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Episode 288
:
Eugenia Chen - Pandaloon

The Viral Content Formula: Create Content that Captivates & Converts

In this episode of the eCommerce Evolution Podcast, Eugenia Chen, founder of PandaLoon and CEO of Huxley Media Group, shares her secrets to creating viral content that can propel your brand to new heights. Discover the science behind crafting videos that captivate audiences, drive engagement, and boost your product's visibility across multiple platforms.

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Key Takeaways:

  • How PandaLoon drove 30 million organic views in just a week and 160 million organic views in the months that followed.
  • Understanding the importance of emotional hooks and how to grab viewers' attention.
  • Learning how to keep your audience engaged until the very end.
  • Exploring the differences between popular platforms like TikTok, Instagram Reels, and YouTube Shorts, and how to optimize your content for each.
  • Gaining insights into the power of organic content and how it can significantly impact your brand's success on platforms like Amazon.
  • Discovering the benefits of appearing on Shark Tank and how to capitalize on the exposure to drive sales and establish credibility.

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Tune in to hear Eugenia's incredible journey from math professor to successful entrepreneur, and learn how you can apply her proven strategies to create viral content that will skyrocket your brand's reach and engagement.

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Chapters:

(00:00) Introduction

(08:20) Eugenia’s Experience on Shark Tank

(14:17) The Science Behind Virality

(31:02) Which Platform Is Best? 

(36:09) Using Organic Content For Ads

(38:19) Conclusion

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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, Bryan Porter and more. 

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Other episodes you might enjoy: 

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Transcript:

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're talking about the science of going viral. The best brands that I know today are thinking about and investing in organic content. And so my guest today is the CEO and founder of Pandaloon, which if you're a dog lover and you're on TikTok or Instagram, you've maybe seen some Pandaloon videos. These have for sure gone viral. So we're going to dig into that. And she also runs Huxley Media Group, and so really has a unique outlook on viral content and D two C and growth. She's been on Shark Tank, all kinds of fun stuff here, and so I'm delighted to welcome to the show, miss Eugenia Chen Eugenia, how it going?

Eugenia:

It's going great. It's fun to see you after Seller Summit.

Brett :

Yeah, I got to hang at Seller Summit with our friend Steve Chu and Tony, and what a great event, man. What an awesome event in Fort Lauderdale and heard your story there and thought, got to get you on the podcast. So for those that don't know or that haven't seen the videos, which most people probably have or a lot of people have, what is Panda Loon and what was the inspiration

Eugenia:

Behind this? So Panda Loon is a viral pet apparel brand. We were on Shark Tank, so it all started when my dog Huxley, who looks like a little panda in everyday life, he's always supervising. So he's off screen right here. I decide to,

Brett :

If he does get close, I'd love for Huxley to make an appearance on the pod for those that are watching the video. So entirely up to you, but probably more up to

Eugenia:

Huxley. Yes, I will. I'll let him know. So he already looks like a panda, so I thought I'll dress him up as a panda for Halloween, and I made a homemade panda costume that looked like a walking teddy bear walking on two legs. So if you've ever seen a little panda running around the internet, that's my little guy, Huxley the panda puppy. And it went crazy viral, had no following on Facebook at the time, but on Facebook it shot up to 30 million views in about a week. That's insane. And then insane,

Brett :

30 million views in

Eugenia:

A week. It's crazy. And then through a few different uploads and reposts, it has now reached over 160 million views on that first video.

Brett :

And that's across multiple platforms or that's just the

Eugenia:

Facebook platforms? With Instagram, it's platforms, but primarily Facebook and I think, yeah, a bit of TikTok, but mostly those two. Yeah.

Brett :

Yeah, that is absolutely mind boggling and wild. I mean, you could expect mean people love dogs and your dog is very cute, and Huxley may be in the corner being like, Hey, you can talk to my agent buddy before I get on this podcast. So I accept that. So you would expect it's going to do okay, but to go to 30 billion views that quickly. Insane. And now you said 160 million views at this point and counting.

Eugenia:

It was insane. I think it was a time where something that was visually intriguing and fun to watch was just that sweet spot for the internet.

Brett :

Yeah, yeah. So cool. So you made this costume yourself, put it on Huxley, he becomes an internet sensation, an absolute star. When did you think I should start selling these and I've got potentially a real business? Yeah,

Eugenia:

Pretty much right away. I was already an online seller. I was already an Amazon seller. I thought I was kind of bootstrapping my way towards creating my own product, but I hadn't quite landed on exactly what I wanted that to be yet. So I was actually a math professor in my previous life, but it wasn't working out that great, I guess at the time.

Brett :

So what type of math did you teach? And so was at the undergrad level,

Eugenia:

Graduate level? Definitely undergrad. I would say lower undergrad. So it was a lot of basic college algebra, some calculus, and a little bit of statistics.

Brett :

So college algebra, that's when you've got a lot of begrudging students that are like, I don't want to be here, but I have

Eugenia:

To be here. Precisely. Yes. So I had to, I guess encourage would be the word, or coddle a lot of students through their math experience. But it was nice in a way because I could see that people were empowered by that, that they didn't think they could do it, but if we made it actionable and they could overcome it. So that was cool. Well,

Brett :

And now this gives even greater credence to your formula for virality because you're a math professor, so your formula is absolute

Eugenia:

Whole up.

Brett :

Yeah, I should publish something. Awesome. For sure. So you were selling this from the get go, felt like it was going to be a business. What did the video do though? So as it starts climbing into the millions of views, what is this doing for sales online?

Eugenia:

So at the time, I didn't have it ready to sell to my regret. I wasn't expecting it to happen like that. So people started emailing my online store and just asking, where is this? Can you make it? What's the deal here? And I wasn't prepared, and I always feel a little bit scared to take anyone's money before I have a timeline ready. So I just took their emails and I said, I'll work on it, let me email you and I'll update you as soon as possible. So I hit the ground running. I went and found a local seamstress in San Diego at a sewing company who could make a pattern. So I could try to turn my little homemade version, which is not the best sewing, but just kind of encapsulated a very good illusion, a very precise fit and design. And she helped me turn that into a pattern so I could try to pursue manufacturing. The local sewing company actually didn't want the project because this furry fabric, apparently they would have to shut down the entire factory just to sew my project because it would fly everywhere. Whoa.

Brett :

Because the fur goes everywhere. So

Eugenia:

I had to figure out a company that was bigger because they would have the laser cutting machine and be able to handle that kind of thing. Got it. So that's when I started finding an overseas manufacturer that handles plush fabric and refine the prototype and put in my order for my first line of panda costumes. And I started taking pre-orders at that time, which at this point it was very out of sync from the viral video. So it wasn't the biggest pre-order launch by any means, but I just had faith that this was something that could go viral again and it was worth pursuing.

Brett :

It's amazing. So let's talk a little bit about, and we're going to get into the science behind virality because you made a really great point as we're prepping and getting ready to hit record, is that of course there's an element of luck and an element of timing for virality, and you can't fully predict, no one would guess that there's going to reach 160 million views, but that's not to say that there isn't a formula, and that's not to say that there aren't some steps you can take and some planning you can do to get some viral success. We're going to dive into that, but first I want to hear about Shark Tank. So did they reach out to you? Did you reach out to them? How did that

Eugenia:

Begin? I was just a regular person who stood in line. It was a big hotel east of LA and I stood in line at 4:00 AM with hundreds and hundreds of people, maybe a thousand or so, and I had my chance to give this 62nd pitch in front of a table of casting directors. And I just thought, okay, I'm going to go for it. I've been a fan of the show for a long time, why not? This sounds fun. I've had this moment and something that's visually interesting. So my dog, Huxley and I, we went up and we gave our pitch just like the show. And then it seemed to go well because everyone started looking over and the casting director asked to take a photo of Huxley in his panda loon. So that kicked it off. And by the next week, I had gotten a call and the ball started rolling towards Shark Tank.

Brett :

It's crazy. So what was that experience like? And I think the most important question that everybody wants to know is, did you get

Eugenia:

A deal? Yes. Spoiler alert, I got a deal. I got a deal with Damon John.

Brett :

Oh man, he's

Eugenia:

The best at, yeah, he's great. So he has equity in Panda loon. People always want to know what's he like to work with, and I'd say he is very down to earth. He follows my lead. He's never ever been demanding in any sort of direction. It's always been, what do you want to do? What can we do to help? Yeah, I'd say that as the show's progressed, I think it's hard for sharks to juggle a lot of companies. So you have to kind of pick what you want to focus on with your shark. The Shark Tank process was super fun. I know that some people have kind of a traumatic experience, but totally,

Brett :

I've heard the trauma

Eugenia:

Stories. I was very fortunate, I guess, that it was a fun edit and it was made to be a fun segment, and I had a great experience. It was a bit nerve wracking, and it was a lot of work leading up to it. That's the part that I had no idea that I was spending easily 20 hours a week doing show stuff leading up to filming. And then afterwards you have this secret where you can't tell anyone, but you need to prepare for 4 million people to hear about your product. So it's an interesting experience, but I am so grateful for it.

Brett :

And what was that like then once the show aired? What did that do to website traffic into sales? And then has the show aired multiple times since

Eugenia:

Then? Yeah, when the show aired, it was a little interesting. I was a little heartbroken, but I can't be too mad that I got to air, which is great. Not everyone gets to air after they film, but I aired in January, which is very much not my season. So it was a little bit like trying to sell Christmas trees in July

Brett :

One month earlier, and it would've been

Eugenia:

Insane. Insane. So the traffic had, I think it spiked 3000% compared to the previous time of the same month. So it was a huge spike, but I knew that I had to work really hard to keep momentum going until my peak season that fall. So it was a huge traffic boost. It wasn't the ideal time for conversion, but it was still a really nice lift. And the lift actually continued for pretty much most of the year because I guess the beautiful thing with Amazon is that they love that velocity and bestseller ranking. So that lifted quite a bit. And then your question about have I aired multiple times? Yes. So I got one what I would consider a big rerun where you get to air again on A, B, C, which is great. And then I've had a lot of CNBC reruns. Sometimes they're like every other month or sometimes every quarter or so. So it's

Brett :

Awesome. That's great. And a comment you just made, I want to dive in into this a little bit. A lot of people would, one lot of people wouldn't even try to get on the show you did and you were successful in it, but then if people get on the show, they're like, well, let's see what happens, right? It's going to be in front of a lot of eyeballs. Let's just see how the Shark Tank effect impacts my business. But you understood, and part of this was because it aired a little bit past your peak season, but you knew you're going to have to do some work to keep this momentum going and to keep the lift up. And so how did you leverage the Shark Tank appearance, and what kind of work did you do to make sure that you were able drive sales lift from that? Yeah,

Eugenia:

I definitely took the Shark Tank appearance credit as a resume item to wave around wherever I could as a small person selling something that is kind of silly. There were times before I could say, so before I could say I was on Shark Tank, that people would just kind of be like, oh, yeah, that's a really cute hobby that you must do out of your garage costume for your dog. Wow, that's fun. Yeah, your parents must be so proud you left teaching math for this. But as soon as I was on Shark Tank, they understood like, oh, okay,

Brett :

Instant validity, instant street cred. You're a real business at that

Eugenia:

Point. Totally. Yeah. So when it came to wholesale orders, it was no longer trying to prove myself. It was just like, oh, okay. Yeah, you're a real business there.

Brett :

Yeah. Very cool. Very cool. Okay, so let's dive in. Let's talk about some of the science behind virality. So when you're sitting down to create content and you want this to reach as broad of an audience or as big of an audience within your niche as possible, what are some of the things you're considering and what are you looking

Eugenia:

At? Yeah, I really think hard about the concept maybe too hard at times because the concept has to be interesting enough where you can craft a hook. And the hook is actually, I would say 50% of the work of being an exceptional content creator. And you must deal with this with ads too, where you have to make, yeah, absolutely. You want to make that scroll stopping. Otherwise, no one's going to see. It's probably going to cost some incredible multiple more to get eyeballs on it. And similarly with organic, if you don't make that first even split second interesting, and then really, hopefully you get about two seconds to really bring people in. So nowadays you have to do something that's visually intriguing often, and then also supplement it with audio and sometimes a text hook as well. So that would be the first step.

