surefire ways to tell that, Hey, my brand is growing in popularity that more people search for my brand by name month in and month out than that means I'm getting traction. So we do need to know I do have traction. I do know who my ideal customer profile is. I do know why they buy the product. Okay, now we're ready to go. So that's step one. That is the first success factor. Number two, a site that converts and a landing page or landing page is designed for cold traffic.

So we don't have to be perfect here, and there's always improvement. There's always ways we can get our conversion rate up, but we need to at least be adequate. You need to at least not be below average. The average conversion rate for e-commerce sites for cold traffic is one to 3%. If you're way below that, you're going to struggle. If you're over that, you're likely going to do better on YouTube. And so this comes down to do I have good pride detail pages? Is my cart at least not slower than average? And do I have some optimizations on my cart? And then we want to think about, okay, specific landing pages. And a great way to test this is do you have landing pages that are converting cold traffic from Facebook or Instagram or other channels? If you do, likely those same pages will work on YouTube converting cold traffic.

So what are some of the things we need to have on these pages? Well, these pages need to show why your product is unique. So remember, all the video is really doing is it's getting someone to say, maybe it's getting someone to say, this sounds interesting. I want to check it out. They're not fully convinced to buy just yet. So the page has to show why your product is unique, why it's different, why it's better. What is your unique selling proposition? Page has to show that it has to overcome objections. We're all skeptical. We show up on these pages and we're like, yeah, probably not. I'm going to not believe your claims. I'm not going to believe your promises until you prove them. So how do you overcome objections? Are there concerns about will this fit my car or my body if it's closed or will this break after use or will this actually solve my problem?

There are objections people come to the page with. Overcome those, overcome those visually, overcome those with text, overcome those with video images, graphs, anything that will work to overcome those objections. It needs to demonstrate the product, right? And one of the great examples is Purple Mattress where hey, historically we've always bought mattresses by going into the mattress store and laying on mattresses and trying them and seeing what they liked. But purple was like, Hey, we're selling these direct to consumer. You're not going to get to sleep on it until you come in. They overcame the objection by saying, Hey, test this for 50 days or a hundred days, or whatever the case was to provide confidence and hey, here's a guarantee. But they also showed the product, they showed the raw egg test, the big pane of glass dropping on top of raw eggs on the bed, and the purple mattress held those eggs.

They did not break wherever the mattress broke, right? So show the product in action. Flex Seal, right? It's showing, Hey, it'll seal the pots around your house or your gutters or whatever. And it's such a strong sealer. We can spray it on the underneath of our truck and then drive the truck into water and it will hold water. It'll float because of Flex Seal. Show the product in action. We need to give customers confidence. It will work for them in their situation, for their needs. Is this product for you? Your page needs to underscore that. Take away risk, just like we talked about with the guarantee. Try it in your home for X number of days. Money back today, easy returns, no question asked. Exchanges, things like that. How do we take away risks and then make purchase easy? So is it easy to add to cart?

Is it easy to take that next step? All sounds like table stakes. All sounds easy, but we do need to make it easy. Are people having to hunt? Do they have to scroll to be able to find add to cart? You need to make that easy. And then also, are we capturing shopper's info? If they're not ready to say yes yet, because it's not that common that someone sees a YouTube ad for the first time or Facebook ad or anything, and then they click and they buy, right? Then that happens very, very rarely. So if someone does that, do we have a way to capture their information? Do we have abandoned cart flows set up? And I'll talk a bit more about that in a minute. But do we have opt-ins where if they're on the page, they do not buy yet, are we enticing them to leave their email address so we can start following up with them and getting them to purchase?

That is going to add a couple of percentage points potentially in your conversion rate and potentially change the total math of your campaign. So do we have a site that converts and do we have landing pages built for cold traffic? Next, the right creative. So YouTube creative is different. YouTube ads are not TikTok ads. They're not Instagram ads, they're not any other ad, they're not Google Shopping ads. They are unique. The ad, the video ad stands alone, right? There's not really much of anything around it. There's not the block of copy like there is on a Facebook ad. So the video has to stand alone. It has to interrupt the prospect, it has to demonstrate the product, it has to overcome objections, it has to keep attention, and really it works better if YouTube ads are a little bit longer than ads on other platforms.

So what are some of the elements? And we have resources to really dive into this deeply. I'm just going to cover this in a few seconds. One, it has to hook your ideal prospects. And this is important. We're not just trying to hook anybody. If we're selling to middle-aged women, we don't care if teenagers hit the skip button and don't watch, right? We want to hook our ideal prospects. So what are we doing to capture attention? We could do some kind of pattern interrupt or shock and all. We'd have somebody in a gorilla suit, Dr. Squat style or whatever, or we could just be very straightforward and say, Hey, do you have this problem? Are you not sleeping well at night? Is this issue happening in your life? But we have to hook the ideal prospect. If we don't get attention, nothing else matters. If YouTube ads are not working most of the time it's because the hook is not quite right.

We're either not hooking anybody or we're hooking the wrong person, or we're hooking someone in the wrong frame of mind. You want the hook to be relevant to the problem you're solving, right? And so again, going back to Purple Mattress, it would say, what are the signs that your mattress is truly awful? And that's kind of a bit of a, I didn't expect you to say that and now I'm kind of intrigued. Or if you look at it, William Painter, shout out to the guys at Raindrop. It opens with him saying, your face is your moneymaker, and why are you putting cheap pieces of plastic on your face? And it gets right into the message. A bit of a pattern interrupt. Super interesting, my buddy Ryan, at True Earth, there's a witch that opens in one of the scenes, one of the videos about the laundry detergent strips, and it says, Hey, what do you not mix with water?

Well, witches and computers and whatever, and also laundry detergent. And then it gets into the whole pitch. So we got to hook prospect's attention. We need to demonstrate the product. This is video. We need to see the product in action. We need to see kind of daily use demonstrations and maybe a dramatic magic demonstration, kind of like the Flex Seal, where Flex Seal, you can spray it on a pot and it'll hold together, or you can spray it on your truck and make it waterproof. Although not many people do that. We need to overcome objections. Our page is going to do this, but if those objections aren't solved in the video, then someone is not going to click, right? And so they may think it's too expensive or it'll never work, or this isn't really proven or whatever. So overcome those objections in the video show social proof, show people like your ideal prospect, loving, enjoying your product.

This can be reviews, it can be UGC, but show social proof, remove the risk, some kind of guarantee. And then a clear call to action. Click here to learn more. Click here to check it out. It's super easy. You click here, you choose your size, you choose your color, whatever, and check out sounds simple, sounds obvious, sounds like you maybe don't need to do it, but asking someone to take that specific action will increase the percentage of people that actually do it. So way more that could be said. I encourage you to go to omg commerce.com. We got the top YouTube ads, guides, plus lots of examples of ads. Also, this episode has been made into APDF if you want to check that out. And there's also examples of great ads there. Okay, so that's number three, getting them right, creative. So what do we have here?

Number one, product market fit. Two, a site that converts on landing pages that convert cold traffic. Three, the right creative four email, we kind of talked about this, but we need abandoned cart flows at a minimum. That's going to happen a lot where someone comes, they're not really planning on buying, but they'll add to cart and just see what does shipping look like? What are the details, anything hidden here that I need to know about? So have those abandoned cart flows really dialed in? Go back and listen to some of the episodes I did with Nick Flint, OMG email expert on email and SMS campaigns for abandoned cart flows. And then what about new customer offers? So if someone just opts in on the landing page, hey, let's send them that indoctrination sequence telling them why our practice is great, why they should buy it for the first time, and maybe if they delay, delay, delay, you give them some kind of incentive to buy.

So number four is proper email follow up flows. At OMG commerce, we accelerate growth for some of the most loved brands in e-commerce like boom, native, true earth overtone, and dozens more. If your Google and YouTube ad performance isn't where it should be. If you're struggling with Performance Max or if you're not scaling like you'd like on Amazon that we have two ways to help. One, we have amazing resources that are free for the taking like our top YouTube ads guide with lots of examples, our P max checklist or our Amazon DSP roadmap plus many more or hit us up for a free strategy session. So go on over to omg commerce.com and click on Let's talk to request that free strategy session or click on resources and guides and pick the guide that's right for you. And now back to the show. Number five, solid Google search, shopping and or Performance Max.

Now let's talk about search. So what do people do? Someone watches a Facebook video. They don't buy, but they're intrigued. They watch a YouTube video, which is obviously the topic of this show, and then they don't purchase. What do they do next? Well, the next logical thing is they're going to search. They're going to search for you likely on Google. So, hey, I saw that video. Now want to know more? What's interesting is that we saw once we started to ramp up for Boom by Cindy Joseph on YouTube, and this was years ago with YouTube ads, we noticed people kind of searching for stuff they heard in the video, but they couldn't quite remember the name. So it was like pro age makeup or makeup for older women, or boom, by, they would get it all wrong, but because they couldn't quite remember, but they saw the video, they were intrigued, and now they're searching.

And so we need to have good search ads in place. I like to set up branded search where it's separated by branded search for loyalty, branded search for new customers. We want to be set up and we want to even bid on keywords that, Hey, what keywords might be triggered by this ad? If it's purple mattress, say, what if someone types in raw egg mattress because they can't remember the name of it or raw egg test or something like that. So what are some of the searches that someone could be conducting based on watching this video? The other piece is Google Shopping, or most likely you're going to be running Performance Max or maybe all Performance Max. But again, if I'm searching for a product, I'm likely going to do that on Google. And you need to control what that looks like for your own branded keywords, but also related keywords.

We see this a lot. We've helped other cosmetic brands and some that are high priced where someone will see a video and then that leads to a search. But if you're not careful, if you've got lots of other competitors, low competitors, things like that that are showing up, maybe all you're doing is generating awareness for someone just to buy another product. So you need to have good search shopping and for short performance Max in place to feel confident that, Hey, we're going to get full benefit from YouTube because the direct click from YouTube to purchase, that's a small percentage of the impact you'll get, get much more of an impact from branded search lift and people that convert off of search later. That's number five. Number six, remarketing campaigns goes without saying, but we audit hundreds of accounts every year, and we knows a lot of people are not running remarketing campaigns or they're not running remarketing campaigns in a way that's smart.

And so we want remarketing campaigns on Facebook and on YouTube and on discovery and with display. And essentially anywhere you can run remarketing campaigns. And we do want to focus more on recency. So that one to three day audiences, those are the ones we really want to key in on, but you can certainly go longer. So you're not going to get full impact from YouTube if you don't have remarketing in place. That's number six. Number seven, a full funnel mindset. I liked to use the analogy of team sports. I'm a sports guy. I coach basketball, I love football. I like to think about marketing in terms of team sports. Every member of a team has a role. If we look at the bulls of the nineties, everybody had a role. Michael Jordan was obviously the superstar of the goat. He scored a ton of points. Scotty Pipman did everything.

Lockdown defender scored a lot of points. Dennis Rodman, bit of a crazy dude. He was on the glass getting rebounds and just harassing his best players. So we would never look at that team and say, you know what? Dennis Rodman is not doing the work of Michael Jordan. We need to bench Rodman. I love football. I would never look at a football team and say, man, those are offensive linemen. They never get in the end zone. They never score points. You get points by getting in the end zone linemen never get in the end zone, cut the lineman. Anybody that knows the game knows that linemen are the key to an offensive unit success or defensive unit success. So the key there is just knowing what role should a player play and what role should a campaign play knowing that YouTube YouTube's greatest strength is at the very top of the funnel.

It's creating awareness, it's creating interest, it's getting someone into your funnel to convert. And so we got to have that mindset that, hey, we're building a team of campaigns. I don't need every campaign to generate a three row as I need my campaigns to collectively get a three row As. And so we need to look at that from a full funnel mindset, understand the shopping journey and understand how you need to influence that. I like to think about being an offensive coordinator. So how do I dial up the right plays? How do I get the right players on the field to achieve what I want them to achieve? But here's the cool thing. Your competitors don't know how to use YouTube. If you learn how to use YouTube, it's going to give you an edge. It's going to allow you to scale more quickly. But YouTube is a unique player on your team.

Don't measure it the way you measure search or shopping or even Facebook. Number eight, useful reporting. Now, what's so interesting to me, and this is one of those debates, there's attribution debates. Do I use third party tools? Do I just use Google analytics? Do I look at the metrics in my platforms? What numbers do I use? And I think the quick answer is you need to probably use a little bit of all of those things. And I think you need to obsess over being directionally correct and don't obsess over being 100% correct because you'll never be 100% correct. Even shoppers don't know why they buy what they buy. I just got to speak to some high school students and I talked to them about, Hey, what's something you bought online recently? And they would give examples. I'd be, well, why did you buy that? Well, because the most comfortable pair of shoes or whatever, well, yeah, but what triggered it?

Well, and sometimes we can't even remember, right? We don't even remember what we clicked on or what we did. And so attribution is never going to be 100% accurate, but we need reporting that shows impact. And so really all we should care about as a marketer from a top level perspective is am I driving financial outcomes? Am I building my brand, building sales, building profits, building my EBITDA through my marketing campaigns? Because now what can happen is if you're a multichannel, which I hope you are, someone can see a YouTube campaign and then go buy your product in store. Or someone will see a YouTube campaign and just go buy your product on Amazon. We'll talk more about that later. And so really want to be able to see holistically, how are sales growing? We want to see directly attributable conversions to campaigns, but we also want to begin to isolate and see, okay, when I spend more money on YouTube, when I spend more money on Facebook, is that causing Lyft and other channels way more?

We can unpack there, but do we at least have clear reporting where we can start to see Lyft? And then I would recommend running a brand lift study through Google, but more importantly a search Lyft study as we spend more on YouTube, how is that driving more branded search? Because I think branded search is one of the clearest indicators that your marketing efforts are working. Nobody just wakes up with an epiphany of your brand name in their mind. The only way they search for you by name is if they see an ad and if they're compelled by it. Number nine, proper budget. So the good news is you don't need to spend a fortune. And this has shifted some in recent years used to we'd talk about, Hey, you probably need to spend like 15 grand a month to really give campaigns enough volume to begin to see what's going to work.

Now, I would still say that the YouTube takes a lot of experimentation. You're not going to nail it the first go round. You're probably not going to be profitable month one, month two, or maybe even into month three, but you should be gaining learnings as you go and getting a clear picture of, Hey, here's a pocket of an audience and a creative that actually work. And so ideally, we're going to be able to spend at least a hundred dollars a day to begin with on YouTube so that we can at least measure engagement, interaction view rate, click-through rate, things like that, and then begin to see, okay, is this driving a lift in branded search? And are we seeing conversions? And really though, you're probably not depending on what you're spending on other channels. If you're spending 500,000 a month on Facebook and then you do a $10,000 a month test on YouTube, what are you really expecting to see?

Right? That's not going to be enough to create any kind of meaningful lift. But if you need to test small to see what content are people engaging with, what are people clicking on, then you can definitely do that. But then to be able to see lift, I want to see things like, Hey, am I causing a 10 to 15% lift in overall traffic from YouTube? If so, I should be able to see a lift in branded search and a total search and shopping volume. One thing we've seen a lot is once a brand gets to like 50,000 a month in YouTube spend, we start to see a 30% plus lift in branded search. And often a 30 to 80% lift in overall search and shopping performance depends on the brand of course, but getting that meaningful spin level is great. You can start small though to test.

That's number nine, proper budget. Number 10, adequate patience. If I'm turning on branded search where I'm turning on Google shopping, or if I'm running sponsored product ads on Amazon, I should be a little bit impatient, right? This should work almost right away. It won't be optimal right away, but I'll make sales right away. It's going to work right away. YouTube takes some trial and error, right? We're going to potentially find more audiences and more ads that don't work than those that do in the early stages. But once we find stuff that works, we can scale and we can like to scale for a long time. One of the things I love about YouTube is if we find an ad that works, you can probably ride that horse for a year, maybe two years. We've seen that with several large brands on YouTube where once we find a creative that works, we can run that for a year to 18 months to sometimes more.

So 10, we got to have adequate patience. Number 11, a marketplace strategy, AKA and Amazon strategy. Now, I don't believe you have to be on Amazon to be successful, but I believe you've got to be strategic about this decision. Over 50% of all purchases in the US online are done on Amazon. All of your customers are buying on Amazon in some form or fashion. Doesn't mean though, for sure have to buy your product on Amazon, but a lot of people only want to buy on Amazon. One interesting statistic, and I'll go back to an episode I did with Jordan Pine on infomercials. This guy was in the infomercial business, still is helped a lot of the greats, a lot of the recognizable brands that then products that have sold through infomercials. Here's what infomercial producers know right now. If they launch a new infomercial product, they know that 20% of those sales are going to come by phone, especially if they're targeting an older demographic.

Still, people pick up the phone and order these products, not younger people, but people. 50 plus for sure. 30% of sales are going to come from the website. So people looking at the product, googling it, finding the URL, finding the whizzbang potato peeler.com, clicking on that buying, 50% of the sales of an infomercial are going to come on Amazon. That's if they don't even mention Amazon, right? People see a product on an infomercial, they become intrigued. They say, nah, just lemme buy it on Amazon, right? Amazon's got my payment information, my address I can get in a couple days likely. Lemme just go to Amazon. So a full 50% of infomercial purchases take place on Amazon. Why should we expect anything different if we are running ads on YouTube especially, but also Facebook, you're driving searches to Amazon, people are going to Amazon to look for it.

And here's what I believe. If someone sees your ad and they're convinced that that's kind of a cool product and maybe my needs and maybe just for me, but then they go to Amazon and they see other competitors that maybe have more reviews or maybe a different price point, then they're likely to potentially buy someone else. So especially if you're not there. However, if you do a good enough job telling why you're different, why you're better overcoming rejections, maybe making it seem like there's nobody else that does exactly what you do, then even if you have competitors that looks somewhat similar on Amazon, you'll still be able to capture enough of those customers to make it work. So we got to think through our Amazon strategy, and when we look at Amazon, we built a course, smart Amazon e-Commerce with Ezra Firestone, smart Marketer. Our agency helps with basically full channel management on Amazon. But we got to think about this. How are we merchandising our products on Amazon? Are we optimizing all of our listings on Amazon? Do we have search ads built on Amazon sponsored products and sponsored brands and sponsored brand video? Do we have a smart approach to Amazon? Because any top of funnel campaign is going to also drive traffic to Amazon.

So let's do a quick review here. What are the 11 things we need to have in place on YouTube? Well, it's not just a good video. It's a lot of other things. It's one product market fit. It's two a site that converts and a landing page built for cold traffic. It's three the right creative, creative built for and or modified and or optimized for YouTube. It's for email follow-ups. It's five solid Google search shopping and performance max. It's six remarketing campaigns. It's seven full funnel mindset and approach. It's eight useful, directionally accurate reporting. It's nine proper budgets so that we can actually see what's working and what's not. It's 10 adequate patients. We can't give up month one or even month two. We got to be willing to test to find something that works. And then 11, it's a marketplace strategy that works. So my advice to you, if you want to learn YouTube more, again, we built a course with smart marketer, Ezra and the Gang on smart Google Ads, and there is a whole section that talks about YouTube ads success.

If you want to do this on your own, you have an in-house team, get that course, go to omg commerce.com, click on courses. There's links to all of that there. Or you check it out at the Smart Marketer site. Of course, at OMG Commerce, this is what we do. If you are a growing D two C brand, if you've got traction, if you're spending over a hundred thousand a month on paid media, then we should talk and we can talk about potentially how we can help you scale on YouTube. So with that, hey, let's make it a priority in the coming year to make YouTube a viable customer acquisition source for your brand. And to do that, you need these 11 things in place. With that, this has been so much fun. Thank you for tuning in. If you like this show, please share it. Please rate it. Please leave us that review. We really, really appreciate that. Thank you for all the love that I experience when I go to events and hear from loyal listeners. And with that, until next time, thank you for listening.

Episode 260
:
Preston Rutherford - Co-Founder of Chubbies

Lessons From Chubbies with Co-Founder Preston Rutherford

Few DTC brands have been as polarizing or as successful as Chubbies.

The Chubbies story is a wild one. It started with humble beginnings, selling shorts one by one in parks around the Stanford campus, leading to an IPO.

Four Stanford college students had 3 things in common: 

1. They were tired of working for the man. 

2. They didn't fit the "Abercrombie" fashion mold of the late 2000s and 

3. They loved shorter shorts - BEFORE the short shorts trend. 

And so, Chubbies was born.  

This is a deep dive with Co-founder Preston Rutherford on what Chubbies got right, what they got wrong, and how to think about building a brand.

Here's a look at what we cover:

  • Feedback loops. This started when the co-founders were selling their shorts in person. They could immediately read customers' reactions and hear what they liked, what they didn't like and what needed to be tweaked. As the company grew, this shifted to digital and online feedback loops tied to ad creatives, social posts, and user experience.
  • Downplaying vanity metrics. We all want to brag about ROAS and revenue. But, these metrics can be misleading. If you maximize ROAS, you sacrifice long-term growth for a sale today. And you get into a trap that squeezes profits and becomes hard to break. 
  • Obsessing over core metrics. We should focus on metrics like contribution margin, total profits and branded search growth (as a sign of a growing, healthy brand).
  • Building a brand. Want to have a big exit? Want to charge a premium? Want to drive consistent demand? It's all about brand. 

Transcript

Preston:

Why do you build a brand in the first place? Well, it's so that people seek you out without having to prompt them with a conversion ad basically. Or when people are in market, they think of Che's and they come and they go to Nordstrom, where they go to Dick's Sporting Goods or they go to Amazon or they go to chubby.com, but ideally unprompted, and that becomes a conscious or subconscious learned behavior. Those are the dynamics that we're trying to create, not this Pavlovian. And I see a product offer urgency ad in my feed, and I click and I buy because it's 15% off. And I had to get that because the discount expires in two hours. That's not what we're trying to build.

Brett:

Well, hello and welcome to another edition of the e-commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce. And today we are talking about really just an iconic DTC story, an amazing success story, an amazing brand. Talk to one of the co-founders of Chubbies, and we're going to talk about brand building and how to think about growth and how to think about brand. And I just can't wait to dive in. And so my guest today is Preston Rutherford. He is the co-founder of both Chubbies and Loop Returns. And so Preston, welcome to the show. Thanks for taking the time and how's it going?

Preston:

Awesome. Yeah, Brett, thank you. Great to meet you. Great to chat with you and really look forward to this conversation today.

Brett:

It's going to be good, man. And so I was telling you before we hit record, well two things. One, you and I met on LinkedIn, so I've been following your posts. I don't know, some friends of mine commented or shared or whatever, and I'm like, dude, this guy's smart. He's got some fresh takes on brand building and how to think about stuff like ROAS and who you are as a brand and growth and things like that. And then I also met Kyle, one of the other co-founders of Chubbies, about a year ago. We spoke at the same event in Los Angeles. And what a cool guy. And so when I saw you posting, I'm like, dude, got to get you on the show and we got to talk about this. So let's do this first. I think a lot of people are interested. First of all, what is chubby for those that don't know? And then what's the origin story? How did you and your co-founders start this brand?

Preston:

Totally. Chubby's is a lifestyle apparel brand. Basically if you think about what you want to wear on the weekend, it's our job to provide that apparel net lifestyle. And in terms of how we got it started, it was, gosh, it was over a decade ago now. We were friends from college. We had been working for the man for a while, four or five years and just thought we would love

Brett:

Working for the man. Nobody wants to do

Preston:

That long term. Exactly. And we just weren't a fit for it. And at that time, Shopify was just becoming a thing, a platform that existed. And we realized, oh my gosh, it used to be so much harder, more expensive and slower to just be able to sell something online. And some of these tailwinds were making it ridiculously easy. And we also thought there was a product gap in the market for some reason or another. All of us really liked shorter shorts. Two of us played soccer, one of us played rugby. Another one of us just spent a lot of time growing up in the southeast where shorter shorts were more than normal.

Brett:

And you were the rugby guy, right?

Preston:

I was the rugby guy, yeah.

Brett:

Nice man. Rugby from the time you were a kid, this is a sport that fascinates me. I think you can make the case that there may not be a tougher athlete out there than the rugby player, but how did you pick up rugby?

Preston:

A good friend of mine freshman year in college, he played it in high school. He just asked me to go out for tryouts, and I really loved it. I grew up playing soccer myself. Wasn't good enough to play at Stanford, like some of my co-founders, but I liked running around. I liked the team environment and the culture just seemed awesome, really fun thing to be a part of. And again, with rugby as with chubby, fun and community were at the core. So it drew me to it.

Brett:

Yeah. Now wait a minute. So now you started playing rugby with a guy who was on the college rugby team, or you just decided, I'm going to go out for the college rugby team, and you made it

Preston:

A guy who was already on the team. He knew what he was doing. I had no idea, but he knew that I liked playing sports. I like running around. Maybe I'm fast, who knows. And he asked me to come out and try out, and I was blessed enough that got on the team.

Brett:

That's insane. And was this at Stanford?

Preston:

Yep. Yep, it was at Stanford. So it's a club team. It's not D one, it's not varsity, it's club team, but lot of amazing athletes on the team.

Brett:

Yeah, I've been around club lacrosse teams at the collegiate level. I mean, it's still collegiate sports, man. Most people don't just decide, yeah, I'll learn the sport as I go. I'll learn at the college level and then I'll go. So anyway, that's super impressive. Hats off to you. Your first experience was at the college level of rugby. Holy cow. I appreciate,

Preston:

I appreciate that, I appreciate that. So yeah, that was a little bit about who we were. And at the time, if you remember back late 2011, the Abercrombie and Fitch vibe different from today, but back then it was very guys with six packs standing at the door spraining with cologne, like the NCE music playing. And if you weren't that vibe, you didn't even feel like you could walk in the place.

Brett:

Dude, I was so not that vibe ever in my life, and I resonated with that. I'm like, I can't even buy this stuff.

Preston:

Yeah, exactly. And then just at the time, it was very much serious and exclusionary and there wasn't a lot of humor and we just thought, well, let's just flip it on its head. Let's have some fun here. Let's create a vibe that is the vibe that we wish existed. That hearkens back to the retro days of shorter shorts, barbecues, fun, welcoming humor, creativity, and let's just have a go. And so nights and weekends while we were doing our normal jobs, we just started trying to make some product first made it for ourselves and then just started making it for our friends. And then this was also at the time when the square card reader came out where you could actually transact with the credit card in person. So we just put product in our backpacks and went out and would do the weekend thing at the park or at brunch or whatever, and there'd be just a group of us wearing these bright tiny shorts and people would either love it or hate it. And we loved that polarity existed. There wasn't apathy. It was either you love it and you want to be a part of it, or you're just like, this is clearly not for me. And I think these guys are idiots. But that's kind of what you need with a brand that is what you need. Because

Brett:

The worst thing is apathy. The worst thing is that I don't really care that polarity means that there's a group out there that they fall in love with it and they want to be associated with it. And so that's perfect.

Preston:

Exactly. It was clear what we were and clear what we weren't, and that was just authentic to us. That was our story. That was who we were. And people would come up to us, people who liked it, they said, where can I get this? And we said, well, oddly enough, we've got some in our backpacks you want to try 'em on. And then people would just be buying. And so in-person sales was huge for us. There was such a tight feedback loop. Now it's tougher. You've got this meta and Google middleman in there, but it was awesome to just have that hands-on direct connection with folks at the beginning.

Brett:

Now I know the trend, and we're actually just talking about this with some of the guys that work here at OMG. We're talking about how shorter shorts are the thing. And a couple of guys that work for me are runners and they love the short shorts. And I am more of a child in the nineties. I played basketball in high school in the late nineties, and that was the era of the giant shorts. I have no idea why this was a thing. But the Fab five in Michigan, I mean you look at now and you're like, how did we move? How did we do a crossover between, I was a post player, so I didn't do any crossover between the leagues, but how do you do that with the long shorts? I don't know. But were you guys very early on in the short trend? Do you feel like you helped helped that trend, or were you kind of riding the wave?

Preston:

Oh my gosh, we were early, super early. We looked like idiots for the first number of years in terms of what we were doing because the vibe was the longer the cargo shorts with 20 pockets

Brett:

Cargo shorts,

Preston:

The tight ed hardy shirts, that was the vibe. So yeah, we were not riding tailwinds at that time. Now, I would hope that we were a part of creating these tailwinds and this change, but that's something out of our control. We were just focused on the inputs and what we felt was a missing piece of the market. But at the beginning it was just very polarizing and very different. But we knew we were a customer and we knew there got to be people like us out there. And it wasn't a top down sort of men's fashion tam and then men's bottoms, if you did that analysis, you wouldn't have started chubs because the tam totally addressable market gets really small real fast. That's why a post I did was basically no MBA in the right mind would've started chubby because it's a tiny tam and people generally want to attack massive tams. But we didn't care. It was just let's make a product for ourselves and let's just see

Brett:

What happens, make a product for us and then see where it goes. Yeah, it's so great. And so I want to skip ahead to kind of the ending because I think a lot of people don't know this. And then we're going to get into lessons learned that I've got some great topics, again kind of inspired by your writings, but you guys were acquired by this what became the solo stove kind of platform, which iPod, and there's a lot to that. But what was that exit and was that process, were you involved in that process? Did you leave the company prior to that or what was that like?

Preston:

It was a whirlwind. I mean, first of all, a huge blessing that anything like that even happened. And

Brett:

You had to go from selling in parks in around your college campus or whatever to company that had an IPO. That's just wild. It's just crazy.

Preston:

It's totally wild. It's mind boggling, and it is crazy to think about it in that way. But yeah, I mean, it was wild and a crazy, crazy process. And yeah, you're exactly right. It was a bit of a rollup. So it was the solo stove brand and then two other brands. And then very quickly after the acquisition went public, which was its own crazy whirlwind, so many learnings and things like that. But yes, so that was gosh, about a decade after starting the business. So my takeaway is these things take time. Consumer brand building takes time. And our hope is that this is just the beginning, right? That this is a multi-generational thing, like a brand that transcends and that's the hope. So we view it as sort of the Jeff Bezos quote of day one, and it's amazing to see that the brand continues to grow, the resonance continues to strengthen. And I was just in Dick's Sporting Goods last week looking for a golf club, and I saw this massive chubby set up there. I almost started crying because it was just amazing to see that something like that could happen after, again, just walking around San Francisco selling one short at a time to people who would just walk up to us. So

Brett:

Were you tempted people walking through the aisles of Dick's Sporting Goods? Hey, hey, I'm one of the founders of that.

Preston:

My wife does that. I'm so embarrassed to do that kind of stuff, but my wife does that sometimes. Then I get really red and blushing and kind of look down. But no, it's such an amazing thing to just see all the UGC, for instance, thousands and thousands of things that have been created by just people living their life, having fun, kind of reflecting back at us, what we hoped to put out into the world. And it's things like that that gosh, just kind of floor you and fill you with humility. It really just kind of shows you, gosh, left a little bit of a positive mark on this and what a joy to be a part of that.

Brett:

Yep. It's so cool. And yeah, I think most overnight success stories, unquote, this was about 10 years in the making and lots of blood, sweat and tears along the way that eventually led to roll up in that IPO, which is amazing. Let's dive into a few things. I want to unpack several lessons you guys learned along the way, and one of those is I think we learned a lot from failures or missteps. So what are some of your favorite lessons learned at Chubby's from what you guys got wrong?

Preston:

Geez, so maybe to start, we made all of the mistakes in the book, I would say. So anything that I say or anything that I write about, if you read any of my stuff, is all coming from a perspective of starting with humility and having made all the mistakes, not I know this is right sort of thing. So just a couple of things that pop into my mind. One is around changing the view, having more learning, humility around channel expansion. So for the longest time it was the trend of I got to sell everything through my site. I'm going to own this customer, own this transaction, get this email address, and I'm just going to, it's mine. You get all the data, blah, blah, blah. What we realized is a e-comm is a very small sliver of overall retail or commerce, what, 20%, maybe a little bit more growing fast, but still very small.

Amazon owns half of that. So we're fighting for 10% of this broad sort of pie, yet spending a hundred percent of our dollars on that pie. So that to us started to make less sense over time. So I think one thing we got wrong was holding onto that digital D two C for way too long, have a little bit of humility that even if someone really loves your brand, they're busy and you want to be where they're buying and you don't want them to necessarily have to just type in ch.com, be where they are. So big thing there, maybe start going multi-channel, exploring multi-channel earlier. Now it's hard to do that before you actually build an association in people's minds. So you've got to do those things, those basics, but be where the customer is.

Brett:

And a couple things to piggyback on that, because I 100% agree with you, people are strapped for time. It's not easy to just buy in one place. And I think a lot of people mistakenly believe that, Hey, if I don't have someone's email address and phone number so that I can follow up with them, or I don't have their address where I can mail to them or whatever, then they're not my customer. And while in an ideal world, yes, we would want all of those data points, that's not necessarily true. We can all think about our favorite brands, whether that's Nike or particular kind of jeans, or my favorite hot sauce. I'm a hot sauce guy, I am a customer of certain brands, and I may buy those brands in a variety of places. Maybe it's on Amazon, maybe it's D two C, maybe it's through their app, but yeah, maybe it's just at a retail outlet. And so I think we over romanticize having full control of the customer experience when it'd be a lot better if we just put our products where people are, because another reason, a lot of people may find you in a retail store and then become your customer online. So it can work both ways, and I think we forget that or are just a little bit too shortsighted about that.

Preston:

Totally. And there's fear. I mean, on Amazon, is Amazon going to duplicate my product and put me out of business or will the same thing happen

Brett:

When it comes to brand? They can't do that, right? Amazon's not, I mean, okay, maybe they could at some point, but you guys had this brand going for which I think that's the key. And Amazon's not just going to recreate that brand overnight

Preston:

A hundred percent, but we have these, now I can call them irrational fears, but at the time, very real. You're trying to do the right thing and I get it, but that was a big lesson for us and big growth drivers now that we're able to be in more of the places where a consumer already is. Another one is how to spend our marketing dollars to better drive the outcomes that we actually want. And so what do I mean by that? For the longest time, it was very much, and this starts to get into the roas, short-term ROAS conversation, but it was very much, I feel like I'm doing a good job if my ROAS is a high number and not really thinking about what that means in terms of business fundamentals. And so starting to think a little bit longer term, my primary goal is not to buy short-term revenue pops. My primary goal in building a brand and building a business is to generate a machine that generates sustainable sequential increases in profit dollars over time,

Brett:

Which

Preston:

Allows me to create jobs, which allows me to make more great product, invest in great product and build great content, create great content that brightens people today. So let's create a machine that actually does that rather than give me whatever, 8.3 x roas that I can then screenshot and tweak. And so that was a big shift because we thought we were amazing media buyers. We thought we had cracked the code. We would constantly look for these little pockets of arbitrage, short-term arbitrage, but we thought we were killing it, but we weren't really generating any profits at the end of the day. And so shifting a little bit to, okay, what are we trying to do and then how do we think about getting there? And so a little bit about what does it mean to be strengthening a brand? Why do you build a brand in the first place?

Well, so that people seek you out without having to prompt them with a conversion ad basically. Or when people are in market, they think of Chubbies and they come and they go to Nordstrom or they go to Dick's Sporting Goods, or they go to Amazon or they go to chubbies.com, but ideally unprompted, and that becomes a conscious or subconscious learned behavior. Those are the dynamics that we're trying to create, not this Pavlovian. And I see a product offer urgency ad in my feed, and I click and I buy because it's 15% off, and I had to get that because the discount expires in two hours. That's not what we're trying to build. Not that we shouldn't do any of that. Of course there's a balance. But shifting the way that we thought about, okay, what am I buying when I spend a dollar? And getting a little bit more of an understanding of that was huge, was huge for us. Let's build these.

Brett:

Yeah, I love this so much.

Preston:

Yeah, let's build these resilient bases of revenue and then let's build a layer cake rather than just a pop. And then you have to do it again. And then because you're reaching an ever increasing pool of people, the LTV to CAC ratios just get funkier and funkier over time, and CPMs go up, CACs go up, and you kind of get in this upside down position where they're just insurmountable headwinds or you're starting to sell multi-channel and the old playbook didn't work for us. So you just have to make these shifts and I think start to think a little bit more long-term, like how is my percentage of new customer revenue coming through owned and organic channels? How is that changing? What am I doing there? Fundamentals.

Brett:

Yeah. And I think what's really interesting here is that of course, we want all of our marketing dollars to be productive. Of course, we want everything to work in our favor, but on what time horizon and what does that really mean? Because we can all become ROAS obsessed. And if you think about it, the only way that you truly maximize ROAS is by making mistakes or doing things the wrong way. If I want to maximize roas, I'm just going to go for search and branded search. But where does branded search come from? You got to generate that in the first place. Or going to, if I only want to maximize ROAS today, then I'm going to stop organic content and I'm going to stop prospecting on Facebook and I'm going to stop prospecting on YouTube and I'm going to stop doing some of those things.

But that kills your brand in very short order. And so I love that being able to spread out the time horizon and think, yes, I want this to be a maximum return, but over the long haul, right? Because I want to be able to charge a premium forever, and I want people to associate with my brand and share my brand and talk about it and to seek me out and all those things. And you don't get that. You don't build that by just running discount ads and by just creating that discount death loop. And so I'm so glad, so glad you brought that up, but sometimes you have to learn that, right? We all get addicted and even as an agency, and we run a lot of Google ads and YouTube ads and stuff, and I get it, we want to be able to show those impressive ROAS numbers and put 'em on case studies on your website or brag about it on social media. But it's pretty much a vanity metric, and it really only tells a sliver of the story, not the whole story

Preston:

Vanity metric. Yeah, I mean, I think for us realized vanity metric revenue we found for us was a vanity metric. I mean, optimizing around revenue, you're missing a whole bunch of stuff. Start thinking about contribution, contribution margin, things like that. Letting that drive everything we do, at least on the demand driving side of the business was also huge. So yeah, just learning about these vanity metrics took time. You get there, but then can we start to spread that message a little bit more broadly so that people get there a little bit faster without having to struggle through it for 5, 7, 9 years?

Brett:

And one thing, sometimes we kind of push aside lessons from bigger brands because we think I'm not that big. I can't do that, right? I'm not Apple, I'm not Nike, I'm not Procter and Gamble, but one of my favorite lessons I actually heard from Procter Gamble, and we'd already thought about it this way, but hearing it from them was validation. Then one of the key success drivers they look for in ad campaigns, what they're doing is, does this lead to branded search? Does this lead to branded search? If it does, then it's probably working. So if we're running a TV campaign, it's maybe hard to measure exactly, but is it driving branded search? Are these other campaigns driving branded search? That is a huge component of brand building, and that's kind of a shift in mindset that gets you to think, and that's where the big profits are is I do want to double click on something since you brought it up, and we'll kind of talk about this for a minute, and then I want to hear some lessons from some of the wins and some of the stuff you guys got. But you mentioned contribution margins when we talked about vanity metrics. So what metrics did you start leaning into? And let's start with contribution margin and the way you guys viewed contribution margin.

Preston:

Yeah, yeah. I mean, an example, maybe it's helpful to think about an example. So you could, as you know, get a really nice roas, but what's happening is you're selling shorts that are 15% off, and so you're still spending the same amount as you were when your shorts were full price. It looks like ROAS is going up, or you're just driving a bunch of conversions. And ultimately the dollars that are flowing through your p and l are dramatically reduced. And so then at the end of the month or at the end of the quarter, you look back and you're like, I thought I was killing it. And then you realize, wow, I generated no cash from this. So then we started to think, okay, gosh, what really matters here? And then how do we look at things on an apple to apple basis? Then it allows you to compare to things like wholesale and things like that, and it starts to incorporate things like the amount of dollars you're spending and the discounts that you're running.

And so for us, just that change and then ideally trying to, and I know Bennett True classic talks a lot about this of daily contribution. It's one thing to get a number from finance at the end of the month once you've chewed everything up, but that's far less actionable on a day-to-day, we're making these decisions on a daily basis like budget allocation, channel tactic, creative decisions. We need this daily feedback loop. So yeah, very much getting away from revenue because revenue can be tricky and can, I mean you can gain short-term contribution, but looking at long-term sustainable sequential increases in contribution dollars that your business machine is generating for us was huge. I mean, it just totally shifted how we thought about things and how we gold our team and things like that.

Brett:

And just for those, I think a lot of people listening are very familiar with contribution margin, but for those that aren't, can you define it really quickly?

Preston:

Sure. And I think people have differing definitions, but fundamentally it's just taking into account sales less all of the things like your cost of sales, which incorporates your marketing costs, which incorporates your product, gross margins, but then also all of these other costs like diminishing returns maybe in terms of where you are in your business. But once you become relatively sophisticated, you start to incorporate things like per skew, returns per skew, CX tickets, and all of these other sort of associated costs. Getting down to incorporating shipping one little aside here, we started doing, one of the things you want to do is drive basket size, drive your ALV, and we didn't have $200 shorts, but we could do bundles, and I think a lot of us have tried bundles. The thing about bundles is that you hit a shipping size threshold where you might go from an average of five bucks to ship a package to 10, and you didn't take that into account.

You didn't know you hit that threshold. Maybe you scaled shipping costs linearly and you're like, wow, this is way off. So having that sort of sophistication where you're incorporating both shipping costs as well, especially as you run these different promos becomes very important. So then you get this sort of nut of cost associated with selling your goods. And I mean, you're not incorporating fixed costs. This is all your variable costs, so you get to effectively your variable profit. So it's not incorporating things like your rent or your headcount, things like that, but nearly everything else. So then it helps from the perspective of, okay, I'm the marketing team. I'm the demand driving side of the business. What can I truly control? I can't control the whole p and l, I can control revenue, but that's not really driving the fundamentals of my business. I can control effectively down to, and obviously there are other teams that are taking into account product gross margin and CX ticket costs and things like that. But from the demand side, driving demand side of the business, what are we able to really affect here and help drive the business and get just closer to the bottom line effectively? It's just more of a tie to what the business is actually producing at the end of the day.

Brett:

It's so good. It's so good. And yeah, when you realize that rose is a vanity metric and revenues a vanity metric, and even percentages, margin percentages can be a vanity metric, it's more about what is the contribution margin? How am I getting closer to the bottom line with each sale and getting those daily feedback loops so I can adjust marketing efforts and adjust merchandising to really get there. And so it's so smart. It's great. I love it. Let's talk then about what did you get, and I think sometimes people confess we're definitely this way in the building and scaling of our agency. Sometimes you get stuff right on accident, you did this and you're like, oh, holy cow, we were spot on here and that was an accident. And then sometimes you're very intentional about it and you end up being right. But what are some of the things you just got right early on?