Brett :

So how are you thinking about the hook and the big idea? So you're saying two seconds, maybe three seconds, and thinking about panda loon, it would've been somewhat interesting if you started the scene with you sewing or creating something that'd be somewhat interesting, but I don't think that's what you did. And so how do you come up with that concept, that big idea, and then how do you translate that into a

Eugenia:

Powerful? Yeah. So when you have something that is surprising, looks like a stuffed animal that came to life for a long time, that was an effective hook in itself. But nowadays, most of the time when we're showing products, we want to tap into some kind of emotional hook because people can read that emotion much faster than they can read a sentence or hear a sentence. So oftentimes when I'm assisting companies in their strategy, the thing I try to focus them on is figuring out what emotions happen behind the problem of their situation that their product solves. So for example, if you are the classic garlic press example, so if the problem is that most garlic presses are really hard to squeeze, then you need to show the pain, the frustration, things like that at the top of the scene in order to hook people. When you're doing something like what I have, which is very cute and fun, that may seem actually easier in some ways, but I actually believe that being able to show the pain of a problem is much better because it's way more repeatable in your content.

Brett :

Yeah, I love that emotion without emotion. People don't pay attention. People don't watch movies. They don't watch shows without some emotion being evoked. People don't pay attention to ads or remember ads or take action from ads unless there's emotion. And you got to look at your organic content in the same way. And one thing I talk about a lot when we're screening ads or showing ads to people is what are the moments of the ad when you lean in? What are the moments in the ad when you can't take your eyes off of it? Or you find yourself gasping if it's a shock or laughing out loud if it's something funny. And when you find what that is, there's some kind of emotional trigger. Move that piece to the front. Exactly. Right. That is probably your hook, rather than that being buried, kind of use some old newspaper lingo. There's this idea of burying the lead. This is the most interesting part, but we're going to bury it in the middle of the video. No, no, no. Bring that to the front. That is almost certainly, definitely your hook. So thought,

Eugenia:

Yeah, that's actually something that I've been doing more and more in my editing, and I think that it works, especially for the way that content is starting to look in 2024, where people are interested in kind of the hyperreal videos where they follow along. But because of that, you have to find that moment, that shiny moment within your video. So I'll move it to the front. So for example, I made a video with my dog where we're photocopying his paw, so this was just an organic piece of content, but there's a point where he slips his paw out at the last second, and we laugh. And so moments where there's a pop of laughter or shock, a gasp, like you said, yeah, move that right to the front, that's going to grab people, and then you can show it more linearly as far as beginning to end. Yeah,

Brett :

Bring me into that emotional moment. Help me feel something. Now I'm interested in your story. So now tell me the linear story or something close to linear, but get my attention first. So this is really important, tapping into the right emotion. So for you, for panda loon, this is whimsy. This is just the awe factor, not the shock and awe, but the awe. This is cute, this is warm and fuzzy. But if you're coaching another business, how do you find, what emotion should we tap into?

Eugenia:

Yeah, often it's more about the problem, so it tends to be more negative. So negativity is a great hook. And so I think I encourage businesses to not be afraid of it. And I think that's something that a lot of businesses, especially ones that are run by elder millennials or up, that we're a little bit afraid sometimes to show things that are negative or a little bit, but those play so well on social. So I would say don't be afraid of the negative hook of showing that I feel horrible and run down. I need to take this supplement. That's where you're going to show the transformation between the two.

Brett :

Totally. And I think, yeah, people are reluctant to lean into the negative, but we're more motivated to fix a problem or to overcome pain than we are to just lean into pleasure. And in a previous life, I did quite a bit of marketing for chiropractors. That was just kind of a niche that I had. And I remember chiropractors would always say things like, I don't want to just talk about back pain. I want to talk about wellness. I want to talk about feeling great. And here's the deal. Nobody wakes up and says, I feel fantastic today, but I'd like to feel better. So I'm going to find a chiropractor. I want to go peak wellness here. Let's go reach out to a chiropractor. That doesn't happen. Somebody wakes up their back is killing them, they can't sit, they can't think they can't do anything, and they're like, I got to find a chiropractor. Now, once someone visits the chiropractor, then they can talk them into a wellness plan and kind of go from there. But it's the pain that gets someone to take action. And so I think that applies though to a lot of products where we're motivated to fix things.

Eugenia:

Totally. And that reminds me of something I'm constantly telling brands is that people aren't thinking about you. They don't wake up and think, oh, I wonder my chiropractor is doing, especially in this TikTok atmosphere, which has then bled over to the way that we scroll through Instagram reels, or we scroll through YouTube shorts, people are scrolling through and they just saw a video about someone's pathological liar, husband. They saw some cats falling off of things, and then they see you. So we're far from top of mind, and in order to get our message heard, we really have to grab them like that.

Brett :

Yep, yep. So good. So we're thinking about emotion, we're thinking about a concept. We're hooking people. What's kind of next in the process?

Eugenia:

So the structure of a viral video, it starts with those things, and then we need people to watch to the end. And I think this has a lot of overlap with some ad metrics too, of we want that retention, we want that watch time to be as high as possible because that will signal to the platform and the algorithm that this is a video worth pushing out to more people organically. So in order to get people to watch to the end, we're going to be working our way towards a reveal. So something that happens at the end, whether it's just the resolution or maybe it's a surprise or a twist or a result. So all along the way, we want to construct it the middle to be something that builds suspense or is gradually working your way towards that ending.

Brett :

Got it. So you've got the reveal in the beginning, kind of the hook. Then you're teasing something like, Hey, stick with me, I'm going to show you this thing. And then you're building to that so that someone sticks around. What does that look like? Or do you have an example from a Pando video from

Eugenia:

Another video created? Actually, one video that I show sometimes when I am trying to get this point across is my friend's product Lion Latch. So it's a little jewelry case holder that has a carabiner that clamps it in place so it can't unscrew and fall out. So the problem is that my friend invented this because she broke her wedding ring. She was catching a softball and it broke and diamond fell out. So there's emotion, there's stakes behind this. So she shows that broken wedding ring at the beginning and it captures you, and then she's showing her product getting filled with jewelry. So there's a little bit of visual suspense where you see this little pile of rings and she's putting them into the jewelry case. So we're waiting for this process to hit completion. Yeah,

Brett :

What is this? Show me. What am I watching here? This is interesting, but what am I

Eugenia:

Watching? Yeah, so she gets all the jewelry in there, she puts the top on, and then she clamps it closed, and she shows how it locks and it's not able to come apart. So we've waited to see that reveal of what is this? How does this work? And then we get that final picture at the end of how it's going to protect the jewelry.

Brett :

Very cool. Love that. Okay, so we're concept, we're hooking, we got the emotion there, some kind of big reveal in the beginning. That's the hook. Then we're leading someone to something. We want them to watch the whole thing. And I will, just as a side note, you're 100% right. This does tie into ad metrics as well, because what platforms want is they want people to engage on the platform. They don't want to serve ads that people hate. They want to serve ads that people love. And we've seen this, we've got a pretty large outdoor brand right now, and we're doing a YouTube push to try to drive in-store sales. And they've had some videos, and these are fantastic videos, and we got great structure in our campaigns, but they're getting 60 plus percent view rates on some of these videos, which is just insane. Typical view rates are 20% or something. But if you can do that, if you can really drive up those view rates in the beginning, and then also your completion rates, platforms want to show those ads, you get a lower CPM, you get more exposure and it just all works. So totally ties into ads as well. What's kind of next in the viral process?

Eugenia:

Sorry, I think my internet just lagged.

Brett :

Oh, no worries.

Eugenia:

Could you repeat what you said just so I kind of get the gist of it?

Brett :

Yeah, yeah, sure. And so yeah, I just kind of talked about ads and how it ties into it. View rate gets people to watch longer, the platforms want to show it anyway, so I just tied that back to, Hey, what is next then in crafting this viral

Eugenia:

Content? Okay. Exactly. So all that tends to help us with retention or watch time. So then what are the other metrics that signal to an algorithm or a social media platform that this is a video that people really want to see? So the next strongest signal that I see or shares and saves, because if someone cares enough to say, Hey, hey Brett, I want you to see this video. That usually means that it's extra engaging, extra interesting. So I look for shares and saves because I notice a very strong correlation between the percentage of shares and saves as views. So if I see a 1% ratio of shares and saves or more, if it's just a little bit more, then I can usually predict that this video will do quite well. And when I look at viral videos, they tend to have a higher than average share and save ratio.

Brett :

So likes and hearts, that's one thing, but that's the baseline, that's the minimum level of, I like your content. This is kind of cute, but if I'm sharing it with a friend or family member, I love it. And if I'm saving it, then that means either I'm coming back later, I'm going to share it later, whatever. So shares and saves. And you said if you can see a 1% share or save rate, then you're

Eugenia:

Onto something. Yes, exactly. If it falls below that, then I think there's something wrong. Likes I find to be kind of the most irrelevant ratio, because if it doesn't get about five to 10% of likes, then it's not getting delivered anyways, so it doesn't really matter. So shares and saves, there are some things that we can do to improve our likelihood of that. So with saves, if you make any content that is worth reviewing later. So for example, if you created a tutorial or something that had steps in it that someone might want to refer to later, that's a good way of creating save bait in a way. And then shares that kind of ties into the concept and the hook. If this is something that really delivered a surprise, really delivered an incredible punchline, that often will motivate us to share it with a friend.

Brett :

Very cool. Good. So then what else can we say here about viral tips, viral strategies? How else are we making our content really go

Eugenia:

Nuts? So the biggest mistake I see that brands make big and small is just being, unfortunately what's very much human nature is just to be a bit self-centered, because just like that, what I said before is people aren't thinking of us, and it's so much more extreme with this discovery type of algorithm, the tiktoks, the Instagram reels, the YouTube shorts, where unlike browsing on YouTube where I might be searching and I'm curious about how to make really great Google ads, and then I find a Brett Curry video. Oh, well, that's a great thumbnail, Brett, I'm going to go ahead and click on that. By then, I've really bought in, right? I've evaluated, I've searched a question, I've seen your thumbnail, I've seen your title. I am trusting that you have something to deliver, and then I'm going to watch your video. That's so much more of a more committed viewer than someone who has just seen the cat video, the Four Seasons baby video, all the junk we see on TikTok. So we have to really think about someone who's not coming in with us at all, top of mind and quite the opposite, and someone who's coming in without any context. So we have to treat each short form video like we're introducing ourselves to a stranger all over again. It can be very hard because we're thinking about our products every day. We've done it for years, we've obsessed over it. So we really have to step outside of ourselves and think about what is it like from an audience point of view.

Brett :

Yeah, we have that what's called the curse of knowledge. So in the weeds and in the background of our product that it's impossible for us to fully be objective about it. And to think about it like someone who's never seen it or experienced it before takes a lot of work to get that perspective. My buddy, Jacque Spitzer, he runs Raindrop awesome creative agency. He talks about one of the mistakes, and this totally ties into what you said, one of the mistakes that marketers make is they sit down and think, what do I want to say? What do I want to say? When in reality, you should be thinking about what does my market want to see and what do they want to hear? And then how does that relate to my product or my offering? So really tailoring this to, it doesn't matter what I want to say, it's, it matters what you want to receive or see about this. And then, yeah, I think one of the biggest fallacies, biggest mistakes in marketing is assuming that your customers or the marketplace is thinking about you. They're not. They're thinking about themselves. And so for you to break through and to get them to think about you takes a lot of work.

Eugenia:

Totally.

Brett :

Yeah. Awesome. So let's talk about platforms just a little bit, because I know you had your initial success on Facebook and Instagram. You've done really well on TikTok as well. Do you view those platforms very differently as your crafting content, or is it mostly the same with a few differences?

Eugenia:

Yeah, I do think of them a little differently, but for the most part, TikTok has set the trend. So TikTok has dragged these platforms along to their culture and their type of algorithm. They're not quite the same algorithm, but they're following along. So I often create with TikTok in mind for the most part, because that tends to be where the other platforms are going to follow. So TikTok is sort of the trendsetter in that way. So I'll think about TikTok first where their videos are favoring over a minute long, so the delivery is crazy different. If you can just hit that one minute and one second mark. As opposed to being under. Yeah, yeah. Isn't that wild? They blew up as the 15 second video platform, and now they favor over a minute. I saw they released some news on how much longer content is being consumed, and it was a majority of it being over a minute.

So the appetite for longer videos has grown quite a bit. So this is an advantage for us. So if we know that the demand for over a minute videos is much higher, but the supply is still a lot of people favor creating short, quick videos because it's easier, we can take advantage of that. Instagram is also following suit a little bit. So I received a notification on Instagram reels when I posted a short video and it said, oh, hey, reels over 30 seconds are performing better. Wow. So there's a bit of an appetite there. So for reels, I'm aiming for somewhere between 30 seconds and a minute for YouTube shorts. They still accept short videos. And I had a short video recently that did nothing on TikTok and Instagram, but it reached, I think it's about 4 million views on YouTube shorts. Wow. Yeah. So super simple, easy. It was just my dog and his Panda loon, panda costume, just running on a dock and then posing looking happy, and that was it. So it was wonderful. I used some text to try to hook people into that, but it did great. So YouTube Shorts has more flexibility, and in some ways I believe it favors shorter content just because audience is still expecting short content from that platform. So I will create the first concept with TikTok in mind, but then create these alternate edits for the other platforms.

Brett :

And when you're editing, I love that. So you're creating for TikTok first with TikTok in mind first, then you're doing edits for Instagram reels and YouTube shorts. As you're making those edits from TikTok to the other platforms, is it more about the length of the video that you're changing or are there other elements about the video that you're changing to do well in Instagram reels?

Eugenia:

Yeah, that's a great question. So on Instagram and Facebook, so much content is actually consumed on mute. That's very different. If we want our video to do well on those platforms, we really have to figure out how do we make this consumable while it's muted,

Brett :

Visual storytelling, and maybe submit some text on screen screen

Eugenia:

Exactly, exactly thing. And then caption. So we have to also think about leaving a lot of extra space at the top so that we can include captions, although people won't know what's going on in the video. And then YouTube shorts is also more heavily visual than TikTok. TikTok tends to have a lot more storytelling these days, a lot more audio, face to camera talking. I've noticed that in 2024, there's even seemingly more favor towards natural sound. So people are less interested in the voiceover. Unfortunately, on TikTok, I miss the days of voiceover.

Brett :

Interesting. For a while, it was like the AI voiceover trend was going on.

Eugenia:

I think that there's been a increased appetite for that hyperreal stuff where instead of a day, the or old days of, Hey guys, come with, I'm going to go and do my makeup now. People just want to see the natural sounds of the makeup clinging and someone storytelling in face to camera style like FaceTime. You'll even see something interesting. If you see a video that's gone pretty viral and someone put music over it, people will comment, Hey, can you repost us with just the raw sound? I don't want to hear the music. Yeah,

Brett :

No

Eugenia:

Way. And they have no idea what the sound is. It's even interesting. But they just have that hunger for what really happened.

Brett :

Don't need music. I want to hear that. I want to hear the story. I want to hear the real sounds

Eugenia:

Of what people want to be a fly on the wall and watch what happened.

Brett :

And so how are you advising your clients? You're coaching them on creating content, you're building for TikTok. First, you're making edits for Instagram reels and YouTube shorts. How are you then advising them what to do with this content from an ads perspective? Because a lot of times great, viral, organic content can make for either an ad in and of itself, or a component or a piece or the hook

Eugenia:

Of an ad. Yeah, definitely. So I see that people talk about TikTok ads quite differently than Meta and the others where TikTok ads seem to have a much higher level of pressure on seeming like organic content. So in order to create TikTok ads, I think we really have to figure out what's playing well in organic TikTok. Otherwise, we're kind of just throwing money away. People have just such an expectation when they're scrolling through TikTok that this is going to be something that's entertaining on its own and not feel like an ad. So the moment that someone smells the ad stock music or the ad tone, they can get really turned off on TikTok. So I think for my clients, I try to encourage them to use this as an opportunity to set a higher bar for what feels like a real authentic, organic piece of content that they can then use for their ads. For Meta. I see such different results from company to company, and I'm sure way more about this than I do, just as far as what ends up working on their ad account. It's so varied, but if you make something that is organically grabbing, I think it helps you with your ad retention and all the things that could make ads hopefully a lot less expensive.

Brett :

Totally. Yeah. And sometimes we're seeing even just taking an organic content, the best piece of organic content and running them as ads, we do that on YouTube shorts quite frequently. Well, let's do this. This has been an absolute blast. I do want to talk about Panta Lo a little bit more where people can find it and buy it and stuff like that, and also your agency. But any other final tips, final takeaways, final thoughts that we didn't already talk about? Yeah,

Eugenia:

I think just as far as actionable steps for people who are trying to direct their teams or themselves trying to make content, just keep in mind that people want to hear from a person. They want to hear about your stories and your voice more so than they want to hear from a brand. So I think of actually one of the sharks that was on my Shark Tank episode, Sarah Blakely, she's such a rockstar.

Brett :

Wow. She's a legend man. Yep. Founder of Spanx, married to Jesse Itzler, Jesse Itzler, Hass, written books and marquis jets. Jesse Hitler's an awesome guy too, but Sarah, wow, what an amazing,

Eugenia:

She's a legend. Youngest self-made female billionaire. I'm going to keep her in that spot. I don't buy the Kylie Jenner thing. So if you look at her personal account, her Sarah Blakely account, people are so highly engaged. She's talking to the camera, she's bringing them along with her personal perspective and point of view, compare that with the Spanx account. People are not that interested in seeing a catalog photo hosted. So yeah, bring people into the raw story. Be willing to share the emotion and the things that are problems that your product can solve. Brainstorm on all the problems that your product can address, and just keep on hammering on that. A big mistake that brands will make is that they feel like, oh, well, I demonstrated my product a couple of times. People are tired of saying that, no, it's a totally different audience. You reached 10,000 people.

There's hundreds of millions of people still out there who need to hear about it. So you have to do that ad nauseum. So stick with it. And then really, really, when you are engaging with team members or content creators, hold them to those metrics. See where the math is pointing you on. Whether this is set up for success. I sadly see a lot of brands wasting tons of money or multiple salaries being spent on creators who are just not going to perform well. So yeah, really look at those things and if you need help, get someone who has a real clear view of viral strategy in there to help you with do that.

Brett :

Really great advice. I think one of my favorite bits of wisdom related to communication or organic content or ads is just about the time you are sick of saying something. That's the very beginning of people beginning to understand it and absorb it. And so you've got to tell the same story a thousand different times in a thousand different ways. And you've got to re-look at the same problem from every angle and use different analogies and different stories and different things to tell that. And really, yeah, when you are sick of something or when you think you've just repeated yourself over and over again, you're just getting started. And so hopefully that gives a little courage to, I'm just going to keep shouting this from the rooftops in an interesting way, and it will make a difference over time. So that's awesome. So as people are listening to this and they're like, Hey, I just got to get a visual of what a pantaloon is, or maybe they're like, Hey, my dog could be the next Huxley, maybe I need to buy a panda loon. Where can people find

Eugenia:

Your dogs? Sure. Panda loon.com is always the best place to get everything, the best and best prices. We're also on Amazon as well. If you're in a hurry and you need that prime shipping, I totally understand. And then we're also my socials. I tend to lean into my socials through Huxley's accounts, Huxley, the panda, puffy, and that goes into, actually what I just said was people want to hear from a person. So it's like me and my dog's point of view as opposed to a brand. So yeah, I lean into storytelling on those accounts.

Brett :

So how demanding is Huxley? He's a star. He's a star of the business. Does he demand certain treats or certain dog food, or how do you spoil Huxley, but also how do you keep it real

Eugenia:

With him? He lives a pretty pampered life, I will admit. Yeah, he has a pretty great life. Nothing but the best for Huxley. He really is my co-founder. I tell people that and I think they giggle. Like I might be joking sometimes, but he's been to every meeting with me, every speaking event. Yeah, every call, he's there. He's right there. So yeah,

Brett :

It's amazing. It's amazing. I forgot to mention this. I forgot to ask rather, I forgot to ask earlier, but Amazon, what's your, in just a few minutes, what is your overall Amazon approach? Are you digging into Amazon ads? Are you working on Amazon Organic? Are you mostly treating Amazon as this is a place for people to buy? It's a preferred place for some people to buy, but I'm going to focus on brand building and content and then let Amazon just close

Eugenia:

Teams? Yeah, honestly, it's a bit of both. Everyone has a love hate relationship with Amazon for sure. I have a friend who describes it as an abusive relationship sometimes.

Brett :

Yeah, not completely inaccurate for sure.

Eugenia:

Unfortunately, don't turn off the podcast. Amazon, if you're listening. Yeah, I have to use Amazon. Unfortunately, it seems to be a place that is almost impossible to get away from, in part because there's such a seasonal rush for my product that in October when you need that quick shipping, people are just going to go there. So it's a combination. I do some Amazon ads. I leaned in a bit heavy on Amazon ads last year, and I felt like it ate up my organic sales quite a bit. So regret. But I am finding that getting organic content to perform off Amazon really skyrocketed my Amazon. So I launched on Amazon and had some luck in a video going viral at the same time again. And so it went from complete zero ranking up to when the number one new releases very quickly because of that organic. And I think Amazon just really loves when you bring them traffic so much that they're willing to reward it.

Brett :

They love external traffic, absolutely take care of Amazon's traffic as well. So treat that customer right. You need to have a high conversion rate and things like that. But Amazon loves it when you bring in fresh eyeballs and people that are coming from outside of Amazon just to buy your product that is gold and really makes a difference. So Eugene, yet, this has been brilliant. This has been super, super fun. I loved it. How can people get in touch with you? What if they want to work with you on content or consulting or whatever, how

Eugenia:

Can they get in touch you? Yeah, I'd love to hear from you. You can always find me on social and send me a DM or Eugene at Huxley Media Group. If you go on huxley media group.com, you can grab my email pretty easily. Yeah, I love helping brands. I've created content for a lot of big brands, but it's actually a ton of fun to help small and medium brands with strategy so that they can learn to fish for themselves.

Brett :

Well, Gina, this has been absolutely a blast. Thank you so much. We'll link to everything in the show notes, but really appreciate the time and now I'm motivated and inspired. Got to go create some viral content. Alright, sounds good. Awesome. And as always, thank you for tuning in. We'd love to hear from you. If you've not left a review of the show, please do that. If you heard this podcast and you're like, Hey, this person needs to hear this content, then share this with them, that would mean the world to me. And with that, until next time, thank you for listening.

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Episode 287
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Dara Denney - Thesis

Crafting Ad Creative That Converts: Combining Data & Boldness

You've heard that creative is KING.

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In reality, it's probably King, Queen, and more.

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In this episode of the eCommerce Evolution podcast, I sit down with Dara Denny, a performance creative consultant who has worked with an impressive array of brands like Speedo, Laura Geller, Daily Harvest, and Condé Nast. Dara shares her wealth of knowledge on crafting ad creative that truly converts, diving into the importance of testing, iteration, and taking big swings. If you're looking to level up your ad creative game, this episode is a must-listen.

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Key topics and lessons include:

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  • The power of specificity in ad creative, from calling out exact prices to reflecting customer age demographics
  • Why UGC isn't dead, but some of it does suck, and how to garner UGC that works!
  • How to strike a balance between data-driven iteration and taking big, bold creative swings
  • Dara's creative testing methodology, including how to structure tests and identify winners
  • Five ad formats that work, including feature-benefit callouts, "golden nugget" reviews, founder stories, statistics, and educational ads

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Chapters:

(00:00) Introduction 

(04:56) Which Hook Won?

(16:48) Is UGC Dead?

(28:40) Creative Testing - Quality vs. Quantity

(36:42) Dara’s Testing Methodology

(41:35) What Is A Typical Ad Win Rate

(43:22) Five Killer Ad Formats

(53:48) Conclusion

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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, Bryan Porter and more. 

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Other episodes you might enjoy: 

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Transcript:

Dara:

So number one, I definitely don't think that UGC is dead, but I just think that the heyday of easy UGC getting results and this idea that, oh, people want to hear from other people that are like their friends. It's just no longer that easy. You just actually have to make really good content.

Brett:

Well, hello and welcome to another edition of the e-Commerce Evolution podcast. On this episode, we're talking about creative that converts, and we all know creative is king. Without the right creatives, whether you're running YouTube ads or meta ads or TikTok ads or whatever, you are destined to fail. I know YouTube says that 50 to 85% of your success comes down to the creative. I believe that. And so my guest today is Dara Denney. Now you probably know her already. You may be one of her faithful subscribers on YouTube, or you may have heard her speak at an event. I got to hear her speak recently in Austin, Texas at Ezra Firestone's event. Her talk was my favorite of the show, so we connected and I said, Hey, got to come on the pod. She graciously agreed. So with that, Ms. Dara, Denney. Dara, welcome to the show and how's it going?

Dara:

Amazing. Hey Brett, thank you so much for having me on. It was really amazing to meet you back in Austin, so I'm really glad that we get to do this and talk even more about creative.