Preston:

Man, I think a lot of this was wasn't an accident or things we stumbled into, but we did try to be very thoughtful around the things that we did. So I think first and foremost, no ad spend can compensate for substandard product. So I mean, you got to start there. Your product has to deliver, has to be unique, it has to meet a need that's currently unmet, and that's relatively obvious, but with how easy it is to create a product and then just start running met ads against it and being able to sell some stuff, there's somewhat of an issue there in my opinion. And obviously you'll get feedback and you can iterate over time, but fundamentally, that's why I'm such an advocate of in-person sales at the beginning because you see that look on people's face, you see if they'll just walk up to your thing and be like, eh. You get so much feedback that

Brett:

You can read the emotion and you hear the language and they're like, there's so much rich feedback there. Yeah, I love that too.

Preston:

It doesn't show up in clicks or sessions. I mean some of it does, but that's one of the things I think that we really focused on. And I think it started because we made the product for us. We were the first customers. The second I think is the fundamental approach that we had to the relationship with our customers. So because we were making product for ourselves and our friends, this was sort of easy, but generally what we were seeing out there that we thought was fundamentally problematic was companies, this corporate entity communicating with faceless customers. And that drove the communication, the communication style, the content that was put out, and we just kind of fundamentally decided to take the opposite approach. We are not a company first, we're just group of people first, and we're developing friendships with other people, and that's it. So then how does that govern what we do and how we behave and how we communicate?

We're trying to build a relationship. So then when you internalize it and you think about, okay, how do I behave in my friendships? What are the things that I do that drive deepening of friendships? What do my best relationships look like? I'm giving, I'm investing. I'm there, I'm dependable. I'm building trust. I'm honest, I'm transparent, all these sorts of things. Whereas if you're a company talking to customers, you don't care about investing in the relationship, you don't care about giving a hundred x more than you ask for, so you can just feel good just throwing an ad in someone's feed that's like, yeah, buy this right now. I don't care who you are. And not that we never put ads in front of people that we're telling them about our product, but it was just fundamentally different approach and it just guided everything that we did, and it really kind of permeated the culture of the org. So I think that was something that really helped because it really helped in building a community. People felt like they were in it with us, they were building it with us, and they felt like they knew us. They did. They really did. And that I think led to a level of closeness and loyalty and trust that you just can't really manufacture if you're doing it another way.

Brett:

Yeah, it's the stuff you can't hack, you can't shortcut, you can't get there in sneaky ways. It just takes time and you just got to do it the right way. Yeah, absolutely.

I want to talk a little bit now about content creation and we will talk ads and inorganic. We can talk about both, of course. I'm going to quote a post you made on LinkedIn recently because I thought this was great. You said that, Hey, there's three parts. There's a three part playbook for infinite video success, part one roller blades, part two, Nerf footballs and part three my favorite mullets. And so this tied into a specific piece of content you guys created, but it was so great. It was so fun. It was so funny. But my question is how do you create content that is on brand but still impactful, where people want to watch it and want to share it, want to comment on it? You guys did that so well, you do that so well at Chubby. So what's your approach? Talk about your approach there.

Preston:

Yeah, I mean, appreciate it. So yeah, obviously that was me being somewhat facetious, but

Brett:

For

Preston:

Us, what we learned is, and it'll be different for everyone's brand, but it's about an approach. So the only formula we really have is making sure we have a tight feedback loop where the learning can take place, and that's all that matters. And I think that's the thing that's universally applicable. And so that's relatively obvious. So then what does that mean? It's having that deep process in place. So what is the quantifiable goal you're trying to achieve? You mentioned one metric that is branded search, or you could even take it a step further and talk about engaged sessions from branded search, right? Because a lot of totally and bounces. So what is getting to two page views or collection view or whatever it might be, however you want to define that, but there's a quality there that we found matters, but what is that quantifiable?

What are you driving for as it relates to brand video content? And it's not that it necessarily cannot have any kind of ACTA or anything like that, but for us, we found that it wasn't necessarily short-term revenue. That was the way that we would measure the success of this stuff, but have that quantifiable metric and then use your gut to come up with two or three different ideas and then just start the learning process. But you have to know what you're going for. And once you have that, you can start the beautiful process of looking at the data, coupling it with your intuition and doubling down on what's working, doing less of what's not working, and just build that machine. And it doesn't cost a lot of money. I mean, you probably saw some of our videos. Production value was effectively one of the things we found was that production value was inversely related to success of the video.

So it was just very much like let's make something that's authentic and that resonates, and that allowed us to have the fast feedback loop where you didn't have to pay up front 50 K to just get one idea to explore you, to explore a lot of ideas very quickly so that the feedback loop could happen. So I think that was the key for us is just having a feedback loop and you got to have that dependent variable that you're optimizing for, and it has to be very clear. Everyone has to know what it is. And then you got to have a method for to the best you can connecting what you did to that metric. And that's it For us, it was rollerblades and nerve footballs and mullets for you, it's going to be something else

Brett:

That's not going to be universally applicable. I mean, maybe

Preston:

That formula,

Brett:

Who knows mullets could work anywhere probably. So let's talk a little bit about, you were saying that, or maybe we talked about this before we hit record, but your brand statement, what you focused on, what drove and inspired everything you did was chubby equals weakened. Now was that something that was just kind of baked in and part of who you were when you started or did you have that crystalline focus in the beginning or did that kind of evolve over time? Talk about how you got to that chubby's equals weekend, and then how did that impact everything you did?

Preston:

Sure. The way we thought about it was that the core is fixed and then around the edges or the narrative evolves over time. And we didn't necessarily know that at the beginning, but the notion of weekend, the way we kind of summed it up was that Friday at five feeling was there from the beginning. We graduated college in 2008, global recession, very stressful. It was hard to get a job

Brett:

The worst time, the worst time possible to graduate college.

Preston:

Yeah, I mean, it was a time. And so there was all this stress around work and getting a job and holding onto your job and feeling nervous about whatever, that whole thing. And so for us, it was just kind of like, man, that's rough. And what can we do there? How can we contribute on that front? And it's, gosh, it's that moment where you leave the cubicle, you change into your weekend where you relax. It's Friday at five, that's the trigger, that's the switch, that's when things turn on. And we just wanted to capture that feeling and that was the kickoff for the weekend. That was the time when you were making memories with your friends, when you felt in control of your time and where you just kind of felt free. And so it was that feeling of freedom that was associated with Friday at five with the weekend and all of these things that were the story that we wanted to tell. And then that just very nicely tied into a lot of the charitable things or the cause things that we decided to associate with around mental health because this stuff matters. It's all a consistent story because ultimately that's what we were trying to is help us have a different approach to life and stress and our work and what's important. So yeah, that was there from the beginning. And with that comes an irreverence, comes a humor, comes a levity that we can

Brett:

Not taking seriously.

Preston:

Yeah, it's the weight that we add to our lives that in a lot of ways can be changed if we just bring a little bit of levity and take ourselves a little bit less seriously. And that's what we were trying to do, the story we were trying to tell, and we knew it had to be a tight story because people are busy. Again, back to that note, humility around the fact that you are not the only thing people are thinking about. You get a quarter second and then they're moving on. So are you going to tell the same story over and over? Are you just going to continue to build that mental availability, that mental association around one very simple thing? You're going to monopolize that niche in someone's mind. It's got to be tight, but it can't be boring. So it's finding that balance. That's the infinite balance.

Brett:

And I think it's one of the fundamental marketing mistakes that so many people make is assuming people are paying attention to you or assuming that people are more interested in you than they really are, and in the beginning they're not interested in you, right? In the beginning, they're not thinking about you. You really got to work and you got to be both succinct and interesting and funny if that fits your brand and all of those things. Now, I saw some videos, and I think this was you guys, but it may not been the videos of the guy on the Zoom call and he's got the green screen behind him, so it looks like he's in his office, but he's really on the golf course where he is riding his bike down a busy street. Was that you guys?

Preston:

Yeah, yeah. In partnership with one of the most awesome TikTok creators. But yeah,

Brett:

So where did that idea come from, and can you talk a little bit about the success of that? Because one that I was just remembering and I watched the other day, which was so great, was a guy's on a Zoom call and he's got a headset on. He's like, yeah, yeah, yeah, but he's actually lining up a putt. He's on a green, and then he sinks the putt and he's like, yeah, exactly. Everybody else on the zoom call is whatcha excited about, but that really captures that weekend vibe. Where did that come from? Was that you guys? Was that this TikTok creator? Was it a collaboration? I'd love to hear the story.

Preston:

I mean, we've been doing videos, making fun of work from the beginning. We would make videos where we would just get dummy laptops and do flipping the tables or throwing our laptops out the window. But again, it all kind of speaks to what is the video, what is the content that you want to see when you just got out of that performance review and you're just feeling like, what am I doing? I just want to flip the table, throw my laptop out the window and just go fishing. And so that was a lot of the stuff that it is such a blessing to be able to even spend time making content like this. I mean, we were the luckiest people in the world to be able to do this stuff. But yeah, just bringing fun and levity to work. I mean, we talked a ton about just the shackles of the cubicle and all these sorts of things.

And so what's the opposite of that and how do you think about, gosh, this is exactly what I want to be doing when I'm looking at this content. And again, that was one of the consistent themes that ran throughout and it's just fun. It's just fun to think about because so many of us spend so much time sitting looking at a Zoom screen, and so then to be able to just sort of say, okay, what is the most creative approach you could take there? Because it's just something we all resonate with and generally sucks. And so how do you turn it into something that is like, oh, this is awesome. This is super fun. I wish I was doing this.

Brett:

Yeah, we've all been on a Zoom call where we desperately wished we were on the golf course or riding a bike or doing anything other than being on the Zoom call. Totally on brand and totally worked for you guys for sure. So other just, and I know there's a million, I know we could talk for hours and hours. I want to also talk about Loop, which is kind of your newer venture, just a second. But any other lessons or takeaways, some of your favorites from the building of Chubby that you want to share with entrepreneurs that are listening?

Preston:

I think one of the realizations that was really helpful for us was just an understanding that 95% of your audience is not in the market for your product at that given moment. So then what does that mean? What are you going to do with that information? And that kind of blew our minds. We were just sort of thinking, man, as long as my CT A is good and I can tweak this language a little bit and I can run all of these variants, and it was kind of like missing the forest through the tree sort of thing, or playing just fundamentally the wrong game. And once we realized that stuff and we're able to start thinking a little bit longer term like, Hey, this is a marathon, not a sprint. We're trying to drive this machine that is this ever increasing percentage of new customer revenue coming through, owned in organic channels and just create this layer cake of resilient based revenue.

I think that's the mindset shift. And I'm not being prescriptive in terms of what you actually do to do that, but just how can we think about our businesses like that? That might be the one thing I want to leave people with because when we were changing our mindset and changing our approach to these sorts of things, and there were a set of tactics that worked for us as we kind of waded through, stumbled through most of the stuff that didn't work, but that really was one of the big things that drove this unlock in not only growing top line, but bottom line profit generation as well. And having gone from a business that wasn't really doing that to doing that, that's all I want to contribute to the ecosystem is how do you do more of that and what are these fundamental approaches and mindset shifts that we think we learned are more aligned with better way to run our business?

And just because it's not as popular or talked about on Twitter or whatever, doesn't mean it's not right. It's harder. It takes longer period of time. The feedback loop is less well measured in platform, but it's the stuff that lays these foundations that helps us build the business we're all trying to build. So I think that's maybe the main thing is just that mindset shift and I'm exploring it myself because it's something that to be silently articulated so that people can understand it, internalize it, and then operationalize in their business. So that's the fun of writing and having a conversation, Brett with you, is just figuring out how to talk about this stuff in a way that actually makes sense to people.

Brett:

And I think we just, a lot of people are trying to solve the wrong problem. They're trying to solve a short-term revenue problem rather than obsessing over long-term sustainable revenue, or they're trying to optimize towards the wrong metrics, roas in revenue versus contribution margin and some of these more sustainable healthy things and trying to drive sales instead of trying to build a brand and building long-term demand. Then of course we got to meet cashflow needs for today and things like that. But shifting the mindset there, it's so good, and if you can successfully do it, you'll be happier. You'll have more fun in business. If you want that exit one, an additional and eventual IPO like you guys, then that's really about the only way to do it. And so really enjoy that. That's awesome. Love it. Let's talk a little bit about loop returns. That's a newer venture. So what's the idea behind that and what is Loop returns?

Preston:

Yeah, I mean this was something that we built for ourselves while at Chub's, oddly enough, and we had no idea

Brett:

Noticing a theme here, right? Building for ourselves first, which is a brilliant way to start a business.

Preston:

Well, thanks can really, I mean, what it has turned into is absolutely fantastic. Jonathan Palmer and the team amazing in building this thing into a great, great company, growing very quickly and really helping the Shopify ecosystem. And then more broadly, non Shopify ecosystems really provide much better customer experiences around this truly bottom of funnel, these experiences that used to be really bad. So I mean, we had a habit of just building software tools, software experiences that solved their problems internally. I mean, if you remember, I don't remember exactly when it was 20 15, 20 16, the returns and exchanges process was rough. I mean, you just think about the back and forth.

Brett:

It was so rough that that's why a lot of people didn't buy online. And apparel being the most challenging, really good shot, this isn't going to fit. And that would just deter. It was so painful to deter people from purchasing,

Preston:

Totally emailing in, say, I want to do a return email back. They send me a photo so I understand you didn't violate the return policy. They send the photo, then you check the policy, then you send back a manual PDF of a shipping label, just so broken. And then the realization, so many returns could have been exchanges and just that the material difference that that can have on your p and l if you're converting a return into an exchange. It just sort of seemed obvious to us that there had to be a better solution. So we built it for ourselves. And then other brands came to us saying, we want this experience. This is so much better than what we have. And we were just like, I don't even know how to think about this. This was for us. Are we a software business? Are we not?

So we stumbled into it and it seemed like it was solving a need that wasn't unaddressed elsewhere, just kind of like what happened with Chubby's just in a different context. So yeah, I mean, put together, spun up a new entity, put a team in place, and they have gone and built an amazing business. It is awesome to see, so proud of the team, and I think a lot of customers are having much better experiences with a ton of brands, thousands of brands because of this. And that's humbling and awe inspiring to be a part of in some small way.

Brett:

So making returns less painful for both shopper and merchant. Such a needed, needed thing. Where can people learn more about Loop returns?

Preston:

Loop returns.com.

Brett:

Easy enough, man. So we'll link to that in the show notes as well. And I do want to underscore, if you've enjoyed this podcast, which I'm confident you have, you need to follow Preston on the socials. That's how he and I connected. I was reading his stuff on LinkedIn. The post about ROAS just got me teary eyed and I was crying tears of joy as a marketer, but your content is really, really good, man. So where all can people follow you? I know I saw you on LinkedIn, but where else are you posting regularly? If anywhere else?

Preston:

LinkedIn's the place, man, that's where I'm trying to do it and spend time and invest and try to get better at it. So just search Preston Rutherford on LinkedIn. There's a little shorts emoji in between Preston and Rutherford, so you know that this is the one you're going to select and follow. But yeah, LinkedIn would be awesome to interact with you, comment on my stuff, give me feedback. I mean, this is a learning process. I'm not here to just dictate stuff. It's searching for truth and trying to learn together. So would love to follow, would love the comments. I mean, let's learn together.

Brett:

And your teaching style, the style of your posts, the style of your education is very chubby esque, right? It fits the mode and the ethos of Chubby, which is fantastic. I really like to hear that what you said, you're focused on LinkedIn. That's what I'm doing as well. I kind of, for a little while I was like, I'm going to try posting on Twitter and I'm going to on Instagram and all these things, and TikTok, which I'm never on TikTok as a user, but I was like, this is ridiculous. I like LinkedIn. That's where I'm going to connect with other brand owners and stuff. So I'm just going to go kind of all in on that and then I may add stuff later. But I think there's a lot of wisdom in that. Preston, this has been an absolute joy, an absolute blast. I have to do it again sometime. Thank you so much.

Preston:

Would love it, Brett, thank you. So grateful to do this with you. It was really fun, super fun conversation. And yeah, I'd love to do this again sometime.

Brett:

Awesome. Keep up the good work on that content and I will keep reading and sharing, and I know other people will as well.

Preston:

Appreciate it, man. Thank you.

Brett:

And as always, thank you for tuning into the show and we'd love to hear from you. What would you like to hear more of on the show? If you'd like this episode, share it with somebody that will enjoy it. And if anyone is thinking about being an entrepreneur or they run AD two C brand or they're a marketer, they're going to love this show, Preston Rutherford. So please share that. Until next time, thank you.

Episode 259
:
Brett Curry - OMG Commerce

5 Untapped Growth Opportunites

“If you do what you’ve always done, you’ll get what you’ve always gotten.”

“The definition of insanity is doing the same things over and over again and expecting different results.”

Not sure where I first heard these quotes, but they definitely apply to this week’s episode.

I firmly believe that to grow like no one else is growing, you must do what no one else is doing.

In this episode, I walk through 5 growth opportunities that you’re likely under-leveraging or completely missing.

This is the recording from a recent talk I gave in Austin, Texas, to a group of 1,200 eager Amazon Sellers and DTC brand owners, where I unpacked these 5 growth opportunities.  

While there are a few cases where seeing the video might be more helpful (watch it here), the audio should still be helpful! 

I hope you enjoy it.

Transcript

Brett:

At OMG Commerce, we accelerate growth for some of the most loved brands in e-commerce, like boom, native, true earth overtone, and dozens more. If your Google and YouTube ad performance isn't where it should be, if you're struggling with Performance Max, or if you're not scaling like you'd like on Amazon, then we have two ways to help. One, we have amazing resources that are free for the taking, like our top YouTube ads guide with lots of examples, our P max checklist or our Amazon DSP roadmap plus many more, or hit us up for a free strategy session. So go on over to omg commerce.com and click on Let's talk to request that free strategy session or click on resources and guides and pick the guide that's right for you. And now back to the show.

For two hours they ran out of lemonade, they made 200 bucks. Now I was impressed, but also like, man, does this set these kids up to fail? Are they going to think everything is this easy? And so anyway, now my entrepreneurial juices are flowing. I'm like, Hey, we should make cookies and muffins and let's double production. And so all this stuff, and I overheard Sophia, the success had gotten to Sophia's head a little bit, and so she's talking to her siblings and she said, guys, dad is trying to give us business advice. We make more money than he does. And so love Sophia, but her siblings were like, Hey, maybe dad knows a thing or two. So anyway, they kept it going and the success was quite impressive and quite fun.

Well, hello and welcome to another edition of the e-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce. And today's episode is different because this is a live recording from an event I did in Austin, Texas in front of about 1200 DTC brands and Amazon sellers on five untapped growth opportunities that you are likely missing. This presentation was a lot of fun. I got rave reviews. I hope you enjoy it. I'll talk about three big marketing mistakes that are holding you back. We have the privilege of auditing hundreds of DTC brands, Google and Amazon and YouTube accounts every year. And so it gives us really clear insight into what separates the best from the rest. I'm going to talk about that also. Sure. Kind of a fun and humorous and insightful story about my kids' lemonade stand. As many of you know, I do have eight kids.

I dive into that a little bit. But we get into Performance Max. We talk about a way to look at branded search campaigns that you're probably not doing now. We talk about how to tap into Amazon's number one traffic source and their number one source of new customers and lots of other good stuff. So please enjoy my presentation on five Untapped Growth Opportunities Seller Con, what is up? Hey, I think we should do something really quickly. How many of you guys are enjoying Mimi? Isn't that guy full of energy? Give it up for justice. Mimi. Love that guy. Love that guy. I want him to do all of my intros forever. That guy is fantastic. So I love what Matt Clark said yesterday that just one idea, one strategy, one connection, and I really encourage you to focus on that can add millions of dollars in sales to your business and can change their trajectory of your business.

So my goal is I hope to give you at least a few of those ideas right now. My guess is of these five strategies, these five untapped strategies, you are likely missing possibly all five. Or if you're using them, I bet you're only using a few and I bet you're not fully leveraging them. So I believe to grow like nobody else is growing, you got to do what nobody else is doing. And so that's what I'm going to help you do today. As Justice said, I do run an agency team of 73, 1 of the top spenders on YouTube ads. We manage about a hundred million a year in ad spend. So I got a lot of data, got a lot of data to pull from as I share these ideas and these strategies. Got a full Amazon department, so I'll talk mostly about D two C growth, but I'm also going to mix in some Amazon growth as we go.

We do Amazon DSP, one of the fastest growing agencies there, and so we're going to get after it. I also work with some great brands like Native deodorant and Overtone Boom, my city, Joseph Organify, a bunch of others. And so I had the privilege of working with some pretty great folks. But in addition to running a large agency, what I'm also known for is just having a whole bunch of kids. So this is my wife and I. If you don't have the time to count, thank you. Yes, thank you. Yes. Do you have a lot of kids? Okay, kids are great. Kids are great. So we have eight and not a blended family, no adoptions, just old fashioned growth. And so if you want to learn how to scale a family or scale a business, I'm potentially your guy, so I'll talk to you. But people always look at this picture and like, oh man, your kids are adorable.

And I'm like, yeah, that's because you don't know. But in all seriousness, we love it. We wanted a big family, then we just overachieved. And so this is what we ended up with would not change. It would not change it for anything. It is chaos, but it's beautiful chaos. And I think that's what it's like being an entrepreneur, running a brand, managing all these things, inventory and ads and all this crazy stuff. Employees and emotions and stuff. It's beautiful chaos. And so that's where I live. I want to tell a quick story to get us started, sets the stage for where we're going to go, and it's kind of cute and entertaining. So that's my daughter, Sophia. If you're thinking she's a little sassy, you are correct, you have a good keen eye. She gets it from her grandmother. That's my mother-in-law, Tammy. And so a few years ago, the kids came to me and they said, Hey dad, we're going to open a lemonade stand.

Now we don't have the worst spot for a lemonade stand, but it's not the best. We live on five acres. We do have neighbors. The road in front of our house is relatively busy. People don't slow down for our driveway unless they're coming over to visit. But I'm an entrepreneur. I love the life lesson. So I'm like, yes, let's do a lemonade stand. Now, this is not a picture of the lemonade stand. I was so uninspired by the lemonade stand that they did produce that I did not take a picture. Apparently it's like table and an umbrella and handmade signs, cute lemonade stand stuff. So I remember doing stuff like this in my neighborhood and I don't know if I just had all the realists in my neighborhood, but they're like, Hey, we can't give these kids expectations too high. Here's a nickel for your lemonade.

We made like 50 cents or something. So my kids get started on the lemonade stand and two minutes in they set up a shot for two minutes. Sophia comes running in and said, dad, someone gave me a $5 bill and didn't ask for change. I'm like, cool, alright, well that's probably your day, so that's good. Get after it. She comes back a little later, dad, I got a 20. And then in one change I'm like, this is interesting. What are you guys, what does the sign say? What are you advertising here? And then later it's like 40 bucks. And this just kept going for two hours. They ran out of lemonade, they made 200 bucks. Now I was impressed, but also like, man, is this setting these kids up to fail? Are they going to think everything is this easy? So anyway, now my entrepreneurial juices are flowing.

I'm like, Hey, we should make cookies and muffins and let's double production. And so all this stuff, and I overheard Sophia, the success had gotten to Sophia's head a little bit. And so she's talking to her siblings and she said, guys, dad is trying to give us business advice. We make more money than he does. And so love Sophia, but her siblings were like, Hey, maybe dad knows a thing or two. So anyway, they kept it going and the success was quite impressive and quite fun. So the reason I share that story is I believe as we unpack these five strategies, you could take Sophia's approach and be like, eh, I'll just kind of do what I'm going to do and you'll achieve some success. Or you could go all in on these things, really absorb the advice. And I think you can take it to some pretty impressive levels.

So we're talking mostly about YouTube and Google and some other related stuff, but want to take just a minute, set the stage. Talk about how we've never seen anything like Google in the history of marketing. So every day, a billion shopping experiences across Google. So that includes YouTube display, Gmail, search shopping, all of that, a billion shopping experiences every day. 86% of people touch Google in their shopping journey. Even if they're going to buy on Amazon, they still often touch Google on the way. And let's talk YouTube for a minute. 90% of the US population watching YouTube talk to your kids, talk to your parents. They're all using YouTube. And what's really crazy is that the average session duration is about 42 minutes. So people are spending time on YouTube. It's a great place to interrupt and share your message and drive new customers. And primetime is becoming really personalized.

How many of you guys watch YouTube on tv? Not YouTube tv, but the YouTube app on the television set? Yep. Yep. So that is the fastest growing platform. So I bet if you observe your kids, like my teenagers, if they're watching TV in the evenings, they're usually watching one of their YouTube favorite YouTube creators. So that's the fastest growing platform. And more people watch YouTube during prime time than any cable network. About 70% of people say they bought something that they first learned about on YouTube, and about half of people that are on YouTube are bouncing back and forth between YouTube and search. So they see something interesting on YouTube now they've got their phone and they're searching for that and exploring a little bit more. So the two paired together really nicely. Now, quick case study, I'll share more as we go, but Boom was largely a Facebook driven business.

So mostly acquiring new customers from Facebook. We launched YouTube top of funnel, really beefed up what they were doing on Google and grew top line 30% and achieved about 200% growth on Google. Now the combination of Google and YouTube is their number two source of new customers and it continues to grow the brand. So before we get into the five tips, I want to talk about three mistakes that could absolutely trip you up, hold you back, squash all of these five strategies from working. So three mistakes, let's dive in. First one, forcing campaigns or channels to work outside their strengths or expecting channels to work outside their strengths. So every channel is different. YouTube is not search, display is not shopping. They're all different and they have different strengths, but on occasion even as well-meaning marketers, we can end up like this guy. Now, I don't know what this guy was thinking.

I don't know if he just convinced himself this is okay to do with a Lamborghini. I don't own a Lambo. I don't pretend to own one on Instagram either, but I know there's some Italian sports car lovers that weep when they see this picture. This is not okay. And so I don't know if he just overextended himself and he is like, I got to make this Lambo pay for itself. But that doesn't work, right? That's not cool. Let's talk about YouTube and Google shopping for a minute. How many people are running ads on Google shopping? That's actually not very many, so that's good opportunity for you. So Google Shopping is to Google what sponsored products are to Amazon. They just work, right? This is like the Toyota truck of advertising. You mistreat it, you don't change the oil, you don't care for it. It's just going to work, right?

You can optimize and make it better, but it's just going to work. Now, YouTube on the other hand, is a little trickier. It's like the Italian sports car. You got to really take care of it. It's going to need some maintenance. You got to love it a little bit. You can't treat it like a Chevy Silverado like the guy in the previous image, but it can unlock scale and speed and growth. Give you a couple examples. Some buddies of mine ran all the media for Purple Mattress and they grew to over 150 million in sales top line largely from YouTube. And they were not VC backed. They did this all on their own. Dr. Squatch love this brand. They grew from 3 million to 150 million a year run rate, largely driven by ads. I know the agency that does their Creative Raindrop agency, shout out to the guys there, but huge growth there.

We helped with YouTube there, but they grew over a hundred million in sales largely from top of funnel ads. Okay, mistake number two, not understanding that campaigns work together. This is a team sport. I love sports, I coach basketball. We want to look at individual statistics. How are individual players? How are individual campaigns performing? But the collective performance is what matters. It's a team sport. So if we look at the shopping journey, someone goes from trigger to now they're shopping and evaluating, trying to decide what to buy, whether they're exploring, looking at all their options or evaluating going deep on something, we've got a chance to interrupt with the right message at the right time. But all of these things work together, so know that it's a team sport and measure accordingly. And then number three, not getting the proper mix of AI plus smart humans.

So we're not going fully auto, not fully black box where it's like we're just trusting the machine to do whatever it wants. But we're also not saying fully manual as well, because when you've got the combination, you've got smart humans driving good strategy, you got more leverage, more speed, it just works. And the cool thing is Google has had the best AI scientists since 2015. So the backend of their smart bidding and their targeting and their in-market audiences and cool stuff like that, AI is powering that and it's really, really good. So let's dive in five untapped growth opportunities. We'll go quickly, but we'll still spend enough time. First one is performance Max. Show of hands, how many of you guys are running performance Max ads? I see Seven hands or something like that. Okay, great. This is a pretty divisive topic. I'm in a lot of e-commerce forums and I hear people call this performance meh instead of Performance Max.

And so up to date, we've spent about five to 6 million on this platform and with almost overwhelmingly positive results. Now, when I first learned about this platform, I actually, I hated the idea. I'm a Google fan, we're a Google partner agency. I go to the Google offices frequently. I talk to people there a lot. I'm very transparent with my feelings. I said, I hate this I idea. So basically what it is, all seven of these channels, search shopping, Gmail, display discovery and maps. If you're local all in one campaign. So usually you'd have to set up seven different campaigns to reach these channels. But with this, you give Google your assets, your ads and your headlines and things like, and they'll run ads in all these channels. So when I first heard about, I thought this is terrible. I thought this is going to be no control, no room to be creative.

It's just not going to work. But to my surprise and delight, there actually is a lot you can do with these campaigns. A lot. You can manipulate in a lot of ways, you can be creative. And so we'll break that down. So why did Google create this? I believe it's primarily for these two reasons. One, this is the perfect environment for AI and machine learning to go wild because now the machine can do all that it wants to do across all these channels and across all these shoppers, and they'll find you new customers. Also, Google has a lot of unsold inventory. I know these are pictures of boxes. I'm actually talking about unsold ad inventory. So the Google Display network covers like 90% of the web. YouTube has basically unlimited inventory. And Google is saying, Hey, you don't really know how to utilize YouTube and you don't really know how to utilize the display network, but we do.

So give us your assets and we'll take care of the rest. However, you can't just say, oh, here's like a sloppy headline, or here's kind of a lean video and machine. You're magic. You can find people, people will buy. No matter what I say, that is not true. So it requires your best assets. So on the left there, that's true Earth Laundry detergent strips, we helped them launch on Google and on YouTube, that video scaled to over a hundred million profitable paid views and just continues to drive new customers. But in the middle, even the og even search search ads that a lot of people forget about because they're not sexy and they're not new. Those work. But you got to have a good headline, a headline that grabs people and a description that makes people want to click. And so you've got to still have good assets and if you want to succeed on the display network, you got to have good images.

But most of Performance Max is actually this Google shopping. So 60 to 80% of your spend will be in Google shopping. And so you want to optimize your images and kind of the way they look. That's pretty appealing, right? That's overtone, coloring, conditioner makes you want to click. Alright, couple of results. So this is a subscription product, large LTV, great stick rate. So they were getting just right about a two x return on ad spend that may sound low to you. That was great for them. We quickly scaled performance Max from zero to about $10,000 a day and they were thrilled finding new customers, automotive client, automotive accessories, big shopping client spent a lot of money on Google shopping. So when we switched to Performance Max from their old shopping campaigns, we improved impressions and clicks and volume and improved roas. So more sales at a more efficient return.

Now this part's a little bit nerdy. I'll go kind of quickly through this. If you're primarily growing on Amazon, you can't run feed traffic or Google Shopping traffic to Amazon. You can search, we'll talk about that in a minute. But you can actually remove the feed from your performance Max and then you can use Performance Max to grow directly on Amazon. That's more advanced. I wouldn't suggest you start there. A couple of bottom line things, if you're running Performance Max and it's not a top campaign for you, then something's wrong. If it's not driving the most conversions and likely the best row as then something is wrong. And so it ultimately comes down to these three things. Success on performance max, right Audiences. So Google knows who to target, who your ideal shopper is, the right assets, the right creatives like we talked about, and then the right campaign structure.

Now we could spend all day, we could do an entire course on Performance Max, but here's the good news. I actually did make a course and you get it for free. And so that's something that we are giving to everybody. So if you're like, I don't even still understand Performance Max. So we do like a three hour training, we sell it for 400 bucks, that's not like a made up price, that's what we actually sell it for and you get it for free. So it's going to be emailed to you afterwards. There you go. So Performance Max, I'm telling you it's the future of Google Ads. You got to dig in. So enjoy the course at OMG E-Commerce, we accelerate growth for some of the most loved brands in e-commerce like boom, native, true earth overtone, and dozens more. If your Google and YouTube ad performance isn't where it should be.

If you're struggling with Performance Max or if you're not scaling like you'd like on Amazon, then we have two ways to help. One, we have amazing resources that are free for the taking like our top YouTube ads guide with lots of examples, our P max checklist or our Amazon DSP roadmap plus many more or hit us up for a free strategy session. So go on over to omg commerce.com and click on Let's talk to request that free strategy session or click on resources and guides and pick the guide that's right for you. And now back to the show. Next one, Google to Amazon. A lot of people don't know this, but Amazon's number one source of traffic is Google and Google's largest advertiser, the company that spends the most money on Google ads is Amazon. And so if Amazon is spending money on Google ads and you are not, then that means they know something that you don't, right?

Which is this their millions of people every day that search for products on Amazon, but they do it on Google. It doesn't make any sense really, but that's the way it works. A lot of people think the internet begins with Google. That's just where they start. That's where they go to make a search. And so this is just a snapshot of people searching for mattresses. Mattresses, Amazon, over a million searches there. Now, a couple of benefits. If you send Google search traffic to Amazon, we know that Amazon loves external traffic. Amazon loves it when you send traffic that wasn't already on Amazon to Amazon, especially if it converts. Now if you're like us where we're running sponsored products and sponsored brand and sponsored brand ads, we're running DSP for remarketing, then you put Google to Amazon in there, it just makes everything better. So Google to Amazon is a very effective little addition to what you're doing.

Now I want to show an example. So this is the Google search suggest. So I type in protein powder and then I stopped. And you see the number one suggestion is protein powder. Amazon. That's what Google thinks. I'm probably going to type next protein powder on Amazon. Now, if you were to click on the ad, if Amazon was running an ad for that keyword, which they usually are, and you click on that ad from Amazon to an Amazon page, where would you land? What page would you land on? Well, you would land on a page kind of like this, a page that's littered with ads, right? All these sponsored projects. So Amazon's playing a brilliant game, guys. They're paying for clicks on Google, then they're sending people to a category page where they're running their ads and they know people are likely to click one or two or maybe multiple ads are getting a lot of their money back.

But the issue there is your traffic's going to a page where all your competitors hang out. So if you control the ad, if you run the ad, which you can do, and then you can send people directly to your storefront or directly to your product listing, now you've got the chance to really sell that shopper. Now, this may not be a complete game changer for your business. We have some brands that spend a couple thousand a month on Google to Amazon and it's like a nice little incremental bump. We have other brands that spend a hundred, 150 a month on Google to Amazon, and it works, right? It grows ranking, it grow sales, it just works. So Google, Amazon, a great strategy. Strategy number three. This is one that's gotten a lot of bad press lately. Again, I hear a lot of people getting angry, getting upset, getting visceral about this one.

But branded search, some people saying, I will never pay for my own brand name. I've already earned that. So I'm not paying Google, I'm not paying Amazon for my branded keyword. But I think there's maybe an alternative perspective. Love this quote. This is from Mark Pritchard. He's a guy from p and g and he said, Hey, one of the best ways to measure our success is by the number of people searching for our brand. And when that happens for you, when you're no longer just converting sales off of sponsored product ads, but people are looking for your brand name, they're keying in your brand to Google or to Amazon, that's a really special time. You're no longer just selling stuff. Now you're a real brand. And that's where real value comes in later, bigger exits, bigger momentum, lots of good stuff happened, but I don't think you should just go nuts on branded search.

So how many of you guys think branded search is a waste? Like, well, I'm not going to say that now. How many think branded search is maybe just the necessary evil? Okay, how many? You don't want to raise your hand. Sweet. Okay, awesome. So this is the way we do it. I don't know any other agency that does it this way. This applies to Google. We like to separate brand. So we like to think about, hey, if someone's never done business with us, if they've never bought from us, never shopped from us, we're treating that like a new customer. So even if they're searching us for by name, searching for us by name, they saw a YouTube ad, they saw a Facebook ad, they're searching for us by name, but they've never bought before. I want to make sure I'm showing up for that person because there's no chant, there's no guarantee they're going to buy from you.

You're not Nike, right? There's no guarantee you're going to close that sale. So for new customers searching for you by brand, we want to target them. If it's someone who's shopped with you before or they've bought from you before, maybe we don't bid at all or maybe we just bid for efficiency, but we do want to show up for branded search. It is a bit of a necessary evil. You also want to watch that branded search grow as you do cool organic things. You run YouTube ads or Facebook ads, you can see that branded search grow, which is really important data. So we like to separate the two. Alright, growth strategy number four, remarketing and loyalty campaigns. Remarketing. This is something that everybody is doing, but everybody is pretty bad at. We audit hundreds of accounts every year and remarketing is usually there. It just usually sucks.

And so what we recommend here, and I'm going to quote Dan Kennedy again, Devin mentioned this yesterday, but it's a really good quote. The company that can afford to spend the most, not the least, but the most on ads wins. Now the reason for that, this is not advice to just start blowing money or spending recklessly or just spend baby spend, that'll all come in. But the idea is, are ad costs going up or down? They're going up. Is competition going up or down? It's going up. The strategy of let's spend less overtime on ads probably isn't a good strategy. Probably isn't a good long-term way to build a company. But if you're better at remarketing, better at closing people that visit your store or visit your detailed pages on Amazon, then you can be more aggressive at the top of the funnel. And if you're better at getting people to buy more and more often, you can spend more at the top of the funnel.

So a few things we like to do, reorder campaigns, that's where we look at, hey, if someone should buy every 30 to 60 days and they haven't, let's remind them. And so here's an example, live bearded, awesome brand. So if they haven't bought their beer product in 30, 60 days, we're going to run an ad across Google encouraging them to buy. I also love this bought X, not Y. So if someone has bought our moisturizer but they haven't bought our mascara, maybe they don't know what we offer, maybe we emailed, maybe they didn't see it. So we're going to run an ad for them promoting our mascara. If they've purchased moisturizer, this is usually one of the most cost-effective campaigns out there. Highly recommend it if you bought beard products, but not a beard trimmer. We'll say the beard trimmer. Alright, number five, we're going to wrap up right here.

So YouTube, top of funnel. I love YouTube ads. I've been talking about YouTube since 2017. Quick show of hands, how many you guys are running YouTube ads? Not YouTube organic, but YouTube ads. Okay, yeah, that's like the fewest hands of anything yet, which makes sense. YouTube is a little bit different. It's not the easiest nut to crack. YouTube ads are just slightly different. A couple things. One, you have to say enough in your ad. So it's not like Facebook where maybe the video can just be the scroll stopper. And then you've got text above the video to really do the selling and convincing. With YouTube, the ad has to do everything right, the ad has to carry the day. We found as the sweet spot, like the ideal link of a YouTube video if you're trying to get conversions is a minute and a half to three minutes.

Now we've seen as low as 45 seconds work. We've seen as high as seven or eight minutes for an ad work, believe it or not. One exception is YouTube shorts and we're seeing a lot of success on YouTube shorts. Those have to be under 60 seconds. But in general, that's the sweet spot. Important thing to keep in mind is that the story, what you say, how you say it, how compelling are you, how interesting are you? What's the pace of your ad that's more important than the production value. So you don't need to go out and spend 20, 30, 50, a hundred grand on an ad. We like to tell people, dial in the message first. Make sure that you've got the right hook, the right offer, you're targeting the right audience with a simple ad and then you can begin to iterate. But what's really, really cool, so YouTube is maybe hard to dial in, but once you find it, once you find the combination of ad audience campaign structure, we've had the same ad, we've seen this for native, for boom bunch of others.

A winning ad can run for a year or more, same ad. And a lot of that's because Google's audiences or YouTube's audiences refresh all the time. But this isn't like TikTok and I'm a fan of TikTok, but it's not. YouTube isn't that creative hungry once you find things that are working. So I'm going to show you a couple of ads, won't play all of them, but I want to show you a couple ads that have done really well on YouTube to illustrate the point. So this is overtone color depositing conditioner. Let's give this a watch.

Brett:

Here we go. This is insane. This is so bright. It doesn't really matter what your hair type is. A product like this is going to work for you no matter what. Today I am dyeing my hair for the first time with overtone. It's a semi permitted color depositing conditioner. It's a vegan, it's moisturizing. It's really, really easy to use. I'm going to put my hair in like six sections. I applied it on my dry hair. You want to make sure that you are fully saturated.

Brett:

Okay, so that's good. So let's talk about that for a minute. One, I love the energy. It starts with the girls saying, I'm going to color my hair today. It shows pictures of guys and girls with the product in their hair, pink, green, blue, whatever you're looking for, you can go gray or brown too. And so if you're thinking I'd kind of like to do that, now you're seeing people excited and you're seeing people doing it. It shows that it's easy. It shows that it's healthy for your hair. It shows it's vegan and cruelty free. It just makes it seem like I could do that. And then it shows a quick walkthrough of how to do it. Now that did have some production value, but those were mostly real customers and those were mostly influencers. And they were able to get those videos, chopped them up, add some fast-paced music, add some fast-paced cuts. And that ad is cranking. Now this one's a little simpler. This is for live bearded. Live bearded has some higher production quality videos that we run to, but this one is super simple. So I'm going to show a little bit of it. You could recreate something similar to this. So here we go.

Brett:

Without products, with

Brett:

Products before, products after products,

Brett:

My beard without products, my beard with products

Brett:

Without products, with products,

Brett:

Without products with product. If you're considering trying look beard at products, I want to take just a couple of minutes to walk you through these products. Demonstrate first.

Brett:

So super simple in that basically you you're just seeing before and after. So without product, with product, how simple is that? But it illustrates the point. They look better, they look put together with the product in their beard. And then Spencer, he is one of the owners, he just shot that in his bathroom with an iPhone. Here are three ways to adjust your beard care, your beard grooming sequence, simple ad and it works. And we've been running that ad forever. Now, a couple case studies, they got a free bonus and then we'll wrap up. So a large haircare brand, we worked with them. They were a large six figure spinner on Facebook, did TV ads, could never get YouTube to work. And so we worked with them, we helped them modify the creative, we revamped the campaigns and then grew that into their number two source of new customers.