Brett:

Yeah, I can geek out about creative. It's one of my favorite topics, so it's going to be a lot of fun. But a couple things to call out. One, you are a performance creative consultant, but you're also a creator. So how does that work? How do you consult and create, because you're kind of doing both.

Dara:

Yeah, I never sleep candidly. No, I'm kidding. Well, I worked in the advertising industry for years and years. I've really spent the last seven, eight years working agency side. So I've been able to work with an amazing array of brands. Initially I was a trained media buyer, and then really as a response to how important creative was becoming over the last few years, I started focusing more and more on the creative portion of meta ads. So at my last role at the agency, I was actually overseeing the entire creative department. So I made the UGC Creator division. I also managed about 15 video editors, graphic designers, motion graphics artists, and also the creative directors. So the people who actually spearheaded the strategy. Now I am very much working to create more educational content for those type of people and for brands and people working at brands and agencies to make creative that converts. But I do still actually do the work. I think it's really, really important because how much our industry changes to really have some skin in the game. So I do actually work with a few brands right now to help them with their performance creative strategy, and that's honestly my favorite part of the week. I love making the content, but I still really, really love the

Brett:

Work. Got to be in the game. We were just talking about that. It happens so quickly that you get rusty if you're not in the game on the daily, you miss out and things change. So core fundamental principles of creative don't really change, but some of the execution does change. And so it's important to be in the game. And I believe it all comes down to creative overall strategy and then execution. So how do we do those three things and do them well? And you've worked with some impressive brands like Speedo, Laura Geller, daily Harvest, Conde Nast, and a bunch of others. And so really excited to draw from your knowledge. And also we found out not only did we share in our affinity for creative, but while we were in Austin, Texas, we did what any good Texan will do. Neither one of us are Texans, but we rode a mechanical bull. So we were at this event, there was a mechanical bull there. There were a lot of people hanging out, and we both braved it, rode the mechanical bull. What was that experience like for you?

Dara:

It didn't last very long, to be honest, but I think we were true to our nature. We were going to test it out absolutely. And we were also just there to win in Texas, so we were just taking the experience and seeing what would happen. And to be honest, the test, it didn't pan out for us, but it was a good learning experience.

Brett:

We did not miss our calling. The rodeo was not the life for us for sure. So we ended up in the right spot. But I brought several team members, several OMG team members with me. I initially said, not a chance am I getting on that mechanical bowl. Peer pressure was there, so I did get on there. Yeah, it was ugly, but it was also fun and funny. So good stuff. Well, so let's dive in. One of the things you led with in your talk, which I love this, you kind of did a witch hook won, and the beginning, the hook of an ad, I know this is true on YouTube, I believe it's true across platforms, the hook is the most important part. You don't get attention or get the right attention. Really nothing else matters. And so you showed multiple variations of a similar ad.

Visuals looked about the same. Headlines were different, voiceover was a little bit different, and you pulled the audience on which test one. And I will say, I did win this one, I picked this one, right? I don't always pick it right. And this is one of the things like this is why you always test because sometimes even someone who's been doing this forever still gets it wrong. But lemme just kind of lay out these winners and so you can play at home, you're driving in your car, listening wherever you play at home. And do you want to set this up? This was for a smoothie client. Can you talk about what the product is real quick and then I'll go through the headlines?

Dara:

Yeah, I've talked about this ad many times. So I'll just say this was an ad that I did for Daily Harvest a few years ago, and essentially we were testing some new UGC creator content and we essentially formulated this test to be a hook test. We were testing out several different headlines and questions. Really the angle to that we were taking is we were changing up the comment that was in the TikTok response bubble for each of these. So that was really the only factor here that was different. So yeah, one out by a landslide. So I'll go ahead and give it back to you so that you can go through the different headlines.

Brett:

So here it is. So headline number one, this smoothie is cheap and tasty. Double question mark. So not just one question mark, two question marks. There we go. If you have ever spent $9 on a smoothie, next one. So headline three, manifesting a healthy relationship with food this year. Any suggestions, thinking, Hey, I'm going to get healthy. What can you recommend to me? That's headline three, headline four, something sweet but healthy. Any suggestions? We got headlines 1, 2, 3, and four. What say you, dear listener, give you a second to guess, and then the big reveal, Dara, which one of those won? It

Dara:

Was B. So this is the one that said, for those of you who ever spent $9 on a smoothie, there's a few

Brett:

And we all have. Yeah,

Dara:

Right. Yes. Especially if you live in New York, which we both do. They're like $14 now, which is astounding. No,

Brett:

I actually live in Missouri, so I want to clear that up. I've stayed in Brooklyn, stay with my buddy Ezra back in the day when he lived in Brooklyn. We love New York City, but no, I live in Missouri, so it is cheaper here. I've spent lucky spent time. Yeah, I'm from the Midwest, so it's like seven here. It's way cheaper. Way cheaper. Yeah. So why, why did that one win?

Dara:

So before I dive into why this one won, I want to give some background on how we chose those

Really great. Initially, we actually went through all of the comments on recent ads and were pulling out primarily questions or comments that people had. And we looked at the ones that, or we looked at the themes that came up again and again. And we also looked at the comments that had the most engagement and we really wanted to find a variety, a big swing. We noticed that it was really important to get people who were manifesting a better, healthier relationship with themselves in the new year because this is an ad that was coming out around January. So we wanted to try and capitalize on that feeling as well. And then we also wanted to look out for the people who were like, oh, I want a sweet treat, but I want it to be healthy. That was something that kept on coming up again and again.

We actually threw in the value prop of, oh, people who spend $9 on a smoothie in there as a totally random last minute one. So it was really surprising to me that one won initially. And what's funny too is daily harvest smoothies at the time were not that much cheaper than $9. I think they were about $7 per smoothie, but I think there was something about people feeling that experience of the $9 smoothie was something that a lot of people had experienced. And when they saw that, they were like, oh yeah, that's me. That's in the morning. Because a lot of Daily Harvest customers were from New York and California, so they were accustomed to paying that higher price. But I also think it was how specific it was too. That stood out in people's minds. The specificity marketing is something that I lean into a lot right now, whether or not it's calling out a specific price range or doing some price anchoring, which is really what that strategy is, but also with people's ages. So I work with a lot of brands right now that target 40 50 plus, and we find that with these age groups particularly they like to say their age in their website reviews and their ad comments. And when reflecting that same strategy and ad creative, that's something that helps a lot. And I just think that the more specific you can be, the more that you're going to stick out in the minds of your users and differentiate yourself from the competition.

Brett:

So $9 more powerful than saying $10 for a smoothie as an example. Yeah,

Dara:

Exactly.

Brett:

Or calling out an age of 43-year-old dude versus a forties, something like that. So be specific.

Dara:

Yeah, yeah. Or even just saying, oh, these are cheaper than, these are cheaper than what you buy on the street. If you can actually just say what the price is, that tends to stick out for people.

Brett:

And I love that you were price anchoring. You were saying, Hey, if you've ever spent $9 on a smoothie, which does indicate, okay, you are serious about your smoothies if you're willing to pay $9, it also says these are less, but then it compares it to the $9 smoothie, which means that's like real ingredients. This is not just a powder, it's not just a kit. This is not like some sugar laden thing. This is a real smoothie. And so lots going on with that headline, which was really cool. Why else do you think that ad won? And we have the disadvantage of not being able to show it on the pod, but what other elements of that ad made it work?

Dara:

Yeah, there are two big elements. I want to zoom in on one, which again, we can't see the ad right now, but the visuals were wildly important. We had a lot of dynamic shots. So the first shot is actually opening up someone doing almost a flat lay looking down into the smoothie, and then the exact next frame was actually the smoothie being poured into the bowl and you are in the bowl. So immediately we have these competing visuals that are drawing people in and getting people really interested. And the frames were changed up pretty much every 1.5 to two seconds. So we were never focused on one visual long. And a lot of people, that video had a really solid hold rate. So people were watching that thing a lot longer than normal. The other thing that was really important to the storytelling of that video was we did use language that was pulled again directly from website reviews and midway through the video we actually have a part of the script that says that it tastes like a milkshake, but it's actually really healthy for you. And that was something I pulled directly from an ad comment. And even though the brand hated that line, we had people in the ad comments that'd be like, oh my god, yeah, it does taste like a smoothie, but it is really good. You need to try the mint chocolate chip. That's the one that tastes the most like a smoothie and the one that tastes most like a milkshake. And we just saw that language being echoed back to us, which showed us that, hey, yeah, this is actually really effective.

Brett:

And sometimes I think we get too cute as marketers or we have this elevated view of our brand, which isn't necessarily bad, but it's way more important to understand what resonates with the customer. And if you see a recurring theme where people say something about your product over and over again, and especially in this case where you put it in an ad and then more people comment on it, it doesn't matter at that point, if you like that phrase or not, that phrase is working and it's resonating with people, so you got to lean into it.

Dara:

Yeah, I wish I could have tested it as a hook. The brand would not let us, but at least I got it midway through the script.

Brett:

You got it in there. And that is a win. And one thing I always talk about for other agency people, agency life is difficult. I love this gig, I love what I do for sure. But when you are pitching an idea, creative idea or campaign idea, whatever, you got to please multiple people, you got to first convince the client and what convinces the client may not convince the user and you got to convince the user and then you got to get the platform on board and all that stuff too. So it's difficult, but I would call that a win for sure that you got it snuck in there in the middle, so that's awesome. I love the fast paced edits as well. This is something we've seen on the YouTube side as well, where sometimes you take the exact same script and a lot of the same visuals make the cuts snappier and or speed up the voiceover, and sometimes you can speed up the voiceover by 10 or 15% and no one notices.

It doesn't sound off at all. It's just a little bit faster. And that almost always increases retention, increases click-through increases conversion rate. And I love the way my buddy Jacque Spitzer from Raindrop talks about this. It's not so much that we have short attention spans, it's just we have short consideration spans. So we will binge watch Netflix for eight hours in a row or we'll watch a three or four minute ad if it's awesome, but if it's not, we're bailing very quickly. And so some of those things, fast edits, unique angles really keeps us considering and hanging on longer.

Dara:

I even think about my own user experience when I'm going through TikTok. I very often will put my thumb on the right side of the screen so that it'll go two x, three x and speed up. And I also hear people being like, oh, I listen podcasts at 1.5 or two x. And I think that we are very much now in, when I think about our consumption habits overall, it's like we need the information faster. So if your own paid ads content is belaboring the point, you're going to lose people if you're not getting to it quickly.

Brett:

Totally, yeah. And I've always heard, and I do the same thing with audiobooks with podcasts, I'm a 1.2 to 1.8 kind of range depending on how fast the voice is naturally. But we can process information a lot faster than most people speak. And so when you're face to face with someone, you're reading cues and you're paying attention to a lot of things and someone's there so you're being polite. But online, dude, we're ruthless. If it's not keeping us, we're failing for sure. So awesome. Let's talk about, you talked a little bit about UGC and this is something you and I talked about before we hit record, but there's kind of this popular thing going on right now where smart people that I know and respect and love are saying UGC is dead, right? Do something else, UGC, it's tired, it's played, do something else. What is your take on that? Why would someone say that and is that true?

Dara:

Yes, so I have a really interesting perspective on this. For the last three months actually, I've been tracking 20 brands, best performing creatives. So every single month I'll take a look at the same 20 brands that I have ad account access to and I'll list out their top three performing types of creatives. And what's really interesting is for the last three months, more than 50% of all of these creatives have been UGC. So number one, I definitely don't think that UGC is dead, but I just think that the heyday of easy UGC getting results and this idea that oh, people want to hear from other people that are like their friends. It's just no longer that easy. You just actually have to make really good content. Another interesting wrinkle to that is I do see UGC creators themselves not being as effective. The brands that actually succeed with this type of content are actually just working with creators.

So these are going to be your micro, not huge influencers, but they are creators that already make content about the industry that your product is in. Those are the people that I see to be the most successful. Going back to my data poll, my own little pet project that I've been doing UGC versus images, images are still wildly important. Totally. I'd say that about 70% of all the brands that I was pulling, so 15 of these 20 brands, they still have images in their top performing creative. So it's not that it's an either or. It's like how can we use all of these formats to supplement the end goal for wherever the brand is In scaling journey, what I've noticed too is that brands that spend more than 500 K per month, particularly those that are spending more than a million per month, they do tend to over index a lot more on UGC and on that creator content to actually still get customer acquisition costs that are profitable for them. And what I see them doing that's really smart is they will rapidly test a lot of messaging points using images and then take those messaging learnings and apply those to their UGC content so that they're not just putting out BS like content from creators. They're actually starting from a really good learning whether or not it's an angle or a specific messaging point, and those are the people that are seeing the most success right now.