So outpacing everything except Facebook. Now we had another brand, and this is where I want to tie in a couple things related to Amazon really quickly. So we had another brand and they were a large spender on YouTube, but when iOS 14 hit, they paused YouTube because they had to figure out tracking and stuff. And we were also running all their Amazon. And so when they did that, when they paused YouTube over the coming weeks, we saw that branded searches, searches for their brand name on Amazon dropped in half. And we since have gotten them back. They're running things are great. But during that process, YouTube went down. Amazon went down because Amazon, Google, YouTube was driving Amazon business. Now I'm a big fan of infomercials. I don't know what it's about. I love 'em. I remember the Ginsu knife commercials from the early, I think they're actually from the eighties, but I actually did a great podcast with my buddy Jordan Pine and he's like a veteran of the direct response TV industry.

So we talk about this, but if you've ever wondered how do those products work, what's the math behind these products? Because these products, whether it's like a potato peeler, like the tack light, you run over with your Humvee or whatever it is, Ginsu knives that cut through bottles and stuff, how does that work? Because pushing the phone number, like, hey, call in and get this whizzbang offer, or they mention a website or whatever. This is actually the stat. So only about 20% of people call in. Makes sense, right? Need millennials out there. Of course I'm never going to call, but you're probably not going to buy from an infomercial either website. Only about 30% of people do that. But 50%, and this is not mentioning Amazon, this is just running an infomercial. 50% of the sales will come from Amazon. Quick stat, we noticed this with true Earth laundry detergent strip. Once we got to a little over 50 KA month in YouTube spend, we started to see everything else. Lift shopping went up 300%. Search and remarking went up 80%. And so the direct click and buy from YouTube was quite small, but it lifted everything else. And so if you're running YouTube, you are going to see Sales Boost on Amazon.

Last thing, I think the best way to learn is to watch other great ads. This is a guide I put together some of our favorite YouTube ads. I break down why they work and kind of the formula behind it. This does not require an opt-in. This will get you right to the PDF with links to the ads so you can watch those and learn from them and be inspired by them. And with that, that's my podcast, that's my email address. I'll be around. I would love to chat. You guys have been fantastic. Thank you so much.

Episode 258
:
OMG Experts - OMG Commerce

Cyber 5: How The Best Brands Win

How can you make the most of the Cyber 5?

It all comes down to strategy, planning and execution.

Ideally, you’re planning all year and working on the perfect strategies to attract new customers and inspire existing customers to buy more. 

But planning is only part of the success equation. Making adjustments and tweaks based on what’s working and what’s not is also crucial.

On this episode, I’m bringing on a star-studded cast of OMG experts. We talk about Black Friday and Cyber Monday success from essentially every angle. 

We talk about successful email and SMS promotions. We cover do’s and don’ts for maximizing Amazon profits and share insights for getting the most from Google, YouTube and other channels. 

My guests:

  • Bill Cover, Google Strategist
  • Nick Flint, Email Strategist
  • Trenton Bodenbach, Amazon Growth Strategist

What we discuss:

  • Top BFCM mistakes merchants make.
  • What you need to plan ahead of time and lock in vs. what you can change on the fly during the Cyber 5.
  • Or favorite Cyber 5 growth strategies.
  • Protecting margin while still driving purchases from customers who expect deals. Can you make a 10% off deal irresistible?
Episode 257
:
Peter Awad - White Stone Coaching

Grow Your Leadership, Grow Your Business

I believe in the who, not the how, for more business problems and opportunities.

Want to grow faster?

Need to solve a nagging problem?

Rather than thinking about how to solve it, you might want to start with who.

But that only works well if you have strong leadership skills. As your business grows, you’ll be doing less and leading more. 

My buddy Peter Awad joins the show today. He’s an eCommerce vet. He launched his first online venture in 2000 and co-founded Mission Meats, an online snack company, in 2015.

Now, Peter’s passion is coaching and building great leaders. 

I’m a big believer that culture and leadership will trump strategy any day of the week.

Here are a few of the things we discussed:

  • What’s it like on the other side of me?
  • Knowing yourself first.
  • Radical candor or ruinous empathy.
  • The nothing to lose, nothing to prove, nothing to hide approach to discussions.
  • The fact that the life you want, the business you want, is on the other side of a few hard conversations.
  • How to lead vendors, freelancers, and agencies better.
  • How to have better meetings.

Transcript:

Peter:

If you walk into a meeting, whether it's going to be a tentious one or not, doesn't matter, or this conversation we're having right now, and you repeat that to yourself and you believe it, I've got nothing to prove, nothing to lose, nothing to hide. You show up completely differently. You show up authentically you. And one of those things for Johnny in this example would be like, I don't need people to like me. They don't have to like me. I would like them to like me, but I don't need to worry about losing my likability. What's more important is that I do what's best for the business and do what's best for this person across the desk. For me,

Brett:

Culture eats strategy for breakfast. What's up? It's Brett Curry here, CEO of OMG Commerce, host of eCommerce Evolution podcast. And I'm so excited about the show today because we're talking about improving your leadership. I do believe that culture is more important than strategy because even the best strategy, if poorly executed or if you've got a toxic culture, you won't be able to execute on what you want to do. And I believe culture is totally driven by leadership. So you want better growth, you want more profits, you want to have more fun doing what you do than you need better leadership. You want better vendor relationships, better agency relationships. You need to improve your leadership. So my guest today is Peter Awad. He's a friend of mine. He's the co-founder of Mission Meets an online snack company. He also started his e-commerce group back in the year 2000.

That's right, the dawn of the internet. He started his first e-commerce gig. Now he's the founder and head coach of Whitestone Coaching. And so we get into what does it mean to lead better? How do I lead myself better? How do I know myself to lead myself better? How do I lead better meetings? How do I lead vendors and others? We get into lots and lots of good stuff because here's what I believe. As your business grows, as my business grows and I've got a team of about 70, you're going to do less and lead more. And so there's going to be some effective cools, some tips, some strategies here that I think are really fun and really helpful. So please enjoy my interview with Peter Awad. I'm here with Peter Awad of White Stone Consulting Group. Peter, what's up my man? Thanks for coming on the show and I think this is round two for us on the podcast.

Peter:

It might be so you didn't learn enough the first time,

Brett:

A slow learner man, you had to come back and you keep trying to drill it into my thick skull.

Peter:

No, no, I meant more so you didn't learn the first time to not have me back. That's what I meant.

Brett:

I think either one of those could be true, right? So yeah, I like it, man. First of all, just a good friend, love chatting with you, love hanging with you. Any chance that I get Love your e-commerce background and then also what was you're doing now in terms of coaching. So we're going to talk today about being a better leader and to kind of set the stage for that. I think that's important. A lot of times we get tactical on this podcast. We'll get a little bit tactical today too, but I'm a believer, especially as my business grows, but I think this is true for anybody as their business grows, the answer to any problem, any question, any issue is often more about who than it is about how. So instead of solving how do we come to a decision here or solve this issue, it's more about who do we bring in, who do we consult with? Who is going to be the one to lead this or solve this? And so that really all pivots back to us as leaders. How do we grow and become better leaders? And that's what we're going to talk about today. But first off, we'd love to just talk a little bit about your e-commerce background. You'll be able to connect with people, they'll realize, Hey, Peter is my people. Talk a little bit about running an e-comm brand, the challenges and anything in that that led you to the current path now where you're so passionate about leadership.

Peter:

Yeah, I mean, just quick backstory, I started e-comm in 2000, the actual year 2000. So I'm like the old man in the room. Yeah, started in automotive parts, did a bunch of other,

Brett:

The dawn of the internet.

Peter:

The internet was around then. Yeah, it was around then. So I think that doing that and then starting Mission meets D two C snack food brand in 2015. So just had a lot of experience around e-comm and just the life of an e-commerce owner, which I think is unique in many different ways. But what led me to this is just realizing that I didn't know what it was like to be on the other side of me. I think a lot of times as founders, we find ourselves in a leadership position. We didn't plan to get there. You start typically you're one man band or one woman band, and then you add a couple of people and then before you know it, you kind of find yourself in this leadership position. Maybe you don't call it that, and you're severely outgunned. You don't have the tools or you don't have many of the tools that you need in order to figure out how to lead effectively and efficiently a team or a group of people.

And so I just got off the phone with a new client just right before this call, and he's 57 years old and realizing, man, I've been running a business for 20 years, an e-commerce owner running a business for 20 years, has a fairly large team, and is realizing I don't have the tools that I need in order to lead these people effectively. I've just been doing what I'm doing and it's kind of morphed into what it's turned into and I'm defaulting to certain behaviors and tactics that maybe aren't the most effective. And so that's kind of where I found myself at. And it's a really hard mirror to hold up. Like, wait a minute. I thought I was great. I thought I knew what I was doing. And then you realize like, oh man, I kind of don't look so great some of these days and it's not physically looking great. It's like I don't communicate that well or I'm not communicating effectively or efficiently. And so that's what led me down this path to learning more about leadership, learning more about myself as a leader, learning where I was missing the boat and then improving upon that.

Brett:

It's so good. And I love that perspective of seeing what it's like being on the other side of me. And that's one of those statements that can be a little bit scary, a little bit scary sounding, what is it like to be led by me? And a lot of us, and myself included, we've been leading companies or we've in the executive position, president, CEO, founder, whatever for so long, it's pretty hard for us even to put ourselves in the shoes of someone who's being led. And there's been a few situations recently where I've been talking to groups and I'm like, I wonder, do I ever show up like that? Or is this what it feels like to be led by me? And it's one of those things that it's kind of hard to have that real objective perspective on what it's like to be under your own leadership. And so really enjoy this process. And I'm a big fan of Craig Rochelle, Craig Rochelle leadership podcast, but he says, everyone improves, everything gets better when the leader gets better. 100% agree with that statement. So let's maybe start here. Let's talk about what's the difference between a really good leader and just a mediocre leader?

Peter:

I think that it goes back to not knowing what it's like to be on the other side of you. And big part of that is understanding what you're strong at and then particularly what you're weak at. What's the shadow of your strength? Because you're a hard charger and you have a huge bias for action and you can get things done if that's your personality. A lot of times you steamroll people in the process. I'm talking about myself. I'll steamroll people in the process or I won't slow down long enough to hear what they have to say and understand why the ideas maybe not so great. So we put people through an assessment through our program called Giant as part of Whitestone, and it's called Five Voices and everybody's got the five voices, but they can be in different orders. And so I'm a pioneer connector.

And some of the terminology we use to give you some context is we have triggers and weapon systems. And so a trigger is something that somebody will do or say are the types of people that will then cause you to deploy your weapon system. So my weapon system is a grenade launcher, meaning I will just blow up a situation, person, place, whatever, not physically, but you understand. And then triggers. My triggers are time wasters, people threatening my vision, people perceived as incompetent people threatening my competency. And so it was so revealing, Brett, for me to learn that like, wait a minute, if you're like, Hey, Peter, pump the brakes, I don't know about that idea. I would feel like you're wasting my time. You must be incompetent. You didn't understand the vision the first time. You're threatening my incompetence telling me that I need to slow down and then I'll just blow you up.

And so that's the difference between a good leader and a bad leader. A good leader will know, okay, I have a tendency to do that. And so when you tell me to pump the brakes and you're a guardian, which means you like to dot i's and cross t's, I'm prepared for you. I'm going to bring an idea to Brett and I'm going to be prepared with more data. I know he's going to ask me some really hard questions. And it's not because he's threatening my vision and it's not because he's incompetent. He has a different skillset and he's going to protect the business and protect the vision. And he's actually not an adversary. He's an ally. He wants this to succeed. And because of that, he's going to ask the necessary questions. Now that is an effective leader, I know what your personality type is, and I know mine and we can now work it together.

And this ties back to true ROI of learning this stuff. Most orgs are barely over 50% efficient. Why? Because I might spend an hour arguing with you and really treating you. You're an idiot, and I've done that when instead I'm prepared for you. And we can cut through all that and I can share the data that I need to share so that you can understand and so I can understand where you're coming from and maybe we won't do the idea. It turns out it's actually stupid idea, which is usually the case. And so that's a difference between a good leader and a bad leader. Just one example,

Brett:

This is so good, Peter, because to have a successful organization, you need people with different personality profiles, different ways of attacking the same issue, and finding ways to work together. Because let's face it, if everybody was like Peter, if everybody was like me, holy cow, it'd be a wreck, right? Organization would be a wreck because for me, and I'm more a visionary, high level, pretty fast in a lot of things, but not great with details. And so certain details would just get dropped, missed, it would be a mess. But if we don't understand ourselves, we don't understand the people on our team, then that's going to lead to issues for sure. A couple things that I'm curious, I haven't gone through your test, so I don't know some of the terminology, although it's totally resonating. Have you done Peter Lencioni's, five Working Geniuses?

Peter:

I have not, yes. Have you heard of that? Yeah. Pat Lencioni. Yeah, I have not. I've heard really, really good things. Have you?

Brett:

Yeah, it's really good. And so he's got these acronyms, I'm sure it lines up pretty closely to what you are talking about, but it's an acronym that spell widget, but it's Wonder Inventor, discerner, galvanizer, enabler, and then Tenacity. Anyway, as you look at those, and it's kind of the same thing where you got one or two strengths and you got some competencies and you got some things that you're kind of deficient at. Probably for me, I'm a wanderer and a galvanizer, so I do like to wonder. So it's more like if you're solving a problem, you're like, Hey, what if this might actually be really cool? Lemme think about this big picture thing. I enjoy doing that, but I also enjoy rallying the troops. And what's interesting is sometimes when you face a problem, you just go back to those strengths. If there's a problem, I want to reinvent things. I'm like, Hey, we wonder about this. Lemme wonder about that. And if someone's really just a tenacity person, let's just get stuff done. Problem shows up. There's one charge through it. So kind of understanding how you operate and how your team operates, man, it's a game changer. Game changer, because you go from communicating in a way you're wrong as how we might lean into that to be like, Hey, this is a different perspective and we need this perspective.

Peter:

That's right. You're exactly right, man. And I think that it's so incredibly powerful because just like you said, a whole group of Peters, a whole group of just Bretts, it's going to be disaster. You're going to be running through walls as fast as you can, but they might be the wrong ones. And then a whole group of guardians, the people that are maybe, I don't know the terminology in the six working geniuses, but someone who's going to dot i's and cross T's very, very safe, very, very safe organization going nowhere. And so you need both. And when you see everybody as an ally and understanding that you need all these different personalities at the table in order to do something really special, it just changed the organization, it changed the way you lead. And then also understanding that they've got some weaknesses that got to maybe pick up and you have some weaknesses that you got to pick up. And so together you're just making each other better. And so it's a totally different organization.

Brett:

Yeah, absolutely. And so let's talk about this in any practical tips or suggestions. So it'd be great to use a tool, some kind of personality tool to kind of see how your team operates. I think everybody's got their favorites. I love the way yours sounds. And so once you kind of do that, then how do you create this unity amongst your team? And how do you allow those different voices, different perspectives to be shared, but then also to get stuff done and to move forward?

Peter:

So one of the tools that, because I know that maybe most people are listening and not watching, and so just visualize an X in AY axis, and the top right corner is a liberator. And so the Y axis is support, and the x axis is challenge. So if you're high support, high challenge, you're a liberator, bottom right corner, low support, high challenge, that's a dominator. Top left corners all support, very little challenge. That's a protector. And bottom left, low support, low challenge, that's an abator. And so the reason I'm bringing that tool up is because when you calibrate, and that's a very specific word, and I'll tell you why in a minute, support and challenge to that person knowing their personality, you can bring them effective support and challenge so they can be liberated. Now, calibrated means when you know that person, each person's going to need different sorts of levels of support and different levels of challenge, different types of support, different types of challenge.

So you start to understand what it is this person needs in order to succeed in their position. So that's calibrated to that person. Now, what does it mean to liberate and what does support and challenge even mean? This is the sticking point. This is I've found really, really fascinating, Brett, is that most good leaders that are also kind, which is most of us, they actually lean more towards a protector. They're going to protect that person from maybe not so great in interaction. You're like, ah, John, Jenny, you didn't really perform that well. We're going to avoid that. It might make them feel bad, it might be awkward, it might be awkward for Brett, it might be awkward for those people. And so you're going to protect them. You're going to bring them support, a lot of support, but very little challenge meaning like, oh, I'm sorry you missed the Friday deadline.

How about Monday is Monday, but then that develops a lot of mistrust and why does it develop mistrust? Brett's going to come in over the weekend and just get it done. It really actually needed to be done on Friday. And then they're going to come in on Monday and be like, wait, why'd you do it? You told me Monday was okay. You're like, yeah, it wasn't actually okay, but I didn't know how to bring effective challenge. And we don't have that terminology now why is that? It's because most people have not been modeled what effective challenge looks like. A lot of times we hear that word or we think about a negative interaction where somebody didn't perform well, an interaction or a situation where somebody didn't perform well, we think about it as negative. We think like, oh, there's going to be yelling, crying, cursing. It's going to be stressful. Somebody's going to quit, somebody's going to get fired, they're going to feel bad. There's going to be all kinds of excuses. And so we just try to avoid those. We avoid those situations. And so another podcast that I was on, I was saying this story, and you probably know him, Brett, and he has almost a billion dollars of property under management, $1 billion.

Brett:

Dang,

Peter:

It's crazy. This guy is a real estate. Ty Khan, a real estate guru, and he just starts laughing, why are you laughing, dude? He's like, Peter, I am the deal in this industry. He goes, and even when I come in and there's been a remodel or something's happened and I see all the things that are wrong, I'll then look the contractor in the face or the general in the face and say cash or check. I don't like those situations. I don't like telling somebody, well, yeah, you did a great job. However, there's one thing you got to do a little bit better. So that's him protecting them, but it's also him protecting himself. He doesn't want to deal with that sort of situation. Now, what's the downside of this man? What's the downside of this? You're robbing yourself in many different ways. One is they didn't do the job and that sucks.

You're robbing them because they now don't get to do a better job and come back and be your a-player contractor, your a-player vendor because they didn't know to do better, and so they're going to keep delivering you mediocre work or you're going to have to go find another vendor because you didn't give them a chance to improve. And so you're robbing the business and all the relationship in all the situations in every way possible because you didn't spend the time and do the hard thing to bring effective support and challenge calibrate to that person so they can be liberated and be your A player that's your contractor for the next 20 years. So amazing and know exactly how Brett operates. And so that's just an example of bringing that support challenge, liberating a person so that they can become effective for you. Now, there's people listening right now, I guarantee it. They're like, well, I shouldn't have to do that. They're the specialists, they're the drywall, they're the Google ad specialist. They should be able to do that. I shouldn't have to tell them maybe, but you're the one that's dictating and you're the one that's the drumbeat of the organization. If you want it done a certain way, it is your responsibility to communicate that and give them a chance. Now you give 'em a chance and they don't perform fine, get rid of 'em. But you'll never know until you become that liberator leader.

Brett:

Yeah, it's so good. And I heard a quote recently that I really like. That's the life you want, the business you want. It's on the other side of a few hard conversations. And if you are stuck, it's because you're unwilling to have those hard conversations. And I really like the way you position that, that it's not just cheating you, it's cheating the other person if you're not sharing that feedback. One of my favorite books in this genre is called Radical Candor by Kim Scott. Do you know Radical Candor?

Peter:

Yeah,

Brett:

It's so good. And she talks about ruinous empathy versus radical candor. And I believe in a lot of ways, I'm a protector. I don't want to make people feel bad. I think I'm very conscious of the way people are feeling and their emotions. I think I'm pretty in tune with that, and I hate to ruin someone's day or make them feel bad. So I would have a tendency to not give radical candor. But the thing is, people want it. They may not want it in the moment, but ultimately they want it. They want that candid feedback. They want to be able to improve, and they certainly don't want to, not if you're upset, they don't want to be sitting in the dark. And I remember one great story about Steve Jobs, and I think we can obviously clearly a genius and one of the great business leaders.

I don't know that we want to adopt all his leadership styles, but obviously a genius and very effective. He had a conversation with Johnny, ive, and of course Johnny Ive is a famous designer that created all the products we love, iPhone, iPad, Mac and all that stuff. And so there was this time when Steve was like, Johnny, why don't you talk to your team about making these improvements? This is not good enough needs to be improved. And Johnny's like, well, there's stress. I don't want to upset them. I don't want to do this or that. And Steve said, no, Johnny, you're just being vain and you want people to like you. He realized, yeah, that's actually a big part of it. And so understanding that too, that part of why I don't want to challenge or give this feedback is because I want people to like me and I'm being vain, but I'm just hurting myself. I'm hurting someone else. And so I've got to give that feedback. So I think it'd be good to talk about how do we get better at leading ourselves? I think that's something we got to do, right? If you can't lead yourself, probably can't lead other people. Then I've got several specific questions I think will tie into our e-commerce owner friends, but also any business. But how do we get better at leading ourselves?

Peter:

So we have a phrase, know yourself to lead yourself. And a big part of it are these voices. A big part of it are like this, you just said this about Johnny, the understanding that you want to be liked and how that's impeding your growth as a leader. And so we've got a phrase, nothing to lose, nothing to prove, and nothing to hide. And it's so interesting, Brett, because if you walk into a meeting, whether it's going to be a contentious one or not, doesn't matter, or this conversation we're having right now, and you repeat that to yourself and you believe it, I've got nothing to prove and nothing to lose, nothing to hide. You show up completely differently. You show up authentically you. And one of those things for Johnny in this example would be like, I don't need people to like me. They don't have to like me.

I would like them to like me, but I don't need to worry about losing my likability. What's more important is that I do what's best for the business and do what's best for this person across the desk for me. And so those types of tools that we teach, they allow you to lead yourself in a way that is authentic and in alignment with who you are. If you think about those three questions and you say them to yourself, do I have anything to lose, prove or hide? And you walk into a meeting, it's pretty crazy because if you even use it on your next one, Brett, and you'll find yourself about to say something, you're like, wait a minute, why would I say that? Oh, I don't lose the argument. Or I need to prove that I know what I'm talking about. Or I need to hide the fact that I made a mistake. Then instead just being like, oh, I don't know. I guess I made a mistake or that was wrong. Yeah, yeah, you're right. It's a bad idea. It's so powerful to see. That to me is leading yourself right down the path that you're supposed to be on. I dunno if that's answering your question.

Brett:

Yeah, it's really helpful and insightful. I do have a couple of questions that to kind of follow up on that. So how do we do that? And it totally makes sense. If you go in with nothing to lose, nothing to prove, nothing to hide, it's just going to go better. It at least strips out the chargey side of emotions that could lead you to make a snap decision or to fly off the handle or do something you're going to regret. But what about situations where it's a pretty tense situation and you do have something to lose, client's going to cancel or customer's going to leave a bad review or somebody might quit. How do you frame that? I'm sure still saying those questions is going to help provide the right frame of mind, but what do you do in tense tough situations?

Peter:

What's so interesting about that question? I've been thinking about it a lot recently. You're walking into a meeting and you're like, man, I'm going to lose this client. You probably feel exactly what that feels like right now. You're like, yeah, I remember this was a month ago at this meeting with a big time client, huge retainer. And I'm like, man, I don't think they're happy. We call it making the implicit explicit. So I'll just walk in and be like, Hey, hey guys, I know we're definitely not making you happy. This has not been working out. We have not delivered on what we were supposed to deliver on or the way that we were supposed to deliver it. So what should we do? And speaking explicitly, everybody knows the elephant in the room, just call it out. And the other thing is on losing the client or the employee is I lean on the fact that maybe that's the right thing.

Maybe the client's not supposed to be your client. Maybe they're making your life hell, you're making their life hell or you're just the wrong fit. And so again, nothing to lose walking in with just being like, man, I don't want to lose this client, but maybe it's the right thing and let's just call out the elephant in the room. Let's make it explicit. Hey guys, we haven't delivered and I'm sorry, what should we do about it? Or with the employee, this situation hasn't been working out. I know it's been contentious for you, it's definitely been contentious for me. What should we do? And just calling it right out, and maybe they're not the right fit. It's crazy examples where you've held onto a client or an employee because you really didn't want to lose them. And you look back, you're like, dude, we should have just cut them loose.

That was so stupid. Why did I fight for that? That was just a bad fit for us. So that's my mentality. Maybe it feels a little bit naive, and maybe it is, but it's like that's how I'd walk into those situations without trying so desperately to hold onto it. And I think it's an andreesen quote, you have to Google it, but strong opinions loosely held comes to mind where it's like, yeah, I feel like this is the right idea or this is the right employee or this is the right client, but I'm okay being wrong. I'm open to being wrong. Maybe I get some more data. And it's just like it's not the right move for us.

Brett:

Yeah, strong opinions loosely held. It's so powerful. And it kind of ties into that the mindset of this is my position until I learn different data, this is what I believe about this topic, this ad campaign, this product launch, this person who's an employee, this is my belief. Until the data changes, then, so I've got a strong opinion, but I'm willing to change if the data changes. And I do think it's 100% the right mindset that you don't need any one deal or any one customer or any one team member to be successful. There are some of those changes that could be right. You lose a key team member, your partner bails, you lose the largest client you have. Some of those things are legitimately painful, but they're not usually life threatening, right? You're going to make it. And I do believe, like you said, most of the time you find out that, dang, it's actually good.

It's probably good that this happened then I should have made a change sooner. And one of my favorite quotes comes from Peter Drucker. He talks about, you look at a situation, so this team member, this vendor, this client, if I had to go back, would I do that again? Would I hire that person again? Would I hire that vendor? Would I take that client on? If the answer is no, then why do you persist, right? And so I love that. Why do you persist if you wouldn't, knowing what you know now, if you wouldn't have done it, why do you keep doing it now? Why do you persist? And a lot of times I think we're holding on because of fear or something when probably if you go in with kind of that mindset of nothing to lose and then you make the implicit exploits like you talked about, then you're probably going to be okay if that thing ends or that relationship ends, and you may find it's better anyway.

Peter:

You know what else, Brett too? You said it's painful. It's painful in the short term because you're letting go of a client and maybe he's a big partier revenue. I just had a friend of mine that he's a freelancer and he just cut loose. His biggest client, big part of his income, he couldn't afford to lose him, but he knew two things. One was making his life hell. And second, if he didn't let them go, he wouldn't have any room to bring the right client in. And so he knew, he's like, man, this is a chicken the egg thing. I got to cut them loose to relieve the pressure from them, but also to make room for him to do the business developing he needed to do to bring the right client in.

Brett:

And it's painful, but I think deep down, we typically know, we know when it's time. We just allow some of the other louder voices of, no, hold on. It'll get better. You can fix it, they'll change or whatever. We allowed that to crowd in and we don't make that change. Well, we've already kind of talked about this a little bit, but I want to go deeper. So how do we use some of these tools or some of the tools that we haven't talked about yet to lead vendors better or to lead agencies better or freelancers? So we've got these other relationships that aren't just people on our team. How do we lead them better?

Peter:

A lot of the same tools, man. I think really a lot of it comes back to me in support challenge. So I don't know how many vendors that we've held onto as our company, I won't speak for you, where I kind of smiled and nodded and I'm like, I don't know. The data they're providing just doesn't make any sense, or I'm not really seeing the results. But they're nice people. They're nice people, and I feel like maybe if I hold on a little longer, things will work out. And instead in the very beginning, understanding what metrics to measure with the data you have now, iterating on those accordingly. And then asking the hard questions, just saying, Hey, how long do we persevere? Or, Hey, this data doesn't line up, or, Hey, I need a different report. I'm not really confident in what you're saying is not really lining up with our expectations.

So again, calibrated support. Challenge those people so that you in the end can do both. Do your business as service, but also them as service and cut 'em loose if it's time. Or they can iterate and they can find that gold coin or whatever you want to call it in your marketing space or in your supply chain or in raw material. And so I don't know, there's a lot of times where I've sat in a meeting and someone, a vendor has said something and I just smile. I'm like, oh, okay, sounds good. But then I get off the call and I'm like, that didn't make any sense. I didn't understand that

Brett:

And

Peter:

I don't want to look stupid. I didn't want to be like, Hey, I didn't really understand what you said. Can you repeat that? And now it's kind of a fun game for me to just ask the dumb question, Hey guys, sorry, dumb it down to a fifth grader. Talk to me. I'm a fifth grader. I don't understand what you're saying. I don't know how this pertains to us. This doesn't seem to be working, but you're telling me differently. What do you mean by that? Help me to understand. And so bringing that support challenge to a vendor or to a contractor in a way, it's the same thing. It's like the example of my buddy in the real estate. It's like you got to be able to do that in order to lead those folks better as well.

Brett:

And from an agency perspective, and we consult with clients, work with clients all the time, and sometimes clients come to us and they just say, man, my Google ads are a mess, or Amazon's a mess. I just need help, man. I just need help growing. Or I know I'm not scaling quick enough. Can you help me? And that's always fine. And we can dig in and we'll ask the right questions, we'll uncover things. We'll get to clarity around goals and objectives and how to support your business. But I always appreciate it. I always love it actually, when a client comes in and says, Hey, this is what we need. We're really, we're trying to reach this objective. We want to get to this top line, this bottom line, because we want to sell in three years. And so our golden metric is we need to acquire new customers at this CPA if we can do that.

And if we can do that on a consistent basis, we will be here forever. If we can't, we're going to have issues, we're going to have to make a change. Or sometimes we've had clients come to us and they say, Hey, in three to six months, we want to build an in-house team potentially or keep you guys on for consulting. But we help build things. And I love that transparent upfront conversation because then we as an agency know how to calibrate with that, and we know how to effectively launch a plan to meet those objectives. And then those conversations are easier too. And I think the same is true with an employee. You hire someone on to run to be a sales rep for you. You clearly say, we expect this kind of inputs and outputs. We think you should make this many calls and be able to answer this many emails and have this many discovery calls. And you just map all that out. This is what we expect, and we will be measuring it and talking to you about it and helping you improve and things like that. That clarity, I think the right team members love that too. And so yeah, I think just being very clear and then measuring against that, man, you almost can't go wrong if you do those things.

Peter:

And you know what else is crazy, Brett, is that there's such a gut rot around not knowing if you're doing a good job. And so the vendor or the employee, if they don't know and they're constantly wondering like, oh, is Peter mad at me? I'm not really sure. I don't know if I'm doing a good job. I feel like I'm doing okay, but he just asked for more, better, faster. And there's no way to put that in a spreadsheet. Yeah, we more better, faster. You want a specific number of what you're trying to hit versus the goalpost just keeps getting moved more, better, faster, more, better, faster. And then as the owner not knowing exactly what you wanted to begin with is foolish. And so for that client to ask you like, Hey man, this is what we need from OMG. We need this, this, and this.

Okay, great. Now we know exactly what you want. And guess what? We can report on that. And guess what? We'll know we're doing good or we're not because you told us what you were measuring. And then you quoted Peter Drucker, my favorite Peter Drucker quote is What gets measured gets managed. And so that falls right in line with just being explicit and support challenge here. There's no need to wonder, this is what you need. We need the CPA. Great. Awesome. This is what we're trying to do. What's an example of the absolute worst client that comes to you, Brett? What's that look like?

Brett:

Yeah, it's usually when things are really, really unclear. And then I love the more, better, faster. Well, what does that mean? What does more mean? And what does faster mean? What does better mean? And like I said, we're pretty good at asking questions and getting there. But what's also kind of funny is we always have these discussions around budgets, right? Because budgets are kind of like a fluid thing with a lot of e-commerce brands. And so the initial growth rep will hear one thing, and then there's another call and there's something different, and then there's the kickoff call and something totally different. And we're like, I don't think this person knows what their budget is. Or sometimes the CPA changes. And it's like we just had to really get way better at asking the same question about three or four different ways. Or you can just tell sometimes someone comes in, they're just buttoned up and they know exactly what they want and that's great. But if they don't, then you just got to keep asking questions and that's all fine. And I think it's one of those things where a good employee, a good agency, a good freelancer, they're going to take it upon themselves to, as Jocko willing talks about, lead up the chain of command, right? I'll try to lead the client better. I'll try to lead my boss better by asking good questions. And if it's not clear, I'll make sure it's clear. So yeah, I think that's important as well.

Peter:

It's so good. I love extreme ownership. That's where that quote comes from. I think on the leading up,

Brett:

It does. It comes from extreme ownership work.

Peter:

And I think that's a really great point, man. For anybody who's listening, who's on the other side of it and they're dealing with their contractor or their vendor and they're dealing with a customer that's asking for their services to know and help them understand what it is they actually want and how to measure it. And so that everybody knows what success looks like. I mean, that's a huge point.

Brett:

So good, man. We've covered a lot of ground and we are about out of time. I do want to ask one more thing before we talk a little bit about your coaching biz and how that works and get a lot of people to get in touch with you and stuff. Yeah. What about leading better meetings? I think this is a real pain point for team members, for vendors, for freelancers, meetings that should have been emails or Slack messages or whatever. But any quick tips on how do we craft better meetings?

Peter:

Yeah, I'm going to lean on EOS and traction for this. For us, having a level 10 meeting and then understanding scorecards and who's responsible for what and what seat do they own and what metrics they're, and then understanding what is it, identify, discuss, and solve. Is that what IDS stands for?

Brett:

Yes, that's correct.

Peter:

And so to drop things in that can wait until the next meeting to drop it in the IDS, and you can go through that and actually solve it on the meeting. And I love the idea of not leaving open loops. We have too many open loops emails that go out and you're not really sure if the person got it done, that's an open loop versus them replying back and we're like, got it done. There's just way too many open loops. And so if you can identify, discuss, and solve on the meeting and have it done and know what the next steps are, that to me, those are my favorite meetings. And so I think that they need to have a clear agenda, who's responsible for what metrics they're reporting on, and then understanding what the issue is and discussing it and solving it on the meeting when possible, not always possible. We follow that level 10 meeting structure. It's my favorite.

Brett:

It's so good. Yeah, understanding who owns this meeting, what's the objective, what are we trying to accomplish in the meeting? And then those other pieces you identified so important because I think in some cases, a meeting is the most efficient use of time you can have if you've got the right group, solving the right issues and talking about the right things. Meetings are fantastic if you're missing some of those components. If there's not a clear objective, not a clear owner, you're not really working towards something, you're just kind of chatting it up or trying to figure out where to go. Meetings are such a waste of time. And then everybody loses energy and then they don't want to go to the next meeting. And so yeah, we spend so much time in meetings, we got to put in the effort to lead better ones. If you do, it's like a breath of fresh air, a boost of energy, a shot in the arm organization. And so you need to make that happen.

Peter:

Yes, for sure. And one last thought on that, think about what you can do asynchronous. Could you have just sent a Loom video? Somebody asked you a question, let's not have a meeting. I'll just send you a loom and it's done.

Brett:

I do love the Loom idea. Love loom videos. The asynchronous is really great. Awesome. Man. This has been fantastic, Peter. I'm motivated. I've always loved leadership stuff, but I want to get better. You're challenging me and inspiring me, which is super great. And so for those listening that say, man, I kind of want to understand those triggers and those weapon systems that Peter was talking about, and I want to really know myself or see myself to be able to lead myself and others and some of those things. Talk just a little bit about your coaching practice and then how can people get in touch with you?

Peter:

Yeah, for sure, man. We do some one-on-one and group coaching. It just depend on what you need and if we're the right fit. And so typically we'll do a discovery call and just figure out what it is that you're trying to overcome and whether we're the right fit or not, and whether you need some one-on-one or whether you need group. We have both of those going on and there's a lot of accountability associated with it, A lot of learning. I like to say we're not just inspiring, we need to be transformative. Otherwise, this is just that conference that you went to and you're super excited and you took a bunch of notes and then you put 'em on the shelf and you forgot all about. You had a lot of email that day. I do not want to be that ever. And so what you're going to learn, it's actually going to take root and then it'll just inject itself in your company culture and you'll start seeing it everywhere. And so that's what we're doing. I do have a free resource for your listeners. They can just go to whitestone coach.com and they can download a free resource. And there's a lot of those tools that I talked about. They're in there, they're free, and they can check them out and hopefully learn something. And if they want to get in touch with me, they can just email me, peter@whitestonecoach.com,

Brett:

Peter@whitestonecoach.com, or go to whitestone coach.com to get those free resources and tools. Peter, I would, ladies and gentlemen, Peter, you crushed it, man. And I knew you would, and you're a podcast pro. You've done this stuff, man, but so good. And we got to remember, everything's going to improve. Everything's going to get better when you lead yourself and when you lead others better. So thanks for the time, man.

Peter:

Thank you, Brett. Appreciate it, man.

Brett:

And as always, thank you for tuning in. We'd love to hear from you. What would you like to hear more of or less of on the show? If you found this helpful, then I'd love that review. I'd love that. Share. If you know someone else in the e-commerce space or, Hey, this episode applies to about any entrepreneur, if you found it helpful, share it helps other people improve, and everyone's going to thank you for sharing a good resource. So with that, until next time, thank you for listening.

Episode 256
:
Frederick Vallaeys - Optmyzr

Using Generative AI to Unlevel the Playing Field

Are you dabbling with generative AI or using it to gain a competitive advantage? 

Are you getting better at using AI or staying the same? 

If you're like some professionals I know, maybe you've gotten frustrated with only slight gains using AI, so you've moved on.

I'll admit, I'm still just dabbling compared to my buddy Fred.

Fred Vallaeys is one of the smartest dudes I know. His perspective on AI is inspiring and sure to get your wheels turning. 

But first, take a peek at Fred's resume! 

  • One of the first 500 employees at Google
  • He was on the team that acquired Urchin, the precursor to Google Analytics 
  • He was on the original Quality Score team
  • He was one of the original 6 people who built the AdWords editor

Now, he's the co-founder and CEO of Optmyzr and the author of 2 amazing books.

Here's a look at the taste AI morsels we chew on in this episode:

  • Practical ways to use Generative AI that you might be missing.
  • How to ground the AI so it doesn't "hallucinate."
  • Understanding the best LLMs and how they impact generative AI.
  • How generative AI is different from Machine Learning.
  • Embedding, vectors, and chain prompting

Ready to step up your AI game? I am!

Transcript:

Fred:

The machine continues to learn. And so the answer it gives you today is not going to be the answer it gives you tomorrow. It basically gives them a function, a python function, to calculate some probability of next month's budget. And it's like, oh, great, it's able to do it. So now they come back every week and they plug into new numbers and they ask the GPT system to do it again and again and again. But it's not because it wrote to the correct Python code last week that there's a guarantee it's going to do so again or do it better this week. So every time you use generative, you kind of have to fact check, and that's to your point. I mean, wish I could go sit on the beach, but no, I keep having to validate what it's saying because if I don't, I'm going to get into a lot of trouble.

Brett:

Today we're talking about how to unlevel the playing field with generative ai. We don't want to level playing field. We want to slant things in our favor. Now, my guest today is one of the smartest dudes that I know, Fred Valets. Take a listen to this resume. One of the first 500 employees at Google, the team he was on acquired urchin. Urchin was, it's the U in UTM parameters by the way, but Urchin was the precursor to Google Analytics. Also, his team designed quality score. Quality score is like one of the early innovations that set Google Ads apart from all the rest that awarded ads for their good quality and quality score, so legendary. Also, he was on the team of six that invented ad Words editor. Now he's an author of multiple books, one called Unlevel The Playing Field, and the other called Digital Marketing in an AI World.

And in this episode we talk about how to understand the difference between generative AI and traditional ai, how to use it in very practical ways for your business, where people get it wrong, how to get the AI to stop hallucinating if it is, plus some really nerdy things like embedding and vectoring and chain prompting. It does get a little bit nerdy, but it's also super fun and super practical. So please enjoy this interview with Fred Valets. I'm here with Fred Valets talking generative AI and how to leverage it to grow your business, improve your PPC and do other wildly cool things. So Fred, man, how's it going? It's been a long time. Welcome back to the show, and thanks for taking the time.

Fred:

Yeah, thanks for having me back on, Brett. It's been too long indeed. It's been a weird couple of years and just got back on the road seeing a lot of the industry people. So good to see you again as well.

Brett:

Yeah, it's so fun to get back in person more and yeah, and I used to see each other probably at least once a year, right at a Google Marketing Live or something. And of course that has all dramatically shifted over the last several years, but getting back out there, just thrilled to have you here. And so I love the topic of ai and you literally wrote a book on ai, and so why don't you tell us a little bit about that book?

Fred:

Yeah, I mean, so it's funny because I wrote a book called Digital Marketing in an AI World, and this was published in 2019, and this was after I'd been writing on search engine line in 2017 on the topic of how AI would change the landscape and the P P C professional's job and the digital marketer's job. But that AI that we were talking about back then is so different from the AI that we're talking about now, the generative ai. So I wrote a second book, which is called Unlevel, the Playing Field, and the premise was to take that concept to the next level. So if you believe that the human is still necessary to produce better results, even in conjunction together with the ai, what are some of the techniques you can put in play to make your team perform better? Because as an agency, as an in-house marketing team, sure you can use all of Google's automations and you can get average results.

Now, anyone can get average results, which is really cool because before it wasn't possible for everyone. But if this is your job, if this is what you do, then average is not good enough. You got to prove your additional value. And that's sort of what the book is about is how do you take these really cool technologies and how do you make them your own? And then when it comes to generative, I think it's hugely misunderstood, used in many incorrect ways. And so I'm kind of on a quest right now to teach people how is it different from traditional ai? What does that mean? What's it good at? What's it not good at? How could you use it, and how do you get it to basically get a promotion as opposed to get fired because someone else used it better than

Brett:

Ted? And that's the topic of today, really understanding what generative AI is and understanding how we can use it to unlevel the playing field in your advantage. And I'm still the mindset that it's better to have AI plus smart humans. We're not wanting exclusively one or the other. We don't want to give the stiff arm to AI and say, no, no, no, just smart humans. That's all we need. Scared of the ai, but we also just can't turn things over to the machine and then go hang out at the beach. It's more about how do we leverage AI to do more, to be more strategic, to get more leverage out of what's going on. And so really excited to dive into that topic. We'll certainly talk about a few of the things that we're doing on our end as it pertains to ai, but I'm more, and I kind of this before we hit record, I'm more in the observing, learning, watching dabbling stage. I know you're going really hard into the generative AI space, so can't wait to get your perspective on that. But yeah, talk about what is generative AI and why is it different than traditional? How is it different than traditional AI and where does that trip people up?