Brett:

Super interesting. So using images to understand and the text that goes with it and understand hook to understand what angles are working, and then they're taking that and then they're specifically asking creators to create content based on that, or they're taking existing content and editing it and pulling forward hooks that line up with what they just proved in their image ads.

Dara:

Most of the time it's taking messaging point or angles that are interesting that are great learnings from images and then applying those to the creator brief essentially. And again, when you're working with creators or influencer types that are already making content about that specific industry or niche that comes a lot more naturally than your run of the mill UGC creator who's just trying to make an extra buck, which I respect it and there was definitely a good time for that. I think that time probably isn't now anymore, and we're really just looking to work with creators who love to make content for a specific industry.

Brett:

Got it. So you're not looking for a huge influencers, you're looking for influencers that are really dedicated to a specific vertical or specific topic that they've got a following, they're great at creating content, they're authentic. Anything you would add to that? What are you looking for in a creator that's going to create great UGC?

Dara:

Yeah, I'd say these creators typically have anywhere from 10 K to a hundred K to a hundred K followers on. I think TikTok is a great place to find these people because you can often amass more followers on TikTok versus Instagram, and that's kind of where I initially find really great creators who haven't hit the mainstream yet, but have a bit of a cult following within a certain niche industry. I work a lot with beauty brands right now and TikTok is bar none the best place to find those people. But it's the same thing too. When I'm working with an apparel brand or a supplements brand, TikTok is really just still the hotbed of where to find amazing creators. I've used all of the platforms to find creators and find UGC, but I think that nothing really compares to working with the creators that already have dedicated themselves to a niche in a way

Brett:

That range of followers makes sense because it's showing 10,000 followers. It still means you're doing some unique stuff and you're doing pretty well and up to a hundred K, that's great, but they're maybe not so big that they're demanding a high fee or maybe they lose touch with their audience a little bit or whatever as they get bigger, just harder to work with. I think that makes sense. But I really want to double click on your first point where you said, really the days of just doing UGC, that was the strategy, that was the unlock. We did UGC, that's done right now. It's got to be good UGC, it has to be the right influencer, right creator, the right message, the right editing, you're putting it together the right way, it's following the good principles of marketing, but still UGC at the center of that makes a ton of sense. And I think you proved it there too by those top spenders that are spending 500 KA million, a couple million a month online, UGC makes up a large part of their ad spend. And we see the same thing on YouTube. A number of our bigger clients, their top spending videos are influencer, influencer mashups, like mashups of influencers work really well. Is that something you're seeing on the meta and TikTok side, like a mashup of influencers or is it more individual influencer delivering their content?

Dara:

What's so interesting is actually when we did the talk at Blue Ribbon, so this is only a month ago, and I had done the last two data polls for the month. I had seen that single testimonials were winning across the board, everything was focused on one creator, one influencer, and my hypothesis there was, oh, okay, it seems like people get a more authentic experience when it's just from one creator and they're a little bit more suspicious or it's more like of an ad queue when it's compilations or multiple creators. But in this most recent dataset that I pulled for May, I actually found that compilations were on the rise again. Yeah, my personal belief is that the question of whether or not to go single testimonial versus compilation probably boils down more to it being a factor of how you're doing your internal tagging and your internal strategist being able to pull the right content from the right different creators and knowing when and where to make those mashups, which I find can be really hard for teams, but with some of the brands that I worked with, we've found a solution for that. So that's why I think we're seeing more of those.

Brett:

Nice. Yeah, so I think the edits are simpler. If it's one influencer, you still got to have quick cuts and it's got to be tight and it's got to be sped up. Don't let them ramble, got to get to the point and lead with a wow statement or provocative question or something. But I think it is easier to add just one. And so it takes a unique skillset to do the mashup or the compilation of UGC or influencers. But one reason why I think the compilation works so well or the mashup is as a viewer, if I'm watching an influencer, I'm conscious or subconsciously judging like, well, they're not like me, they're bigger than that person and so this clothes might not work, or I don't really work out like that, so maybe this product isn't for me or I don't like that person's tone.

What are there's reasons why someone doesn't resonate with us? But if you've got multiple people in an ad, there's likely going to be someone there that really connects with you where you're like, ah, that's my person. I see me in that person. And that allows for a much deeper connection, trust, overcoming of objections, wanting to then make that click, but it's a bit of a different art. And so getting that mashup to work is a little bit more difficult, but we like what we call the mashup explainer where it's like, Hey, we've got these three feature benefit sets or these three points we want to make about our product, so let's mash up three or four people making each of those points and kind of string it together with fast edits and B roll and stuff like that. And I think that can work.

Dara:

What I used to see with compilations versus testimonials too is compilations would work really good for more top of funnel audiences or broader audiences because of the point that you mentioned before, people are more likely to find themselves in a multiple cast of characters. And when I see compilations not working for a brand, I actually do dig into, okay, should we expand the ages? Is there more diversity we could inject to the compilation cast of characters there so that we can reach better audiences? But I also think single testimonials inherently target more of a lower funnel individual who are like, okay, I want the in-depth perspective, I want the authentic IRL review. So single testimonials again, could in theory be working inherently targeting a more bottom of funnel audience. So there really

Brett:

Good point.

Dara:

Yeah. Yeah,

Brett:

They may work a little more for mid funnel, bottom of funnel could work for remarketing as well. People want that. Yeah, I'll just sit and listen to you talk about this product. I really want to know. Yeah,

Dara:

Exactly. So it's kind of hard since Facebook is all broad now, and a lot of my brands aren't using many retargeting audiences, so it's really hard to say, yeah, this is a retargeting audience only or this is a prospecting audience only. It's all the same thing now. But when I take a step back and look at, okay, which part of the marketing funnel in theory would this be targeting? Sometimes that helps illuminate more clues for me.

Brett:

Yeah, it's really cool and I'm glad you brought that up. I know for a lot of DTC brands, meta is the biggest platform where most of the ad budget goes and not as many people are running on YouTube. Although I think people, everybody should run on YouTube if you've got the right content. We're still seeing a breakdown of top of funnel viewed video remarketing working well on YouTube, but I totally get now on Met. It's mostly just broad audiences, but you want the content there so the algorithm can do its thing and find the right match of ad to audience, but you got to have all the ads there. And so this is a good time to pivot and talk about quality and quantity of creatives. And I remember hearing someone say a long time ago, I can't remember the context, but you find quality in the quantity.

And it seems like especially on meta and TikTok, you just got to crank out a lot of content. If you don't have enough content, your chances of winning are very low. And I heard this example one time, I may butcher the context a little bit, but it was a class, like a college class. And so one group was given the assignment of create the best pot that you can create, take as much time as you want, choose your materials, whatever, but make the best pot you can make vase, that kind of pot. And then the other group was like, Hey, just make as many as you can possibly make in this timeframe. And it turns out the group that made the most actually ended up creating the best as well because they were testing, learning, trying, failing, doing the next thing. And I think that kind of applies to ad testing as well. You don't know, and so just start creating a whole bunch, but how do you ensure getting the right quantity and quality of creatives?

Dara:

So I think it all kind of backs into a budget that a brand is going to be spending on meta ads. So the way that I like to roadmap out the number of creatives to test per week really does back into that monthly budget. And so if a brand is going to be spending a hundred K per month on meta ads, I'm thinking to myself, okay, that's going to equate about three to four creative tests per week, and I'll roadmap that out for a month so that at any point in time we know what type of creative is going to come down the pipeline for the next four months. And to go to the second part of your question, which is like, okay, quantity, that's the quantity part. How do we focus on quality? Really it's a confluence of prioritizing what you can get out the fastest and what you think is going to perform the best.

So at any point in time, of course, we want to prioritize what we think is going to perform the best while what's also going to be the easiest to produce, but sometimes it's really our big swings that we have the highest confidence in and we have to roadmap those out to give us more time to actually produce that so that we are still hitting our three to four creative tests per week benchmark, because a lot of it is a numbers game. I know when I talk to a lot of my friends about dating, for instance, especially for my friends that are single in their thirties and they want to find the one, it kind of becomes a numbers game at a point. And I think it's the same for creative testing, even though we all get really attached to the creatives that we want to win and the learnings and yada yada, but especially as you begin to scale a lot, you just have to have that volume and you have to get learnings from that volume.

I think one of the biggest things that brands are in danger of though when they start pushing up their quantity and looking for that quality is they get into what I would call iteration paralysis where they only start making content based on the data and based on their learnings. And I can always tell a brand is in iteration paralysis when I look at their ad account or I look at the creative they're currently testing and if I can squint and they all kind of look the same, they're all using the same content, they're all using the same font and they're not materially different. I'm like, Ooh, you are not standing out on the feed as well as you could. Because the reality is people are swiping up pretty quickly when they're scrolling through Instagram when they're scrolling through TikTok or Facebook or whatever, they're having conversations with their partner, they're having conversations with their parents, maybe they're just looking at it while they're in a meeting, they're not really paying attention. And if you are showing up the same time every single time, you're blending in the background. So that's why I really do encourage brands to when thinking about quality, it's not just about being data-driven, it's also about taking the big swing and the brands that I see taking a few big swings every single month, those are the ones that tend to win more often than not.

Brett:

Man, it's so good and iteration will only get you so far. And if all you're doing is little tweaks, why would you expect anything other than just little improvements? Right? And I remember hearing people talk about landing page optimization is something as well where it's like, wait, let's just test every little tiny variable

This test. So let's test. Let's test the button color first and we'll get 'em like, dude, you're never going to get anywhere meaningful. But if you can use the data to then form theories about what people are liking and not liking, then take a big swing, be risky. That's where you're going to find a breakthrough is with a big swing, not with alliterations, nothing wrong with tweaking as well, but if you're never taking those big swings, why would you ever expect to get a big outcome? And so really, really good call out. I've never heard of the squint test, but I like that if you're squinting at the ad library, it all looks the same. Okay, you got to branch out. You got to be a little bolder there.

Dara:

Yeah. Yeah. I'd say too, when thinking about big tests and yeah, I just think that a lot of media buyer types, I work with a lot of growth teams and the number one thing that they tell me they're afraid of when it comes to creative is they're really afraid to give the subjective opinion as to why a creative worked. That's why they're really comfortable looking at videos and being like, oh, this brand had this video had a hook rate of X, Y, Z, and that was better than this one. That's why it worked. The hook was better. But they won't go into more of the subjective things that actually make a big difference. Like, oh, the creator was the creator looked like this or said this. That was really interesting. And the data isn't always going to reveal why a creative worked. So the more comfortable you can get with being subjective and pulling out those bigger learnings, that's where I see creative teams starting to make those much bigger unlocks.

Brett:

And really, I mean, that's what you're looking for in the data. And this is something we deal with as an agency all the time, and I know you have as well where teams can be tempted to just share with the client, here's all the data, here's the data, here's the data from creative A and creative B and creative C. You're like, okay,

Dara:

That's not an analysis.

Brett:

What do you think? What does that mean? What do we do? And so I just on a call with a big brand where we're doing this big YouTube push and seeing what's driving in-store traffic because you can actually track that with YouTube. They're a D two C brand, but also on Amazon also in retail stores. And two ads quite similar. One I actually liked better than the other, but the one I didn't like as well had quite a bit higher conversion rate as we're looking at it because it was in store and stuff. The main thing that we saw that was different was the option two, mention the brand name very quickly and for YouTube. And I don't know that that was the reason, but that was our initial hypothesis. We're like, Hey, let's test this more. But with YouTube, people can skip after five seconds, but if you mention the brand in the first five seconds, that could really trigger people looking up directions to Walmart or some of the things we were testing for this brand. And so that's where the data really matters, and that takes someone that kind knows creative and knows the game and has kind of been in it a while to look at a couple of different creatives and say, this is what the data is indicating why and what do we test now? What's our next swing?

Dara:

That subjective analysis of honestly the gravy.

Brett:

It is. It is, and it takes a little bit. You got to kind of put yourself out there and you may be wildly wrong, but you got to be willing to do it, and that's super important. Can you talk a little bit about your testing methodology? So how do we go about creative testing? So now we're getting these three to four creatives a week. If we're spending about a hundred K, or I'm assuming it just, does it just kind of double as spend doubles? Does it go up linearly with the budget? Is that how that usually goes?