Fred:

Yeah, I mean, so when you think about traditional ai, it's really been about machine learning. And we've been using that for a very, very long time. And when I say, I mean everyone listening who advertises on Google, you've had quality score for your keywords, and that has been artificial intelligence. And that thing has existed for over 15 years. So I joined Google in 2002, fairly shortly after I came there, Google started looking at ad rank as C T R was a factor of it, but then it was like, we're not just going to use historical C T R, we're going to use predicted C T R and how do you get predicted C T R? Well, that was a big machine learning system, and it was crazy because these machine learning systems back then, they took months to train, we'd feed the data, and it wasn't months, but it was like weeks.

And then so the machine be learning, and then eventually we'd get something out of it and then we'd be able to go and have the humans validate that the machine predictions were somewhat valid and then we deploy it. And nowadays you do the same thing in minutes, but that's sort of the traditional machine learning, pattern detection, feed it a bunch of your historical data and make predictions about the future outcomes of similar things. Generative is about you start with a blank slate and come up with headlines, come up with keywords, come up with songs, make videos. What's interesting is generative ai, the way it does this is super mathematical and it is based on machine learning. It's based on predicting the next logical word in the sequence. But it's not about giving you the number, it's about giving you the text, the verbose, the beautiful description of something that happened.

So that's a big difference. But then sometimes people think about it and they're like, Hey, well it seems like I can go to Chad g p t. And by the way, when we talk generative and Chad, g p t, it's often interchanged, right? But Chad, g p t is just one of the vendors in that space. But you can go through it and you can give it a mathematical question, and then sometimes you get the right answer. And if you get the right answer, you're very lucky. Lemme tell you that because it's a prediction, it's not an actual mathematical equation that it's solving for. It's just like predicting what's the likely next word. And if you're lucky, it sends your question to the actual arithmetic and then you get the right answer. But there's no guarantee of that. So that's one scary thing because I've seen people go to it and be like, here's a list of keywords. Can you tell me the predicted cost per click for these? It's like, it's just guessing. It's not telling you anything actual from a database.

Brett:

Yeah. And so I think that's really appreciate that breakdown there. And we have been using traditional AI for some time, even going back to the quality score, which kudos to you and the team that developed quality score. I believe that was one of the original innovations that really made Google what it is today in addition to measuring backlinks and stuff like that in the really, really early days. But this idea of giving ads a quality score and then rewarding good ads and the whole ad rank quality score system, brilliant game changer, I think changed the industry for the better. And then of course, as we look at smart bidding, target return ad spend, target C P A, even Performance Max and all the things that are in there that still leans more machine learning and predictive ai. But I like how you laid that out. I've heard that even generative ai, it's still predicting, it's still predicting what should come next in a sequence of words, but it does, it shows up different and it functions a little bit different.

Fred:

Exactly. I mean it's all based on the transformer technology, which by the way, was not invented by OpenAI, it was invented by Google Brain. And then OpenAI, which was a nonprofit, took that technology, did really well with it, and then all of a sudden they were like, Hey, we're going to become a commercial company. And then Elon Musk, who was part of it, he got so pissed, he was like, oh, I'm not doing this anymore. So he left and now he's building his own version of transformer generative ai. It's all fascinating if quality score hadn't existed.

Brett:

So just to double click on that, so transformer that's sitting at the core of OpenAI, that was actually developed by Google.

Fred:

So it was Google Brain that did the academic research that developed that, like you're saying, right? I mean it's all very mathematical and prediction driven models. So I can't explain this because it's way beyond my capabilities, but again, in the sequence. So if you give generative AI a very simple phrase like the cat in the most basic example of generative ai, it's trying to complete your sentence. You basically are saying continue writing from this point forward. And so now it says, well, I could put in the word meows or barks, but how does it know which one is the better option? Well, it uses predictions and it says, well, when I've looked historically, and this is a large language model, so when we say historically, it means all the historical text that it's considered to learn, is it more likely that the word meows appears close to the word cat, or is it more likely that the word barks appears close to the word cat?

And so obviously now it says, well, it's 85% likely it should be meow and only 25% that it's barks. So it's going to say the cat meows, but it could have equally well said, the cat purse. That's another fine answer. And so that's fine when you're talking about being creative, writing headlines coming up with keywords. But if you're saying one plus one equals, well, likely it's seen two appear very close to that combination of words in the past. But again, it's guessing. And there's this fascinating study that came out of Stanford that was done recently, and it basically talks about the concept of drift in ai. And so what they did is they said, is the number 17,077, is that a prime number? It is a prime number. But they asked G P T four in March of 2023, and it was about 84% of the time it got the answer correct. And then three months later, by June of 2023, it was down to around 50%. And that's interesting, right? Because it used to be really good at answering that or quite good

Brett:

In theory, it should get better if it was at 84%, then several months later it should be getting better. Ideally you would

Fred:

Think, but this is what's happening. So they call this the concept of drift. The machine continues to learn. And so the answer it gives you today is not going to be the answer it gives you tomorrow. And that's quite scary because then I've talked to digital marketing professionals and they say, oh, I've been using the advanced analytics capabilities and G P T, and we can talk more about exactly what that is, but it basically gives them a function, a python function to calculate some probability of next month's budget. And it's like, oh, great, it's able to do it. So now they come every week and they plug in the new numbers and they ask the G P T system to do it again and again and again. But it's not because it wrote to the correct python code last week that there's a guarantee it's going to do so again or do it better this week. Every time you use generative, you kind of have to fact check. And that's to your point, I mean, wish I could go sit on the beach, but no, I keep having to validate what it's saying because if I don't, I'm going to get into a lot of trouble.

Brett:

Yeah, totally makes sense. We can't be totally unplugged and unengaged and you got to fact check and you got to spot check. So how can we use generative AI from a marketing perspective? What are some of the ways you are using it now? What are some of the clever ways you're seeing it used? Let's get practical for a minute.

Fred:

I mean, so there's the basic stuff in P P C and search marketing, which is give me some headlines. We have a responsive search ad, so we're being asked to provide a whole bunch of different headline variations, and as humans, we get bored and we sort of run out of steam. And so we have our 10 headlines and it's like, Hey, G P T, can you suggest five more? Kind of like this? So it's really good at stuff like that, and that makes sense right now, one thing to keep in mind is most people, again, they use chat, g p t and chat, G P T is like this one interface where you can have a conversation, but there's not that many tweaks and settings and things that you can control. Once you start deploying these solutions at scale, you're probably going to look at some a p I capability or a plugin for Google Sheets or a plugin for Microsoft Excel. So yeah, one thing that I think is really interesting, especially when you're thinking about creatives and headlines and how creative or non-creative you should be. Like say you're in a regulated industry and you can't really make stuff up or the AI can't make stuff up

Brett:

Finance or health related or things like that, you got to be really buttoned up.

Fred:

Exactly right. And so now you have this factor called the temperature in generative AI that you can control. If you are using a sheets plugin or you're using the A P I, you actually have access to this. And so you can say the temperature is zero, which means the model has to be very deterministic, and it can only say things that it's heard somewhere before or seen somewhere before. Or you can set the temperature all the way to one which is the highest, and that says, just be as creative as you want. And maybe in the example of the cat, it's going to say at some point, sure, the cat barks. Let me try something new and see how that lands. So that's basically one of the things people can do there.

Brett:

Yeah, it's really interesting. We're using chat GBT in a couple of ways. Of course, we run a lot of Google ads, and so we've got specialists that are writing headlines, and now there's kind of the generative experience inside of Google ads, which is pretty exciting. But we've been using it for a while to, as you said, if we're trying to write 20, 30, 50, a hundred headlines, that becomes difficult. If we're running a thousand headlines, that becomes difficult. And so utilizing Ative AI for that is great. I'm writing copy for the podcast and bullet points, and I, I'm creating other content. I found that when I want chat G B T to rewrite bullet points for me or rewrite headlines for a podcast or headlines for an article or something like that, I'm only using the suggestions a pretty small amount of the time, but it's still right, even if I only use 10% of what it's giving me, sometimes it sparks a thought or sometimes it leads me in a different direction or it is just a lever. It's a way to not start at zero. It's a way to jumpstart the next idea. And so yeah, it is generally quite helpful.

Fred:

It is. And I think the more that you start using it and the more you use capabilities like custom instructions and you start doing prompt chaining, it is going to give you better results, right? Because I find the same thing. If I give it a pretty simple prompt, I often have to rewrite it extensively because it might use words that I don't really like, even though I say write in my voice, but maybe I don't like my own voice, I want it to be different. So I've started using these custom instructions on G P T. So if you don't know what that is, it's basically under settings, you can say, this is my context, this is who I am, this is how I'd like you to respond. So as opposed to me having to have that interaction every time I start a new chat, it already knows this about me. And so one song that my kids are listening to a lot right now is A, B, C, D, E, F U.

Brett:

Yes,

Fred:

I've heard song, that song. And yesterday, my son's playing a variation of that, which is actually A, B, C, D, E, F, G, H I love you.

That's kind of interesting. Somebody took that song and what if I took something and did P, P C related A, B, C, D, E, F, and then P, P C, right? So I'm like, I'm going to go to G P T and I tell it, I like this song and I want you to write something like it. Are you ready to do this? And I'm thinking, I'm going to have to give a follow-up prompt, which is like, what is the starting the seed word that I want to start with? And before I even do that, it's like, oh yeah, here's a chorus. And because it knows my custom instructions, it knows that I'm super into P P C. And it wrote me a chorus right there about P P C. I was like, wow, that's spot on.

Brett:

We should share, we should drop that chorus into the show notes. If you're able to share it, that would be super.

Fred:

Right now I'm working on producing the, so I have the lyrics, I have the full lyrics. They're quite good, I think. So

Brett:

You're produce the

Fred:

Song, I have to figure out, yeah, I'm going to produce this song. And so this is not a P P C example of course, but from a marketing perspective, yeah, that's kind of cool if we can put a video out and do something cool along those lines. Now, I'm also, so I'm a Captain America fan.

Brett:

I see that.

Fred:

So I'm trying to produce a comic book with some superheroes about P P C. And again, I'm not a good artist. I can't really draw, but I figured out ways to get generative AI to draw characters in a certain style and to draw images in a certain style. And so a lot of what I'm working on these days is make this generative your own, make it follow your brand guidelines. And that's really cool, right? Because once you get it to that point, now I could imagine you, as opposed to only getting 10% of the headlines and saying, these are good, what if we could get that to 20%, 30%? And that's again, that's the playing field because you're using really cool technology better than anyone else,

Brett:

And it really makes sense. And so you, you're taking your ideas that maybe you previously couldn't execute on either efficiently or maybe even at all, right? To use the art example, got this idea for a comic book, I'm an artist, I can't draw it, but I can explain my ideas to generative AI and it will create it for me. And so yeah, I love that love finding those little improvements and ways to go from 10% to 20% to 30% can be a real game changer. We're also using generative AI to review, do competitor research and look at, hey, this is a product that we're competing against in Amazon. And so we feed all the reviews to the AI and say, Hey, what do people like about this? Not about this synthesizes to me in the top five, top 10 topic thing. And then we can also use it for landing page copy, product detail pages, things like that. So all of that, again, stuff you could do on your own, but unlevel the playing field and gets you to a great place much faster.

Fred:

I don't want to get too tactical, but these are really great examples that you're putting out there. But I think a lot of advertisers or marketers, they kind get stuck at the level of how do I input, where do I even get these reviews? And then once I have the reviews, how do I give it to the machine? Because every time you talk to G P T, you put in a long blob of text. It's like, oh, sorry, I can only read the first 2000 words or whatever. Now you have to figure out chunking it up. So I've done sequences where I'm like, I'm going to sit here on chat and I'm going to give you 10 sections, process each of these and then give me the output. So a lot of the time savings are kind of lost in me having to give it that many examples.

I've been using Claude from tro, that's a Google backed llm claude.ai. What's really cool about that one is you can do five uploads with every chat that you have, and each of these uploads can have 10 megabytes of text. If you think about 10 megabytes of pure text with no formatting, not a P D F, that's a lot of text. This is really good. And then I've even there had conversations. One thing that I like to do in terms of blog production, a new topic comes out and I want to write about it. What I do is I turn on my iPhone, put in my AirPods, go outside for a walk around the block, 15 minutes, and I'm just rambling and recording myself the whole time. I'm like, oh, well here's what I think about it, and it's really cool that this new report includes the cost metric.

And then I'm like, oh, wait, does it include a cost metric? So I paused my recording, I go on Google, I'm like, oh no, it doesn't include the cost metric. So I turned my recording back on. I'm like, scratch that. It doesn't actually include cost, so that's not that cool, so don't mention that. But here's the other things that are cool about it. And then I take that voice recording, I transcribe it. There's a lot of transcription software that doesn't cost a lot of money nowadays, and it's really good. And so you get this transcript of just my stream of consciousness, which by itself is useless, but I give it to Claude and I'm like, what was I talking about? Summarize? It does a really good job. And even the points, the cost thing where I misspoke it understands that I misspoke and it doesn't make that part of the final summary.

And then I'm like, okay, well, so that's what I think, but now here is the article, the help center article from Google about the topic, or here's the blog announcement from the actual place that built this thing, what they say. And then maybe there's like, here's a couple of blog posts from other people who've talked about it and have validated that the blog posts are good, they're factual. And then I'm like, okay, so on what I think and the factual nature of this, propose some bullet points for a blog post, write me an outline. And then it's kind of that chain, that chain of prompting or the prompt chaining that's really worked a well for me.

Brett:

Yeah, it's almost like having a personal assistant, personal writer, researcher all roll into one. But again, it's so relying on your prompts and your direction and your input, it looks fascinating. So Claude, c l a u d.ai. So claude.ai, fascinating. I'll have to use that voice recording idea because that's something I actually, I'm an audible processor, I think better as I'm speaking sometimes. And I do like to be outside, so I've heard some people talking about that. Never use that myself, but I love that. Just pick a topic, start talking. I could see then using Claude to help you write a blog post or write social media posts or whatever. Just lots of options there.

Fred:

Exactly. And the one thing for people to keep in mind too is we've all had voice dictation for a very long time, and it's quite good. You can go into a Google Doc and you can start speaking and it writes your blog post. But I think where I always get stuck on that is I can't process in a logical manner what I'm going to speak. So that's why I prefer writing because I can go back, I can take a pause,

Brett:

You're chasing rabbit trails, you're looping, you're coming back. It's pretty convoluted. And sometimes when you're just speaking, and I think Google is better at this than Siri by a mile, but you start talking, then you're like, oh, wait, no, you didn't get that right. Well, okay, so lemme stop. Lemme correct that. Then lemme get back to it. And then now you've kind of lost your train of thought, right? So

Fred:

Exactly what I'm saying is don't do any of that. Just speak into your iPhone, into your voice memos and then transcribe the whole thing. And then don't even read the transcript. If there's mistakes in there, like G P T is good, they understand the context of what you were talking about and then sort of the same grammatical correction that Grammarly would do by looking at that word in context and knowing it's misspelled. Well, G P T does the same thing. It knows, oh, you probably meant C P C as cost per click instead of C, B, C with like B as in boy, which may be the transcripted, right? It doesn't matter. It picks that up and it's going to fix it for you.

Brett:

Really, really cool. Super helpful. You'd mentioned something before, you talked about drift with AI and how sometimes you can just start progressively getting worse in certain areas. How do you ground the AI so that you can get better results, better results for you?

Fred:

Yeah, I mean, so the easiest way to do grounding is what I just talked about, right? It's chain prompting and feeding it in. Here's the actual thing that I want you to transcribe, or here's the article I want you to summarize. Then it becomes sort of focused in that area. Now, one project that we did as well, so I took the two books that I've written and we wanted to build a chat bot around this, and we also wanted to bring a sidekick into optimizer. So where you could start asking questions about how is my account doing? And maybe we say, well, your budget is not fully spent, but your results are good, but you have budget available, so what is it I should do next? Well, in that case, we would recommend that you maybe increase your bids a little bit, or you find new keywords for more coverage so that you more fully spend that budget.

So that's the advice that we want to give. So how do we ground it, right? Well, there's a couple of ways of grounding. So the first way of grounding is in G P T, there's a thing called function calling. So keep in mind G P T by and large, the data that it has is from a couple of years ago, and then anything specific to your account or your situation, it just does not know. But what you can do is you can say, here's the structure of an A p I call the J ss o n to do an a p I call that's going to give you back the information that you need to do a good job. So if you go and say, tell me something about the budget, it will know, oh, I have a function which allows me to query for the budget for this account.

And so it constructs the J ss o n, the Js O then gets sent on to whatever a p I needs it. The j ss o n comes back with the answer, and now you've grounded it by saying, this is the actual budget, or this is the actual amount of money that you've spent. Make that part of the answer. And then it can do its construction of, okay, well it seems like you spent less than you wanted to and now it needs to give advice. Okay, so how do we give advice? And this is where we get into embedding. So embedding is this kind of advanced concept of vectors where basically the question that you ask is turned into a mathematical number and then that mathematical number is compared to every page of the book. And how do you get mathematical numbers for every page of the book?

Well, you have to embed the book, and this is actually not that hard. So if you look at open ai, they have an a P I that's called embedding. So you feed it one page of the book and you say, give me the mathematical representation of that one page. And then you store these mathematical representations in a vector database. So Pine cone is one example. They have a free plan available, so you put it into Pine cone, and now what happens is if the user comes to my chat bot and wants to have a conversation about their account or advice from the book, we take their question, we turn it into the mathematical representation through OpenAI, they do that for us. Then we compare that mathematical number in the vector database and then it says, well, here's five pages that seem to be similar in the mathematical representation.

So these five pages come back, get given to the large language model, and now the large language model construction response from those five pages. And so what comes out of it is not based on all of the text that the model's ingested, but it's based on five pages in my book. So it is grounded, it is factual through function calling, and that is a way to make it your own. And of course there's many marketing applications to this as well. So you could build a model that says, here's my style guideline, here's every page on our website and how we describe products. So when you go and make ads for these products, it's grounding it in how you speak.

Brett:

Dude, that is next level. That may be one of those we're have to pause back up the recording a little bit, listen to that again, start making notes. There's a lot to that. Super, super interesting. And it really interesting, I think for a lot of people, and I confess this to you before we started recording, I'm more in the learning phase with ai. You are getting after it, and a lot of this is next level stuff. So super interesting. I want to talk a little bit about large language models. I know you talked about Claude, which is kind of backed by Google, and you talked about transformer, which was part of Google Brain. So what do we need to understand about these large language models? Do you have preferences on which ones are better? Which ones are better for different circumstances? What do we need to understand here?

Fred:

Yeah, I mean, so large language models have bias is sort of the first thing because they've been taught based on a certain set of text. And one fascinating example to me is if you ask a large language model a question about gun control, you're going to get a liberal sounding answer. And if you ask that same large language model a question about religion, you're going to get a conservative sounding answer. Why is that? Does it have a political affiliation? Well, no, it doesn't. It's just because more liberals have written about gun control and more conservatives have written about religion. So it takes that tone of voice, it mimics that. So the question that becomes about can I build a large language model that maybe it doesn't talk about the things we don't want to talk about? So could I build a large language model just based on my corpus of data? So the books that I've written, the FAQs on the optimizer website, the support questions that we've had. So the answer is no, you probably shouldn't because you're not going to get to the volume of text to teach a good large language model. That's

Brett:

Not a large language model at that point. That's just too small of a set of data.

Fred:

Exactly. It's pretty small. And there's pretty interesting studies that show there's really like an inflection point and it needs to be a very, very, and we're talking about on the smallest side. So meta has a large language model, which is based on 70 billion parameters, 70 billion parameters, and that's small. Five times bigger is Google's model, which is called Palm two, so that's about 340 billion parameters. And then five times larger is G P T four, and it's split eight ways. But basically when they combine this all together, it's five times as large. So it's in the trillions of parameters, it's 1.4 ish trillion and we're just not going to get there. So we have to look at these different models. So Metas is good. It's called Lama Lama two. It is free for commercial use. So it's not the biggest model, but it's free, which is really appealing. As with anything from Google, I think it's a little bit too factual. It lacks creativity in my mind. That's always the frustration I have. That's the frustration I have with Bard as well. If I ask it to write something, it's like, yeah, it's kind of correct, but it doesn't read nicely, so I have to teach it too much to take on a certain tone of voice. G P T four, I mean, what comes out of that is beautiful. I really love how G PT four writes sort of the inferences it makes.

Brett:

You can get it to write in any style. We were got to get the office who's always getting Chad G P T to write memos that he sends out. I want this to be like a snarky third grade English teacher's voice or whatever. And it is pretty good. It's pretty good at adopting that tone.

Fred:

Exactly. And so that's sort of the three models that I would look at, the three primary ones. But then even within the large language model, if you say that you go with open ai, you have to start thinking about costs, right? Because Chad, g P T, sure you pay $20 a month, but you're not going to scale your business. You're not going to scale an agency or a big in-house project with that. You're going to have to use the A P I in some capacity to do things for 10,000 products for 15 advertisers that you're working with. And so when it comes to the A P I, now you have choices. You can use model 3.5, you can use model three, model four. And sort of the trend is every model becomes three times as expensive as the previous one. And then if you get into the really old model, it's like a hundred times cheaper, a thousand times cheaper, but that cheapness comes at the cost of it's not as good, it's just not very good at writing headline.

So at the very minimum, you probably want to use model three. And then speed is the other consideration I love, you can go and talk to G P T four and you can sit there reading the response as it's generating. So by the time it's done generating, I've already processed it and I'm like, yeah, this is good, or No, this is bad. It needs a tweak, G P T 3.5. On the other hand, it's like, boom, here's the response. Here's two pages of answer about the thing you just asked, which is amazing. But if speed is of the essence, which it often isn't in business, then 3.5 may be a better model to stick to. And then you sort of ask what's up with these different large language models? And so training your own model, that's like question number one, should you be doing that? And then if you want, we can talk about fine tuning and embedding, which are sort of prompt engineering, which are those next two levels that are probably a bit more accessible to the average user.

Brett:

So we talked a little bit about embedding already, but how does that apply in this context and kind of the prompt engineering? What advice would you give there? Where do we maybe get it wrong naturally? What say you on that topic?

Fred:

Yeah, exactly. So the prompt engineering that oftentimes is about things like in context learning, and it's about providing that thing that you wanted to summarize or that you wanted to talk about or the source of truth for what it's going to verbalize. And so again, it's about function calling. It's about turning things into vectors and storing it into a vector database. But again, it can also be about simple prompt chaining. The other thing people often don't really understand about generative AI is that open AI's initial models, we're not chat-based. Now chat is nice because it becomes an interaction and that interaction has memory. So the thing you asked five questions ago, that's part of the memory of that large language model. And so it brings that back and it keeps grounding things in what you asked at that point. Whereas the original forms of generative AI were much more in completion mode.

So it was like, here's a list of five bullet point headlines, and then you would say, now complete this. And it'd be like, okay, here's 6, 7, 8, 9, and 10 in that same style. So it would use your one prompt to come up with the next thing. But prompt chaining is probably one of the easiest ways to not go into embedding, but sort of prompt engineering, give it better or give better answers based on what you've built up to. And the other thing, like you said, this isn't like having an assistant, right? You can't come into the office and say, Hey, write me a blog post. I mean, sure, but what about how long? You have to give it very specific instructions, take a few minutes to come up with a really good instruction, and what would you have put in the email to your employee to help you with that? That's a good instruction probably for a large language model. So you still have to do that work. But what's cool too, that is you can actually use, so we use Mid Journey for image generation, and there's a very specific way of prompting Mid journey. So you can go to G P T and you can say, write me five prompts to get this sort of an output from Mid Journey. And now the one AI is telling the other AI what to do. And that works really well too

Brett:

If you want to get better at prompt engineering so that AI gives you better answers, use AI to help your prompt engineering. It totally makes it very meta.

Fred:

And then you know what, at the end of the day, Google's AI is reading the content that you've written to decide what's good enough to recommend to a user. And by the way, that's the other thing I was really, my mind was blown when Google and Microsoft, they started putting generative results. Because when I looked at chat G P T and people would ask the questions, I go, what's the highest tallest mountain in the world? Okay, it's Mount Everest. Maybe it's K two, I think. I'm not sure if that debate ever got resolved, but it's like, okay, well, so it seems to know things, but it's often also making things up. There's this great story I was talking to a friend who's a PM at Google, and he was in a meeting and they were debating what's the average conversion rate in B two B P P C?

And they were not agreeing with him that it was around 30%. So he goes back, G P T had just come out with chat G P T. So he goes, ask the question, and G P T comes back and he's like, yeah, it's about 30%. So he feels super validated, but he's like, well, can you give me some examples of reliable c r REM companies that talked about average conversion rate in the past year? It's like, okay, Salesforce, HubSpot, Oracle, and it's like these PDFs to these amazing sounding reports. So he clicks on the links and it's 4 0 4 error after 4 0 4 error. And what the large language model had done, it was like, well, you told me reliable C R M companies. So HubSpot, Salesforce, Oracle, it knows that it's like something that was written in the last year. Oh, let me put 2022 in the title of the link.

And by the way, G P T doesn't even look at links after 2021 or some of the models Don, right? So how does it even know that? So he was smart enough to click on it and not lose his job as a result of making stuff up. But then it was like, well, now all of a sudden Google and Microsoft, they're doing generative results. So how do they make sure that that is correct? That's exactly what they use as they use embedding. So it's not like they have a large language model and that thing magically knows the right answer to anything. No, they're still running it through Google's ranking algorithms and they're saying, well, look, here's 20 high ranking pages about whatever you asked. And they use vectors and they use semantic search to do that. And then it says, okay, now give these 20 results to a generative system and summarize it. And that's why the answer is usually fairly correct because it's not making stuff up and it's grounding by in context learning of saying, here's the 20 articles that I want you to take back and do something for the user with.

Brett:

It's amazing. It's amazing. So we're running out of time. I want to talk about just a couple things here as we wrap up just to see if you get a perspective. So how do you see chat-based AI changing Google's core, which is search, right? So there's, there's all kinds of debates and articles and stuff online talking about, Hey, chat, G P T is going to destroy Google search, and will Bard be enough? And Bard's going to upend Google's economic model and stuff. How do you see chat influencing search and search ads?

Fred:

Yeah, I mean, it's a big unknown. And the question is how do users interact with this chat? And I've been fascinated because I think Microsoft's approach to generative is much less aggressive, at least on the search results page than Google's. And you would think as the number two player, Microsoft would be incented to really change things up. But for them, it's a fairly small section that runs on the right side, and then you can expand it up in the edge browser to be full page. Whereas Google, it's like, I've turned that capability on, and half the time I don't see the organic search results anymore because they get pushed down by the generative answer. I think I've already seen improvements where Google is getting quite good at knowing what deserves a generative answer and opens that up by default. And something where it's more debatable, if that's helpful, it stays closed until I say, go and give me the generative answer.

But what you do have to realize, and you see this within Google, is that like I'm saying, what's in that generative answer is still what came out of the top ranked organic results, the top ranked shopping ads show up in there. It's just summarizing it. It's just providing a different interface to interact with them. But then the big question is, how does the user interact? Does this become a zero click search event where they got their answer? And if that's the case, then it probably wasn't commercial. It was probably not going to be leg gen anyway. So at some level, like who caress, right? But those things where the user does need to click through to buy something to get more information from your company, those links are appearing in generative. So I would say, I mean, keep doing the things you're doing, use generative AI to be more creative, to produce better content.

But if you're just turning it loose and saying, generate me 10,000 landing pages about different cities for my hotels, that's probably pretty risky. You need to ground it, you need to train it, you need to fine tune it so that it speaks your language, and then you still need to have human quality control on top of that, and that's going to produce good content. Google might appreciate that. That might become part of the rankings, but at the end of the day, this is Google's cash cow. So if the cash cow dies, then I think we're in a lot more trouble in general.

Brett:

Yeah, yeah. They're going to find a way. Google's always good at figuring out how do we still monetize this? How do we make sure there's plenty of ads to click? Because you got to keep the machine going and you got to keep advertisers happy. And let's face it, we all love Google search. If we're searching for something that has commercial intent, if I'm looking for a product of some type or a place to stay or a place to go, people click on ads. People click on ads even more oftentimes than they click on organic results. And I love what you said though, even the generative results that is pulled from, if it's something product related that's pulled from a shopping theater, it's pulled from a website. And so having the right structure, the right ss, e o, the right feed optimization, all of those details really, really important. And if you have that, then you're not going to get just left in the dust likely by the generative results.

Fred:

Exactly. And I think this whole track of having more authority, more influence, I think is really going to continue to matter a lot. So for what it's worth, I mean, something that I've written, because I've written a lot about it, it's been linked back to like Google's going to say, well, something that he produces probably is going to be better than something that's been no name author. That is probably just generative ai. So build your brands, build authority. It's same things we've been doing before. And then we also have to think about multimodality, right? We're seeing fewer and fewer clicks from text-based search results. We do more video. I mean, we're doing this podcast, right? It's because people like listening to people, they like seeing people. That's how people get a lot of content these days to do more of that.

Brett:

But it also does sort of just go back to Google's original. One of the original thesis was what if great ads are just answers to questions? And so then it's a matter of, okay, well, how do I answer the question in a really great way, whether that's through text or video or through my feed or through the page or whatever. And yeah, it comes down to just building a great brand and being great at merchandising and creating a great experience. And if you do that, yeah, the AI is going to help you, not hurt you in the long run. Fred, this has been amazing, and we could keep going and we just barely scratched the surface, and a lot of people's heads are spinning. Mine was spinning at several points in this conversation, but if you want to dig in, read your books, read your blog, check out optimizer, how can they best do that?

Fred:

Yeah, all of those ways. And then you can connect with me on LinkedIn. So frederick vales optimizer.com, go take a look at our blog. We produce A P P C town hall, which is every month we do a video episodes. So we talk to interesting people, and I think you've been on it, so have great conversations there. But yeah, thanks everyone for listening. And if I made head spin, I'm sorry. I hope I at least gave you some nuggets. I'm working to dig deeper

Brett:

In a good way, in a really good inspiring, yeah. Yeah, you're generating ideas, man. People are going to be able to listen to this and put this into, I also feel smarter just by listening to you, so that's always good. So awesome. Fred Valets, ladies and gentlemen, I'll link to the books. I'll link to everything in the show notes. So check that out. Check out optimizer. And also you spell optimizer too, Fred, because that's an area where people get tripped up sometimes.

Fred:

Yeah, O P T M Y Z R,

Brett:

Which just turned 10 years old, by the way. So congrats on that. Awesome piece of software top rated. Check it out if you need some help with your P P C optimization and with that, until next time, thank you for listening.

Episode 255
:
Byron Myers - Glimmer Wish

Why Your Prices Are Probably Wrong

Price. It’s an emotional topic for shoppers and for brands. 

As shoppers were more influenced by price than we care to admit.

As brands we’re often afraid to change our prices. And our current prices were probably created a long time ago. It’s almost a certainty that they price for at least some of your products is wrong right now.

Byron Myer’s is a super smart dude. He started Inogen, a med-tech business, while in college and took it public in 2014. Now he runs Glimmer Wish with his wife and daughters. He used price theory and price strategy to add tens of millions in sales at Inogen. He’s also used it to scale Glimmer Wish from 0 to over 7 figures in less than a year. 

And this isn’t a “let’s raise prices a bit and see what happens” approach. This is a scientific, mathematical way to find the optimal price to maximize profits.

Why Is your pricing wrong:

  • It’s likely based on flawed strategies like competitor benchmarking or cost plus. Both strategies are ok to start with but do NOT produce your optimal price for total profits.
  • You’re following old customer psychology that states you should always charge $19.99 instead of $19.97 instead of $20 or $22. Often this is incorrect.
  • You haven’t changed the price in over a year.
  • In the current environment if you’re not changing price or running tests quarterly, your pricing is probably off.

This topic will make you more Cold. Hard. Cash. Give it a listen!

Byron:

Everyone is so data-driven on ad performance, right? Or they're doing a CRO experiment and they're just diving into the data. But then again, they haven't looked at price in five years on their main selling product. So take that same mindset you use that you're so analytical with on your paid ads and apply it to pricing because there's just so much value. It's one of the easiest things you can do now that you know that there is a process to do it, to improve profit for your business, all of that profit's just going to flow straight to the bottom line. And it's best for almost every brand out there. I could almost guarantee you're at the wrong price point right now.

Brett:

Hey, it's time for the Spicy Curry segment. The point of the show when I get just a little bit spicy. And how is this for spice for you? Your prices are wrong. Almost undoubtedly what you're charging customers right now is not optimized. And I think the reason for this, and we talk about it in the show, is because we kind of are reactionary with our pricing strategy. We price based on co competitors competitor benchmarking or we use cost plus, but we never look at how does our price impact conversion rate and total volume and total profits. And here's the deal. Mathematically speaking, there's a way to find the right price for your business, the right price that will maximize total profits. The deal, we can't take percentages to the bank, we can't take competitor comparisons to the bank, but what we can take to the bank is cold hard cash. So in this episode, Byron Myers and I talk about pricing theory, pricing strategy, and pricing optimization, that you're going to love it. You got to check it out. So now back to the show. I'm here with Byron Myers and can't wait to dive into pricing and pricing strategy, but I want to hear a little more of your story, Byron. And so you're a longtime entrepreneur, very successful guy. You started a med tech business, then now you got a business with your wife and daughters. And so we're going to talk about both, but talk a little bit about your med tech business, why you started that and what the scoop was behind that.

Byron:

Happy to and just great to be here as well. Brett, this is, you're one of my top three podcasts of all time I listened to on the regular. So love that. It's an honor

Brett:

That warms, that warms my heart. That's better than a fivestar review any day, that verbal affirmation there. Love it. Thank you

Byron:

For sharing that. So yeah, my entrepreneurial journey started back in college, uc, Santa Barbara entered a business plan competition with a couple friends just for experience. Didn't want to start a company, but we stumbled onto a great idea, just completely driven from the market, just trying to solve a problem for a grandmother, and that was a portable oxygen concentrator. So basically made its own oxygen from room air and would replace all of the oxygen tanks that people had to drag around, which obviously have a limited capacity. And again, just all from the market. None of us were engineers. I was a math econ major and so it was another founder and the third was biology. And so we really developed the technology along the way after we had a full understanding of the market. But we launched that company still while in college. Ultimately took it public in 2014 at the peak, our market cap was over 6 billion. Definitely has stumbled since then. But I put in a good 20 years with the company and now actually I'm doing a new company Glimmer Wish that my daughter came up with haircare and skincare. And that has already been more fulfilling, has been more fun, more rewarding personally than taking a MedTech company public. It's just been great to do it with family

Brett:

And that's one of my dreams. I would love to start a business, start a brand, do something with family. We have a small real estate business that a few of my kids and my wife, my wife mostly runs it, so that's fun. But we'd love to do more. Building a business with family kind of fun. And it's great. Even if it doesn't make a lot of money, it's still enjoyable. And so I love the story though of Enogen where most people that start a school project, Byron, they just try to get a passing grade and hope the teacher doesn't call 'em out too much. They're just throwing stuff together. But you built an idea that eventually turned into a real business that eventually iPod. That's crazy. Not very often that that happens for sure. And I know maybe the recent history hasn't been as great for the company, but great while you were there, sounds like, and things do change for sure. I love this topic of pricing and price optimization, but when did you first become passionate about pricing? Was that something that just kind of evolved over time? Was there a eureka moment? Talk about why you became so focused on pricing.

Byron:

Yeah, yeah, great question. And this has really become my passion project now because brands I've just noticed don't pay attention to pricing, but how I stumbled across this at some point along the way in the Inogen journey, I wanted to put some more tools in my toolbox. And so I did the Rady M B A program, which is at uc, San Diego down the coast from where I was in Santa Barbara. And just in one economics class, the professor was talking about pricing just sort of on the side more on a theory basis. But I took the M B A program for my business. I want tools. How am I going to grow my business, make it as successful as possible? I didn't want just the M B A to further my career on my resume. So I saw there that economic theory allowed people to optimize prices by really solving for prices. But in the textbooks it's done with quantity and on a theory basis. So I adapted that to the modern e-commerce seller, which was all on conversion rate and made a bunch of changes and then used it in Inogen and used that process repeatedly year after year to optimize prices. And we improved profit by millions by doing this. And so now I'm doing it in my new businesses and it's working well and I just want to share it with others.

Brett:

Yeah, this is so interesting because I think most people when it comes to price, they're more reactionary. They're looking at what competitors are charging, they just arbitrarily pull something that's kind of what do I think I can get away with? What do I think I can charge here? Rather than being strategic and mathematical and applying pricing theory. And to your point with your previous brand, this was responsible for millions and millions of dollars in profits by improving your pricing model. And little changes in price can have a dramatic impact on profits, but little changes in price can also have a dramatic improvement or change in conversion rate. And so really excited to dive into this topic a little bit, but where do you think most brands get priced wrong?

Byron:

Yeah, I think that probably the most common error is that they just set it and forget it, right? They think about price once and then never look at it again. But the second most common problem is that they're setting prices incorrectly. And I think largely using the methods that you mentioned, they're looking at co competitors. That's competitor benchmarking. They're doing cost plus trying to get their margins to a certain place. But all of those methods, I mean they're great when you don't have any data and you need to launch with something, but once you have data, you need to use a mathematical tool. And to be fair, I just don't think brands are aware that you can mathematically optimize price to maximize margin. I mean, it's not a just arbitrary point. You test and test a few prices one way to do it, but you're not going as far as you can. There's an actual method you can use to get to the right price point. There is a correct price which you can solve for.

Brett:

And it's really great that you said some of those tools, competitor benchmarking or cost plus. It's okay if you don't have data or you got to start somewhere, so you got to start somewhere. But yeah, ultimately is your goal to compete with your competitors or is your goal to maximize profit? Is your goal to get a certain margin on each item? Or is the goal to maximize total profits? Right? We don't live on percentages. We can't take percentages to the bank, but you can take cold hard cash to the bank. And so yeah, you can find mathematically what the right price is. So can you walk us through what does your model entail? How are you weaving theory with practical tools and stuff? So walk us through that a little bit.

Byron:

Yeah, you can really set up a few simple tests, which you need to gather the data, which you would then do calculations with. And you hear a lot of people say sometimes, especially now, just raise your price, see what happens, see if you're better off, which again is better than not doing anything. But I found that many times brands are better off lowering price because you get such an improvement in the conversion factor. And so as you said, it's not about maximizing the margin on a per sale basis, it's the total margin in the business. So what you need to do is run several price tests and pick higher prices, pick lower prices really as far away as you can, 10 20% or more. It kind of depends where your price point is and capture the conversion rate data at each one of those price points.

And there's tools out there to easily do this. Like the simple shop is one where you could see conversion data on a per product basis. You can get it in ga. Shopify doesn't show conversion rate by each product for some reason, but I'm hoping they're going to improve that. But then you're essentially drawing this relationship, which is actually the demand curve. Every business has its unique demand curve, which is also price elasticity. So that's how demand is changing. So in other words, how the conversion rate for your product is changing as the price changes. And so each one will have a different slope, a different shape of that demand curve. And once you have that data, then you can do some real math. And from there it's just an equation. You need some other points of data, but you're just doing calculations to find the right price and not between those test points that you did, but any price along the whole demand curve which will maximize profit.

Brett:

Yeah, it's super interesting. So not just what the prices you tested, but look at that demand curve and the concept of price elasticity. It's brilliant and it does unlock new thought processes and a new level of profitability for you. I remember actually this is one of the areas in college really sticks out in my mind. The price elasticity of demand and understanding that for some things are very elastic. Heart surgery as an example, you need heart surgery. Does it really matter what it cost? You're going to figure out a way. It could be 10,000, be a hundred thousand, be 200,000, you're going to figure it out if you need it to save your life versus gasoline. I don't know, the two gas stations next to each other, one's 10 cents a gallon cheaper. You're probably going to do that. Why wouldn't you 5 cents, even 1 cent a gallon cheaper? If you notice, maybe you would take that into account and that's inelastic, right? And so what you've got to do though is you've got to price, you've got to have enough tests of price to build that demand curve for your business and then you find the sweet spot along that curve. Am I understanding that correctly?

Byron:

Yeah, pretty much. And almost every brand in e-commerce is pretty elastic, which means it will vary. The conversion rate will be sensitive to price changes. And so almost every brand can benefit from doing this exercise. And you need to understand what that price elasticity value is for your business. And then you can find out what the optimal price point is doing a bunch of math.

Brett:

And now that I just said that, did I inverse those? I know what I described was good, but I think I described one as elastic when it was not elastic, and so I didn't want to spell you out. Econ class concept is the same. I swapped the words, whatever. So yeah, demand is inelastic for heart surgery, demand's going to be what it is,

Byron:

Elastic

Brett:

For gas, so

Byron:

Correct.

Brett:

Thanks for not calling me out, but there was something in there that you said, I was like, oh, wait a minute. Yeah, I said that backwards. How many tests are we maybe going to need to run and for how long can help map that out?

Byron:

So at a minimum, you want a higher price point than your control and a lower price point than your control. So you have three distinct points where you're using your control price as well. Ideally I like to do more, but it kind of comes down to the brand's ability to track data, to simultaneously run tests. So you're doing these simultaneously. Ideally, if you're not set up to do that, you can do them sequentially, then you have to take into account seasonality. You have to have some normalization factors that put the data back so you can compare it with the prior data, but that's all doable. This is all better than not looking at price at all. So we're better off no matter what. And a lot of people get all concerned about is the data statistically significant and all that. Of course you can use calculators online to find out if it is and the amount of data you need to run for it to be stat sig and all that. I try not to get too hung up about that because again, you're all better off no matter what, but I tend to run a test for at least one month regardless of the volume that a brand's doing. So ideally you're simultaneously running three different price points for at least a month

Brett:

Would be control, higher price, lower price, run those all three simultaneously, ideally for a month.

Byron:

Correct. Then you'll have plenty of data to do the calculations.

Brett:

And when you're running these price tests, are you mainly suggesting someone does this on their Shopify store or on Amazon or both or does it depend on where they get the most volume in any insights there or does it matter?

Byron:

You can do it anywhere for a glimmer wish. Amazon's doing great for us right now. That is our best channel. And so we're leaning into Amazon. I've done all of the data using Amazon data. You can get to conversion rate data in Amazon, you can change prices, you can do some price AB testing, but you don't need to wherever your most volume, the volume is for your business. I recommend doing the process, but you can do it everywhere.

Brett:

Yeah, super interesting. Cool. And so anything specifically for a Shopify store owner? I know you mentioned can see conversion rate by product. So if we are running a Shopify store, that's where we need to lean into GA or some other tool

Byron:

You can use ga. I use, I think it's $5 a month and no relation on my part, but it's called the simple shop.com and it's just an overlay and it will show you everything you need to know, conversion rate data by product and a bunch of other helpful info. So it's a pretty inexpensive solution.