Dara:

Yeah, yeah. I'd say that for every additional 25 grand that you're spending every month, that's another creative test to add per week is my really rough estimation for that. And the anatomy of a great creative test for me is when I'm making a creative test, I'm not just going to be making one asset. I am going to bake in a little bit of iterative variation testing into every single test. So if I'm going to be testing a UGC creator's content for a brand, I'm going to create ideally three unique hooks for that content. So I'm going to edit it down, have the base edit, and then I'm going to test out three really different hooks. And my secret sauce here is I do try to make these hooks fundamentally different. Maybe I'll have the creator, I'll start with a reaction point. So earlier to your point, you were talking about having creators say something about the product that's really surprising or exclamatory, I find reactions, authentic reactions from creators can do really well.

So maybe I'll do that. Maybe I'll have another one that talks about a certain value prop that they really liked about the product. So it'll be really product first and then I'll try another one that's maybe more problem oriented because I find that a lot of times when I look at the hooks that work again and again, they're either product oriented, so they're already talking about a specific product or they're problem oriented, so that is going to be targeting slightly different parts of the funnel as well. So depending on who you're trying to target, they could be different, which is why I like to test those things inside of one unique creative test. So say I have these three variations for this UGC creator's content, I'm then going to deploy that ideally in its own ad set, all three of those so that I can throttle money to that ad set.

I'm not really concerned about getting the same amount of spend between each of those variations. In fact, if I see one variation coming out heads and tails above it, I think that's a really good sign because it means that that version is probably really scalable in some cases. Yeah, I'll go ahead, scale that one up to a different campaign, try throttling money to the other ones, but if it doesn't work, it doesn't work. We've already found our messaging point that is going to be the winner for that one. And for me too, I like testing things on a broad audience that is the most scalable audience. And the idea too is if it's going to work on broad, it's going to work on all your other audiences. And you're also sort of creating a new ecosystem within that ad set too. That's its own unique targeting pool based on that creative.

So I like to scale that up within the ad set. And again, if we're seeing really good results from scaling that up 20% every three days-ish, but if I see a bang an ad, I'll double triple it overnight. It doesn't really matter. Absolutely. Just let's push it and if it continues to work, then we'll put it to the scaling campaigns and see how it compares against other winners and see how long it takes for those to scale up and compete against each other essentially. But yeah, what I do too is after we see that creative winning or losing, I do retros at the end of every month with the brands that I work with to look at a specific test in depth, this is going to go over a lot more of the subjective analysis, but it's also going to force them to pull learnings that they can then iterate on. So okay, what are we going to do in the ad account next? But also, should we take a learning here, apply it to an upcoming static test or an upcoming creator brief? How can we make sure that we're always drawing those learnings from every single test? Sometimes I'll have brands make slide decks for all of this, but oftentimes we don't have time. So it's just something that's done verbally and a meeting. Yeah,

Brett:

Just do the platform, just show the ads in the platform, talk through it, talk about what the next tests are going to be. That's what really matters. I do think sometimes we get hung up in the, are we presenting this data when every, it's just about we get the data, let's make some theories and hypotheses on that, and then let's work on our next test, which I think makes a ton of sense. What is a typical or kind of expected win rate? So we're testing three ads in an ad set, or maybe we're testing six or eight creatives across an account. How many of those are we expecting to be losers? How many are we expecting to be mild winners? How many are we expected to be maybe runaway winners? Any thoughts there? Yeah,

Dara:

I'd say that it looks really different as you start to scale more With some of the brands that I work with, they're spending more than $2 million per month on their ads. And what I'll see is there's a certain benchmark I need creatives to hit, and I'd say more than 50% of those creatives are hitting it, but they're not necessarily creative winners. They're just something that are going to add padding to your ad account, add that newness, add that juice, and then after two or three weeks we turn them off, they stop being as effective. But in terms of absolute banger winner, unicorn ads kind of rare.

Brett:

Yeah, it's rare. They go a few months right before you hit another one. I mean it

Dara:

Can time the creative that hit your benchmark should not be underestimated. And I can count on those, and I see those almost more than 50% of the time. But the real banging unicorn ad ones once a month sometimes.

Brett:

Yeah, I mean it's on

Dara:

How much creative we're putting out.

Brett:

And if it's sale period, it's like a star player, the star student, I mean they're not going to be that many. That's just by definition there's not going to be that many truly exceptional outlier type ads. So Awesome. So let's do this star. We are coming up against times. So we've got about five to seven minutes. I want to go through quickly. You have some ad formats, which I think will be really helpful. We'll lead people with this. This will be good food for thought. So I'm going to need you to give a 32nd explanation of each of these and we'll run through them. So ad format number one, feature benefit, call out. What is that and how would you advise people to execute

Dara:

Those? So essentially what this ad is, is it's a static image ad and it ideally will have your product on a plain background, and then you are pointing out certain key benefits or features of that product. I love, love, love this ad because it is so easy to create. Anyone can create it in Canva. And this is actually something that Ogilvy used to use in his print era days, which I think is really interesting. And based on his research, he actually found that people retained a lot more information about the product or service by using these callouts, which is why it still works today. And my most recent analysis of the 20 brands where I'm pulling their creative learnings, we still had featured point outs in those top performing ad formats. So it's definitely something that's really easy to execute on. And even though for performance creative types, they're like, yeah, yeah, this is not revolutionary. It's absolutely not, but it should still be used.

Brett:

Still works. And that was another reason I loved your presentation because you called out the greats, the classics. Yes, David Ogilvy, Ogilvy on Advertising Required Reading for anyone in the marketing advertising space. Yes, some of the styles and stuff don't translate, of course, but the principles and what they're doing, human nature doesn't change. Good marketing principles don't change either. And so I love that feature benefit call out number two, golden nugget reviews. What is that?

Dara:

Golden nugget reviews. Golden nugget reviews are those testimonials from your customers that are just so absurd and memorable and wild that you can't help but just have a chuckle to yourself. Those things often make amazing advertising. These testimonials are not going to be things like, this is the best shampoo, or Oh my God, I loved these shoes. Those things are really generic and honestly are probably maybe potentially faked even if feel like you do get that comment and maybe it feels good as a new business owner, it's not really memorable. So I often

Brett:

You're the only one that likes that comment. As a brand owner, other people don't care.

Dara:

Yeah, I think some tactics that brands can use though to find those golden nugget reviews are like, again, specificity here is key. So if people are bringing up their age, they're bringing up a transformation in a certain amount of time, those type of things can very well be golden nugget reviews. But I actually just had a conversation with a few founders today and I was like, yeah, do you guys ever screenshot reviews on your website and send 'em to each other and text message? Those are probably the ones that you should be using.

Brett:

Totally, totally. Yeah. Yeah, I love it. I interviewed Mickey Agrawal, founder of Tushy on the podcast, been a little over a year ago, but one of these that came up for her, which I just still stuck in my mind, it was Tushy is a bidet company, so you attach the bidet to the toilet and stuff, and really brilliant marketers, but some customer said, tushy is eye candy and butt bliss. And it was like, okay, it's just wild. It is weird. But it was like they look really good and of course your butt has never been happier. And so they borrowed that, used it in ads, it did very, very well. So golden. That's a great example. Yeah, golden nugget reviews. Love it. Number three, founder story. What is that?

Dara:

So a founder story is essentially going to be a video told from the point of view of a founder. It's essentially saying why you created your brand and why it's so important to you. I think there's a few reasons why this works really well. Number one, I think that people don't want to buy from the unknown unnamed corporations anymore. They love knowing the story and the people and the behind the scenes of their brands and their favorite brands. I think the brands that kill it on TikTok are actually just the ones that show the behind the scenes, show their office, show their warehouse. So it kind of goes back to that innate curiosity we have about the big brands that we love. But I also think that these founders are often the ones that are most well positioned to communicate the problems that they had that forced them to make the product.

Something that I talk a lot about with brands right now is the ones that are succeeding on meta ads are the ones that are solving an actual problem because it is just a little bit harder to succeed on meta right now. And if you're speaking to a specific problem that people have, that problem is often going to get people to make an action quicker if you're providing a solution for them. So I often just think founders can really twist the knife a little bit more when speaking about problems and show a little bit more of an empathetic view to people that are looking for that solution,

Brett:

Especially if the problem was very personal to them, and especially if it was embarrassing or just their life was bad. The taboo

Dara:

Helps

Brett:

For sure, taboo helps as well, but, and then I solved it and now this is what my life is like, and that really connects with people. And so yeah, love founder stories when the founder is authentic and even if they just show up halfway decent on camera, but they're authentic and real can work quite well. Number four, statistics sounds like that could be boring, but how do we make this interesting?

Dara:

Yes. So statistics, if I was giving this talk a few months ago, I probably would say something like, oh, if you use statistics and numbers in your ads, that gives people a logical reason to say yes. And sometimes people just need that logical approach instead of a more emotional based one or a buy more button, sort of like if you give people statistics, they're more likely to trust you. I also think that statistics are a different visualization of the before and after experience. So you really have to use statistics that communicate more of that end value and that transformation as opposed to one in four people have this problem. If you instead say, Hey, 97% of these people experience this outcome, that's way more impactful than a statistic about the problem or whatever. So I find that using statistics can just really unlock for people what they think they can expect.

Brett:

And I think statistics also lend to believability. We want to believe the promise of a product, we want the benefit to be true, but we're also skeptical as we've been burned in the past. And so numbers can kind of lend credibility there, but I also think numbers can be emotional as well, and sharing the right statistics can really dial up the emotion and make it a little more concrete. And kind of goes back to the specificity we were talking about. I've got a fresh in my mind just two days off of this, but we did the Murph, the workout on Memorial Day weekend with this one of my wife's family. And so if you're not familiar, you run a mile and you do a hundred pullups, 200 pushups and 300 squats, let's do with a weighted vest. I did not do with a weighted vest.

I thought I was going to die anyway. But you tell someone we did a hundred like, are you kidding me? That's insane. So that number really is more of an emotional reaction than we did a lot of pull-ups, right? And so I think looking at it that way too, does the number communicate something? Is there actually some emotion or some benefit or some believability in that statistic and use that to draw that out. But I actually love this one because it can be super boring. Nobody probably hated a class more than they hated their statistics class, a lot of us. But you pull out the right statistic, emotional connects to a benefit, it just works. So that's awesome. And then number five, last one, educational ads. What are those? So

Dara:

Educational ads back into this idea that people really are looking for content first. I also think that educational content, what's interesting about it is it can be inherently way more top of funnel. You're trying to educate people on a specific problem or a specific solution. I think it can really, really work for brands that are in the supplements industry, but it can really work for anyone because I think that if you can really showcase why you're different through a content first approach, that can be a really big unlock for brands. There's an example I like to share of a brand, and it's a supplement brand that I worked with. And in this ad, the founder is actually just going through certain ingredients that are in her supplement. And what's interesting is she never actually mentions what the product is. She never actually mentions what the brand name is. But because she was going through these different ingredients and tying them to certain problems that people might have, that ended up being a top performing ad creed for them because people were like, wow, actually this sounds a lot like me. I'm going to click more into this. And they were then able to go to the landing page to see, oh, actually there's a solution for me here. And that was a lot more scalable because they weren't just targeting people who were already looking for a specific solution.

Brett:

And I think it's one of those where if you can have this perspective of if someone just consumes this ad, they'll receive a benefit. So they'll receive a benefit from the ad itself. And I think if that's true, then someone's going to be much more likely to talk about that, to share the ad, to mention that little nugget they learned from the ad itself. And yeah, I like that approach where you're talking about, Hey, turmeric, this is what turmeric is, anti-inflammatory does these things and cortis jump into cortis right now. It creates energy, but stable energy and you feel centered and grounded. Anyway, that totally makes sense and I love that approach. Really, really good. So awesome. Dara, this has been an absolute blast. I can just keep going talking about this stuff, but we are up against it. We're running out of time. So for those that are like, I need more Dara de in my life, how can they connect with your content or connect with your company? What's the best way to take next steps?

Dara:

So the best way to figure out what I'm up to is to follow me on YouTube. I launch one long form video every single week there. That's about media buying and performance creative. So yeah, like and subscribe. And I'm also on Twitter at Denney dara. So if you ever have a question or want to see the random things that I'm thinking about marketing on that specific day, that's going to be the place to find me.

Brett:

Awesome. Dara Denney, ladies and gentlemen, Dara, thank you so much. We'll have to do it again sometime.