Brett:

And then you're getting the data, you're running the calculations, and that's going to basically the calculations you run, is that going to give you one price? Is it going to give you a price range? What is that going to spit out for you?

Byron:

It will give you the exact price to maximize total profit. Now, there's two separate processes actually. You can maximize total revenue or you can maximize total profit. And those are two distinct price points. That's not the same price to accomplish both. And so if for some reason you want to maximize revenue, you're valued on revenue, not on profit, it could be

Brett:

An exit and you want to show that top line growth and there's some real business reasons to do that

Byron:

Potentially,

Brett:

But you're going to maximize profits.

Byron:

So you could do that. And I like to do that anyway just to see where that point is. But most brands are going to want to maximize profit, so it will give you the exact to the cent price. Now from there, I recommend doing some fine tuning just math, and then I talk about in a course I have where you can bring in consumer psychology and some other factors where you do want to finesse that mathematical price point a little bit sometimes to just fine tune it,

Brett:

Yeah, get it to maybe end in an interesting number. You do the dot nine 9.99 or 0.97 or 0.67, whatever, what you do in there to optimize. And then you're also taking into account other things like how's this going to impact my sales velocity on Amazon, which could impact rankings, which has a bit of a virtuous circle I guess because it's looking at conversion rates, it is taking that into account.

Byron:

It is, and it's also taking into account in the equations you need your marginal cost, so that's the cost for one additional unit. And so you're not including fixed costs in there like rent and overhead and actually not even including advertising costs, which a lot of people would include, but just that cost really of your product, any processing costs, fulfillment costs. So some of those Amazon fees are going to go into that as well. But you need your marginal cost and eventually you get your marginal revenue from your demand curve. And so to get marginal revenue, you have to do some derivatives. So I don't want to scare people, but there is some math involved, but I have a calculator to make it easy. So you don't have to do all that hard work, but you're setting marginal costs equal to marginal revenue. And that is what is from the textbook that when you do that, profit is maximized at that point. And so it's just how you manipulate the data to get it into the economic theory to maximize profit.

Brett:

Nice. So you need to understand it for the most part, but yet you don't have to run all the calculations yourself, just get the inputs, use your tool, and then it will spit out the answer. Now, once you get that optimized price and it's to the penny, and then you maybe tweak it a little bit to use consumer psychology and things like that and to make it look right after you do that, now how often are we going back and looking to run a test again and maybe change our price or reoptimize,

Byron:

Right? I'd say at least twice a year. And this will depend on a lot of factors, how much volume the brand is doing, if there are changes, competitors coming out, other products launched right now, just the economic environment, so uncertain, I would probably be doing things every quarter because everything, what this process is using is real buying decision. That's why it's so much better than any other method. It's how people are spending money from their own wallet. That's the data you're using. So everything's included, the economic factors going on, large macro factors where your competitors are priced, even using the cost of your product, your cogs, because that is changing as well. So all that data is factored in to these decisions.

Brett:

And man, with things changing rapidly right now and inflation still happening in uncertainty, this process is coming up with your demand curve and it's very possible. In fact, it's almost a certainty that demand curve is shifting a little bit right now because of outside factors, because of competitive factors, because of economic factors. And so running these calculations on a quarterly basis makes a ton of sense. Any other, I know we could get into more of the nitty gritty or break down the formula, but that would be difficult to talk about in a podcast. And so we're going to plug the course. I know you've got a special discount for the listeners. We'll talk about that in a minute. But any other insights on how we should be thinking about price or any mistakes that we left out? Any other general thoughts there?

Byron:

The biggest thing was that I would just encourage brands to look at price mean. Everyone is so data-driven on ad performance or they're doing a C R O experiment and they're just diving into the data, but then again, they haven't looked at price in five years on their main selling product. So take that same mindset you use that you're so analytical with on your paid ads and apply it to pricing. Just so much value. It's one of the easiest things you can do now that you know that there is a process to do it, to improve profit for your business, all of that profit's just going to flow straight to the bottom line. And it's best for almost every brand out there. I could almost guarantee you're at the wrong price point right now.

Brett:

And man, how much easier is it to go out and adjust your price than it is to AB test landing pages or split test your bullet points on Amazon or hire a C R O firm and go through that process? All those I would recommend, I've had recent podcasts, guests and episodes dedicated to C R O and how to improve ux, and that's all valuable, but it's a lot easier to adjust price. And I think we forget how much price impacts conversion rate and then again, how much little price changes can impact profit one way or the other. And one other thing that's interesting about price is it can impact your ad performance, right? I'm a Google shopping guy from the very beginning of Google Shopping, and we see it all the time. Back when we used to do SKU level bid adjustments and pulling data at the individual product level, you could see it, you drop price and Clickthrough goes up and you drop price and more people see the product, you drop price.

And even before any of that happens, Google starts showing the ad more because they know that if the price is lower, more people are going to click and more people click, that makes more money for Google. And so yeah, there are things that shift here, and so it makes all the sense in the world to look at this the right way and also to know that you're probably at the wrong price point. Honestly, this is interesting. This has me thinking about pricing from a service standpoint. So a service model, and actually just to click on that, just this is mostly for my benefit, but I know we have other service providers, other industry people that are involved that are more service-based. How do you apply pricing in a similar pricing model to a service?

Byron:

And you can also apply it in a B two B scenario as well. For an actual product, it gets a little tricky because then you tend to go into quantity rather than conversion rate. But if you a service where you are displaying prices, you are measuring that in a conversion rate scenario where you're probably capturing a lead and then converting that lead. It doesn't matter if there's a Zoom process in the middle of that or a phone call, you're still having the conversion data. I did all this at Enogen using phone sales. It was before e-commerce. So you can apply the process to pretty much any selling environment you may have to make some tweaks. I'm happy to talk to brands if they have unique situation of how they could apply this to their own store SaaS or B two B, whatever it may be. It can definitely work.

Brett:

Yeah, really cool. Let's talk a little bit about Glimmer Wish. So you mentioned it, I know you're running with your wife and your daughters. You have more fun with that than you did your previous business even though the previous business went public. But where did the idea for Glimmer Wish come from and what do you guys sell?

Byron:

So my daughter came up with the idea, she was 10 at the time, and she always wanted these just fun looking haircare skincare products in the store. And then my wife would look at the label and see, oh, this just has all these terrible chemicals in this product. You're not getting this. And so it was my daughter's idea, well, let's make fun products. Kids want these ones that she saw with clean ingredients that moms will approve of, right? Because the clean products were boring. Nobody wants something in cardboard and it smells like lavender or something,

Brett:

Or patchouli or something.

Byron:

Yeah, exactly. So we custom mold, mermaids, unicorns in these fun shapes, these fun bottles, all with clean ingredients. We do haircare products and skincare, and we launched to the market about a year ago, and it's going great, and we're just having a ton of fun.

Brett:

What a cool concept. And I love that your daughter's the one that came up with the idea because yeah, most shampoo bottles, conditioner bottles, haircare product, it's just a tube or it's, it's a cardboard sleeve or something, which by the way, there is a market for that. We have several brands that create clean products and someone who's really interested in avoiding plastics or whatever, they're going to gravitate towards that. But what about kids, man? They want cool products. And it is actually easier as a parent to get your kid to brush their teeth or put conditioner in their hair, take care of self-care if it's fun, if the packaging is fun. But most of that stuff, for whatever reason, I'm sure it's cost related and probably a few other factors, but most of that stuff is garbage, right? It's garbage that you don't want to put on your body or in your body. And so yeah, it's a really cool brand. And I'm looking at one of the unicorn, the unicorn conditioner right now, which is super fun. And I'm also, now I'm looking at your pricing, got me thinking how long did it take you to come up with your specific pricing? And so actually, do you mind if we talk about the pricing?

Byron:

Sure.

Brett:

Cool. So I see some of these, the unicorn shampoos, $22 unicorn conditioner, 22 body wash is 18, mermaid haircare, duos 44. So those are ending in a low number. And I know psychology or some of the teachings in the past were like, Hey, end in seven or higher or whatever. So talk about these prices and how they compare to maybe where you started.

Byron:

Yeah, well, I'm definitely using what we talked about for my own business as well. And like we said, Amazon's working really well. So that's where most of our data is. We're on Shopify too, and trying to grow that channel, of course, but Amazon's about 60% of our revenue, and so most of our data's there. It's easy to test things on Amazon. And so we launched at around $17, $18 and use the traditional processes. You don't have data. So yeah, we did competitor benchmarking, we did cost plus, and our cogs were high when we came out of the gate, so we kind of had to price it up there a little bit. But once we had data, ran the process and found out our optimal price point to maximize total business for the company was around $22. So we went with that. And then once you run that, you implement those prices, then you verify, okay, am I getting the right conversion rate, which the process predicted I would get? And that's the,

Brett:

So you got to go back and check it, right? Process said this price point, this conversion rate, but does that actually happen? So you got to run it and then verify the data.

Byron:

And so we did. And then the fine tuning, that's an interesting point because I think here the consumer psychology has shifted a little bit and it's what happens. Everyone used to price at 1999 would be kind of the price point. And you're seeing a ton of brands now, especially in the beauty space. So I think kind of geared at this audience, which we're in our customer are moms buying the product, moms are buying the product, and they're buying all these other products and related industries. Everyone is moving towards just rounded off, just give me a price, $20, don't say 1999. I think other industries that still works, but the latest trend is to just give me a flat price, even one number that I can take to the bank.

Brett:

A lot of people are saying, yeah, I get what you're trying to do. I know this is a pricing tactic. And so yeah, now people are just like, give me, I want clean ingredients. I want clean pricing. Exactly.

Byron:

Yeah,

Brett:

No

Byron:

Gimmicks.

Brett:

Yeah, really good, really good. Byron, this has been fantastic. You got me motivated to talk price more frequently with customers and take a closer look at that because one of the things we talk about a lot back to the C R O discussion is we run a lot of top of funnel traffic as an agency, a lot of YouTube, a lot of Google shopping, a lot of search and more. And so we love conversion rate optimization companies and specialists because if you can improve your conversion rate a little bit, now that changes the economics of your top of funnel campaigns. Now we can go harder on YouTube and we can push performance max more and we can grow the business. Same is true though with price, we start to get more profitability or we optimize price for conversion rate, which leads to profitability. Same thing. That has an impact on top of funnel lines. I know I mentioned Google shopping a little bit ago, but it has an impact on all your ads. So big fan of this. So for those that want to check out the course, how can they find it? We'll link to it in the show notes of course, too, but how can they find it? And then I think you got a special deal for everybody as well.

Byron:

Absolutely. So the course is profit professor.io, go check it out. It's just my passion project, just trying to help people and definitely want to do a discount for your listeners, 50% off what we can do. Just use code O m G

Brett:

Code O M G, and that's at Profit professor because he's taking you back to school. But he doesn't in a polite way, even when he is a guest on your podcast, if you make an error in describing something, he'll kind of let it slide and be gentle about it. But a profit professor, really, really good stuff. So use that code, omg, get 50% off, I think impossible for this not to pay for itself and not to help you tremendously so likely. This is a lever you are not pulling either not pulling frequently enough or not pulling in the right way. And it's another way to optimize your business. Byron, so glad I had you on. This is really, really good. Can't wait to share this with the e-comm world. And any parting thoughts, anything you want to share? I'll also shout out to girl dads out there like myself, I got six daughters. I got to go buy some unicorn shampoo now. I think that's going to make some people very, very happy. But any other asks, tips or anything to close on?

Byron:

Well, as you're looking at the course, just know I'm available. I want to help people. And I love just connecting with brands too. If you want to reach out, hello, at profit professor.io is the email address. Happy to help you through the course or just talk, see how we can help each other. We're all in this together. So I want to thank you too, Brett, it's been an honor. I love the pod. I listened to every episode and it's just been great to be here

Brett:

Now. It's going to be both super exciting and potentially a little bit weird to hear yourself on the podcast.

Byron:

Absolutely.

Brett:

But you did a great job, really informative. Love this. Can't wait to share clips and share the whole episode. So Byron Myers, ladies and gentlemen, Byron, thanks for taking the time and we'll have to do this again sometime.

Byron:

Sounds good. Thanks a lot.

Brett:

Awesome. And thank you for tuning in as always. We'd love to hear feedback from you. What would you like to hear of on the podcast? And if you haven't done it so far, we would love that five star review on iTunes. It helps other people discover the show. And with that, until next time, thank you for listening.

Episode 254
:
Brett Curry - OMG Commerce

7 Ways to Supercharge Any Ad

Why does one hook work and another flops?

Why does one offer get customers clicking and buying and another offer get’s only a shrug?

How can you know BEFORE you spend money on an ad if it’s likely to convert?

Today’s episode is a recording from a recent talk I gave at Ezra Firestone’s Blue Ribbon Mastermind.

I break down 7 ad tests guaranteed to make ANY ad better.

Follow these tests and your ads will have more stopping power, more engagement, and drive more ACTION.

The visuals do help with this one, so watching on YouTube might be a good idea, but the audio sill captures most of the value.

Here’s a breakdown of what you’ll learn:

  • How to tell if your ads differentiate your product ENOUGH from the competition
  • A test that great standup comedians use that applies to your ads as well
  • A test that’s best illustrated using a cat, and one that’s best identified using a donkey. Any guesses what these tests might be about?
  • How to handle lingering objections
  • How to tell if your ad has the power to motivate your prospects to take action
  • Plus more!

This presentation was super fun for me. Hopefully you’ll find it entertaining and helpful!

Transcript:

Brett:

Well, hello and welcome to another edition of the eCommerce Evolution Podcast. I'm your host, Brett Curry, CEO of OMG Commerce. And if you've been in this industry for any time at all, you've wrestled with questions like, why did this hook crush it and this hook completely flop? Or why did this ad scale to the moon and this other ad that seemingly was similar, completely fizzled out? And what if you could know ahead of time if an ad was likely to work or not? And so this episode is a recording from a recent talk I gave at Ezra Firestone's Blue Ribbon Mastermind where I talk about seven ad tests to run before you spend money on your ads. Another way to look at this is seven ways to supercharge any ad. It's a ton of fun. Hopefully it'll be entertaining and engaging as well. And I think whether you're running display ads, Facebook ads, YouTube ads, TikTok ads, this will apply and help make all of those better. So please enjoy my presentation on Seven Ways to Supercharge Any Ad

Brett:

Thanks to Jeremiah and thanks to Chat GPT as well. That was interesting. So fully embrace that, whether it's scaling a business or scaling a family, I'm comfortable with both. So you got questions about either I'm your guy, we can dive right in. So really excited about this presentation and I'm excited about it because we're going to be talking about the part of marketing that I love the most and really the reason why I got into marketing. Now for most of my career, I've done really nerdy stuff. SEO, PPC, feed optimization stuff that will literally put you to sleep. But we're going to talk about today, the fun stuff. So we're going to get into the psychology behind marketing, and I think these seven, Molly Pitman's excited who here likes, who legitimately likes the psychology of marketing. White people buy white people click on one ad and not another ad.

Why do people laugh at one joke and they don't laugh at another joke? And so we're going to dive into that, and I think this is super important for a couple of reasons. But first, how many of you guys are writing your own copy? I bet it's actually not very many, but curious. Okay, that's a decent amount. That's actually surprisingly more than I thought. So I do think over time you guys will probably, as you scale, you'll write less of your own copy, right? You'll hire a team, you'll utilize chat, G p t some. How many of you think though the chat G p t could write like a killer video script right now? Yeah. Okay, that's so few of you. I think it could be like okay-ish, right? And it's probably going to get there. But whether you lean on ai, lean on your own team, lean on freelancers, whatever the case may be, I think these seven tests will help.

Does this ad have the power to stop someone in their tracks to get them interested, to get them to say maybe to get them to click? I also think some of these tips apply beyond marketing, even to presentations and speaking in front of groups. And so hopefully we'll have some fun and we'll dive in. We'll maybe do some q and a at the end as well. And then this will be slightly nerdy, but I'll go pretty quick. So if you'd want to skip the nerdy stuff, it'll be over before you know it. But five growth tips you're likely missing from Google Ads. So we'll dive into this. And also this will be a great teaser because on May 22nd, I believe May 22nd is the big day smart Google Ads is going to be released. I know Victor's excited, Molly's excited. So my team and I, two members of my team and myself, we crafted really a full Google Ads course, search Performance Max, YouTube, we lay it all out, it's available to you as a Blue Ribbon member.

So that launches on the 22nd, and this will be kind of a good precursor, warm you up, gets you excited about that course. Now I have had the privilege of working with some pretty awesome brands like Native and Boom and Overtone. And so we run all the Google, YouTube, Amazon for boom and Overtone. We spend about a hundred million dollars a year on ads across platforms. And so I've got this unique perspective where I'm not writing a lot of copy either. I'm still working on strategy a little bit for some of our bigger clients, but I can see lots and lots of data. What video ads have the best view rates, what ads have the best conversion rates, what landing pages work? And I think these tests will work on landing pages as well. We do have a team of 73. We're in the top couple percent of Google ad agencies and same on Amazon.

So let's get started. Test number one, I think this is one of the most important, and this applies to videos, emails, landing pages, I think presentations, you name it. So this is the Scratch Out write in test. So this is how you know your ad fails this test. If you can take your ad as it is, remove your name and your branding, add in a competitor's name or branding. If the ad still works, it's not a good ad. If you can take the ad just like it is, remove your name, add a competitor name. If the ad still works, it's not a good ad. So the ad really needs to work for you and only you. So this is not like every individual element of the ad, but this is the ad in its entirety. So this ad should really communicate why you are unique.

So a couple of good examples. So this is native, native deodorant. This is an ad that's a couple years old now, but 50,005 star reviews. So lots of other natural deodorant companies, especially at this time, but very few could make that claim. 50,005 star reviews and growing. So they had a lot of the same benefits, a lot of the same features, a lot of the same things going on, but this social proof element was really unique to them. Nobody else could claim that amount of social proof. We all know Purple Mattress. What are just the most iconic video ads made by the Harmon brothers? So this whole ad, how many of you guys have seen the raw egg test ad, the purple raw egg test ad? That's actually fewer than I thought. Okay, so five seconds. Basically they're proving the comfort of the mattress that it will cradle your pressure points.

And the way they prove that is this 300 pound sheet of glass drops onto the mattress, raw eggs are underneath it, and the mattress cradles the eggs. The eggs do not break, proves the mattresses next level. So the whole ad is built around. This is a mattress unlike any other. Every other mattress fails this test. So this definitely passes the scratch out, right in test. Really no other mattress company, at least we're led to believe no other mattress company could pass this test. Now here's another example and I already have a thumbs down on it, but how do you feel about this ad? Our science, your comfort? Does that ad pass the scratch out right in test? Could another mattress company run that same ad? Could another brand like a chair company or almost any other brand related to or product company that you sit in or feels comfortable, maybe even apparel could run this right now.

I will say if that ad is used for remarketing, if it's used to remind if it's used, it's targeting someone that we know has seen the raw egg ad and now we're just reminding them and getting them back in, then maybe it's okay. So another principle that's really important is as we look at these seven tests, we either want our ad to pass the test or there needs to be a strategic reason why it's okay that it doesn't, why? And so we need to be thoughtful about why the ad doesn't pass the test. So this ad doesn't pass the test, but like I said, for remarketing, or in some situations it may be okay, alright, we're not going to watch the video. This is boom. So three sticks is all you need. So this is the boom stick trio, and essentially this will replace your whole makeup bag.

So does that pass the scratch out, right end test or does that fail the test? How many think it passes? Hands up for passes? How many of you think it fails? Yeah, so it passes, right? Because I don't know any other brand that I've never seen this before. Three sticks to replace your whole makeup bag, three sticks of this unique product. And if you have those, that's all you need. So passes the scratch out, right in test. Let's talk about this one. This is the align. This is a probiotic gut health probiotic. So welcome to an Align gut. You got a lady relaxing in a pool, she's living in bliss here. Number one, doctor recommended probiotic brand. So first of all, how many of you, if you saw that ad, how many think you would click that ad? Yeah, nobody. Anybody here an avid probiotic user?

How many of you guys are using Rocking the Probiotics? Okay, that's a pretty fair number. Do you think this ad passes the test? Does this ad pass the scratch out right in test? How do you think it passes? Monica's like, I'm going to scratch the back of my head. I don't know, maybe I'll be ready. So nope, nobody's feeling good about this ad. I think this ad is maybe close, right? The headline, anybody could say that, right? You drop the line, you throw in any other probiotic brand and you can say welcome to the whatever gut. Now the number one recommended probiotic brand by doctors, that is potentially unique. I don't know how much we believe it, but it's potentially unique. So what would be better is maybe to key in on that, right? That headline is sort of a throwaway headline. The graphic is sort of a throwaway graphic in my opinion.

How could you bring number one recommended to life? And how could you uncover why? Why is it the number one recommended brand? Is it gentler on the stomach? Is it easy? Does it work? Is it more efficient? Why is it more doctor recommended? But I would lead with that as opposed to picture. And welcome to the Align gut. So scratch out right in test test number two, the shrug test. We've all heard it said that the opposite of love is not hate. The opposite of love is indifference. And the worst ads are not the ads we hate. The worst ads are the ads that we never see, the ads that we never pay attention to that never make us give it a second look or a second thought or anything. So looking at your headline subject line, the top of your product detail page, does it pass the eh, I don't know.

It's the shrug test, right? It's the meh test. So we'll look at a couple of these. I was served this ad recently, mother's Day, which is cool. Anybody here need the reminder that Sunday is Mother's Day? Because yeah, me too, Matt. I was really glad this was a terrible ad, but it did serve as a good reminder that, oh crap, I need to buy a Mother's Day gift in Pronto. So I don't even know what this ad means, but the gift, it's her. Okay, I'm going to tell that to my wife. I'm like, Hey, you are the gift, babe. So seriously, I didn't buy one. You are one. And so the gift, it's her. And to the almost perfect moms, I don't know what this is. I don't know if we're buying the necklace that's on a cake. Is that an earring? Is that a cake decoration?

I don't know. And I only looked at this ad longer because of this talk. If it hadn't been for this talk, I would've just blown by this ad and kept on going. So this is kind of like a, I'm shrugging because I'm confused, right? Sometimes you shrug because you don't care and then sometimes you shrug because you're like, I don't want to work to figure out what you're trying to tell me. So the shrug test, this is also a kind of related piece, is the, well, I would hope so, right? You make a claim, you say something. This would be like a restaurant saying, Hey, we're not going to serve you cold food when the food shows up on the table, it will not be cold mean's the least you could do. That's what I expect. Well, I would hope so. Or kind related as things like fair, honest, reliable, some of those things that we're probably not going to give any credence to initially until we know you.

And so better just not to say it. So the shrug test, does this make someone shrug or just they miss it all together or does it make them say, well, I would hope so. Next test. Love this one. The authenticity test. And this is really important and this is one where you probably need to get opinions from a few different people if you're running a big campaign or something. I do think, and a quick side note, sometimes it's good just to test ads. You need to, speed is important. So we're testing headlines, we're testing copy, we're testing subject lines, we're testing display ads. But for bigger campaigns, you're making a big investment, you're making a big push. You need to really think about this stuff. Or at least as you're analyzing later, look at maybe why something did or did not work. But the authenticity test.

So this is where we're asking do I really believe that? So you said that I'm seeing this in the ad, I'm watching the video, but do I believe it? Do you seem and feel authentic? How many of you guys feel like you got a really good BSS meter? Your gut on someone else is really quick. So how many you guys are involved in hiring for your company? How many of you know in the first two minutes I don't trust this person? And they haven't even said, yeah, it happens. And we even had this recently in our company, we're like, oh no about this one. But we kind of played it out and it turns out the gut was right, right? We are usually pretty good. Our BSS meter, our trust meter, our authenticity meter is pretty highly tuned and we need the trust of more.

And so just know your prospects. Your customers probably aren't thinking about it, they're not thinking about you anyway. They never were, right? They're not thinking about your ads, they don't care about your company. So they're not thinking about believing your claim unless you really do some of the things we're going to talk about here. So do I believe it? I want to throw some props to ridge wallets. You're going to get to hear from Sean Frank in just a little bit. But as we look at this, especially now, it's really hard in my opinion, to create a good display ad, right? A display ad that actually gets someone to stop and pay attention and stirs up some emotion and convince us and stuff like that. It's pretty difficult to do. But this ad, the wallet redefined and you guys were the first in this category, or at least the leader titanium wallets, R F I D, blocking indestructible lifetime warranty.

So the wallet redefined, we see this wallet. This is the opposite of the, do you guys remember the George Costanza wallet? How many Seinfeld fans do we have in the crowd still? Like the best show ever? Yeah, Jacque's with me on that. So this is the opposite of the George Costanza wallet, right? The big fat thing throws your hips and your back out when you use it. And so the wallet redefined three colors or three materials, 10 plus colors, lifetime guarantee. I think that feels authentic, especially if you are in the market wanting to take a look at it. I believe that at least enough to look a little further, I believe in enough to say, okay, I'll take a closer look. Simply safe. I loved when these guys first launched. Anybody here listening to Sports talk? How many sports talk radio fans do I have?

Wow, me and Craig Hilly. Okay, a couple guys. All right, good, good, good. I remember for a while they were like Dan Patrick, a lot of the other sports talk hosts and they were saying things like, Hey, you set this up yourself so you get the shipment, you set up the system yourself. No long-term contracts, easy security. And that was the real pitch. And in my opinion, I actually did some work in the security business a long time ago. That was the differentiator, right? You choose a d t or somebody else, they come in and they install stuff, it's expensive. You sign like a two year contract. It so simply say, well hey, you set it up in 15 minutes and no long-term contracts. Now as you look at this, what are your thoughts? Do you believe these claims faster? Emergency response. Do you believe that?

Not believe that or not care? How many of you say you believe that A little too good to be true? Yeah. And also how many, and let's talk about this. What do you think are the reasons someone buys a security system? Why is somebody buying a system to put in their home? Yeah, maybe something just happened, neighbor had a break in, they had a break in peace of mind. I want the security. We're traveling, kids are home. We want to make sure that they're safe. Maybe, but is that the security system? Is that why you're buying the security system, right? I want to choose the system that gets the cops to show up quick. I don't know. I would argue that's not why people buy a security system. People buy a security system because they want to feel peace of mind. And something just happened recently.

And so you're almost creating doubt with this headline. You're almost like raising some other objections that maybe aren't even there that where I'm pitching that the cops or the fire department will show up quicker when I was like, oh yeah, maybe they won't show up. Maybe that is a problem. I should have thought of that, right? Where really the pitch of this thing is you install it yourself. No long-term contracts, easy protection done. You don't have some slick salesperson coming out and people drilling holes in the wall to put up the touch pad. It's easy, but that's not what this says. And really under a dollar a day isn't very impressive either because most security companies are 30 bucks a month or thereabouts. So I think this ad misses the mark. I don't know that I really believe it and actually it kind of creates a little bit of doubt in my mind.

Test number four, the curiosity test or the tell me more test. Now the reason I like this, so two ways to think about this. You can run an ad that's strictly a curiosity play where you're telling very few details. You're really just trying to stir something up and get them to click to find out what's up. But there's another point too, where you're kind of just leaving the prospect wanting more. And that's a good bit of advice if you're performing or singing or whatever. You want to leave the audience wanting more so they come back for more. Because really the goal of an ad is to get someone to say maybe to get them to look at your ad, to consume it and to say, maybe this is worth my time. Maybe I should click it. Maybe I should check out, maybe I should sign up for the email funnel.

Maybe this is what I need that will solve my problem. So the tell me more or the curiosity test. Couple of good examples. I'm always blown away by native ads. We're actually doing, we're running native ads as kind of an alpha test right now. We'll see how it goes. I was blown away by the randomness of the picture. Anybody ever scroll to the bottom of a Yahoo article and you're like, what? Are these pictures related to these headlines? I don't get it, but this one I've seen a lot. So that's kind of a sign that it must be working, but don't borrow money if you own a home, do this instead. In parentheses, it's genius. And that little parenthetical phrase, it's genius. You're like, well, if it's genius, I want to know. And I do buy and I do own a home and maybe I do want to borrow some money.

So now I'm going to click. I don't understand this picture. That dude looks angry and she looks like she's not concerned about financing. She's interested in something else. If I was to make an assessment, but this is purely a curiosity play, right? You see this and you're like, okay, I just got to know. I know what your little genius trick is here, so show me. And so this will likely get clicks. I love this ad Zipify pages. Shout out to Lauren, represent Kevin. Yes, sir. So eight easy fixes to improve your Shopify product pages. How many of you would look at that? I'd be like, okay, I kind of want to know how many of you want to know what the eight tips are? You see that and you want to know what the eight tips are. Anybody here? I don't care about these. A lot of you don't want to raise your, so you look at that and you're like, yeah, I would like to know.

I would like to know what these eight tips are so that I can apply them to my business. Has this ad been pretty successful, Lauren, or do you know? Yes, I've seen it quite a bit. And Jeff just, he's got a funny look on his face and it's all pointing to the headline. It just works. I like that ad a lot. I see these guys a decent amount of Fisher Investments. Blunder number 10, mismanaging retirement withdrawals. And so this was looking at, hey, if you've got over $500,000 to invest, we are your group, we're the solution for you. And so has anybody ever seen these ads before anybody been served? Fisher Investments? Yeah, I see 'em a decent amount as well. And so if you click and I always click on good ads just to kind of see where I go from there. Their landing pages are great.

You're basically just getting some free reports and basically like this is blunder number 10. What are the other blunders? What are blunders one through nine? What are blunders 10 through 20? If there are those blunders? So you're left with some curiosity and you want to click and you want to find out more. So passes the curiosity test. So next one, this is really important. So this is where you got to think about, hey, what are all the reasons someone says no to my product? Why do people not buy what I'm looking for? And actually I heard a great way to discover this. Who's using post-purchase, post checkout surveys or post-purchase surveys? Jeremiah has got a few people here. You can find some amazing information there. One of my favorite questions that I can't remember who told me about this, but the question is why did you almost not buy today?

So someone purchases and you ask them, Hey, why you weren't going to buy? What would've kept you from buying? And you'll likely get some key objections there that you can then better overcome in your ad copy and your videos, things like that on your landing pages. So lingering objections, if there are still objections that are hanging out, people will not fully take action. So let's look at some examples. So look at all the reasons why someone would say no to buying our product. And then let's address each one and overcome those. This ad does have a lot going on, but there's some really positive elements. This is Huel pasta versus instant noodles. This is targeting health conscious, busy people, likely busy professionals. So both of these are same prep time. How many of you guys grew up on ramen? Either ramen in college or ramen as a kid?

Dude, I used to love that stuff. Drop an egg in that and it's pretty fantastic. I do want to live past my sixties, so I don't consume it anymore, but it's pretty good. But this fuel pasta, it takes the same five minutes, but it's got 25 grams of protein, vitamins a lot. I kind of like that sometimes. One of the ways to make you feel more authentic rather than trying to prove things more. So there's a couple Legos you can take. You want to be authentic and you want to prove something. You can either go deep on the science or you can actually just kind of crack a joke about it and you can kind of be funny. You need to still back it up with something. But I actually like this vitamins rather than listing it all out. They just are like, it's a lot of vitamins, too many to talk about in this ad.

And then it also talks about, hey, 21 meals for only $3 and 76 cents per meal. So it's not the 10 cents that ramen noodles provides you, but you're getting actual nutrition. It's a good meal, you're going to feel better, your body's going to thank you and that type of thing. So it's got the ideal amount of protein, fats, carbs, fiber in all 27 episode. So this ad is really aimed at let's overcome objections. What are the reasons someone would not buy this? And let's overcome those and get the click. Also like this weighted blankets. Who here likes weighted blankets? Who here hates weighted blankets? I am with you. I don't understand. I got to kick the sheets at a hotel Untucking stuff. I want light pressure on my body. I like one leg out. Sometimes weighted blankets. Sounds awful, sounds horrible, but it's a trend. It's the thing.

I know a lot of people that love weighted blanket, but I have heard they are hot. I will never know because I will never try. But this says, Hey, are you a hot sleeper? Try our cool max weighted blanket, right? So is, I don't really know what cool max means, but it's trademarked, it's got a special name. It talks about me being a hot sleeper. I would like to find out more and you overcome maybe my number one objection to buying a weighted blanket, the fact that they are hot, okay, the physical reaction test. I love this one. I think this is one that you need to think about in all aspects of communication. This will make you better. So how many fans of the office do we have? So BJ Novak, what was his character? I just totally lost it. Yeah, Ryan, of course.

So he was one of the primary writers of the show. I dunno if you guys know that, but I heard him on a podcast and he said, and he did a lot of standup and stuff. He said, good standup causes a physical reaction. And this is something that comedians are watching all the time. I know the guys at Raindrop work with comedians a lot comedians are watching the room and they're watching, Hey, when I say this, when I deliver this joke in this way or at this time, do people move? They have a little lean in or some kind of physical reaction. If not, we got to work on it. So one of my favorite jokes, I actually use this on my kids, they didn't like it. So I have eight kids. So anybody here like Jim Gaffigan, the comedian, love that guy. So he's got five kids and he said when they knew they were going to have their fifth, he sat his other four down and he said, listen, we're going to have another baby.

And I just want you to know, this does not mean that I will love any of you any less, but I'm going to have to let one of you go. It's just one of those. I remember hearing it and I totally had the same reaction, totally leaned in and lost it. My kids did not think that was funny, but I keep telling it, I like it, but it needs to have a physical reaction. So I remember I had this friend once and you would say something and he would look at you with a deadpan and be like, oh, that's funny. Like I don't think you think it's funny because I'm looking at you right now and you're not reacting. You are not showing me any signs that you think this is funny. So a physical reaction. A couple of examples actually, I knew the Raindrop guys were going to be talking a little bit.

This is a Dr. Squat commercial. Anybody seen this one? This is for the Dr Squat cologne ad. And so they're saying Cologne ads are, I'm using an example here from Raindrop. So I had a physical reaction when I saw this part of the ad, so we can play it later, but this is an ad for Dr. Squash and they're talking about how aren't cologne ads weird? And it's showing this man doing all this great and then he just eats raw mayonnaise, just plain mayonnaise. And you have a reaction to that visual, right? You kind of wince or you lean in, you're like, ah, what's going? And then you can't stop watching after that point, after you have the physical reaction, you can't stop watching the ad. And so one thing that we like to do, this isn't always easier, always possible, but I like to show ads and then watch people's reactions.

And so we've done this before where have people in a conference room just play the ad, don't say anything and just watch people. When do they lean in? When if it's a joke, do they actually make some kind of movement? Do they wince? Do they move? When are they reaching for their phone? You can kind do this yourself too. I like to just try to be aware of where I am as I'm watching a video. When do I start thinking about something else? At what point in the video do I start daydreaming or think about, oh, I got to actually check this email, I got to do this thing. Like, oh, okay, that we got to fix that part of the ad, it lost me and this is my ad, right? This is for our company or whatever. And I started to drift in this part.

So your ads should cause a physical reaction because without emotion we don't take action. Without emotion, you really can't get someone's attention and then they for sure won't take action. So you've got to stir up some emotion. And the physical reaction test is a good one. Alright, number seven, the Missouri test. What's actually crazy? So the longest time Brewer and I at Chris Brewer, my business partner, co-founder of O M G, we were the only Missouri peeps in blue ribbon. And then I'm hanging out with the folks at this table, Amber and Ben and Emma, and they like, where are you guys from? They said Branson, Missouri. That's like 45 minutes from where we live. Crazy small world. We know a lot of the same people, it's wild. But Missouri is a unique place. We are the show me state and also our state animal is the mule, which is super, super charming and something we're all very, very proud of.

The jackass is the state animal of Missouri. So the show me test though is this is where any kind of claim you're making, anything you're saying you really want to show it rather than just tell it. So if you don't show me, I probably won't believe you. That's the idea behind this test. So when it comes to claims, you got to show us. So great ads show rather than tell before and afters are great. So this is one from a lawn care company. This is actually Sunday I think. And this actually is a display ad, but it's a video ad and you've got this guy who looks kind of like the sham wow infomercial pitchman up in the upper left corner. It's got the before and after, it's showing old Batman words like bang, pow or popping up as it's showing the before and after.

But it's really showing the results, right? Showing the before and after, which is super powerful. I think you can also, and I wanted to use display examples. One because they're easier to show and they're faster to show, but also I think it's harder to show something in action in an image ad than it is in video. But these are some really great examples. So here's awesome shoe company, but what better way to show this is waterproof, wear it anywhere and then just show it actually in water. And maybe I've even seen some of their ads where part of the shoe is fully submerged, the water goes up to half of the shoe. And so you're saying, Hey, I see that this is a waterproof shoe, I like this one too. So stuff like socks, how do you show socks in motion or how do you show that you got a wide variety of socks or how they fit or how they look or the fact that they're stylish.

I really like this. It's laying out various colors, but you also got to do a foot model as it were here showing off the socks. So this was pretty great. There was this one company we did some ads for and they were actually a lawn care company as well. And so with this company, I was convinced that before and afters would be the winner. So this was another lawn care company showed the lawn before the product showed the lawn after the product. But actually that is not the image that won almost ever. And we did this test and the ad that won was an ad of a dude's hand with the product attached to the end of a hose and he was spraying. So that image worked better than before and after images almost every time. Now I just said that before and afters are great, and I just said that showing is important.

Does anybody have any theories? We've got a theory, and I think this was proved out as we ran some tests, but any thoughts as to what that image was showing that maybe the other one wasn't? Why would an image of just a dude holding a bottle in a garden hose, why would that work versus before and after? So there likely was some confusion, and we actually heard this from a few people. If you show before and after, it could be a service like, oh, I need to hire a lawn guy, right? Yeah, Jacques, it looks like guns are cool. Guns always make, yeah. So I agree with, I never thought the gun thing, but I like that it does look like a gun. But that's what we're convinced of as we started looking at other ad copy and combination things that were working, is it communicated that it was easy?

Like, oh, I can stick something on the end of the hose and go stand out in the yard. I can do that. I don't know what they had to do to get that before and after. Or was that like you hire a gardener, you spread seed, you do all these things, what kind of work did that take? But the image of just the dude holding the spray bottle, it worked. And so you do have to show, and that goes back to the objections. What are those hidden objections? They're going to keep someone from clicking. Are they confused? Are they shrugging? Are they not caring? And then how do we show the real benefit and how do we show someone why they should take action? And so we really do like this too. We like testing, and I showed this at the last blue ribbon, a mix of unpolished U G C cut for length, like cut.

So it's real punchy and just shows the benefit, but they'll also showing that with polished photography and videography, that works really well. So let's dive in really quickly. So we got about 10 minutes. I'm going to go rapid fire through five growth opportunities that I bet you're missing on Google and YouTube. So maybe you're doing some of these, but I bet you there's at least one that you could be using that you're not. So let's dive in right now. Number one, Google ads to Amazon. How many you guys are selling on Amazon right now? Amazon Business. How many of you? Amazon is more than 30% of your total sales? More than 50? It's a few. Okay, cool. So here's crazy, and this did not make sense to me when I first heard it. When I first saw it, I had to look at the data to believe it, but there are a ton of people who want to buy on Amazon.

Their plan is to buy on Amazon, but they still begin their journey on Google. And so for some people, maybe your parents, the internet starts with Google. That's where everybody starts their search. So we've looked at this now several categories, millions of searches a month of people on Google typing keyword on Amazon. So bedsheets on Amazon comforters, Amazon water filter, Amazon, but they're starting on Google, which is crazy. And so the interesting thing about running Google ads to Amazon, and it's also one of the sneaky things that Amazon does. Amazon runs ads too, right? And Amazon's number one source of traffic is Google, right? Amazon gets more traffic from Google than anywhere else, and Amazon is the number one advertiser on Google. So no one spends more money on Google p p C than Amazon. But here's what happens. So if Amazon is running an ad for let's say water filters, someone's searching on Google for water filters, Amazon, you click on Amazon's ad, it leads you to a category page that is full of Amazon's ads, right?

Ads that Amazon is charging other sellers. So Amazon is really playing some arbitrage here where you click on an ad on a Google ad that Amazon posted, they're paying Google for that, but then when you land on a page, you're almost certain to click on one of Amazon's ads and now they're making that money back. And so what we found is we've got some advertisers that are spending a thousand, $2,000 a month driving traffic from Google but bypassing all their competitors and going straight to their product detail page or their storefront. But we've seen companies spending a couple hundred thousand a month on Google ads to Amazon. And so this isn't the key to growth on Amazon, but this is something that likely your competitors are not doing and it's something that can add a little boost to your Amazon business, but it's a way to leverage Google.

So Google to Amazon ads, I really like that strategy. It's something we can talk more about if you are interested in knowing more. Also love this. So we work with bigger brands and I really think the trend right now is going omnichannel. And that seems weird to say because omnichannel was a phrase thrown out in the early two thousands I feel like. But most of the bigger brands we work with are D two C, Amazon and other marketplaces, and now trying to go retail. So trying to get into retail stores. So YouTube actually has some pretty unique opportunities for you trying to drive sales to retail stores. We did this with Native first when they were rolling out into Target and then into C V s where we picked some key markets, do some geographically focused YouTube campaigns, and you can run those to display on mobile and on desktop and also on TVs.

And then they've even got a few tools, they're not necessarily great, but a few tools to show how many people actually show up in a store after seeing an ad. But you can also just measure things like store sell through, but using YouTube to drive in-store purchases likely something you're missing. And if you're selling in physical stores, could be valuable Shorts for remarketing. Okay, I'm very bullish on YouTube shorts. How many YouTube shorts fans do I have just as a viewer? Are you watching YouTube shorts? They're pretty great. And so we've been wondering what kind of ads are going to work on YouTube shorts? Is it the traditional longer form video ads we see typically working on YouTube or is it something different? YouTube shorts have to be a minute or less. What we're finding is that ads on YouTube shorts are fantastic for remarketing and the style of ads that are working are more like TikTok style, Instagram reel style, a lot of influencer content still want to cut it up so that it's really hitting on all the high points, all the top points.

But we've seen this now for a couple of bigger brands where we are, you can't exactly target shorts, but you can kind of funnel the traffic there and then you can see if the traffic is truly YouTube shorts. But some of the lowest C P A campaigns we're running for bigger brands are remarketing campaigns using YouTube shorts, mostly beating traditional YouTube when it comes to remarketing. So shorts for remarketing, that is a winner. Discovery ads for reorder. This is something that we audit hundreds of accounts a year and everybody's running remarketing, but almost nobody's doing really well and almost nobody's running good loyalty campaigns. So thinking about when does someone win? Should someone reorder my product and let's run a discovery ad to get them to do that. So discovery, their display ads that show up on YouTube Gmail, mostly just on Google properties. So really great ad inventory and usually very, very effective.

So discovery ads for reorder. Let's talk about, I'm going to throw out a controversial topic and it's okay if we have massive disagreements in this room. We can carry on a debate later. How many of you hate running branded ads? How many of you think bidding for your own and this I promise is not a trick. How many of you think bidding on your own product name is almost criminal and you sort of hate Google for it? Anybody you hate paying for your own branded name? What's that? Oh, you can ask Ryan what he just said a little bit later. So yeah, this was like your brand, right? So why am I paying Google? How many of you view it as like, no, it's a necessary evil, it's good, I'm willing to invest in my own own brand. That's several of you and some of you're like, no, I still think, I think this is a trick, so I'm going to hang out.

So I actually think that both of those are true At the same time, I think that paying for everybody who searches for your brand name and clicks on an ad is nuts, right? If you have to pay for every single click and try to maximize your visibility there for every single person, I think it's kind of crazy because you likely would've gotten some of those clicks organically. But you do need to look at your product detail page or you do need to look at the search results page rather. You may be having lots of competitors creeping on you, and if so, then you have to be a little more aggressive than others. Talked to Peter Goodwin, groove Life. We were looking at a SERP for his brand and he just dominates every conceivable area. He's got videos, he's got five pages, five different listings in the organic.

He's got the knowledge graph, all the Google shopping everywhere, everywhere. There's no other competitor there. He could probably back off a little bit on branded search and be ao, okay, for other brands, I've seen this with some apparel brands where you type in this name and there are competitors everywhere, and I promise you there are some people that see your ad on Facebook or see your ad on YouTube and they're just sort of interested. And if they go to that serp, because that's usually what people do, they see an ad, they go to Google search next. If they see another more attractive competitor, lower price, better offer, better reviews, they are likely to do that. So here's what we like to do. This is where we separate brand campaigns into two main categories, what we call brand N C A or brand new customer acquisition and brand loyalty.

So you can look at anybody that's bought from you before, sign up to your email list, even visited your site before if you want to be that detailed and you can put them into a separate campaign bucket and you can say, Hey, I want to bid for efficiency, or maybe I don't want to bid at all. If somebody has done any of those things before purchased from me in the past, maybe I don't want to bid at all, but if someone has never purchased from me before or if they've never really interacted with my brand, I do want to bid on that shopper because there's no guarantee that they're fully sold on my brand yet. So that's one pretty easy, simple way. Does say a little work to set up, but separating out brand loyalty, repeat customers from new customers who have not purchased yet. So I think that that is a place you can find some efficiency and get better performance from your account if you treat brand a little bit differently. Friendly.

I was going to do q and a and we do not have time for q and a. Do have a couple of free resources though. If you scan that QR code, we got our top YouTube ad examples and guide, got some Amazon guide, some other free resources that will help you grow through Google and YouTube and Amazon and all of that. Also, happy to chat. You want a second look at your account. Want to talk about struggles you're having either on Google, YouTube or Amazon? I'm here. My business partner, Chris Brewer, Flamingo Shirt, can't miss him right here. He is. Happy to chat as well. Couple podcasts, spicy Curry and E-Commerce Evolution. Been doing E-commerce evolution since 2017. I feel like that's a little bit like OG status for as far as podcasts go. So two podcasts, check those out. I'm always looking for really good interviews as well. So if you like the idea of showing up on a podcast, telling your story, I would love to interview you and so we can chat about that. So with that, I'm finished. Thank you so much.

Episode 253
:
Liz Saunders - Fluencer Fruit

How to 3x Product Sales With Amazon Influencer

Liz Saunders knows the Amazon game well. She was the Chief of Staff for Jungle Scout as it grew from under 40 employees to a few hundred. And the founder of Fluencer Fruit. Through software, coaching, and services, she helps brands and influencers maximize their results with Amazon’s Influencer program.

The Influencer game is still early at Amazon, but right now, it’s free for brands to participate in and driving some compelling results.

Take This Case Study:

An Amazon product with no change in ads, no improvement in organic rankings, and no change in ratings saw a 45% MoM increase and a 3x YoY increase in sales - ALL From Influencer content.

Do I have your attention now?

Check out what Liz and I discuss in this interview:

  • How you as a brand can qualify for the Influencer Program (good news - it’s pretty simple).
  • How to attract and recruit the right influencers for your brand.
  • Where does influencer content show up, and how do you influence the best placements?
  • The difference between the Inspire and Discover Feed on Amazon.
  • How to use Influencer and Amazon Lives.
  • Plus more!

Transcript

Liz :

To make your listing organically interesting to influencers. It's that upper carousel, make sure you have traffic. All the things that as sellers we know, like that listing quality score, going back to making sure you're listing is optimized. That's what you want in place for influencers to just basically find you, so to speak, right? But then there is the other direction of, well first, a lot of sellers that I work with, they'll go to their listings and be like, oh my gosh, I have influencers on my listing. I wondered how those people got there. It says, earns commission next morning,

Brett:

Amazon Influencer program. Why should you consider it? What are the benefits? What's in it for you? Well, the Amazon Influencer program is relatively new and it is making an impact for sellers. I just completed an interview with Liz Saunders of Flu Fruit. She's an early pioneer in the space. Also spent six years at Jungle Scout. She's a legend. And so we talk about what's going on with influencers on Amazon. And I think the reason why Amazon has this program is they're trying to solve the problem of discoverability. Still, the vast majority of the products that are discovered and sold on Amazon are done through search, but Amazon wants you to engage in social shopping, and Amazon wants you to find products in a variety of ways. And so they've got a few tools to do that, right? They've got Amazon posts, they've got what's called the Inspire feed, and they've got what's called the Discover Feed, but then they've also got Amazon influencers.

And so in this episode, Liz talks about one particular client of hers where they optimize a listing for Amazon Influencer. They got six influencers to create videos for one of the products. Amazon rather put those six videos on a product detail page. And over the course of about 30 days, they grew sales on that product, 45% month over month. So 45% increase over the previous month, and that translated to a three x increase year over year. The only thing they did different was these influencer videos. No change in ads, no change in ranking, no real change in reviews. It was driven by influencer. So if you want the full scoop, check out the full interview with Liz Saunders on how to leverage Amazon Influencers.

Well, hello and welcome to another edition of the E-Commerce Evolution podcast. I'm your host, Brett Curry, c e o of o m G Commerce. And today we're talking about Amazon influencers. How do you work with them? How do you leverage them? What does it all mean? How do you grow your business with influencers? And my guest is Liz Saunders, and in case you don't know who she is, you should know and you're about to know, but she was with Jungle Scout for six years as the chief of staff helped see the growth there from 38 employees to a couple hundred employees. We met at Seller Summit in Miami, Steve Chu and Tony Beck. Shout out to the gang there. And as Liz and I were chatting, we chatted over dinner. There's a group of us, and Liz somehow left my phone behind. Liz started taking pictures of herself with my phone, which is great. And so then we started chatting. We're like, Hey, we should do a podcast. And so Amazon influencers, here we go. But with that, Liz, welcome to the show and how's it going?

Liz :

Hey Brett, I'm doing good. I think that the fact that you invited me after I took a selfie on your phone when you left it unattended is a true testament to your love, our shared love for sophomore humor because I literally sometimes have the sense of humor of a 12 year old. So I appreciate that. You

Brett:

Appreciate that. Me too. My inner junior high student comes out a lot. My wife likes to call that out, and I'm like, I don't think I want that to die yet. I want that to keep going. And so no, when I saw the selfie, I was like, this is gold. Thanks, Liz. Made my day for sure.

Liz :

I think the best part is too, it's not like we like our besties going into that version of our relationship, I just was like, here's your phone use. You get help going for it,

Brett:

Going for it. So got to be bold. That's a good lesson, good takeaway there. And so that is awesome. Well, let's dive into this topic and if you would talk a little bit about flu fruit. So your company is flu fruit launched this year, and you tools, software coaching to help brands and influencers really maximize this game of Amazon influencers. And so kind of why did you start this and give us the quick rundown on what you do and then we'll get into some tips and how toss.

Liz :

Yeah. So I started as an Amazon seller in 2016, move to Jungle Scout, have done K D P and merch and retail arbitrage and was a F B A, all the things. So I am deeply invested in all the ways that you can make money on Amazon. And a friend of mine a year and a half ago was like, you should really look at this influencer program on Amazon. It's really fascinating because you can make commission off of traffic that's already on Amazon. And I was like, well, that's wild. So I got approved in December of 21 and coming from the Amazon world anyways, and of course my background being yours at Jungle Scout, it was immediately obvious that there was a tool that needed to be built for this world. There are things that we know on the product listing page that you can pretty quickly prove impact how well an influencer's videos do. So create a score, weight it based on how those factors help your videos be seen. And it was easy to automate. So after a year in the program, I was like, we need to make this tool. And I initially thought, oh, this is going to be a side hustle thing. Really cool. And it very quickly became obvious when I was onboarding people at seven o'clock in the morning and 10 30 at night around my full-time job that it was probably time to go invest more time into this.

Brett:

You're onto something when you start to see that demand. And I'm sure that was rewarding and exciting and scary and all of those things rolled into, but yeah, you realize, hey, I've got something here. I got to give this a go.

Liz :

Yeah, exactly. I love Jungle Scout and I'll always be grateful for my time there, but truly one of the hardest conversations I've ever had in my life was going to sit down with Greg Mercer and tell him that shout

Brett:

Out to Greg Mercer. What a great dude, what an awesome tool shape the industry. Just, yeah, awesome guy

Liz :

Having to sit down with him and be like, I think I need to go do this other thing. And it's not because I don't love being here, but so yeah, it just all happened really quickly. Launched in May and here we are in August, but to your earlier question, it is a software tool. So that part and then coaching, we've got a class now for people who have an audience to get up and running with influencer and making money and then also having so many relationships in the world of sellers, it was like, oh, I need to go help sellers understand the world of influencers as well. And so that kind of spawned this other portion of the business.

Brett:

That's awesome. I will make one comment. I know Greg's a good dude and so I'm sure that conversation went well. I've been on the other end of that conversation a number of times. So we've got an agency of 70 some employees and we've had a few instances where someone who's trusted team member, core team member, they approach me and say, man, I've got this itch to do my own thing. And we had that happen with our very first Amazon director, so the dude that started the Amazon portion of our business and ran it and he's a brilliant guy and his name's Chris, and he came to me and he is like, I got to do something and I've got this idea and I want to pursue it. And so I was both bummed but also really excited. The entrepreneur in me is like, of course if you've got that burning inside, you got to do it. You'll always regret it if you don't give it a try. And so kudos to you for making the leap and really, really exciting. So let's dive into this. So let's speak to brand owners first. So I'm a brand owner. I sell on Amazon. Why should I consider the influencer program? Is it worth it? And what are the benefits? Get us excited about the opportunity a little bit.

Liz :

So the opportunity for brands to work directly with Amazon influencers is pretty wide open right now, and there's a couple things that are really compelling for me when I look at the data now, I will go ahead and call out that we are very siloed. So the data for sellers that's available is not the data that's available for influencers. So one of the things I'm trying to do is put some of that together so that we can have data backed conversations around

Brett:

Stitch that together between the two sides with influencer

Liz :

Fruit because it's a win-win, right? And win. We'll add Amazon into that. When influencers make commission, it's because sellers are making sales and then Amazon makes their piece too. So it's like a win across the ecosystem. But the things that we're seeing, and this is early data, so I'll call that out, is when we drop influencer content onto a product listing that has some page views or traffic on it already, that it moves that conversion rate up, which if you think about makes a lot of sense. We know that video converts better than text. We know that U G C video, which is what Amazon influencers are, we're basically incentivized U G C sitting at the top of your product listing. So U G C converts better than brand. And then we also know that Amazon continuously places influencer content at the top of your page and they are not stupid.

They're not going to do that if it's not doing positive things for sales. So one of the brands that we've been working with, they had a product compared to the others, it had a lot of traffic on it, but the conversion rate wasn't amazing. We dropped six influencers worth of content on it in a week, and they did 45% month over month and they did three x year over year with no other changes to the listing, no changes in P P C and acknowledging that Amazon ecosystem, it's really hard to eliminate all external factors totally. But as close as we could control that, that's what we came back with.

Brett:

So six influencers in a week for a particular brand, it was 45% month over month growth and you said six x year over

Liz :

Year three x? Yes,

Brett:

Three x. Okay, okay. Still, I mean three X is still insane when that's the only thing you did differently. So you get six influencers all to put content in a week. Then where all does that content show up? So you mentioned that it's on the P D P and you're 100% right? Amazon, if they test something, if it doesn't work, they're getting rid of it. But if that content's showing up at the top of a P D P, rest assured Amazon's doing that because it is making them more money and it'll make you more money as well. So where do those six influencers, where do their content show up?

Liz :

So actually there's two steps. You can be in the influencer program, but then that next step is getting approved for what's called additional onsite placement. And as an influencer, that's where my money is, right, is because I'm showing up at the top of your listing. So one of the places is if you are brand registered, you have a product video uploaded that creates that pop-up video carousel at the top of the page. There are six spaces there available only to the seller and to the influencer. So it shows up there. The other places below the fold, there's that middle or lower carousel influencers show up there. Those are the two places specifically on product listings if you get into fashion and some of that, there are a couple other places that they can show up. But generally speaking, the other places that we're seeing Amazon test, and this is kind of like a day by day, but is search results pages. You'll see influencer stuff pop up there.

Brett:

It's almost like sponsor brand video or what used to be called video and search where those video ads appear in the search results.

Liz :

But the wild thing is if I create a video for one of your products and Amazon puts me in one of these places, it's not something you're paying for. I probably convert better than you do. And it has this kind of infinite number of testing places that Amazon plays with from time to time

Brett:

Super interesting and especially this is early Amazon's just testing it and trying all types of things. Probably eventually they're going to monetize it more from the brands. I would assume, and we may get into this in just a second, but so the influencer makes a commission on this. The brand is paying that commission or Amazon's paying that commission or how does that work?

Liz :

So kind of both. It comes out of that referral fee that you pay to Amazon regardless.

Brett:

Okay, so Amazon's not tacking on an additional influencer fee, they're just charging you the 10, 15%, whatever. It's for your category 8%. And so they're paying the influencer out of that.

Liz :

There's no additional cost if you have a listing that's attracting influencers, it doesn't cost you anything.

Brett:

That's wild. I wonder if that is ever going to change. That's super interesting. I mean I'm always watching how Amazon is monetizing things and I kind of nerd out a little bit and looking at the Q two earnings report this year for Amazon, it's becoming pretty clear that everybody has always said that a w s was the cash cow for Amazon, that that's where most of the profits came from. With Amazon, they're generating plenty of free cash flow and profit from the retail business, but now it looks pretty clear that the most profitable part of their business is ads. So ads is like a 40 billion a year part of their business and 75% margins or something wild like that. And so you got to think maybe, so right now they're eating this cost, but eventually they're probably going to monetize it and charge brands. We'll see, I mean if they do that, I'm sure it'll probably pencil out for the brand owner either way, but right now it's free. So do it. What's the risk? You got to try it. I

Liz :

Think of it as the way they're monetizing right now is because it's only available to brand registered brands. So well, the upper carousel, you can have influencers on your listing regardless, but that upper carousel, which my videos and upper carousels do eight times better. So I know that the listings are

Brett:

Doing better eight times better in terms of

Liz :

What in my commissions.

Brett:

Oh, got it. Okay. So you're speaking now as an influencer. This what's cool. So you're on both sides. You work with brands, but you're also an influencer, which kudos to you on that. So when you're creating an influencer piece of content for luggage or something, when your video shows in that upper carousel, you're doing eight x the commission, if it was showing it somewhere else. Interesting. Which

Liz :

For the seller translates the same way because their sales are reflected in my commission, kind of one-to-one almost there. So if you have brand registry and you're, if you haven't uploaded a product video to unlock that carousel, if I can ask you to do anything today, please go find a video that you can utilize in that placement. It is a real opportunity for you

Brett:

Unlock that video carousel. That's one clear action item and takeaway you got to do that unlocks influencer content at the top of the p d p. So cool. So then if I'm a brand, so you kind of convinced me there's opportunity here. There's really no risk here either. So why not get in early and start testing this as a brand? So then how as a brand, do I find the right influencer or is that not really the game? Here is the game really just make myself available and then influencers will find me. What does that look like?

Liz :

So there's kind of two sides of that coin. So to make your listing organically interesting to influencers, it's that upper carousel, make sure you have traffic. All the things that as sellers, we know that listing quality score, going back to making sure your listing is optimized, that's what you want in place for influencers to just basically find you so to speak. But then there is the other direction of like, well first a lot of sellers that I work with, they'll go to their listings and be like, oh my gosh, I have influencers on my listing. I wondered how those people got there. It says earns commission next time.

Brett:

So to participate in that, that could just happen automatically if your brand registered. You don't have to as a seller go in and click a button or sign something saying I'm willing to do the influencer program.

Liz :

Amazon controls placement for influencer content. So that is a really important point to bring up. If I create content for your listing, usually the way it goes is 24 hours and my video is published and another 24 hours and I get placement. I can tell you that as a rule or as a usually I guess not a rule, I show up if there's an empty spot on that carousel, I'll show up there, but at the end of the day, Amazon controls that placement. And so if they decide not to put me there, it's outside of my direct control. But you also then on the seller side, don't have control as to whether or not influencers show up on your listing.

Brett:

So one, there has to be influencers that create content and then Amazon's, you have to have the video carousel unlocked, which means you have to upload a product video and then I'm sure Amazon's just got to decide is it worth it to put this here and is this going to help conversions? That's one thing, and this is a little bit of a parallel, but on the Google side, and I spent a lot of time on the Google side, people always want their product ratings to show up in the sponsored, almost said sponsored products, that's Amazon. But Google shopping ads, and that's something that Google just decides. They decide when to show it, when not to show it. If they think it's a little bit different than Amazon, but they decide, Hey, I'm going to show the product listing here. I'm not on this one. Do I think it's going to increase the click or the conversion? If I do, then I'm going to put it there. And I know Amazon works in a similar way. They're testing everything. And so if I believe this video is going to help, I'll put it there. But that's up to Amazon. Totally makes sense.

Liz :

And we think they do it based on conversion rate. We think it's last touch attribution, we think it's conversion rate. So one of my videos has been in an upper carousel for the better part of 18 months now they test me off and then they rotate me back on usually. But I've been there for a long time and I think that they do a test to see if other people convert better than I do. And so far I've been put back on basically every time. Well, basically I've been put back on every time, but I believe it's because I convert better than the ones they're testing against me. They don't tell me that, but just empirically I believe

Brett:

It to me makes sense. You're observing it, you drop off for a little while, it means they're price split, testing it, you get put back on means you're the control or the winner. So go Liz.

Liz :

Exactly.

Brett:

Teaching those other people how to do it. I love it. That's very cool. So what are some other tips here? So as a seller, I want to get my listing optimized. I want to have the video there to unlock that upper carousel. What else am I doing as a brand to try to make influencer, to maximize influencer for me?

Liz :

So there are ways you can actually reach out to us. So if you find somebody that you're like, oh, I like this person's content, you see them either on your page or on a competitor's page, an unrelated page doesn't matter, right? Because influencers are not necessarily driving traffic that's affiliate stuff. So it's a totally other ballgame. But if you find somebody that you think does a quality job of talking about a product type or whatever, you can actually click on their profile and it will take you to what's called their storefront. And then it is the one place that Amazon lets us direct people offsite because just like sellers, Amazon does not want you to send them anywhere other than Amazon. They don't want us to do that either, but they gave us an ability to link to our other socials. So if you go to my storefront, you'll find my Instagram, you can message me on my Instagram account even though you can't message me directly on Amazon. So if you find somebody, go to their storefront, go to their other socials and message them there if you want to work with them. The thing I'll call out for you is as influencers, we get a lot of outreach from agents who are repping lots and lots of ACEs. So if you can find a way to distinguish yourself as I own the brand, please do that because it helps immediately the influencer know what kind of conversation they're having.

Brett:

Influencers would much rather talk to brands, right, than agents for the most part.

Liz :

Absolutely.

Brett:

So identify that you're a brand, preferably a brand that's already got some traction conversions, good things are happening and you're reaching out to someone that you believe has an affinity towards your category or your type of product. They've done it before, which means it'd be pretty likely to review you. Now one thing that's interesting here, and I've not consumed a lot of the Amazon influencer content, so just put that caveat out there, but I mean sometimes our influencers like, man, I tried this product. Okay, one of my favorite. I mean obviously they're not really incentivized to do that, then they won't earn a commission. Amazon probably doesn't want that there because then it's not going to increase sales. But what does that look like?

Liz :

Most influencers that I work with don't leave bad shoppable video reviews.

Brett:

Yeah, okay.

Liz :

You do get a one click reach for related product. So hypothetically, if I was like, I don't like this product, I would definitely pick a different one and somebody clicked on a different one and bought it, I do then make a percentage off of that one click distance basically.

Brett:

Interesting. So as an influencer, I've got a video for one product, but someone clicks on that and buys another product. You still get a commission on that.

Liz :

So my Shade Tent, which is the one that I've been in the upper carousel for the better part of 18 months, I've made over $5,000 on that one video. Wow. Yeah, it's wild. But not all of that money is from that Shade tent specifically. And I only had one shade tent video for over a year. So I can tell if it's related to the Shade Tent video, if they click through and buy weights for the Shade tent, I make that if it's a related product, it's one click. But as opposed to affiliates who get the 24 hour cookie of your entire cart, it's just a one click related product.

Brett:

Very interesting on the, that's just got me thinking and maybe there's, I think this podcast mostly appeals to brand owners and on the seller side, but just in case someone's out there and I want to be an affiliate or an influencer, that sounds fun. Do you offer training and stuff for how to be more influential as an influencer? Or how do I create content?

Liz :

Yeah, so I actually, the wildest thing for me, and I think that we know this living in this world is the number of sellers who actually also have like, oh, I have this Instagram account that I'm side hustling, right? It's like everybody in this world is some sort of side hustler. And so what I do is help you if you have an audience, because to get into the Amazon influencer program, you have to have an audience on Instagram, Facebook, TikTok, or YouTube. So that has to exist to get approved for the program. I take people who have even a medium size but highly engaged audience from that point to monetizing as an Amazon influencer. And I have a course for that. It's a low cost course, but it just basically walks you through so you're not having to Google and join every Facebook group and ask questions and all of that. It just walks you straight through.

Brett:

Awesome. What kind of following does somebody need? So how big does their Instagram or YouTube or TikTok following you to be?

Liz :

So I'm going to wait for your shocked face, but Amazon doesn't actually give us a number. Oh, got it. But what they tell us is that you need to have an engaged audience that they're looking at your follower account and the engagement numbers. So just anecdotally, I got in with an Instagram account of 2,700 followers. It's basically my food journal. So people are like, do you have to show your face? The answer is no. I did whole 30 a couple years ago and just messed around with this account for a while, had 2,700 people on it, and when I applied, I got in right away. So TikTok is the easiest platform at the moment to get approved with, but really wherever you have an audience on those four platforms, it's worth applying because you can apply to the program an unlimited number of times, and then once you're in that onsite placement, you only have three chances for, so there's kind of like two steps, but if you can

Brett:

Wait, explain that. So I can apply as many times as I want to, so I can just keep building my TikTok following and then apply and eventually I'll be approved, hopefully. But then once you get the onsite placement, there's only three tries. Explain what that means.

Liz :

So you can be in the program and not approved for additional onsite placement. So not approved to show up on product listings, not approved to show up in search results, which is where the money is for influencer. But once you're in, then you have to submit three shoppable videos that puts you into that application process or that approval process for the onsite. And that is the time when Amazon is going to be fine tooth comb looking at your video content, but you only have to upload three. And right now at the time of this recording, it takes between three and five days to hear back on that piece of the process.

Brett:

Super, super interesting. So we talked about it. I'm just again trying to visualize, so as a brand owner, the influencer content can show up on that top carousel. I've got at least one video there can be show up in the middle of the page sometimes in the search results page. Where else are people finding and consuming influencer content?

Liz :

Absolutely. So the Inspire Feed and the Discover feed. So if you haven't seen those yet, Amazon has started rolling out basically social shopping. It's their way to compete with TikTok and Instagram. So Inspire should be on at this point, everybody's shopping app. It was the little light bulb down at the bottom menu, but now it reminds me of a YouTube icon at the moment. But it's like you can scroll through and they'll see influencer content, brand content, and also customer review videos. But basically you can scroll it, influencers can tag a bunch of products in it, including yours, and that shows up there. The Discover Feed is specifically for fashion and beauty, and it's a little bit more of a mystery in my mind, but I have found, I have pictures, they're called Shoppable photos of me in an outfit that I tagged. I bought the clothes on Amazon and I have found myself on the listing in that photo or in the feed for Discover in that photo.

So Amazon has all these different placements that they're testing and starting to get up and populate, but that's actually something as a brand, if you're not doing posts, that's an opportunity for you as a brand to show up in those feeds. So my Inspire Feed, for example, is approximately 40% brands, 40% influencers, and about 20% customers. Just anecdotally scrolling. So if you're a brand, now I'm with you at some point, I think Amazon is going to monetize and make brands pay to show up there. But at the moment, if you're doing posts Amazon, there's a chance they'll put you in that Inspire Feed.

Brett:

Very, very interesting. Now, it is very clear, Amazon still is larger driven by search. That's how people find products on Amazon. But they are trying very hard and being very creative and doing all these things to try to improve product discovery. What are other ways that users and shoppers can find new products? And so the Inspire feed, the Discovery feed, love it. Do those appear to be growing? And I know you've got insights on both sides, sellers and as an influencer, are you getting more commissions? Can you tell if it's coming from an Inspire Feed versus Discover versus on the page?

Liz :

Yeah, so there is one report that you can run that you can see if it came through Inspire. I would say Amazon is putting a lot of money into it. So they're asking basically every time you turn around, Hey, we really want vertical shorts for, they're not saying for the Inspire feed, but that's what it's for. So my guess looking at it is that the amount of content that they're putting in there is getting more and more. It's hard to tell at the moment who's having success on the Inspire feed.

Brett:

And it's just interesting because you talk about how you're making most of your money as an influencer with that carousel at the top of the page. Well, and you already talked about it, but that that's a conversion rate play, right? That's not getting more traffic to a listing, even more internal traffic that's already on Amazon. It's just closing more of the traffic that you've already got. And so that's still a search play. You're still leaning into Amazon ads or whatever to get someone there and then the influencer helping close deals, which is still great. But yeah, I'm just curious. I would love to see the Discover Feed and the Inspire feed really take off, but as an Amazon shopper and the Target demo for the Discover Inspire Feed necessarily, but I'm always just searching for stuff.

Liz :

I do think that the discoverability problem is part of what they're trying to solve for here, and they're going up against TikTok as an example because they want it to be quick and shoppable and trendy, but they also have a lot more rules around what you can do in the videos. So when you think about TikTok, part of the reason you buy half that stuff is because the influencer made you laugh or connected with you or where is this stuff on Amazon? And I still love it. I think it's going to do good things, but it's like 10 things that you must have from Amazon for your car or for my baby or for my dog or so it is, I see it being more home shopping network than TikTok eventually,

Brett:

Which is just interesting to me because that's not the mode most people go to Amazon for. I go to Amazon for something specific, researching a couple products, just going to buy, I'm going to buy stuff, not necessarily consume content. Whereas if I was a TikTok user, which I'm really not, but TikTok or Instagram or Facebook or whatever, I'm going there to just consume content, hang out, and then I'm open to discovering something new. So yeah, it'd be really interesting to see how Amazon continues to iterate and improve that experience and hopefully they'll get traction because that's an issue for a lot of brands. I know an issue for Amazon is that discoverability of new products. And so I hope they keep improving. I hope that they crack that code.

Liz :

It would be really cool if it would help when you first launch your product on Amazon and you're like, if you build it, it turns out they are not coming, right? You're like, wait, I did all this work and it's great, but I can't even find myself when I type in my brand name and product name. So if they can help people clear that gap, I feel like that would be an amazing use of it. We'll see.

Brett:

Yeah, and I think there's also something to be said about if you sell a premium product and you're not really well known on Amazon or even that well-known off Amazon, selling a premium is a okay. And I think that's actually a great strategy in a lot of cases, but you got to tell the story and you got to show someone why are you more expensive? Otherwise we default the price without clear understanding as to why you should pay more. And maybe some of these influencer videos and some of the content in the Discover in Inspire Feed could show someone why you're worth a premium price. So I think there's got to be some branding elements there as well. I want to go back to something you mentioned a minute ago, which is important and we help a lot of companies with their posts. How do I create posts as a brand? But talk about why that's important. And you mentioned that that shows up also in the Inspire feed. Is that right?

Liz :

Yeah. So my best example of this is somebody that we both know from Seller Summit actually, Amanda Creations. And when Inspire launched, I happened to be in one of the first rollouts. So it was like when there was not a lot of content at all in there, and I would be scrolling. I was like, Amanda, I didn't know that you were doing this. And she's like, what are you talking about? And I was like, you're in the Inspire feed. And so then this is at the beginning, we're starting to put it all together and her words to me were basically, I didn't know what Amazon was going to do with it or why it was important, but I just knew that we should do it. Yeah,

Brett:

Test it.

Liz :

And it's like, yes. So when I scroll now I follow her also. So I know it's an algorithm, so it's not random totally that I find her. But you can see when you're scrolling, Amazon is still surfacing brand content in Inspire and discover for free. The brands don't even know it's happening half the time. They don't send you a report that says, we showed 15 people this post that you did today. You just know like, oh, I had a bump in this product. I wonder why. So if you are a brand and you aren't doing posts, it is kind of like a wild play to be like, I'm creating content that Amazon is placing for me that I'm not paying for. It's a pretty good, I don't want to say risk, but gamble to take because posts are pretty easy to put

Brett:

Together. Posts are easy to put together. And yeah, I talk about this a lot on the pod, but the companies that are going to do the best long-term on Amazon and those that are going to be sellable, if your goal is to exit your brand one day is to actually build a brand, not just playing. So we talked about how Amazon is mostly search and it is, but if that's all you're doing is just playing the search game and trying to manipulate price or get a few more reviews here and there and things like that, that's okay, but you really need to build a brand and get repeat purchases if your product is conducive to that. And so some of these additional things are what's going to help you build a brand and protect margins and scale and then eventually sell. So really cool. Any kind of final tips or suggestions? What should I be thinking about as a brand if I want to make influencer work? Anything we left out?

Liz :

Absolutely. So there's one tip that I'll give you. The other thing that you can be doing as a brand that is available to influencers is lives. So if you want to, you have multiple skews, you have one skew, whatever you feel like you can add, go ahead and do a couple lives, you can repurpose that. We never know where Amazon might test that content. And that is available to brands as well.

Brett:

You can repurpose it. So you do a live, you can now take clips of that and share in other places, is that right?

Liz :

Yeah, so any content that you upload to Amazon you own fully and they allow you to post in other places. So if you're doing a live on Amazon, then you could also clip it and utilize, repurpose the content.

Brett:

I think that makes sense. Then that kind of, again, just you're able to leverage a little bit more, right? You took the time to do a live, maybe it did something for you on Amazon, maybe it didn't, but now you can repurpose that content, chop it up, put it on TikTok and ads or Instagram or Facebook or something like that.

Liz :

Yeah, I mean, LifePro is one of the brands that I've worked with through Creator Connections, which is an invite only for brands and influencers. So if you have that in your backend, but they do lives all the time and they're like a fitness thing. So they're like, we have these products and then they do q and a with trainers. There's a lot that you can do and build that audience. And of course, like Amazon, it lets you repurpose it because hoping that you'll repurpose it and drive traffic back to Amazon. So it's a good little flywheel there. But to your question about working with influencers and kind of final tips, I do offer a white glove service. So if you're like, Liz, I have more money than time right now in way of, I don't have the time to go find these people, find them for me, I will find them for you. And I have over a hundred influencers that are using the tool that are available for working with, and they cover everything from dogs and pets and kids and any outdoors, anything that you could possibly need for your brand. So that is also available.

Brett:

Love it. So flu, it's like influencer without the N, whether the i influencer fruit.com. And so yeah, talk about that. So you've got the white glove service, so you can help brands find influencers, but then you also got some training and some software, some tools. So yeah, give us the rundown.

Liz :

Yeah, so I will also put together influencer fruit.com/omg so that everybody can find all of this in one place. But yep, starts with the tool for influencers to help them find your product listings that are optimized for them. So it tells them from the search results page, if you have that upper carousel and how many other influencers are on there, and then goes through the course. So if somebody has that audience is looking to monetize with that. And then on the brand side, if you're just looking for, listen, I need six influencers to fill out that upper carousel for me, can you help me? The answer is yes. So there's a link on there that goes to book a call. Happy to hop on and chat with you about where your brand is at and how we can help.

Brett:

Awesome. So flu fruit.com/omg. Check it out. Liz Saunders, ladies and gentlemen, Liz, this was very fun, very enlightening. I'm so glad we did this. And yeah, we'll have to do it again sometime. That

Liz :

Sounds great. Thanks Brett.

Brett:

Awesome. Thanks Liz. And as always, thank you. Could would not do the show without you, and so would love your feedback. Love that review on iTunes if you've not done. And hey, hit us up on the socials. I'm actually very active right now on LinkedIn, so hit me up. Let me know what you'd like to hear more of on the show or let's continue the conversation on LinkedIn. I'm also on a few other places, YouTube shorts and stuff, so check me out there. But with that, until next time, thank you for listening.

Episode 252
:
Austin Chambers, Chris Brewer - OMG Commerce

Triple Your Ad Spend While Improving Profitability with Amazon DSP

Amazon DSP is a misunderstood platform. Heck, even the name is confusing!

The Amazon DSP we’re referring to in this episode is the Demand Side Platform. Not to be confused with Amazon’s other DSP - Delivery Service Provider (the independent contractors who deliver your Amazon packages).

Amazon DSP Ads are a way to target shoppers on and off Amazon with highly relevant image and video ads based on Amazon’s behavioral shopping data.

No one has more shopper data than Amazon. But Amazon doesn’t publish that data or allow anyone to use it unless…you advertise using Amazon DSP.

DSP is one of the most powerful advertising platforms I’ve ever encountered. But it’s also commonly misunderstood, and it is advanced. This is not for beginners.

There are a lot of ways to waste money with it. But there are a few ways to accelerate growth.

Here’s a look at what we discuss:

  • The top mistakes advertisers make when running DSP ads.
  • The top 3 strategies for accelerating growth with Amazon DSP.
  • Why running DSP remarketing only and testing too small will likely fail.
  • What it means to have a DSP “seat” and why they are so rare.
  • How one seller tripled their DSP spend and accelerated growth by 35%, all while lowering their TACoS.
  • Understanding DSP attribution and why it’s a hotly debated topic.

Transcript

Chris:

Anytime you have uncertainty in an economic environment, we see people pull back on certain areas. I have seen, I don't know if I've seen as low of an inbound interest in DSP since we've been doing this for six years. To me, it lines up exactly with the economic conditions that are out there. And yet OMG has consistent advertisers that are still running DSP and I would just highly recommend that's got to go into your thought process. When people pull back, it's a great opportunity to put yourself right back in.

Brett:

Well, hello and welcome to another edition of the E-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce, and today is a very special episode. We have not one but two guests and not just two, any old guests. These are OMG experts. One guest you undoubtedly know, he's been on the show many, many times. My business partner and the co-founder of OMG Commerce, Mr. Chris Brewer. Chris, welcome to the show. How's it going?

Chris:

Good to be back. It's going well. A little warm down here in the heat box, but other than that, it's all good.

Brett:

Yeah, so OMG HQ is in beautiful Springfield, Missouri. We're experiencing some unseasonably mild temperatures. It's still summertime, but it's feeling pretty good. But Chris is down in Florida and is hot. It's always hot and so you kind of know that, you know that moving in. So just the way it goes. But Chris is not the only guest. As I mentioned, there are two guests and the other guests on the show. This is not just his first time on this show, this is his first time on any podcast. But this guy is an Amazon DSP legend. And that is our topic today. We're talking about Amazon DSP, what that means, what you should know about it, how you can utilize it, and all sorts of good stuff around Amazon DSP. And so Austin Chambers, DSP specialist for OMG Commerce is our other guests. Austin, what's up man? How's it going? And thanks for joining the show. Yeah,

Austin:

Good to be here. It's going pretty good. It's definitely a little change of pace for me from being behind the scenes usually. So we'll see.

Brett:

Yeah, you're behind the scenes. You know how to work a spreadsheet. This guy understands line items and orders and all kinds of stuff related to DSP. He can nerd out with the best of them, but understands the tactical side, the strategic side. But yeah, podcasting, this is new for you and it's going to be a lot of fun. So we're going to dive right in. For those that do not know, what is Amazon DSP? So Mr. Expert, why don't you start

Austin:

For a newbie? A DSP is a demand side platform. So it's a platform to do display advertising. Amazon DSP is obviously Amazon's demand side platform. Their DSPs all over the place. Google Ads is a version of something like that, but Amazon's is exclusive to Amazon. Only accessible through Amazon.

Brett:

Yeah, it's kind of interesting. So one, there's a little bit of confusion as to what DSP is because there's another Amazon DSP. So we're talking demand side platform. We're all about advertising and accelerating growth and getting new customers, making sales on Amazon. But do you know what the other DSP stands for? Chris? This may be the DSP. Some people have in mind.

Chris:

Well there is one with Amazon. When you Google it, it's their delivery, which is brilliant naming convention when they started this.

Brett:

I think this does sort of underscore the fact that Amazon kind of operates in these small autonomous teams and sometimes these teams do not talk to each other at all. Right? So yeah, the other DSP is delivery service provider. And actually there was a point in time where I was like, I want to start A DSP, that kind of DSP. If I find I knew this guy that was into logistics, I'm like, Hey, what if we partnered together, we start this business? And he's like, dude, that'd be a terrible business. And then after I looked at the numbers, I'm like, you're correct. So I'm not talking about the delivery service provider, but demand side platform and to people that don't know. And I am glad you laid it out that way. Austin, people may think that DSP is unique to Amazon if that's their only exposure, but it's actually a generic advertising term demand side platform just means it's a platform that advertisers can access and utilize and run ads on. However, the name's a little bit misleading because getting access to Amazon DSP either requires a special seat or massive amounts of ad spend or a connection with an agency like ours. But simply put Amazon DSP as a way to run display ads, video ads on and off Amazon, but utilizing Amazon's shopper data. Now, Austin, from your perspective, why is that a big deal that we can use Amazon's shopper data to build our ad targeting?

Austin:

Well, the main thing is Amazon has hundreds of millions of shoppers, even just in the us and they don't share that first party data with anyone. It's all housed internally. So using Amazon's DSP as a way for us to build custom audiences or Amazon builds audiences to target shoppers based on data signals straight from Amazon, we're not relying on a third party doing market research. We're getting the metrics straight from Amazon.

Brett:

Yeah, love it. And Chris, from your perspective, why is that? Why is that such a big deal to harness Amazon's shopper behavioral data?

Chris:

Well, I mean, for one, if you're a seller, if somebody visits your page and decides to keep shopping, looking at other comparisons, seeing who's got a promo or a deal, having access to that data is huge because you can quickly within milliseconds, I think Austin retarget those people and we can talk about it too. But you also, you don't necessarily have to be an Amazon seller to harness the power of that data. Brett, you can also run ads off platform to that audience, which can also be valuable depending on your brand and what you're looking from a return perspective.

Brett:

And no one has more shopper data than Amazon. Nobody has more shoppers in the US and nobody has that data like Amazon and you are not getting that data any other way other than utilizing it through the Amazon DSP platform and it just works. And so when you take that data from Amazon and then combine that with the ad networks that you have access to through DSP, now you can reach any Amazon shopper at any time and it can be extremely effective. So talk about that just a little bit, Austin, where might our ads show up? So I'm running DSP, I can target people based on what they're in the market for, what they're shopping for, what they viewed on Amazon, I can target them based on that. Where might my ads show up

Austin:

Really all over the place? I'd say typically 80% plus of spend is on site ads. So whether that's product detail pages on Amazon, so whether that's product detail pages on the sidebar and search results, stuff like that. But also Amazon has partnerships with a few dozen different third party, what they're called open exchanges where whether it's the Google or I mean you can show on weather channel Yahoo. So you have access to endless inventory virtually. Yeah,

Brett:

It's almost the entire internet or it is like the whole internet that you would want to be associated with. You can access through Amazon DSP. And yeah, there's actually a backdoor into the Google display network. And we're a big Google agency as well. Chris and I have been doing Google ads since forever. And so what's cool is now you can run ads on the Google Display network through Amazon DSP based on what people are shopping for on Amazon. But to your point, Austin, 80% of the time your ads are showing up on amazon.com search results page. There are some areas on the side and at the bottom where display ads show up even on product detail pages, even on your competitor's product detail pages, you can run Amazon DSP ads, which is brilliant on Amazon's part. They don't care. They don't care if someone buys from you or from your competitor, they just want someone to buy. But it's also pretty awesome from your perspective too. If you can show up on a competitor's page and steal that shopper, why not do it? Which is pretty great. Alright, Austin, so let's get everybody excited about Amazon DSP. Let's talk about a case study. What is one of your favorite Amazon DSP case studies and what's possible with DSP?

Austin:

So my favorite case is an example. It's a client that came to me about two years ago. They were doing good on P P C, doing good on the seller side of things. We've been pretty consistent on DSP averaging 12, 13,000 in ad spend over the course of the 2021 year. But came to me, said, Hey, I want to lead into DSP more. Here are the keys to the house. So I love hearing that,

Brett:

By the way. Yes, we will always, if it's a brand we know and trust, we'll always accept the keys to the house. We'll take very good care of your house. But yes, we very much love to hear that phrase.