Dara:

Amazing. Thank you so much Brett.

Brett:

And as always, thank you for tuning in. We'd love to hear from you. What would you like to hear more of on the podcast? Have you not done? So we'd love that five star review on iTunes if you think it's worthy. And hey, if you heard this and you think, man, so-and-so has got to hear this podcast, please share it. Please share the content that would mean the world to us. And with that, until next time, thank you for listening.

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Episode 286
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Tomer Hen - Switch Supplements

Building an Affiliate Army to Skyrocket Your Brand's Growth

In this episode of the eCommerce Evolution Podcast, Tomer Hen, CEO and co-founder of Switch Supplements, shares his secrets to leveraging affiliate marketing and influencer relationships to drive explosive growth for your brand. Discover how Tomer took Switch Supplements from zero to $30K in recurring revenue in just eight weeks and how you can apply his strategies to your own business.

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Key Takeaways:

  • Learn how to identify and build authentic relationships with high-impact influencers in your niche.
  • Discover the power of a non-transactional approach to influencer marketing and how it can lead to increased brand awareness, social proof, and sales.
  • Understand the Amazon-TikTok flywheel and how to capitalize on the spillover effect to boost your rankings and revenue.
  • Gain insights into turning your most passionate customers into a powerful army of affiliates and brand advocates.
  • Get practical tips on how to start implementing an affiliate marketing strategy, even if you're starting from scratch.

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Tune in to hear Tomer's inspiring story and actionable advice on how to harness the power of affiliate marketing to take your eCommerce brand to new heights

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Chapters: 

(00:00) Introduction

(04:37) Why Did Switch Start Influencer Marketing?

(07:55) How Do You Find the Right People?

(10:37) $0 to $30K Recurring Revenue in 6 Months

(13:15) How Do You Build an Affiliate Army?

(16:33) Advice on Turning Influencer Content into More and Better Ads

(21:07) Hacking Word of Mouth

(26:20) The Amazon/TikTok Flywheel

(33:48) Conclusion

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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, Bryan Porter and more. 

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Other episodes you might enjoy: 

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Transcript:

Tomer:

And if they are your customers and they love you and they recommend your products either way, if you sprinkle that with some financial incentives and some guidance and tools that will make them see this as a financial opportunity for them, but also as a way to recommend a product they love to other people in their lives, then this is where you can hack word of mouth.

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're talking about building an affiliate army, leaning in a little bit to influencer marketing and affiliate marketing and the content that comes from that. And so I'm so excited about this topic and my guest. My guest is Tomer Hen. He's a CEO and Co-founder of Switch Supplements, and he is also the founder of Massive Influence. They provide coaching and consulting for influencer and affiliate marketing. And so I believe Tomer and I first met at Ryan Daniel Moran's Lake House, if I'm not mistaken, talking about the Capitalism Fund and some other fun stuff. And that's where we connected. And so with that intro, Tomer, welcome to the show, man. And how's it going? Hi

Tomer:

Brad. How's it going? Thanks for having me here.

Brett:

Yeah, dude, it's going great. Excited to talk about affiliate marketing Love Switch supplements. And for those that are not familiar, what is Switch supplements? Who are you gearing your products toward and what products do you offer?

Tomer:

Yeah, so we're in a mission to help high performers, entrepreneurs to crush their days, to feel at their best and sleep at their best. We have a line of natural atropic supplements. Our flagship product is called Kill Switch. It's a hot chocolate sleep supplement that knocks you out and make you feel really good in the morning.

Brett:

That's awesome. And then another product that I've tried that is coming back soon, we'll maybe tease it a little bit if you're allowed to do that on the podcast, but on Switch. Can you talk a little bit about that product?

Tomer:

Yeah. On Switch is our morning focus and flow supplement, and the reason why we are creating version three is because the product tastes really bad, but people love how it makes them feel. So many people could bear the taste because they loved how it made them feel, but now we want to create an excellent product that also tastes really good. So right now focusing on Kill Switch, growing this product, people love it. And next in line, we're going to have on Switch 3.0 and some other products in the line.

Brett:

Super exciting. And yeah, I can attest to that with On Switch. I'm one of those people though. If I know sometHeng is healthy and it's creating a desired benefit for me, I will drink Pond water. I believe we've got a pallet where I can tell if, okay, this is premium coffee or cheap coffee, or this is good quality sushi or not. I've got a refined palate a little bit, but dude, if it's healthy, I will drink anytHeng and so on. Switch does work, but I'm excited about version three that will be enjoyable to consume as well. So going to get into building an affiliate army and Influencer Marketing really leveraged this to create some impressive growth with Switch. And so we're going to dive into that. But first Teller, what's your background? Because you said sometHeng kind of crazy to me as we were getting ready for this. How long have you been doing affiliate marketing?

Tomer:

Basically since I remember. So I've been an affiliate marketer myself since I was 13, which is 17 years ago. Then I turned into helping other companies, bigger companies to build their own affiliated programs while I was promoting the good old ClickBank offers. And then I had an agency for about 11 years. And in 2020 I decided that I really want to build a physical product brand, and I decided to combine my experience with performance marketing and affiliate marketing with my new passion for physical product brands.

Brett:

Love it, man. Love it. So I want to dive into how we're going to get tactical and practical on the pod and show people how to create an affiliate army and influencer army. But first the why are you doing this and maybe even talk about specifically why did you do this for Switch?

Tomer:

Right. So for Switch, it started after we basically ran out of cash trying to make our ads profitable. And as you know better than me, that supplements are very hard to promote on. They are, many brands are crusHeng it, but many brands will pay $200 CPA to acquire a customer. So for a new brand to compete with those giants, it cost us a lot of money. And we came to a point where we had no cash, we had inventory, and we had a really good product and we knew that, and that was the frustrating part. We knew that when people try our product, they love it. We had a really good repeat buyers rate, but we had no money to get it out there. So we decided to use the inventory that we've had to send it over to influential people that our audience trusts and likes and let them try kill, switch. And if they like it, we can create a relationship with them and they might even give us a shout out. And this is how we were able to create that social proof and attract more customers and more customers to a point where we sold out completely without running a single ad just by working back then with about 40 influencers that we never paid for. By the way they were all promoting us. They love the product, some of them got some commissions right after, but we had no money to pay upfront. So we

Brett:

Did. It's amazing. And you really hit on an important point, and we've done a lot of marketing for supplements. I mentioned at the outset, I'm a believer in supplements. I take different mushrooms and of course multivitamins and all kinds of stuff. I've always been into supplements, but it's not easy to sell, right? You compare supplements to other D two C categories like apparel or accessories, you can show it, right? It's visible, it's visual. I can see the ring, I can see the pants, I can see the sweatshirt. If it's sometHeng automotive, which we've done a lot in the automotive space, I can see the before and after on the car truck or SUV, I can see it and I can say I want that, but with supplements it's like, Hey, do you want this jar of stuff that tastes terrible or do you want to swallow more pills?

No, I don't want to swallow more pills. Right? So obviously you're leaning into the benefit and you're trying to make this USP and this value prop really clear, but sometimes it's difficult. It is difficult, and it's difficult to say that in a way that's believable. And so what's great about affiliates or influencers for supplements especially is if you tor as the founder of Switch, say, I love kill switch, it allows me to have the best sleep of my life and I wake up refresh. And it also doesn't tastes like a tasty cup of hot cocoa. That means sometHeng and people will pay attention. It's not bad, but it pales in comparison to a real user talking about it, especially if they talk about it in an authentic way. And so we talked about earlier, what is it? Necessity is the mother of invention. So you needed sometHeng to work and you needed it to be free. And so you leaned into what you knew and you found affiliates and found influencers. So how did you go about doing that armed with just a great product and not a lot of cash? How did you find the right people? Right.

Tomer:

Luckily, relationships are completely free. So you can reach out to influencers if you choose the right influencers and you reach out to them the right way and offer them to try your product. If they like it and you nurture that relationship, then many of them or some of them will post about it. And that creates the first awareness to your brand. When you create a relationship with what I call the high purchase intent influencers as in not the generalist lifestyle influencer, but someone that I follow to get advice on a certain niche or topic, let's say nootropics or biohacking, and they post about a supplement that they tried and liked, and I have the same problem, I would probably at least check out your Instagram page. Maybe I will follow your page. Some of them will click the link and we'll buy the product right away.

But we created that awareness, we created a lead flow. We were able to grow our email list just by having other people saying good tHengs about us, our customers, and we got a lot of referrals from our customers and we got a lot of repeat buyers. That's another level to have person with an influence with even as little as 5,000 followers. But those followers really trust what they have to say. We are able to get more sales, able to get more sales. We get more testimonials, more testimonials, more proof for our Instagram page, our emails work, and this is just how it snowballed.

Brett:

Yeah, one of my favorite definitions or favorite quotes about marketing is it's a transfer of confidence, right? Confidence from either the founder or the brand saying, no, I know this product is amazing. It'll change your life. And I'm transferring that confidence to you so that you'll purchase. That is easier done by an influencer in a lot of ways. And I like Andrew Huberman, I tHenk he's a great, the Huberman Labs podcast is awesome. If he recommended a supplement, I would give it some serious consideration. I would immediately jump from, Hey, this is no longer just a jar of pills. This is sometHeng that is likely trusted to create this result. And that's what you created with these influencers. These are people, maybe they're micro influencers, obviously not as big as Andrew Huberman to their audience trusted. And immediately that transfer of trust is quick and it's received well. And so I really like that you talked about you kind of went from zero to, I tHenk 30 K in sales in eight weeks, and I believe that was 30 K recurring if I'm not mistaken. But what did that look like and how did that go down? I know you've already touched on it a little bit, but fill in some of the gaps there. How did you go from zero to 30 K?

Tomer:

Yeah, so that's actually a story that I'm really proud with one of my clients, and they launched the product at the end of December, and the two months prior to that, they started sending dms to influencers in that space that was the pet space, and started sharing about their upcoming launch. Those influencers, because they built their relationship in an authentic way, that person never asked them to do anytHeng, started posting about a product they'd never even received just because the communication was so well, the mission of the brand, the content they've created, and those influencers just wanted to be a part of it. So they started building hype before the product was even on Amazon. Now, once the product was live on Amazon, about 60 influencers posted about it without even an affiliate link. They just said, we tried this product, we like it. By the way, you can get it on Amazon. Guess what many people did? They went on Amazon and they bought the product, which got this brand, the number one new release badge on Amazon, and they immediately went to, I tHenk it was, I can't remember the number of sales, but that was about $1,000 a day in sales. That was just eight weeks or six weeks after their launch. Now, two or three months later, they're already pacing 60 KA month. And obviously once you get the ranking on Amazon and you're getting the reviews, it's flywheel

Brett:

Now.

Tomer:

It just snowballs. Exactly, exactly. But this was a really cool example of how building relationships with just few influencers in your space can lead to not so many posts. I mean, we have clients who are getting hundreds and hundreds of posts every month, which is 60 posts were enough to create traction on Amazon. That snowballed into becoming $60,000 a

Brett:

Month, which is great for a new product launch. I mean, even an established brand that's doing tens of millions of dollars, you launch a new product and you immediately get that to 60,000 a month in sales. That's great. And then you keep building and growing from there and really can add some nice incremental value. So how are you executing on this? So where are you finding the influencers? Are these Amazon influencers? Are you leaning mostly into TikTok? Where are you finding them? And then it sounds like you're giving them product no strings attached, maybe in some cases not even asking them to post or what does that

Tomer:

Look like? Yeah, so first we start with a non-transactional relationship, a hundred percent authentic. Our number one rule is that we do not negotiate with influencers. I don't want any influencer who starts in negotiating with us on their rate card before they even tried our product, because you could sense that they would probably promote any product that would pay the right price, and they probably lost their audience's trust. So we start by saying, Hey, this is us. That's our story. That's what we created. Would love what we have your content. Would you like to get a free product on us? No strings attached, and we really expect them to do notHeng when it comes to finding them. I get this question a lot of which is the best platform to find influencers at, I would say, is there really isn't the right platform. It's kind of like asking what is the best platform to post content on?

I would say first where your audience hangs out, that was maybe an assumption for two years ago, but nowadays on TikTok, everybody's on TikTok, your audience is on TikTok. There is less competition on the non-traditional audiences on TikTok, for example. So I would say just focus on a platform or a social platform that you can stick to that you like the content you like what they post. You can post more content yourself because obviously those influencers will tag your page. So people would need to see some content over there and just focus there. I would suggest the blanket answer would be to focus on Instagram and TikTok. People always ask me, what software do we use and what tools in ai? Honestly, I've never found a better tool than a well-trained VA to a virtual assistant to find influencers for you manually because the algorithms of TikTok and Instagram just works so well. So if you know three to five ideal influencers in your niche, you can use the algorithms that are completely free to find hundreds and thousands of them.