Austin:

Yeah, exactly. So I took that and kind of ran with it. We like to ease in. We don't want to blow up the boat overnight. So we will increase 13,000 to 17 to 20 to 25 throughout the course of the 2022 year. I think we averaged right around 30, 35,000 in ad spend per month. So up for 13,000 P P C ad spend remained flat year over year. So it was a difference of less than 1% difference in P P C ad spend. So

Brett:

Basically tripling DSP spend, sponsored spend, so Amazon P P C basically stayed the same,

Austin:

Yeah, basically flat on the P P C side. Take that into 2023. We've increased to about 50,000 a month in DSP ad spend. We've actually seen a decrease on the P P C side by 10% or so. Sales are up 35% versus 2021 when looking at it on a monthly average. So tacos and we use DSP ad spend when figuring that tacos is down from 35 to 40 down to under 30 some months. So we've increased DSP ad spend by three x plus, but also decreased tacos at the same time and increase P P C efficiency.

Brett:

Beautiful, love this so much. So we've gone accelerated to the floor, but in a very controlled, methodical, measured approach, but triple DSP ad spend, but we've been able to reduce sponsored ad spend and now total efficiency, total tacos is better than it's ever been. Go ahead Chris.

Chris:

Yeah, a couple of key learnings here. I get the fortunate place to be able to talk to a lot of potential DSP advertisers and now this case study is a little different because they kind of passed the trust threshold with OMG. They were currently advertising and obviously knew what we could do. But the key factor here with this particular client, and I can't emphasize this anymore to brands, is they gave us the leeway to be able to grow and not just like, Hey, let's test this for two or three months and see how it goes. Because typically when I've seen new brands come in and we used to all actually allow a three month DSP test, and that's usually what it ended up. People limped along spent the bare minimum and then couldn't really tell actually how it was impacting because you looked at this DSP spend relative to their P P C spend, and it was one percentage, two percentage, 3%, you're not going to be able to tell any sales differences from those kinds of numbers. So they stuck with it and they had a team that could focus strategically. And this is a key difference because when we get DSP advertisers coming from other places, I'm not going to name names, but a lot of times it's places that are using somebody else's seat or it's software driven and they don't have people that really understand how to effectively use the audiences and scale. So that's something just to keep in mind.

Brett:

Yeah, it's really interesting. We do talk to people and DSP is a bit of a controversial channel and we'll get into this more later, but there's been a couple of Twitter storms or X storms I guess you should say now, where people are like dog and DSP. And we have talked to a number of brands that have not had a great experience with DSP, but we found exactly what you said, Chris, we're like, okay, well how much did you test? How did you test? What did you do? And they're like, well, we spent 3000 a month. And when we do the math and look at the traffic that generated, we can say that increased the number of shoppers to your page is by two or 3%. It makes sense then that you wouldn't feel that or wouldn't notice that, right? If you're already growing a little two or 3% bump, maybe you see it, maybe you don't.

And so yeah, this is unique where this client trusted us and we'd earn that trust. We've proven it and we're able to scale. I do think, and this is just a quick side note because I know we have agencies listening, amen. This, we have a lot of clients listening to this. You're working with an agency, obviously don't trust someone until they've earned it, but when you want someone to steer the strategy or steer campaigns, don't also keep your hand on the wheel. If you're steering and you've got someone over on the passenger seat trying to jerk the wheel, bad things happen. And so yeah, this is one where we were given a little bit of free rein and we took advantage of it and proved it out. And so what's also interesting about this is I think a lot of brands hit a bit of a ceiling with sponsored ads. I love sponsored product ads, sponsored brand sponsored brand video. I think they're foundational. I think you got to start there and really get those working well first. But sometimes you get a ceiling where you can't really scale more than you are now efficiently. And that's where DSP can come in. So it can create great top of funnel growth, great remarketing growth, great repurchase growth, and help you even improve your tacos, which is amazing.

Austin:

And I'll provide a little bit of context of what Chris said about people coming in, spending two 3% of their ad dollars on DSP. This client was spending in the single digits, five, six, 7%. Their monthly sales can fluctuate that much each month anyways. So cutting out that much spend or adding that much spend, it's hard to see the difference. It's going

Brett:

To look normal. The patterns are going to look the same,

Austin:

The patterns are going to look the same. So we took that from 7% to, I mean a quarter of their ad spend almost plus. So whenever you add that much, when it's that substantial of a percentage of the overall piece, you can tell when it makes a difference.

Brett:

What are some of the top mistakes you see Amazon, DSP advertisers, sellers making with Amazon DSP? We talked about one where you're testing at such a small level, you'll never be able to feel the difference. Now I will say I think you should test in a way that's reasonable, right? Don't just start spending 50 grand a month unless that's an in significant amount to you, which I know some sellers it is. So you want to test smartly, but test in a way that we see the difference. So that's a mistake. What are some other mistakes you see people

Austin:

Make? You already said it. Testing small, testing only. Bottom of funnel is one of the biggest things. People want to come in. They want to spend minimum budgets on only retargeting or only repurchasing, which is a piece of the puzzle, but it's only one piece of the puzzle. It's not where DSP really shines. I like to spend roughly a third on bottom of the funnel tactics. When you're only spending a small percentage of overall ad spend on bottom the funnel, you're not going to see a big difference. The other thing which Chris alluded to is people only wanted to test for a short period of time. And this case study, it was six plus months of scaling before we actually started to see a difference in the monthly averages. So can't speak to exactly why that's the case, but that's what we've seen time and again, so giving it 6, 7, 8 months of scaling and being a significant piece of the pie for it to actually prove itself out.

And then one of the other things, and one of the biggest things for me is judging it strictly off roas DSP. When you're talking mid and upper funnel DSP with awareness campaigns, if you judge them by roas, it's going to be a fail 99% of the time, especially when you consider Amazon's attribution model is last touch or last click. Whenever you're running awareness campaigns, that's going to be their first touch. They might have three or four other ad types they come on contract with along the way. So of course that in market campaign is not going to have a good roas. So typically if you're just judging all of the campaigns based on ROAS or ACOs, you're going to be disappointed.

Brett:

Yeah, I love this so much. And I think the way you should look at this is more the way you might look at YouTube or Facebook where part of this is generating awareness and building a brand and getting people to convert later. Anything that's not bottom of funnel, part of the impact or benefit is the lift you generate or the halo effect generated. One reason why people love sponsored products and they get addicted to it, and actually they get a little bit spoiled with sponsored product ads, is it's immediate gratification. If someone clicks on a sponsored product ad, they're likely very close to making a purchase. They're interested, their comparison shopping, they're ready to pull the trigger. And so that's where you get 10, 15, 20% conversion rates, something like that on some product detail pages. So DSP is not the same if you're running remarketing or retargeting, that can be similar.

But the real beauty, the real magic of DSP is when you can layer on some of the other targeting and over time you're building that top of funnel interest and it is going to create a lift. And this is one of those things where you have to have a little bit of faith, right? We're still measuring. We can still see are we on the right track even in the early days. But the real benefit comes six, seven months later, like you talked about Austin, where, hey, you know what? We're spending more on DSP, but our tacos, our total advertising cost of sales, the total percentage we're spending on ads has gone down because of DSP, which is awesome. So let's talk about some of, what are some of the strategies you recommend? How are we utilizing DSP? You said about a third for bottom of funnels, like third remarketing, repurchase. Where do the other two thirds

Austin:

Go? Yeah, so I like to do thirds for bottom, mid and upper funnel. Typically, that's not a one size fits all, but that's usually pretty close. So when we're talking mid funnel, it's going after people that are already familiar with your competitors. They're in the market for, you're selling product A, your competitor selling product A, so they're looking at your competitors. So we're targeting people that have viewed those competitor products or we're targeting the product pages themselves. So this is combination of contextual targeting and competitive remarketing is what a lot of people call it.

Chris:

Well, maybe too Austin, and forgive me Brett, if this is on your roster of questions later, but I think it may be a good time because, and I'm just remembering things when I talk to people on calls and things come up around the same timeframes we were talking about audiences is how is what OMG can do with our own DSP C different from sponsor brand display, some of the display options that you already have within sponsored? Where is it good? Where is it limited? People often want to understand the difference there,

Austin:

Which I know that one of the later questions is when to consider DSP versus just sponsored display. Brett, do you want to wait to compare the difference?

Brett:

Go ahead, go ahead. Yeah, Chris has totally hijacked the show. He's totally just, he decided I'm no longer a guest, I'm a host. I'm just going to fire away questions like I own the place. No, actually that was fun. And so no, yeah, answer the question. I love that question.

Austin:

Yeah, so one of the main differences between DSP and sponsor display is the way you can customize your targeting. So sponsor display is really good at some things. One of the things I love about it the most, which is not available through DSP is bidding on a C P C basis. So DSP is strictly ccpm, so we're paying for impressions, not strictly for clicks, but with sponsored display, you're a little bit more limited with the type of targeting as far as overlapping and excluding certain audiences. With DSP, we can target a viewer of a specific product. We can exclude people that have already purchased that product or a competitor product or people that have viewed 30 days ago, but not within the past 15 days. With sponsor display, you're kind of at the mercy of what they offer. So last 90 day viewers kind of open-ended, last 265 day purchasers. I can target people that have purchased in the last 30 days if I wanted to. So the customizability with DSP is far and way better with sponsor display. And from what we've seen, the scalability is as well with sponsor display on both our clients and other clients or other brands that I've talked to. Sometimes they hit a pretty low cap on sponsor display spend, which is something that we rarely struggle with on DSP. Yeah, D

Brett:

S P way more customizable, targetable, and you can really scale it, which is amazing. Now Chris, you've mentioned a couple things. You mentioned something a few times that I bet people have heard and they're like, wait, whatcha talking about a seat? We're talking about a chair. What is the seat? So can you explain that? What does it mean to have a DSP seat and why is that a little bit unique right now?

Chris:

Yeah, so I don't remember. It's been I think over five years, Brett. Yeah,

Brett:

Yeah, for sure. It was like 2017.

Chris:

Yeah, we had heard about DSP A guy that actually used to work with us, heard about it, and we started to ask questions of our Amazon team about it. And back then, I don't know what is now, but back then it was like you had to have $30,000 as a brand individually to advertise on DSP. I think it

Brett:

Was like 30 to 50 a month that you had to commit to get a seat for DSP.

Chris:

Yeah. And so back then we didn't have that because we didn't have any advertisers at that point for DSP, but we started to get some in and I don't know, we got our own platform. And so here's the key things that you need to ask for, especially if you're out looking for a Amazon DSP provider is one, find out how experienced the team that's going to be actually overseeing the campaigns and the ads is ask them how much time they kind of spend in the account. Do I get a strategic discussion? Because what you'll fare it out there sometimes is if they are outsourcing that, because some places say, oh, sure, we have our own seat. But what they mean is their seat is their advertising software provider and they're running it through that. And again, all I can tell you is the feedback I've had from some of those, we get a decent amount of leads from those kinds of relationships. We've also ourselves provided seats to software companies, but we do it a little differently to kind of give them that strategy. And so that's basically it. We've even helped agencies kind have a seat through us so that they can get enough to kind of get their own. So we try to be a good industry partner there as well, try to

Brett:

Help the ecosystem where we're friendly to other agencies. We don't keep all of our toys just to ourself. But yeah, I think it's a great question to ask. Do you have your own seat? And then what kind of experience do you have with DSP? Yeah, we've been doing this for five plus years. I think it was 2018 ish. We were one of the fastest growing Amazon D SS P agencies. So myself, our Amazon director, we had to fly out to Amazon to the hq. We had dinner with Jeff Bezos. So all of that was true, except the Jeff Bezos part did not see him, did not meet him. But we did get to go to Amazon hq, which is cool. And so yeah, ask those questions. And so Amazon has kept the barrier pretty high to get an Amazon DSP seat for a while. They were not making it available to anybody. I think that's opened up a little bit. But anyway, so OMG is a little bit unique in that sense. We've had a seat for a long time, very seasoned, very experienced. We had a direct line to the Amazon DSP team, so that's pretty

Chris:

Special. And usually a good question to ask is, well, if we run DSP with you, can we get access to the platform so we can kind of get in there and see what you're doing? And if they say, oh, sure, we'll give you a dashboard access, usually that means they've got some kind of software overlaid because with OMG commerce, all of our accounts are within the same essentially DSP seat. So if we were to give a client access, they would be able to see all the information from all of our clients. So it's just a little bit of extra little tip there to find out, hey, is this really their own seat or are they outsourcing this somewhere

Brett:

Else? So let's go back to strategy Austin. So you were kind of beginning to lay that out. So third remarketing and repurchase, third kind of mid funnel. And you were talking about being able to target people that are shopping for competitive products. You talked about being able to put an ad on a competitor's product detail page. So continue the thought there. Why is that? I think that should be obvious why that's so cool, but why is that special?

Austin:

Yeah, well one is you're hopefully drawing sales away from competitors, which if competitors are selling more or less and you're selling more, it's going to help your organic ranking. You're going to show up for sponsored ads more. So that's kind of the main thing. Whenever we go after anything that's not bottom of funnel, it's stealing a sell away from someone else.

Brett:

And how often would that be if someone gave you this scenario, call it five, 10 years ago where they said, Hey, what if shopper's about to buy your competitor's product and at the last minute you show up and show them your product and show them the price and the reviews and maybe a little message about why it's so awesome, would you want to do that? I would be like, yeah, I want to do that. I'd do that all day long. And I remember back in the early days, and I've been doing this a long time, in the early days of remarketing back when that was kind of a novel idea, people would ask, Hey, can we remarket to our competitors shoppers? So remarketing on Google or Facebook or whatever, you're remarketing your own shoppers or your own site visitors. But people have always wondered, can I remarket to my competitors shoppers?

And the answer pre DSP is, well no, unless your competitor lets you pixel their site. Other than that you can't. But with Amazon DSP, Amazon's like, I don't care. So yeah, sure. Use target shoppers of your competitor, put the ad on the competitor's page. We just want people to purchase. And so if you leverage that and do that, right, it's such a powerful way to grow. And the thing you got to keep in mind is I think there are some cases where if I'm looking at Nike shoes on Amazon and a pair of Adidas sneaks in there, probably still going to buy the Nike. But for a lot of product categories, we're not super brand loyal. So I'm looking at one product, but I see another brand that's maybe comparable and has better reviews, and I like the look of it better. It's possible that I'll buy that instead. Yeah. Okay. So that's competitor targeting A do you have another thought there?

Austin:

Yeah, something I was going to add is with those audiences, if you have one or two top competitors that seem to be performing well, we can make an audience of just those competitive viewers or target just those product pages. If you don't care, we can make an audience of 150 different ACEs in your category and exclude ones that have a price point that's too high or too low. So the way that we can customize those audiences to target exactly who we want to target is pretty endless.

Brett:

And one of the things I like to think about with Amazon, and I think this applies to Google shopping and some of the other marketplaces and stuff, is part of the success here is part advertising, part merchandising, showing up on the digital shelf, and whether that's organic, and that's Amazon brand management and s e O type of stuff, or it's sponsored ads, that's the P P C magic that we like to run. But with Amazon DSP, there's a little bit of merchandising too because it's like we're able to follow someone as they slide down that aisle, right? They're on the aisle looking at toothpaste or they're looking at fitness equipment, and as they slide down the aisle away from our products, looking at a competitor's products, we can pop up and say, Hey, hey, what about me? Did you think about this? And just pretty powerful. And so lots of opportunities there. So I would say that's kind of mid funnel. Maybe it's inching in the top of funnel depending on how you define it. But then what would be kind of some top of funnel strategies?

Austin:

So top of funnel is typically going to be in market audiences, which is people in the market for x, y, Z category. So let's say you'd sell toothpaste and someone might be in the market for oral care products. So maybe they were on Amazon and they went to a product that was in the oral code subcategory. So those are typically the largest audiences, super broad. They do have some more specific ones here and there, but usually you're going to get several million people in an audience like that, sometimes 50 million. So super broad audiences, both in terms of size and in terms of how broad the category can be. They're also lifestyle and demographic audiences that can be layered in. So based on people's purchase habits and shopping habits over their lifetime of being an Amazon shopper, they're obviously really into fitness. They buy a lot of supplements and workout equipment and athletic apparel, and then another, not necessarily past top of funnel, but the very top of the funnel is typically where we use video ads, S t V. So streaming TV is kind of the new big thing. It's one of those things, it's like running TV commercials, it takes a pretty big investment, but this is about as far up the funnel as you can go. It'd be comparable to YouTube top of funnel advertising,

Brett:

And we love what's possible there. With streaming tv, you can show up on Amazon fire TV sticks and Amazon devices and things like that, which there are millions and millions of. Let's talk about those in-market audiences really quickly. So give me a category, Austin, make up a category, not toothpaste. I think that's a little too broad, but something else. Dog food. Dog food. Okay, so let's look at dog food. So basically if we're looking at an in-market audience, let's go a little more specific. Let's go organic dog food, okay, so organic dog food, what does that in-market audience look and how does someone get in that audience and how does someone get kicked out or leave that audience? Just so people can kind of understand who are we targeting if we say, I want an InMarket audience for organic dog food?

Austin:

Yeah. So InMarket for organic pug food virtually means that within, and it's either 28 or 30 days, I believe it's past 28 days of shopping on Amazon's side that within the past 28 days, that person has searched viewed bit in the subcategory for organic dog food. So whether they clicked on a couple products and search results that were or labeled organic dog food, maybe that was part the title of the product, something along their shopping journey within the last 28 days indicates that they are about to purchase or wanting to purchase organic dog

Brett:

Food. So we know they've been on the aisle, right? To think about this like a physical store, someone's been on the organic, someone's been on the dog food aisle, but then they've been down where the organic dog food is, right? They've been living for it, they've been shopping, and maybe they add it to their cart and they put it back on the shelf. We know there's interest there, and so now we can target them. So what are some of the creative ways that sellers and that we are using in market audiences?

Austin:

So typically what I like to do, Amazon has some pretty good overlap reports that show us how certain in-market audiences overlap with our custom audiences. So let's say we sell organic dog food and I have an audience that's made up of people that have viewed our product. Amazon is going to show us the in market and lifestyle audiences that overlap. So we can pick and choose which audiences make the most sense based on how our audience actually fits into those other categories. Once we let something run for a while, we like to pull some audience insights reports that show us what other audiences that we're not targeting interact well with these ads. So maybe people are in the market for organic dog food, but it's also people that live in high-end gun zip codes or people that are over 55 and maybe it's primarily women that click and not men. Over time, we can layer in those audiences to get as specific as possible to get the best possible results.

Brett:

What's really cool here, Austin, is actually you can utilize DSP to get more insights into your shoppers, to get more insights into your buyers and those people that are looking at your product by saying, Hey, what are the related audiences? What's overlapping with my buyer? And yeah, you get to learn some pretty cool things and then that can adjust your targeting. Anything. And Chris, want to get you involved in this as well. Do you hear any misconceptions when you're talking to potential DSP advertisers or are there areas where they're just blown away when they hear what's possible on DSP? What's kind of the perspective from an audience standpoint of the people you talk to?

Chris:

Well, first I must say that I've got an audience of organic dog food lovers behind me that may potentially chime in because there's someone in the house they don't recognize right now.

Brett:

You mean the furry, the furry lovers of organic dog food or maybe lovers of any dog food in general? There

Chris:

You go. Actually, I think he got so excited about Austin's organic dog food example that it just could not contain himself.

Austin:

Makes sense.

Chris:

At any rate, your question was around what was that? Because now I'm often dog

Brett:

Food. Yeah, and it's totally okay that the dogs are, which by the way, I'm going to say something kind of controversial, not super related, but just curious to me, curious what kind of dog food you feed your dogs, Chris. Because I've started to see this trend of vegan dog food, and that's always surprised because I've always thought dogs were meat eaters. Are your dogs meat eaters, Chris? Are you feeding them veggies and stuff?

Chris:

Actually they are loving this week because I cooked some fantastic ribeyes out on the grill the other night. And did you Giving your

Brett:

Dogs ribeyes,

Chris:

Man, given dogs ribeyes. We are also, I'm going to tell you what kind of a couple Jenny and I are. We offered to babysit my daughter's boyfriend's poodle while they are in Central America for two months. And anyway, it's one thing walking a dog like our poo who's about this big, and it's another walking a dog of that size. And let's just say that the plastic bag has to be larger. That's all I'm going to say. And I think this relates to your question, it's because we feed them, we lift those ribeyes had to put 'em up way up on the refrigerator so the dog wouldn't get them. And then we woke up the next morning, realized we never put them in the refrigerator. So they've been getting cut ribeye chunks for the last several days and they're loving it. But we actually do buy the fresh food in the refrigerated section at Walmart, which is the organic stuff that doesn't have all the fillers, and we mix that in with some really high quality food. But you asked, there's the answer.

Brett:

Fascinating. Totally a side note, but super interesting. Hey, I believe there's a market for anything. So sell vegan dog

Chris:

Food increases engagement in your podcast. People love dog stories for sure. This is going to be the only part people maybe I love that podcast, especially the dog food segment. I like the

Brett:

Dog part. And why does Chris give his dogs ribeyes? It's crazy when you leave it out and don't refrigerator. It makes sense. So Chris, what I was talking about though was audiences. So you talk to people when they first reach out to O mg and they're like, Hey, what's possible with DSP? What are either the misconceptions about audience targeting or the things people get really excited about related to audience

Chris:

Targeting? Oh gosh, they just don't know. They don't know. They've heard D SS P, they've heard it can be great. They don't know. They aren't familiar with the different audience types. Again, that's a good vetting out for your agency is how well does your agency understand all the audience types, all the various targeting and where you should actually start. We don't do this with everyone, and I think we also are sensitive to people's interest in getting a good return. Sometimes people just want to see, Hey, what is my return actually going to be? And in those cases, we'll actually recommend, Hey, let's start more bottom of funnel. Let's get you those retargeting audiences and most people that they get that audience right away. Retargeting, there is some confusion sometimes about where their ads are actually going to appear to these audiences on platform, off platform. But we've got a great resource in our strategy document that we can share with folks, and I'd be happy, anybody wants to contact the podcast to send this over to 'em that kind of lists those different audiences out. I think we still have a resource on our website, the DSP roadmap that goes through some of those audiences. I would highly recommend if you are a newbie to DSP and you want to know more, that's a great resource to grab and it's a very easy

Brett:

Read. Yep, got to get that for short. So a couple things to talk about. We talked about some of the traditional things to do like, hey, if you're selling organic dog food, let's target that. If you're selling tooth whitening toothpaste for sensitive teeth, even though I said don't talk about toothpaste, that you target people that are in the market for that, but you can also get creative in addition to that. So use this as an example. Silicone wedding rings. I've seen ads for silicone wedding rings, looking at treadmills or looking at other exercise and fitness equipment. So ways to look at, hey, what else might someone be shopping for that's very related or complimentary to my product? Or they would indicate, Hey, someone's looking for that. They would benefit from having my product as well.

Chris:

Are you doubling up there too? What's that? Oh, that's your, okay. I was looking at that. This is

Brett:

A health. So yeah, talk about this is like a sleep tracker health tracker. It's an aura ring, but same thing if you start to see, hey, this looks like this is a biohacker, this is someone who's buying all kinds of fitness stuff and supplements and crazy things like that. Let's show them an ad for an aura ring. And so you can begin to do things like that too, to find someone who's likely to be a customer of yours.

Austin:

And that's one of the other things about the audience overlap report that we can pull sometimes audiences show up there, show up in that report that it's like, why is someone that's in the market for this clicking on my product at a high rate? It shows you things that you wouldn't have ever thought of,

Brett:

Just shows you, hey, other ways to merchandise and sell this product,

Chris:

And this is a perfect opportunity to do. What I've been able to do on every podcast I've ever been on with you is that I actually was in the market for one of those aura rings, one of those little biohacking devices, but I got it down to two, but I just could not make a decision. I was just frozen because it was just an either aura decision.

Brett:

So I knew it was coming. Listeners, I should have stepped in, I should have spared you. I should have put the kibosh on it. When Chris warms up like that, I'm like, okay, there's a pun, there's a pun. There's a pun impending here. But no, that's actually pretty good either Aura, I get it. W okay, so let's do this. Let's talk about measuring DSP because this is one of the more interesting parts about DSP. I mentioned that sometimes there are people on platforms that talk ill towards D SS P I saw a Twitter storm, a good buddy of mine who's in the space texted me late one night. I was like, dude, do you see what's happening on Twitter right now about Amazon DSP? So I looked and I chimed in and I talked to my buddy and stuff, but a lot of misconceptions about how DSP is measured. So what do we need to know about DSP measurement? Austin,

Austin:

Which one thing that I tell every client that we bring on is I take especially OZ numbers. I take those attribution numbers with a grain of salt because it is view based attribution. One question that we get asked a lot is, okay, I'm selling this product. Someone looked at this product and then we showed a DSP ad and then they purchased or are they going to come back and buy anyways? There's no way to quantify that. I guarantee that some of the people would've come back and bought anyways, which is why we take the numbers with a grain of salt. There's no exact formula for accounting for that, but we do know that there has to be some over attribution just because all the numbers point that there is. So we expect ROAS numbers that are above realistic. If they're lower than what we expect, then something's probably not going quite right.

Chris:

But I think that's to be, there's some amount of that with anything you do. Facebook is going to attribute more, they're going to lean more into Facebook attribute the things that led to conversions there. It's going to lean heavier there. And so I think that's common. I do think that Amazon, because of the nature of what it is, I think you have to go into it with again, that longer view because if you fall in love with your early returns of what you see in the reporting just from a retargeting basis, those are going to change as you move more up funnel. And you've got to see over time how it impacts the bigger picture.

Brett:

And I kind of nerd out about attribution. I like it. So I'm going to give my point of view on this and try not to get too nerdy. I hear people say things like Amazon attribution is wrong, and my take on any attribution is it's only wrong if it's broken, if it's not working the way it was intended to work, that's when it's truly wrong. Otherwise wrong is probably not the right word to use. You just need to understand what is this measuring? Because when you look at Facebook attribution, it's measuring what it's says it's going to measure. If you look at Google Analytics, it's measuring according to a set of standards. One example here, and this may not be a great example for everybody, I'm not an accountant. I've never aspired to be an accountant, but you got cash accounting, you got accrual accounting.

You would never say that cash accounting is wrong and accrual accounting is right. Maybe accrual accounting is preferred for your business model. It's just two different ways of measuring. And so what you got to look at with Amazon DSP is that it's not a click-based conversion only. It's also impression based. And that actually makes sense. Now, you may be like, oh, well I can't handle impression based conversions well, but you're also buying it based on impressions. So that's why Amazon is doing it. So that's not right. That's not good, bad, right, wrong. It just is what it is. So if you know that conversions are coming in view based or click-based, that's going to help shed light on what you were looking at. And that kind of plays into what you said Austin, where yeah, we probably want to overshoot a little bit on ROAS because there may be some view based conversions that are attributed that maybe those people are going to buy anyway if they didn't see the ad. So maybe we need to be a little more conservative in our look at things. Were we going to add something to that, Austin? Yeah,

Austin:

You were talking about attribution models is you have to understand that Amazon uses last touch with an emphasis on clicks,

Brett:

Right? That's another great point.

Austin:

And I think it's across all ad types. Now. I know at one point, I think sponsored brand used a different look back, but I believe across all ad types, it's a 14 day attribution window. So if someone clicks any type of sponsored ad sponsored product brand display and then views a DSP ad, as long as they don't click that DSP ad and they still purchase within the 14 days of the original click, the click gets the attribution. So DSP is not going to get a sale attributed when A P P C click took place within the same attribution window.

Brett:

Yeah, I love that. And again, not to get too technical, that can just be too much for a podcast, but there is a little bit of setup. There's a token you have to place to get everything communicated to get DSP communicated with your sponsored product ads and stuff and sponsor display and sponsor brand. But yeah, once everything is communicating, then only one ad is going to get the credit. And so that's a really good call out. If I click on an ad and then I see a D Ss P ad, DS P is not going to get credit and I convert, or if I click on a DSP ad or just view a DSP ad first and that's what gets me interested. And then I search for you and click on a sponsored product ad. That sponsored product ad is going to get the credit for the conversion. So you got to understand what it's measuring to know how it's working.

Austin:

One thing that we haven't talked about yet, which as an agency, we're just getting our feet wet in is A M C, which one of the nice things about A M C, which is Amazon Marketing Cloud, is they have queries that give us different attribution models. So if we want to see based on first touch or last touch or multi-touch, we can see the path to conversion and maybe eight times out of 10 that in-market audience was the first touch attribution, but it's getting almost no credit because they're converting through A DSP retargeting or a sponsored brand.

Brett:

Yeah, yeah, it's so good. And there's some areas where Amazon is way ahead of Google as an example, competitor targeting and stuff like that. Can't do that on Google for obvious reasons. But then there are other areas where this comparing attribution models, like that's kind of table stakes in Google, but it's not available everywhere in Amazon, but it is inside of the Amazon marketing cloud. And that's so interesting to use a football analogy, what if someone didn't really understand the game of football and we're all chiefs fans Go, chiefs go Mahomes. What if someone didn't understand football? But they did understand that the person in the end zone with the ball, they're the one that scores, they're the one that gets points. Someone could look at Mahomes and look at the chiefs and say it's the receivers, it's the wide receivers and the running back.

They're the ones that have, they have the ball in the end zone, not that dude with kind of the crazy voice or whatever. Number 15, it's not him, it's that's the guy in the end zone. But we all know it's the quarterback that sets it up. And in some ways that's what DSP does. It's the setup. It's the setup for the actual conversion. But you can only see that if you run DSP long enough and you're measuring lift and you're measuring total sales and you're looking at your tacos, or if you're looking at an A M C report and seeing, hey, you know what D SS P was the first click or the first impression on 20% of my conversions or 30% of my conversions or whatever. So yeah, understanding the role that DSP plays, understanding how Amazon measures it all, that's really important to crafting the right strategy and knowing when to press the gas pedal and when to hit the great brake pedal as you're building your business.

Chris:

So what you're saying, Brett, is this is a great podcast or post is this is how you don't fumble in the attribution game.

Brett:

Yeah, you do not want to fumble. You don't want to get right. That

Chris:

Was a great example. I do think you got to go with that somewhere. Yeah.

Brett:

Sweet. I like it, man.

Austin:

I will say that's one reason why I like the N F L more than Amazon because N F L uses multi-touch attribution. Quarterback gets credit lineman get credit receiver gets credit. Amazon's all last touch.

Brett:

So true. Yeah. Yeah. Guys, even the N F L gets multi-touch attribution basketball, multi-touch attribution. You got assist, you got rebounds, you got points, all that. Anyway, so get with the program. No, just last click. Awesome. So let's talk about what are some other considerations here? I'm just getting, if I'm listening to this and I'm like, okay, I'm a successful Amazon seller, when do I know the time is right for me to start on DSP? And then what should I start with other than reaching out to Austin and talking to Austin? That's a given, but what should I start with and when am I ready?

Austin:

And you kind of alluded to this before, there's a point when you are running P P C ads that you're spending about as much as the platform will lets you, you're efficient, you're making money, but you've plateaued. You can't really push any further. And what I've seen is that is

Brett:

Any incremental dollar you spend is just like, it's just going to Amazon. You're not getting much out of that.

Austin:

And that's the point where DSP comes into play. If your P P C is, you're holding it back because performance is not that good, DSP is not going to come in and magically make everything more efficient. DSP is there whenever you've plateaued and you're ready to grow. I would never recommend it for a brand who is not in a great spot on the P P C side of things. Or if they're in a super big growth stage and we don't know where P P C is going to go, then we don't really know where to start with DSP whenever P P C has so much fluctuation. So I like to look at D SS P as a percentage of overall ad spend. Let's say you're spending $200,000 a month on P P C at the right spot. I'd like to be spending roughly 50,000, 75,000 on the DSP side.

Keep a one to three, one to four ratio. So if you've hit that point and you don't have to be spending 200,000, that's just an example. But if you hit that point where your P P C ads are going, well, they're efficient, but you've plateaued and you want to continue growing, that's where DSP comes into play. We like to start small with bottom of the funnel campaigns just to make sure return is going to be what we hope and expect it to be. But we also come in with a playbook that has a built-in ramp up period. So month one, we might only run minimal spend on retargeting repurchasing, but there's already a plan in place for month two and month three to add mid and upper funnel and to scale budgets. So there's no guesswork whenever month three hits. Like, oh, what campaigns do we want to start? Now we already know what campaigns we're going with, assuming everything to that point is performing, we think it should.

Brett:

Yeah, I love that. Really this DSP is a way to accelerate growth. It's not the way to fix fundamental business problems. It's not the way to grow your business when there are other more pressing issues. It's what works when you've got a stable foundation, good product, good reviews, good sponsored product, sponsored display, sponsored brand video, things like that are not sponsored display. Sponsored brand. Sponsored brand video. Then you go hard on DSP. Chris, how do you advise people? People come to you, you're the first one that people talk to, typically, what are you advising people on when they know they're ready for D S

Chris:

P? Yeah, and I would just say these are not hard and fast rules or anything. This is just strictly me having a lot of discussions with Austin and the team and evaluating brands because I could say easily, oh, you need to have at least a $25,000 a month P P C budget so that we could at least have an incremental spend to start with on DSP. This is if you're not coming in and saying, Hey, we want to run top of funnel and we've got this budget set aside and we're good for that. But I think to do having a healthy P P C spend is a good indicator that you could be successful on DSP. I'll let Austin speak to more about that. And we're also going to be ones that are going to say, Hey, we don't think we're going to analyze that because you've got to have enough sessions and visits to your product page. That's a key thing that we can't, even if you wanted to, we couldn't even get advertising. There's certain products, Amazon won't let us advertise on DSP for certain categories, but also if your sessions are running, let's just say roughly below 7,500 a month in a 30 day lookback window, it's probably not going to go anywhere, but I'd want to lean on Austin for any additional things you might say on that topic.

Austin:

Yeah, and I'd say even 7,500 at this point is pretty conservative. Even if that audience does go through, spend is going to be next. 7,500.

Brett:

What? Austin, could you clarify that? 75 or

Austin:

What sessions or with vendor accounts? It's called a glance view. So that's basically how many individual sessions of people visiting the page have occurred over whatever look back window. We do 30 day audiences, so we always look at a 30 day look back window.

Brett:

Awesome. Well guys, we have even exceeded the allotted time that I thought we would spend, but it's been so good. I still love DSP as a marketing junkie as a long time advertising marketing guy. DSP just fires me up, man. It's just unique. It's got unique targeting capabilities, it's got all kinds of data at your disposal. Some really, really cool stuff you can use with DSP. It is advanced. It's not the first thing you should do, but it is something that should be part of your growth strategy if you're a serious Amazon seller serious about growing a brand on Amazon. And so, hey, if you're interested, omg commerce.com, click on the Let's talk button and let's talk about DSP. You'll almost certainly be talking to Chris at some point. And then if everything looks good, you'll probably talk to Austin as well. But gentlemen, any closing thoughts on Amazon DSP or anything marketing related or hey, chiefs related?

Chris:

My closing thoughts would be anytime you have uncertainty in an economic environment, we see people pull back on certain areas. I don't know if I've seen as low of an inbound interest in DSP since we've been doing this for six years. To me, it lines up exactly with the economic conditions that are out there. And yet OMG has consistent advertisers that are still running DSP and I would just highly recommend that's got to go into your thought process. When people pull back. It's a great opportunity to put yourself right back in and

Austin:

A little bit more to add in. Closing thoughts on when to consider DSP. If you think of it like account health seller, account health as personal health, if you go talk to a personal trainer and your diet is trash, they're going to tell you to get your diet right before you start working out. And I like to see you P P C and DSP as diet versus exercise. We could work out all day long on DSP, but if you're not eating right, then it's pointless. Whereas if you get your diet right, you start eating well, get healthy, then you can work out and actually see gains.

Brett:

And even to go next level and to talk about my ring for just a minute, if your diet and exercise are right, but your sleep is garbage, you're going to be sunk too. So you got good sponsored products, you got good DSP, but there's fundamental business issues. We can't fix those either, but love that analogy. Love Amazon, DSP. So check it out omg commerce.com with that. Gentlemen, thank you. This was entertaining. This was fun. We covered a lot of subjects, chiefs, dogs, organic versus vegan versus meat for dogs, plus a lot of marketing. Goodness. So thanks fellas. Awesome. Thank

Chris:

You.

Brett:

Thanks Brett. And as always, thank you for tuning in. We'd love to hear from you. Connects with us on the socials. I'm actually pretty active on LinkedIn right now, so hit me up. Or check us out on Instagram and YouTube. The YouTube channel is growing, so check that out as well. And with that, until next time, thank you.

Episode 251
:
Brandon Young - Data Dive & Seller Systems

Advanced Amazon Strategies That Will Double Your Traffic & Conversions

Your Amazon listings are probably NOT as optimized as you think. Your products likely aren’t merchandised as well as they could be either. In this episode, Brandon shows you how to find obscure keywords to dramatically grow your sales and rankings. He also shows you how to merchandise your product to fly off the shelf. 

We also talk about AI, competitor research, new product development, and what it will take to get ahead and stay ahead on Amazon. 

Brandon is in an elite club of 8 figure sellers on Amazon. His brands will sell over $30 million this year on Amazon, and he’s targeting over $50 million in sales next year. 

Here’s a look at what we discuss:

  • The two main factors that impact ranking on Amazon: 1. Performance and 2. Relevance and how to improve BOTH.
  • How to find obscure keywords that you can rank for quickly to boost sales.
  • The 2 biggest mistakes sellers make when it comes to merchandising and how to fix them easily.
  • How to get feedback faster and easier on product designs so that you don’t waste time or money on products or merchandising that’s likely to fail.
  • How to use AI to quickly synthesize what your competitors are doing well, what they’re doing poorly, and what you should do about it.
  • Using AI to get a clear picture of your ideal buyer.
  • How stacking small changes can allow you to double or triple sales year over year.

Transcript:

Brandon:

I got off the stage. I walk into the hallway, a guy chases me into the hallway from the audience and says, that's my listing. I said, do me a favor and please change your title tonight. Like literally, here's the suggested title that I gave in the talk. He comes back to me the next night, we're out of social after a whole day of audience, he had his team change it. He comes back to me and he shows me a screenshot of 20 different keywords that have gone from either not indexed to top 10 immediately and says, credit

Brett:

In the bank, let's utilize that.

Brandon:

Yeah, he said, we did the math on this. We're going to make over a hundred thousand dollars more profit this year just from that one change.

Brett:

It's time for another spicy curry hot. Take the part of the show when I get just a little bit spicy. So here's the hot take for this show. You're likely focusing on the wrong keywords. Either you're shooting too big or you're not shooting for what's relevant or you're not looking at what are the untapped opportunities. Example, let's say you sell toiletries bags. Should you just go after the keyword, toiletries bags, or should you think about something more specific? Maybe you sell toiletry bags for men. Maybe they're leather. Maybe there's a waterproof component on the inside. So I think you want to look at what problem does your product solve? What are the opportunity keywords out there? What could you be relevant for and what's going to move the needle? And then are you thinking about untapped things like, I didn't even know this, but DOP kit is another word for a toiletries bag.

So focus on the right keywords and look for untapped opportunities. That's where you're going to create a compounding effect. Little wins with little untapped keywords will snowball, and then you go after the big stuff after that. So focus on the right keywords. Well, hello and welcome to another edition of the E-Commerce Evolution Podcast. I'm your host, Brett Curry, CEO of OMG Commerce, and today my guest is Brandon Young from DataDive and Seller Systems. This cat is an eight figure seller on Amazon, and so we're going to talk about how can you double your traffic and conversions on Amazon by digging into the data and understanding things that most people don't understand and finding obscure keywords and obscure opportunities and leveraging AI and understanding the algorithm and all kinds of fun stuff. I first met Brandon in Fort Lauderdale. We were both speaking at Seller Summit.

Shout out to Steve and Tony. Awesome event. You saw on Amazon, you got a 10 seller summit in the future. We both spoke there. I heard his presentation and I was blown away, and so I had to get him on the podcast. And then I also found out my team loves the tool that he designed. So data dive. It's an amazing keyword research tool. My team uses it on the Daily, and so I was just thrilled to meet Brandon and now pumped to have 'em on the show. So with that, Brandon, how you doing, man? Thanks for coming on and welcome to the show,

Brandon:

Brett. I really appreciate you having me on. It was really great to meet you at Steve's event. Can't say enough about how awesome Steve is, and it's such a little known secret, his event because he caps it on only a couple hundred sellers. He wants it to be intimate, and I tell him he could have 2000 people on an event with his following and with the following he has, but he doesn't like it. He wants it to just be one-on-one.

Brett:

Yeah, which I love that about scb and Tony as well. They've designed the event to be what they want and like an event that they enjoy attending. So a couple hundred people, those are my favorite events too. I like the big ones as well. I like speaking on big stages. That's fun. But connections community that you make in a smaller event is super cool. Really good stuff. So I'm going to send Steve and Tony an invoice for our promoting of the Seller Summit here. So you're welcome guys. But man, really excited to dive into this topic. We're going to talk ai, we're going to talk algorithm. We're going to talk.

Brandon:

Sorry to interrupt you, Brad. This is really important. We did not address Steve properly. He is now a bestselling author,

Brett:

Bestselling author, Steve Chu, which I know want him amazing props with his mom, who all of us in the e-commerce space, and I get this all the time as an agency owner, our parents, our aunts and uncles grandparents, they have no idea what we do. And Steve always makes jokes about that. His parents are like, why don't you get a job, Steve? Why don't you just get a job? I don't know what you're doing, but he got the bestseller with Family First Entrepreneur and now his mom thinks he's cool. So that's definitely a win. So y man, I'm super excited about this. So let's talk about the fact that you are an eight figure seller. That is pretty elite status. So talk about that. How'd you get started and how did you go from where most people play to the eight figure

Brandon:

Mark? Yeah, I appreciate that. We started, it was my wife and I when we were dating, we decided to start a business and we figured out what F B A was from a buddy. To me, it just clicked that that was such a scalable business model because we could leverage the billions of dollars in infrastructure that Amazon has. I don't need my own warehouse, my own employees, my own packing materials, and I don't need to ship anything myself. So I could focus on some levers that really drive growth, like product development and getting the inventory in. So we started with wholesale and liquidation, and then in 2016 we went to Canton because my wife now my wife, we got married in 2017. She is originally from China, and I looked at her and we looked at each other. I'm like, why are we not doing private label? We have a huge advantage here. So from 2017 on, we just kept scaling, doubling and tripling almost year over year. Last year we did 22 million, and this year we should do about 32 million.

Brett:

It's insane, man. So cool. Kudos to you guys. I love the way you frame that. We're leveraging the billions of dollars and infrastructure and ads and everything that Amazon's doing, and you're focusing on a few key levers, growth levers that you can pull to create really outsized returns. And so love this. Several things we're going to dig in there. We're going to talk about the algorithm. We're going to talk about under leveraged and underoptimized listings. We're going to talk about AI and some other cool tools you guys have developed, but let's talk about the algorithm first. So maybe give us an overview, your overview of the Amazon algorithm, and then let's maybe dig into some things that people are not aware

Brandon:

Of. Well, this part usually puts people to sleep, so we got to warn, pause, get some coffee, do some dumping jacks,

Brett:

Slap yourself. This will make you a lot of money. This may not be exciting, but it'll make you lots of cash. And cash is exciting.

Brandon:

Okay, good. I'm a data guy, so this stuff really, I get geeked out by it and I get excited by it, but a lot of people are just glosses over them. So data

Brett:

Tells a story though, and I know that's part of what data uncovers what's happening and what you need to do. So there's a story there. You just got to figure out what that story

Brandon:

Is. Yeah, exactly. And so Amazon needs to figure out the order that products show up on different search terms. And so a lot of people, the first, the primary is that Amazon is a search engine. It's not just a marketplace. So you really have to understand how that works. Then you have to understand that they're going to

Brett:

Reward. It's still product discovery, and sorry to interrupt you, but I think this will just be a good setup is still the vast majority of product discovery on Amazon. It's still done through search. There's the also bot, there's other places you can discover products, but it's still largely driven by

Brandon:

Search. Yeah, a hundred percent. What I'd say is there's two elements to the way that Amazon's going to decide where to rank you on which keywords you should show up. And the first part is a bucket we'll call performance. And then the other bucket we're going to call relevancy. And so the relevancy piece is really just a multiplier. So if you think about it this way, your bucket of performance is going to be your click-through rate. So how many times does your listing show up on a search result and how often do people search it? And then it's going to be your conversion rate. So once someone clicks on it, how often are they purchasing it? And then it's going to be your overall revenue that you're driving, which is a big part of it because Amazon wants to get that sweet commission from you. Amazon

Brett:

Takes a cut of that, so they want to maximize it. Yeah.

Brandon:

The other part of it is going to be that multiplier of relevancy. And the way that that works is that if you are selling a dog bowl and someone searches for dog food, they don't want your dog ball to show up, what they'll do is on the relevancy piece, they're going to make that number less than one. It might be 0.4 or 0.2 basically meaning that it's going to reduce that overall rank number that you have. If you consider it, I just got a quantifiable number of what my product score is from ranking potential and I multiply it by a number that's less than one, then that number goes down. So for every single keyword, every single keyword on Amazon, you're going to have a rank score, and then that rank score is made up of those two things. It's going to be that performance times that relevancy.

And so once we started to figure out how that works, then we realized that it can't be calculated daily. It has to be calculated over time. So then what happens is Amazon's going to run that calculation and then it's going to run it again for a three day average and then like a seven day average, a 15 day average, a 30 day average, a six month average, and so on. But they can't value all those things the same because they want products to be able a trend in the right direction to improve and things like that. So what they do is they value the newer data more. So your one day average, your three day average, your seven day average is going to be weighted more than your six month average for example. And so it started to really make sense that when you're sitting there with a product that runs out of stock for 30 days, it's really tough sometimes to recover because what happens is now you've got a bunch of zeros averaged into your performance, and so you've got your 1, 3, 7, 15, 30 day average all zeros, and all you've got is those longer term averages that are weighted less.

And so now you need to start accumulating positive history again, and it could take you another 30 days or more to really start to recover, which is expensive. You've got to spend money on marketing. You're not showing up organically. Most of your sales are P P C, and then that could be a vicious cycle because P P C converts less than organic usually, so your overall average is worse than it was before, and it becomes almost impossible sometimes with that spiral to recover. So we understand how the algorithm works, but more importantly we also understand how relevancy works. And so relevancy to make that number one, two things have to happen. You're going to get two different ways that relevancy is calculated. The first is that where the keyword is in your listing matters. So title is worth more than your bullets. So if you're in the title, you might get a multiplier of one, and if you're in the bullets, you might get a multiplier of 0.8 or 0.9.

It's going to be less. So someone that really wants to rank for a product, you'll notice. And then where it is in the title matters too, the beginning of the title is worth more than the middle of the title. So you'll notice that sometimes people will just write a title with a long tail keyword in the beginning and they're ranking in the top three for that keyword, but the really popular, also relevant high search volume keyword, they're number 20, right? And it's like why are they winning this long tail keyword when the better listings that outperform them, they sell more units are winning the other keywords, the higher search volume keywords, and the reality is it's because of the way they wrote the listing. They're getting more value there and more rank potential is what we call it. The last part of that is going to be the match type.

So if you write your keyword that someone searches in exact form, meaning that if I want to sell a diaper bag and I say, okay, I want a diaper bag backpack. If I write diaper bag backpack at the beginning of my title and someone searches for diaper bag backpack, now I'm going to get what we call ranking credit. So this ranking credit is going to be a hundred percent of the credit toward into the bank of that keyword, but if I write backpack diaper bag, I'm not going to get a hundred percent of the credit. What I'm going to get is maybe 30% of the credit because that's what we call a broad match. It's the same keywords but out of order. So understanding that the order you write the words in the match type and where you write it matters, and then understanding how the algorithm works, we've been able to basically build a listing writer that will help you maximize the rank of your product to maximize the rank potential of your product. Whether you perform or not is going to be based on how you design the product and the competition.

Brett:

Yeah, I love that so much. So thinking about both performance and relevancy, and there's some similarities. I've been in the Amazon game for a long time since 2016, but go way back on the Google side, and there are some similarities here. Both Google and Amazon wanted delight users. They want to give people exactly what they're looking for. Where it varies a little though is Amazon's primary goal is to sell customers stuff. They want people to buy stuff. So that's where you as a seller and Amazon are totally aligned. However, Amazon doesn't care if it's your product or somebody else's product. They doesn't want customers to be happy. And so I think understanding it in those two veins is super, super important. Where do reviews, where do they play into that scenario? Where would you put those and how would you weight number and quality of reviews?

Brandon:

So to me, reviews are weighted a little bit in the algorithm, but not a lot. But what they matter is going to be on the performance. So if your reviews are worse than your competition, you're naturally just going to get less clicks. So your click-through rate's going to be lower and you're going to get less conversions. Your conversion rate's going to be lower, so it's going to impact you on that performance side more than it's going to impact you directly on where you rank.

Brett:

Totally makes sense, and this is one of those virtuous cycles. You get more clicks and you get more conversions, then Amazon's happy, they're going to show it more and the higher you rank and usually the higher your click-through rate is and things like that. So really, really cool. What are some of the things that you think people miss in relationship to the algorithm? Any kind of non-obvious things that are hidden in there that most sellers overlook or most sellers don't pay attention to?

Brandon:

So I think overall people try to write their listing and design their listing to maximize rank, right? This is the goal, but the two mistakes I see people make are going to be that they don't do enough product design and testing of content at all. Even if they think they do a lot, they might make one or two main images, maybe three main images that they test, but they don't spend enough time and effort on the content side. The other side is going to be on the product design altogether. What type of testing did you do with audiences to determine that you have the right to rank higher than the current incumbents, the best sellers that are already out there? Do you know for a fact or do you have a high level of confidence that you're going to outperform the best sellers? Once you come in, now you are competing against someone with lots of reviews, usually a good rating.

You're coming in and you're trying to be the new guy on the block. If you only have a similar performance when you test, let's say you pull a hundred people and it's like 50 50, when they see what the other one has done and the history they have, it's going to be very difficult to beat them if not impossible. So you've got to have a significantly better offer. You've got to have a significantly better design to be able to come into a market and beat them if it's just head-to-head. So the last piece that I think people don't spend enough time on is the keyword research. It's really understanding how many hundreds of keywords there are that drive sales for that product, not just the top five keywords. And so most people don't realize that there are many different ways people will search for a product because we are just a product of our upbringing and what we call something based on our local vernacular. So I'll give you an example, a toiletry bag for example. What do you call a toiletry bag? Do you have any other words or ways that you call it?

Brett:

It's not something I talk about a whole lot, but would a toiletries bag also be like a makeup bag?

Brandon:

So a makeup bag could be, but that would be more geared towards women. So have you ever heard the term DOP kit? No,

Brett:

Never heard of that. There

Brandon:

You go. That's the second or third most popular way to search for a toiletry bag.

Brett:

Wait, spell that for me.

Brandon:

D O P P kit.

Brett:

What parts of the country or world is do

Brandon:

Kit? Midwest, I guess

Brett:

Midwest. Interesting. I'm a Midwest guy. We call it toiletries. We must be like upper crust Midwest or something because I've never heard,

Brandon:

But I'm telling you, tens of thousands of searches a month for DOPP kit. And then you've also got bathroom bag, you've got travel bag, you've got men's travel bag, you've got men's bathroom bag, you've got all these different keywords that, and then you've got all the different material types. You've got leather, you've got any type of bag you've got there, canvas. So this is just an example for toiletry bag alone, you might have a hundred relevant keywords with a significant search volume, and you're really only when you write your listing based on what the research you've done and what you think, you're only going to hit 50, 60% of those keywords, 50 to 60% of that potential search volume is a better way to look at it. So what we've gotten really good at is saying, okay, how do we reverse engineer and find all those different ways people are searching?

How do we find all those keywords? And so there's a tool like Helium 10 that allows you to maybe do a reverse asin. So you can put a product in there and then it'll tell you all the keywords it's ranked for or indexed for and where they're ranked. Now that's helpful, but a product might be indexed for thousands of keywords, but index doesn't mean it's relevant. It just means that you could be on page 15 and doesn't matter. So how do you really start to take that data and make it useful? What we've done is we've started to look at the top 20 or 30 sellers, and then once you combine all of the keywords that all of them are ranked well for, and you eliminate the noise and you add a relevancy formula that helps sort all that out, now you've got just the keywords that drive sales for that product and a score on 'em like is it a loosely relevant or is it highly relevant and is it something I should be building into my title or is it something I should be targeting in the backend?

And so we really start to understand the whole picture, and it all stemmed from a mistake we made. We had a product that we launched and it was a toy that lights up, it's like a Lego type toy with lights inside of it, and it was really cool. I looked at it and it was a plane, it was a train. You could make it into any five or 10 or 15 shapes, and there was a competitor on the market. So I said, okay, well, they're doing well and they're in stores and we could sell that. It's cool. Every kid would want to have this. And we didn't sell more than five units. The problem was that we could not find keywords to rank it for because no one is going to search for Lego and then buy my random step. It's going to be almost impossible to maintain a rank on any Lego keyword because all the Legos are going to

Brett:

Be, you can't mention Lego. Lego is a brand term, so you can't really mention that in your listing.

Brandon:

Yeah, it's very difficult to maintain rank or get ranked or even on P P C. No one's going to click on it because if they search for Lego, they want Lego. So that's the question that I had to start answering, which was before I developed and launched and did anything with a product or even researched or validated or whatever, I had to answer the question, how are the current sellers getting their sales? What are the keywords driving sales? And can I duplicate or beat them? And if I answer those questions, then I'm going to have a very high batting average when it comes to finding, launching and developing products.

Brett:

I really like this and I like the way we're framing it here. I like the way you're framing it. It is kind of two parts. It's one part merchandising. How do you make your product jump off the shelf, so to speak, and make people want it, make sure that it looks unique and it answers that question of, okay, this is the product, this is what I'm hoping for and what I'm wanting, it's that zero moment of truth or first moment of truth that they used to be used on physical retail shelves and how do you make that thing jump off? And a lot of that's going to come back to user testing. So we're going to get into that in a minute. The other part is really SS e o, and that's actually the very first thing I did online was ss e os started doing s e O for Google back in 2004. A lot of similarities between SS e o on Google and on Amazon with a few key differences, but a lot of times we're like, Hey, I just want to rank for toiletries bag. Well, okay, good luck if you're just starting, that's going to take a little bit of time. But there's a lot of money in the long tail and the really long, more random, more specific keywords, there's a lot of money to be made there and things

Brandon:

That, well, not only that, right? I think that a lot of people underestimate those long tail keywords for helping to pad your metrics. We had talked about performance being a major part of your ranking, those long tail keywords that if they're super specific and relevant, you're going to convert much higher on those. So those being blended in, even if it is only a sale a day or a sale every other day, but you've got 50 of those keywords, that extra high conversion rate being averaged in is going to help you rank for those bigger

Brett:

Keywords, those click-through rates and conversion. It's a really high on long tail, which has a compounding effect as well. So that's great. Awesome. So let's talk more about that. So the keyword side of things, the relevancy side of things. So how are you uncovering that? So you're taking top sellers of a given product, cross-referencing what they're ranking for, applying a score, determining what of those keywords is actually moving the needle versus what's not, and then anything else you'd want to add to that, and then where do we go from

Brandon:

There? So the whole thing is once we understand how are they getting their sales and what can we duplicate? And what you'll find is a lot of the best sellers have what we call outlier keywords. These are going to be those generic keywords that you realistically can't duplicate. If you launch a brand new toy, you're not going to come in and rank for toys for three-year-old girls, right? It's just not going to happen. You can try, but you'll just fail miserably. You don't have that foundation of all those other relevant keywords. So what we're finding is that once we see and we can paint the accurate picture of the market and we can understand, okay, these best sellers are selling 6,000 units a month. The next guy's selling 4,000, the next guy's selling 2000, and then all these other guys in the middle are selling 1500 units and they're ranked for 60 to 70% of the search volume relevant search volume.

We see that that's kind of more in line of what we can expect to sell because we're not going to duplicate the success of these best sellers necessarily because they're ranked for almost all of the relevant search volume and they're ranked in the top of those search terms versus being in the 10 to 15 range, which is where you'll be in the first week to two weeks. So we really start to understand what can we realistically expect to sell? How many should we order? What are the keywords that these better sellers are ranked for that we can't duplicate and what can we duplicate? And so it's about painting the picture to make sure it makes sense and understanding if the market's too competitive or saturated or if there's not enough keywords. So really we get to answer all of those questions from good keyword research,

Brett:

Any anecdotes, any stories of, Hey, we uncovered these keywords for this product or for this category, we put them in the listing, we start focusing on it, and this is the impact that made.

Brandon:

Oh, hundreds and hundreds of those. So not just from me but from students or from users. I get sent screenshots on a regular basis where once you lay this out, for example in DataDive, you get what's called the master keyword list. And so it's what it sounds like. You got all the competitors laid across the top, you got all the keywords on the side, and then you got all the ranks. And so if you put your product on there and you're like, oh, wow, I just have this giant hole where I'm just ranked 35 or 55 for these keywords that all share the same root word, the same exact word in them, and you're like, well, what am I doing wrong? And then you go look at your listing, you realize you didn't write it in there, you don't have it in your listing. Amazon's not sure it's relevant.

So all you have to do is unlock that relevancy piece by writing it into your listing. So you might have multiple holes. What we recommend with a revamp is to go in and say, okay, pick one root word that you realize you have a weakness on. Put it in your title. Put the best keyword with that root word in your title and see what happens Within 6, 8, 10 hours, you're going to see a movement in your ranks. You're going to see a movement going up because you've established relevancy and now all of a sudden you had credit in the bank and now you unlocked it. That's the way it works now. Or what you took out of the title was more important, and now you see a downside on some, so you have to change the listing back right away, the title back right away. So we never recommend changing the whole title right away.

If you've got an existing listing, just maybe one keyword at a time, one root word at a time. But I'll give you an example. I was speaking at an event at Kevin King's billion dollar seller summit in Austin, and I was using a case study. I was randomly looking at card shuffler one time, and the bestselling card Shuffler was selling a lot more card than everybody else, but there were a few keywords that he was ranked maybe 35, 55, just not ranked well at all. And he was top three for every other keyword. And I was like, okay, well that's a clear sign to me that he's got credit in the bank for those keywords, but Amazon thinks it's not relevant. All of those keywords, the route that they shared was two deck, two deck shuffler, right? Or one was two to four deck. So the thing is he was selling a six deck shuffler that could also shuffle two decks.

I gave the example. I said, look, without a doubt, if this guy goes in, he's got credit in the bank, if he changes and just adds two deck into his title, he's immediately going to rank better for those keywords. And I got off the stage, I walk into the hallway, a guy chases me into the hallway from the audience and says, that's my listing. I said, do me a favor and please change your title tonight. Literally, here's the suggested title that I gave in the talk. He comes back to me the next night, we're out of social after a whole day of audience, he had his team change it. He comes back to me and he shows me a screenshot of 20 different keywords that have gone from either not indexed to top 10 immediately and says, credit

Brett:

In the bank, let's utilize that. Yeah,

Brandon:

He said, we did the math on this. We're going to make over a hundred thousand dollars more profit this year just from that one change.

Brett:

But that's something you wouldn't have thought of because it's a six deck. It's not a two shuffler, but when you understand that, yes, but it'll also shuffle just two decks if you want to do that. And that's what people are looking for and that's how you become relevant and that's how you sell more units. And so that is awesome. So that's the SS e o side. I know we could talk all day about that. There's more resources on your site and your podcast where people can dig into that. So we'll talk about that later. But let's talk about the merchandising piece. And I know this is something you're very passionate about, that a lot of sellers are just trying to sell something without clear differentiation or without understanding what does the marketplace actually want. So what do you recommend when it comes to testing your product and testing some of your merchandising elements like pictures and design features and things like

Brandon:

That? So one of the, after I validate a product that I want to do it, I have to figure out how I'm going to win. So one of my favorite things to do is to work on the design side. And for the last eight months or so, since the beginning of the year, I've been playing with Mid Journey. So Mid Journey as an AI text, two image generator. And so you type what you want it to generate an image of and it pops it out. And so I've realized that the skill that you're going to need moving forward is going to be what they call prompt engineering. It's going to be how do you talk to this AI to have it give you back what you want? And so I've taken two trips to China this year because I've spent so much time doing custom products, and we have a travel brand, we have a toy brand, and so we are just designing a ton of characters and the usual unicorns and princesses and mermaids and dinosaurs and stuff.

So just spending a ton of time developing new characters. And so once I look at the incumbents or the best sellers, I take their product. Now, if I just need to design the character, I design the character, my team puts it on the product, but sometimes I can get the AI to give me the full product already done with the image I want. And so straight out of communicating with this ai with Mid Journey, I can take that image and I can take the main image of the top three sellers and I can go into a product like a software like pfu, and we can ask 50 people, which one would you want to buy? And if I'm getting more than 50% of the votes against the top three bestsellers that are already on the market, I know I've got a slam dunk. And then so

Brett:

I love that tool, by the way. It's an underrated tool. And I know we're talking ai, we're talking a lot about a lot of things, but pick Fu John and Pick, I think hes one of the founders or whatever, but such a simple affordable tool, but yeah, allows you to get feedback from real people on which image do you prefer, which product would you buy? Things like that, that really can save you so much time, so much money, and really just set you up

Brandon:

For success. And just on LinkedIn, I posted a slushy cup. I was in a talk showing my inner circle. I've kept my AI product development stuff kind of more tight because I think it's really going to disrupt the market. If you're not using AI for product development, you're in a bad spot in six months, 12 months, you might not have a business. This is truly how fast I think product development will go moving forward. You can develop products a hundred times faster, a hundred times cheaper, and they will be better. You're going to convert, you're going to have better designs. And so the old style of waiting for a designer to give you back five concepts and then choosing the best one that wasn't really that great anyway is over. And so straight out of mid journey, you're about 90% of the way there. You have your designer clean it up and then make a decent main image out of it, and then you compare it.

And so just in the class where I was showing the strategies around how to prompt the prompt engineering class, I asked for a suggestive product and someone said a slushy cup. And now I made a Spider-Man slushy cup because first of all, I'm not going to get the licensing to make a Spider-Man slushie cup from Disney. Maybe with this cup I could if I send it to them, to the right IP legal team or whoever's in charge of it over there. But it was just as an example, this cup is 10 times better than anything currently being sold on the market, any of the current bestsellers that are crushing. And what I can do,

Brett:

We can show up for those that are watching the video, and then we'll post a link and actually, hey, if you only listen to the show, which is totally fine, by the way, check out the YouTube video, check out the YouTube channel or check out. That's a really good point. The podcast site@omgcommerce.com on your podcast. See, I excited to see this slushy cup. Now I will confess I'm not 100% certain. I know what you mean by slushy cup.

Brandon:

So this is a new product that you free some stuff, then you add some juice and you squish it together. It's like silicone. You squish it together, and what ends up happening is you make it into a little slushy at home. It's like an at-home slushy type thing, but the designs are so generic, just absolutely a generic. So

Brett:

Now as a preview, what we're about to see, this was just AI generated. So you worked with AI through prompts and Mid Journey and that's how you designed this?

Brandon:

Yeah, all I did was say make me a Spider-Man slushie cup. But I did it in a certain way with certain features and prompted it in the right way, but it wasn't that difficult to get to this product.

Brett:

Dude, that's pretty sick. So we got it. For those that are just watching, it's like a closeup of the Spider-Man face mask or the mask. So the eyes are real big. It's got a pretty cool, I can't tell what's going on with the lid actually from my vantage point. But yeah,

Brandon:

There's no lid currently on this. The lid is going to be separate to put on to drink out of, but it shows the slushie spilling over the top.

Brett:

Dude, that's pretty sweet, man. If I was like a eight year old boy, I would totally rock that slushy cup. You're going

Brandon:

To buy that or your parents are going to buy it instead of a generic one. I could charge twice as much as the current bestsellers and they're going to be like, man, I got to get my kid the Spider-Man one. I got to do it. But I'm doing so many products, I've got hundreds of products right now. I'm going back through my catalog. And one of the things that you need to understand also is that I need to go disrupt myself. I'm going back to my current bestsellers and I'm saying that's not going to be good enough six months from now and I'm making 60, 80, a hundred sales a day better

Brett:

You disrupt yourself than somebody else. So you've got to be preemptively thinking this top seller won't be the top seller forever. So what's next?

Brandon:

What is next? And how do I beat myself? And so I have a list of new products we're developing. I have a list of existing products I need to add variations or new heroes and really just update designs on and just keep outwork the competition so that we can scale to that 50 million mark next year.

Brett:

Love it. That's awesome, man. Any other tips or insights or resources on how do we make sure we're really leveraging the design? I think you've mentioned to me something about you've got a new tool that mines reviews from competitors' products and gives you a summary of what's there.

Brandon:

So it's a product brief tool that this is all the work that we would do with developing a product anyway. We need to go in and see what are the features that we need to add into the product. So if I'm handing a product brief to a factory and I say, okay, needs to have these types of zippers, this many pockets, it needs to have this functionality. Let's say a diaper bag for example. It needs to have a cooler pocket in the front. It needs to come with a changing pad, it needs to have stroller straps, it needs to have a security pocket in the back. But the way that I would come to that conclusion is that I would have to spend dozens of hours going through the top 2030 sellers looking at all their reviews, looking at the features that they all have, finding out what people want, what they don't want, reading the questions and the answers.

Every single product you develop, you need to be doing that. But now AI can do that in a matter of minutes for you instead of dozens and dozens of insane hours. So the tool we just released in the DataDive is the AI product brief tool. You select the competitors, you hit a button and it comes back and it spits out all this information. It tells you these are all the features they all claim to have. You can check 'em off and say, okay, I want that one, I want that one, I want that one. These are all the things people say they don't like about it. These are all the things people say they like about it. Here's some suggested improvements that the AI thinks you should make into the product. And the AI gets involved in helping you develop the product

Brett:

Better. It's reading all the negatives in all the positives, and it's making inferences there and it's saying, okay, this is what we would do.

Brandon:

And then even based on what they figured out the product is, they come back and tell you the top eight avatars, the top eight buyer personas that would buy this product and why they buy it, which to me is magical because you're a marketer as well. So you know that you need to trigger someone's buying a part of their brain. Why are they buying this? What is the value to them? What is that trigger to get them to pull the

Brett:

Trigger? And it's one of those things where the more you understand about your customer, the more directly you can speak to them, the more directly you can design for them, the better you'll be able to zero in on the right keywords when you understand that avatar. And that's something that I think a lot of business owners, and I would say Amazon sellers are definitely in this category. You don't really know who your buyer is. You don't really understand them at a deep level. Now I'm curious, how is the AI by looking at that? How are they understanding who the avatars

Brandon:

Are? Look, I don't know how they do it, but it's pretty magical. So it's just inferring based on the product type and then it's knowledge based pulling from its G PTT category,

Brett:

Product type keywords. Look at all that.

Brandon:

Yeah, so it's inferring based on the questions, the answers, the reviews, the type of product, and it just kind of digs through the whole world wide web and says, okay, these are the top eight people that would buy this product pretty insane. And then after you've selected everything you want, you got those suggestions, you hit a button and it generates the brief that you can now hand to your factory and say, this is how you make a much better product than what's on the market.

Brett:

Dang. So going from idea to really doing all the research that you want to do, putting that together really. Now, and you mentioned this with Mid Journey as well, where you're getting a starting point now with AI and then you're refining it, you're getting a starting point here with AI and you're letting it do all the legwork, then you're refining it. We're not just letting AI do all the work, right? It's not ready for that yet. It may never be, but it is very much ready to do the initial grunt work. And then you're refining and polishing and getting ready and then taking action from

Brandon:

There. And all of that is after you've already validated the product from a keyword perspective. So you look at the competition, you understand that you can beat them from a S E O perspective. Now it's just a matter of making a better design.

Brett:

Brandon, this has been awesome. We could dig into each of these topics at link, but we are up against time. So let's do a couple of things. Let's talk about data Dive specifically. And as I mentioned Team O M G, we love DataDive. We use it on the daily in our agency, but how can someone learn more about DataDive and who did you design DataDive for?

Brandon:

I appreciate that. We designed it for ourselves really. So the reality is we were developing these same exact processes to validate products and choose products back in 2016. This is maybe even back as far as 20 16, 20 17 before Helium 10 even was out. We were piecing together keyword data from seller labs and from viral launch. And so we were having to do VLOOKUPs and try to match keyword search volumes, try to understand who was ranked for what and what keywords were driving sales. And this is all after we made those mistakes. And really I was like, before I pull the trigger on another product, I want to know how I'm going to sell it. That's it. That was like, and I need to know that. And that's where we started. So then once Helium 10 came out and Cerebro came out, we started pulling. They allowed you to start pulling 10 competitors at once.

We would pull that raw data and start manipulating the data. We did that for every single product that we've developed. And then I started teaching in 2018 with seller systems and we started teaching how to manipulate the data and how to create this master keyword list manually where this changes is. A few years ago, two and a half years ago now, my now C T O joins, he was formerly the c e O of the largest development firm out of Romania. And he's semi-retirement, starting a business in retirement and stumbles across me and says, I'll learn how to sell on Amazon. Now I can do it from anywhere and I don't want to work 90 hours a week anymore. But the first thing he says to me when he watches the first class, he dms me. He's like, why is this not a software? This needs to be a software. There's a lot of work that could just be automated. He's like, with your permission, I want to hack together like a Google sheet that has macros that can just do this automatically. And I am not looking to make money on it all. Let the community use it as well. I said, yeah, for sure. We have an abundance mentality. We're all about it for sure. It leaks out of my inner circle. Within two weeks we had 2000 people using it.

Brett:

We might be onto something. I

Brandon:

Said, okay, well we've got product market fit. I said, maybe we should put some money behind this. And so here I am. I'm nearly $3 million invested into this software now, and it does

Brett:

So many people, I don't think people fully understand because we tried to build just a small tool for our agency. Dude, it's so expensive. So yes, software and SaaS maybe may feel expensive to some people, but dude, it takes immense amount of capital to build it and then to maintain it. And yeah, so hats off to you guys for doing that.

Brandon:

No, I appreciate it. Yeah, luckily we're blessed. We do well with our brands. We do well with the coaching, and so we've just been pouring our extra money into the software to keep building it, bootstrapping it, but I'm also impatient, and so I don't do anything unless I'm going to do it big. So I said, I'm not going to have five programmers and take three years to do this. We ramped up to over 20 programmers and really have just been hammering out tools and staying on top of it. And so the fundamentals are, it gives you that master keyword list. It has a product scorecard to give you a quantifiable number as to what the potential risk of doing a product is. So it helps you look at things like R O I, how good the images are for the competitors, the SS e o of the competitors, just all the different elements you'd want to answer before you pull the trigger on a product.

And it gives you a quantifiable score whether you should move forward with that product. We have a listing writer that takes into account the algorithm and gives you a quantifiable score of your rank potential. So we think it's the best in the market. The new AI tool we just launched there yesterday as well is we tap the AI to write your bullets, but we do it in a way where we're telling the AI and we're telling you which keywords to make sure you still include. So anyone can just throw a listing or ask chat G B T to write their listing. But that's not going to rank for all the reasons we talked about earlier in the show, which is you need to know what keywords to put where and in what order. And so you need to know the data first, and then you need to have the AI write it in a way that also incorporates those keywords.

So we did it in that order. The AI tool now writes your bullets and does it to maximize rank. We also have some P P C tools. We have a really unique way of doing P P C as well. We group our P P C keywords based on root word. So we want to make sure that they share a common word or phrase because what we found is that keywords that share a common word or phrase will perform similarly. So if I'm talking about all the keywords that have gray diaper bag and there's a lot of long tail keywords that have gray diaper bag, I'll put five of those together, those all should still perform pretty similarly. So I'm not getting something performing good and something performing bad in the same ad group. And what that does is it helps boost the quality score of that campaign. It lowers your cost per click faster. It's just a much better way to optimize as well. So the software helps you do that. Then we've got a dashboard. We've got a keyword tracker that's in beta. We've got a dashboard and some P P C tools coming out as well. So a lot of development, a lot of things we're doing

Brett:

Totally worth checking out. So DataDive tools, get it, data dive tools, check that out. Also seller systems.com. If you're interested in coaching or learning, I would

Brandon:

Love to have your audience get a discount code with your code.

Brett:

Let's do it, man. Let's do a discount code. Why not?

Brandon:

So for anyone listening, if you use the code O M G, you will get $50 off per month on DataDive Sweet, and you will get a thousand dollars off if you join my mastermind. The inner circle, we've got over a thousand members in there, over 407 and eight figure sellers all helping each other. Weekly calls, five to 10 live classes a month, lots of live events in person. So

Brett:

That is a deal. $50 off a month for DataDive and then a thousand dollars off seller systems code O M G, write that down, utilize that.

Brandon, been a ton of fun, man, super informative. I'm all jazzed up as a result of this conversation. Thanks Brandon, and thank you for tuning in. And as always, we'd love to hear from you. What would you like to hear more of on this show? If you haven't done it already, leave us that review on iTunes. Also connect with me on the socials. I'm getting pretty active on LinkedIn, almost daily posting on LinkedIn. Brandon's a good fall on LinkedIn too, so check out Brandon there as well. And with that, until next time, thank you for listening.

Episode 250
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Trevor Crump - Bestie

What You Don’t Know About Your Customers Is Costing You

Post-purchase surveys can teach you a lot about your customers, and no one knows that better than my most recent guest, Trevor Crump. 


Trevors is the co-founder of Bestie, which is one of the fastest-growing post-purchase apps on Shopify. 


We talked about the key questions you should ask your customers and how you can turn their answers into extra cash! 


Make sure you give this episode a listen to learn key things like...

  • The 3 questions that need to be on your post-purchase survey. 
  • Where your customers are coming from (because we all know how hard attribution can be). 
  • What Trevor has learned from running one of the most popular post-purchase survey apps on Shopify. 
  • Plus, some of the most surprising things surveys can reveal. 

Transcript:

Trevor:

So one of the things we talk a lot about is you've got this, there's a lot of trends out there that merchants follow. Oh, I'm seeing a lot of people do use U G C right now, so I'm going to create U G C. I see a lot of people creating listicle ads such as for the five reasons why I bought Tushy or whatever. And so I think that there's this two-tone approach that you need to go about. The brand should go about things. One is I think that following trends can be great. Try to be early in some of those trends because you'll see that U G C is still super important, but it is not doing what it used to do and people are starting to see through a lot of it. So you got to go a little bit deeper.

Brett:

It's time for this spicy curry hot. Take the segment of the show when I get just a little bit spicy. Let me quote Mark Twain for you. He said, it's not what we don't know that gets us into trouble. It's the things we know for certain that just ain't. So. Now I believe what we don't know about our customers is hurting us, but I also believe there's some deeply held beliefs, myths we have about our customers that just aren't true. As an example, I think a lot of people believe they know the reason their customers buy from them, but often they're off base. So one of the things we talk about in this show is a brand who believed the two main reasons people bought from them were one, cost savings, and two, the fact that their product was environmentally friendly. It turned out as they asked their customers, less than 10% of people believe those two reasons were important in purchasing.

And so can you imagine what if you were crafting all of your sales pitches in a way that only landed with one out of 10 in your audience, or you could shift it? And when you really know why people buy now, you can craft your message so that it strikes a chord with nine out of 10 of your ideal prospects. So what myths do you have that need to be busted? Hopefully we'll answer that on this show. Hot Take over. Well, hello and welcome to another edition of the E-Commerce Evolution podcast. I'm your host, Brett Curry, c e o of o m g Commerce. And today we're talking about do you really know your customer? Do you know them as well as you think? Do you, I mean, do you really, really know them? Because if you knew your customers better, I bet you do at least a few things differently. And so today my guest is Trevor Crump. He is one of the co-founders of Bestie Bestie app, and so excited about this topic. I'm very passionate about it. I love the tool that Trevor and team have designed. Trevor is a fellow podcast host, so when you get two podcast guys together, it's going to be a little bit nutty. It's going to probably go off the rails, it's going to be valuable, but it may go off the rails. So with that, Trevor, how's it going, man? Welcome to the show and thanks for taking the time.

Trevor:

Yeah, man, I'm super excited to be here. Really, really appreciate it. Yeah, I actually love interviewing other podcast hosts because dude, so

Brett:

Fun.

Trevor:

It's a blast sometimes when you're interviewing somebody you never know, are they going to be short-winded? Are they going to be long-winded? Am I going to have to be cutting this person off? Am I going to have to be stretching for questions? And so sometimes the episode doesn't go where you think it should go, but it always turns out super entertaining and super valuable. And so I am a big fan of it, man.

Brett:

Yeah, me too. Because yeah, and really, I don't know which is worse, you have a guest who really doesn't say much. That's difficult, but you can also have someone that just doesn't know when to stop, and then you've got to interrupt because it needs to be a dialogue. If it's not a dialogue, it's not an interesting radio. And so yeah, I like interviewing podcast hosts as well, because what I'm always trying to do just for fun, when someone asks me a question, I'm a guest on another podcast, I'm trying to think how do I package this answer in a way that's authentic, meaningful, fun, but also where I don't talk for seven straight minutes because the host wants to talk to right? And the listener needs that. So that's awesome, man. So first of all, what is your pod and why did you start down the path of podcasting and yeah, tell us a little bit about that. Yeah,

Trevor:

So our podcast is called the Unstoppable Marketer. It's specifically meant to interview marketers and entrepreneurs in the D two C space. So we interview founders, we interview VPs of marketing, CMOs, et cetera. And it's just really to figure out where were you before, where are you now, where are you going and what are you doing to get there and what are some of those big mistakes? And so yeah, I've got a following on social media on Instagram and TikTok that's a decent size, and so was doing a really good job at the short form content side of things. At the time, our main business was actually a marketing agency. So rather than you're very specific on the YouTube side of things, Google side of things, we were very specific in TikTok and Meta. That was our big time breaded butter, little Google too as well, just as ancillary. But TikTok and Meta was where

Brett:

Supports it well, provides a good underpinning for TikTok and other socials. Google kind of closes the deal.

Trevor:

Yeah, absolutely. And so I was getting so much traction, so much interaction on my short form content that I needed to complete. We wanted to complete that funnel. And so we said, let's create a podcast for the people who I've just learned that anybody can be a short form content. It's pretty easy, especially with AI nowadays, if you're good at speaking, you can literally have AI write everything out for you. And as long as you can present it, you can look like you're super knowledgeable when you may not be. And so we said, let's create a podcast, and me and my business partner, we love to just talk and we love to meet other people. And so we created the podcast and it's been awesome ever since. Man, it's been really successful. It's got us a lot of good contacts and also a lot of business.

Brett:

That's one of my favorite parts about the podcast is just the people you meet. You get to hang out for an hour with smart people like you, grilling you with questions and learning, and you get to share that with people. And you're right, you can fake a two minute, one minute TikTok video. It's pretty hard to fake a 45 minute interview. And so the truth comes out when you go long form, which is super fun. So let's dive into a few things. First of all. So to kind of have a preview for the audience, we're going to talk about how do we get to know our customers better? How do we craft surveys, what do we ask? When do we ask it? How do we then use that to improve all the metrics we love like lowering CAC and raising L T V and all kinds of good stuff. So I can't wait to get into that. Also, going to talk about some surprising lessons like, hey, you thought this about your customer, but then actually the opposite was true. So we're going to get into that in a minute. But you ran an agency and then you pivoted to bestie app. Talk to us about that. Why'd you make the pivot? When did that happen? Why did that happen?

Trevor:

Yeah, super good question, man. Actually, before I started the agency, I was formerly A C M O for a big eight figure brand out here in Salt Lake City called Fond Design, which is a women's diaper bag and accessory company. And at the time, this was back in 2018, attribution tools were really, really expensive. I mean, they still are, right? But they were really expensive back then, and I could not convince my C M O or not my cmo, my C F O to get us, give me the budget for an attribution tool. And so we just were doing a little research, we were trying to figure some things out at the time, back in 2018, it was over attributing everything to us. So now it's under attributing. Back then it was over attributing meaning like Klaviyo, if my Shopify said I made a million bucks that month, Klaviyo's telling me that I made 500,000. Facebook's telling me I made 700,000. Google's telling me I made 300,000, but I'm only making a million, right? Yeah.

Brett:

So according to all the tools, the aggregate of 2 million, but you only made a million. And so yeah, exactly one over index thing over attributing. Now post I was 14 really under attributing,

Trevor:

Right? A hundred percent. So it's like, Hey, we got to figure this out. So we were just doing, me and my e-comm director, we were doing some just brainstorming and we saw that our email open rate for our thank you email was like 80% right? And normally our open rates back then were like 20, 30%. And I'm like, holy cow, 80% open rate, 50% click-through rate. This is massively valuable real estate. It's that confirmation, Hey, your order was placed. Here's your shipping information. So we just got a freemium account on SurveyMonkey and we asked three questions. We said, Hey, how did you hear about us? What brought you to the website today? And how long have you known about us? And let's see if that just information gives us some solid information. And we started learning things about our customer that we had no idea, and it became the most pivotal piece of the puzzle when it came to us understanding how our customers heard about us.

And so we started running surveys like crazy through that. So the moment we got enough attribution surveys, then we started asking questions about why they were buying the product. Then we started asking questions about who they were, what podcasts they listened to, what influencers they followed. And it just became the catalyst to so much that we did. And so fast forward, it helped us scale from this seven figures to an eight figure business. Fast forward back to this agency and we just kept finding that a lot of D two C brands, all these companies that we're working with these merchants, none of 'em were talking to their customers. The way they were talking to their customer was usually through dms or an Instagram poll. That was the majority of their conversations. And so we thought, Hey, listen, remember we did this back then let's find a way to automate this and build this process out and really help brands get a better qualitative understanding of who their customer is and what makes them tick. And so we started to develop bestie in 2022, just going through developers overseas and contractors and Fiverr and going down all these routes. And eventually we came with product market fit in first of this year, got approved on the Shopify app store and really just started grinding and getting more and more customers and the rest has been history.

Brett:

Love it, man. And I know you guys are really growing rapidly and I love this process. So let's talk about those three questions for just a minute. And you guys went low tech, right? Or lower tech, right? You used that thank you email. You used SurveyMonkey, right? We got inexpensive tools available if you need 'em. And I know Bessie is inexpensive as well, but yeah, you hear about us, what brought you here today and how long have you known about us? And I think once you get these answers, then it just blows your mind. You're like, wait a minute, I didn't know that. And now that I know that, now I want to know more. And once I know more, then we can start changing things. And so what were some of the surprising things you guys learned? And you said that was called Fawn Design was the name of the brand. What were some of the surprising things you learned in that first round of questions?

Trevor:

Two really big things that we learned. One thing that we learned was that 40% of our audience, the first time they heard about us was through word of mouth. So that was the biggest channel. And as you know, there's no attribution tool that can account for word of mouth. There will be. And so we always had this fear of, okay, hey, we're at our highest CAC possible right now, so any more money we spend, we start to go over that CAC and things become inefficient. And so that was a huge learning is we were stuck in this spend of 50,000, $60,000 a month. And when we saw that, it's like, okay, hey, 40% of our customers first heard about us through other people buying the bags and then walking around with them. So essentially the way we sell more bags is by selling more bags. Exactly. Does that make sense?

Brett:

Each bag you sell is now a

Trevor:

Walking advertisement

Brett:

Billboard. And now that new customer is not just the value of the new customer, but now they're going to be attracting other customers.

Trevor:

Well, not only that, but moms, if anything about the mom world, anything that helps moms be better moms or look like better moms from a style aesthetic perspective, they are going to shout it from the rooftops all. Absolutely. So not only did we say let's try doubling spend and just see what happens. Can I get approval from our C ffo and can we go from 50 grand a month to a hundred thousand dollars a month and just see what happens

Brett:

There? The CFO didn't sleep good that night. Trevor, the CFO was like, man, I don't want to release this money. But

Trevor:

After 40 days, all of a sudden, like CAC went up a little bit, but it was like, Hey, just keep with it, keep with it, keep with it. The other thing that we learned was that our buying cycle was under 30 days. So that was the other thing for us. So it was like, okay, cool. We theoretically should see the fruits of the labors of the word of mouth by doubling our spend within a month here. So it's not like we're going to have to go six months and hope this is going to work and have a really, really bad CAC for six months, but then it's going to start to get better. So that was huge for us.

Brett:

Love that. So you found this key insight word of mouth is driving 40% of business, so let's just sell more bags to sell even more bags, but then knowing 30 day selling cycle, we don't have to commit to a test for that long, so let&