Brett:

That's great. That's great. And now I know you primarily, especially with Switch and sounds like with some of your clients, you're utilizing this content for organic plays, right? And I tHenk it makes all the sense in the world, the more you lean into organic, the better. Even if you're crusHeng it on ads, which we're an agency that leans into the ad space, I'm a big believer in paid because there's a lot of control there, a lot of scale there, man. You got to layer in, I believe, some organic to really kind of create stability, and it can accelerate and amplify anytHeng you do on the paid side. But then there's also this component of, Hey, I'm creating great content that's organic. Now I can grab that. I can mash that up or use it as a standalone. Now I've got almost this infinite supply of great creatives that I can use for my ads, and then I can really scale 'em to the moon. So any advice or thoughts there on taking influencer content and turning it into great ads? Yeah,

Tomer:

That's a really good point. Many of the clients that I work with, their number one goal is I just need more content for ads. I'm sick of getting fake QGC from all these platforms. They don't work well. I'm sick of creating content myself. I just want authentic a hundred percent authentic content that I can use for my ads because my ad team is driving me nuts, and I always ask for more ads. So for many brands who run ads at a large scale, that's our main goal. I always say, that's great. Use the same system drive sales to offset for the free products that you send of the operational cost, and now you're getting content completely for free, and you would probably also make money on the backend with the direct sales that you will get from those posts. What I'm saying is that this is a great way for you to also test which creatives would work well before you spend any dollars beHend.

So you can take your top 10, 20% of influencer posts that have driven the most sales or engagement and then use them for your ad campaigns. Many brands are trying everytHeng and anytHeng that they get from influencers, but they get more data when they see, oh, that post drove so many sales, it probably resonated. The other tHeng is that you could also come to an agreement with the influencer that they will whitelist your account and you'll be able to promote that content from their handle, which calls whitelisting, which would make it even more effective. And then the other tHeng, and that's also a very common question that I get is do I get to use the content? Do I get the usage rights? Because many brands are used to pay for usage rights. The beauty is that when you start with a non-transactional relationship and an influencer that could charge, let's say a thousand dollars for a post did it for you for free, in 95% of the cases, they will also give you the usage rights and allow you to use it in other areas as well. So when you follow that relationship first system and you're not trying to extract sometHeng out of them, you just get it, you get the posts, you get the usage rights, you get referrals. You really don't need to ask them for anytHeng, including users. Right?

Brett:

Yeah, it's so good, man. And I love that first point, especially where you're talking about, hey, understanding which pieces of creative from an organic standpoint did the best, and then leaning into those first for ads makes all the sense in the world. So I was just at Google Marketing Live and talking to some of the product specialists, product managers beHend YouTube shopping, and we'll see how that does. It's designed to be YouTube's answer to TikTok shops, but that's one of the tHengs they do is they say, Hey, now as you have influencers who are tagging you and talking about your products on YouTube, you can see what performs the best and then you can run ads to that directly witHen YouTube and listen, I tHenk the name of the game now with ads, especially on meta and TikTok, but to a lesser degree on YouTube shorts, you need to just test a lot of different tHengs.

You find quality in the quantity. Being able to start with, Hey, we know these 10 or 15 or 30 creatives did really well organically, let's put money beHend those first. And sometimes listen, sometimes you'll find a diamond in the rough that this one influencer just didn't take off for whatever reason. Maybe their audience wasn't big enough at what they said was gold, test that too. Start with the tHengs that had great organic reach and great organic performance and lean into those first as ads. That's just an awesome strategy to both lean into organic and paid traffic. Awesome. So you talked a little bit about this idea of hacking word of mouth, and I've always been a big believer in word of mouth. I tHenk that's kind of the tHeng that can sustain a brand and accelerate growth once you get to a certain level. It's sometHeng I got my start as just a kid doing radio advertising and talking to local business owners, local shop owners, and it was talked about, Hey, my favorite form of advertising is word of mouth, which makes sense. It's just slow and it's kind of hard to control, have a great product and great service. But you talk about hacking word of mouth, what does that mean and what does that look

Tomer:

Like? Yeah, I tHenk that many people can get caught up with definitions. They ask, what's the difference witHen an affiliate and an brand ambassador and an influencer and a partner? And I would say it doesn't really matter how you call them, this is just a person saying good tHengs about your brand and your product to other people. So this person could have an audience, but they could also have 200 followers on Instagram. They could be very active in a WhatsApp group. They could be really active in PDA or whatever it is. And if they are your customers and they love you and they recommend your products either way, if you sprinkle that with some financial incentives and some guidance and tools that will make them see this as a financial opportunity for them, but also as a way to recommend a product they love to other people in their lives, then this is where you can hack word of mouth.

You can turn someone who's a raving fan, who's already a raving fan, and you can add some financial incentives to it and with a few processes just to make them excited and reminded that it exists. And they're probably not going to get to you tens of thousands of dollars in referrals each, but some of them will have a small audience. Many of them will drive 1, 2, 3 referrals to you. And if you do that at scale, this can really add up. I work with a high eight figure supplement brand, and they have tens of thousands of their customers join their affiliate program and they have hundreds and hundreds of them. They drop hundreds of dollars each in sales, and none of them have an audience. They mostly post it on their personal accounts, they post it on different groups that they're at. Sometimes they send it on as a text message message, but it's not about those, Hey, here's take $5 coupon for every referral that you make.

We've all seen that, and all of your customers have seen that, and this is really boring. This is about creating a real opportunity for them to make some little extra money by promoting a product that they like. And since most brands have those loyalty programs or referral programs, when you treat them as your partners, when you treat them as potential as real affiliates, this is where you create contests and you celebrate their success and you send them more free products and you add them to a closed community of your VIP customer slash affiliates, and you treat them as such, you can build a group of raving fans that will become your best brand advocates. And I've seen this over and over with brands, some of them, again, high eight figures, some of them are way smaller than that.

Brett:

It's so cool. And when you do this, it makes everytHeng better. You can use this content for email marketing, SMS marketing for YouTube, for Google, for TikTok and Instagram and Meta, and so highly recommend leaning into this. Now, how does someone like your eight figure supplement brand client, how do they get such a huge army of people that are now affiliates and ambassadors? How do you go from zero to this massive army?

Tomer:

Yeah, so I would say with your customers, most of them obviously will not turn to become affiliates. And even if they are, most of them will not drive sales. But you really just want the top 5% that love your products and will recommend them either way even without getting paid. Again, when you top that with a financial incentive, now they have the incentive to keep doing that. So first you need to offer that. You need to have a very lucrative offer for them. So you need to show them that, hey, if you refer us 10 friends, you might be making $200 from it. And for someone who's not doing this for a living, this is a lot of money. This is not an influencer that does this for a living. Now, if they're also able to get perks that they are not able to get unless they become your affiliate and refer you some sales, like exclusive product drops or early access to new products or a lifetime discount for your products or even priority support. So this is how you build a community of anytHeng between 20 to 500 or a thousand of your raving customers to become your best salespeople.

Brett:

That's awesome. So I want to kind of transition, and we talked about TikTok shops a minute ago, but let's look at this, TikTok and Amazon Flywheels. So sometHeng you were kind of telling me about, and I know a lot of your brands, Amazon is a huge driver of sales for almost all OMG clients, right? Their D two C through Shopify or another platform, their marketplace, which is Amazon, and then a lot of them are also D two C in store as well. But what is this Amazon TikTok Flywheel?

Tomer:

Yeah, so I'll start with a little story. We've neglected Amazon for a very long time, ever since we started switch, and this is why our sales were really low every month. Sometimes we had really, really low sales. Then one day in January, this January, we got a post by a larger influencers in our space, and he promoted kill switch to our Shopify store on his Instagram page. We got more sales on Amazon that month than we got in the past six months, right after he posted, I'm sorry, our Shopify link on his Instagram, but we had such big spillover into Amazon, all of that awareness went straight to Amazon. People prefer to buy there, and we made six x our regular monthly run rate. Now, the interesting part is that up until now, we are getting almost the same amount of sales because that external traffic we sent over to Amazon now rewards us in the algorithm.

So we rank higher, we never touch our listing, we never run any PPC or optimize the listing, but we still get more and more sales on Amazon. So now that we see the potential like, huh, maybe we should focus on Amazon and get some more reviews and work on our listing and optimize, but we're able to get it just from that single post to, I tHenk our growth rate this year is 171% more than last year, and we did notHeng on Amazon like zero, no SEO, no leasing optimization, any of that. Now, in the past few months, we also had many more influencers, probably smaller influencers than that person who also posted about us. And every time they do that, we get more sales on Amazon. Now, if you combine that with TikTok and you know that TikTok prefers TikTok shop videos and products because they want to push TikTok shop, that means that you can get more of that exposure on TikTok.

A lot of that exposure will spill over to Amazon. So if you work, for example, with a TikTok shop affiliate and you pay them a 20% commission or 30% commission, but you are getting three X sales coming to Amazon, you pay zero commission for, you will rank up higher in the algorithm and you only pay that affiliate. The effective commission is much, much, much lower. So knowing that and tracking that, now you are able to maybe offer your next affiliates 50% or 40%. So they will promote you even more because you know that for every sale they drive directly on TikTok shop, you're getting three more on Amazon or even on Shopify. You can win when other brands are trying to negotiate between 15% to 20%. You know that if you build this flywheel correctly, then you will have all that spillover coming to Amazon.

Brett:

It's so smart, and we see this in a number of different categories. You push really hard on meta or Instagram ads, you see a lift on Amazon, even if you're sending all the traffic to your Shopify store, we see this on YouTube all the time. Once an account gets to 50,000 or a hundred thousand or 200,000 or more in monthly YouTube spend, Amazon sales really increase for that brand. And I've shared this before on the podcast, but a buddy of mine is in the infomercial space and so does a lot of TV placements for infomercials and what they expect. Now, when a new product is launched via infomercial, what they expect is that 50% of the sales from that infomercial will be on Amazon, 30% will be from the.com, so from the online store, and then 20% will be from the phone and or other outreach.

And so it's just super interesting that even if you're not mentioning Amazon, people see a product that they really want. For most people, e-commerce equals Amazon. I'm going to go to Amazon and make my purchase there. I'm at least going to check. And that's another really good reason to be on Amazon because what we found with some brands is if you're not there, but there's a product that's pretty close, some people will just end up buying that. So if you're doing any kind of top of funnel activities, influencer, affiliate, whatever, you are driving traffic to Amazon, whether you intend to or not. That's

Tomer:

Correct. And I will also add that influencers create awareness. Most people will not buy right away. And most people who would end up buying the product after they've been exposed to your product through an influencer post will buy after they sign up to your email list or they follow your page or they bought it on Amazon or their search name or Google. So you always see more organic sales once you have more influencer posts, even if the direct affiliate sales are not as high, we always see more direct sales coming right away. Now, the beauty is that if you can also add a system that we call it the DM funnel, where you can convert that awareness into leads, so you can capture leads, and then you can grow your email list, send more social proof to them until they eventually buy. Now, you can use when you see influencers as such and you have a way to convert that awareness into leads and sales, move them through the funnel.

Now it unlocks opportunities that most brands are not exposed to because again, they're calculating their affiliate commission based on their margin on the direct sale. But knowing that most of your sales will come from the spillover, whether it's Amazon or whether people will just Google your name or search your name on Instagram and follow your page and then buy a week later or a month later. So the money is really not in the direct sales. It is in how good the systems are to get more indirect sales from the free awareness that you are getting from influencers.

Brett:

It makes a ton of sense. And I tHenk one important tHeng to remind people of is if you're investing in any kind of advertising, there is a CPA there. You're paying obviously for those acquisitions. And so my thought is you should at least be willing to pay that amount to an affiliate because the nice tHeng with an affiliate is you're only paying if they actually make assailant. If they don't, you pay notHeng. But to your point, because there is that halo effect, the lift, when affiliate or an influencer really post content, we're going to see more than just the directly attributed sales be more generous there, right? Again, there's not really any risk because you're only paying if a sale happens. So really, really insightful. Tomer, this has been awesome. As we kind of wrap up, any final tips or pieces of advice, or if not, where can people connect with you?

Tomer:

Yeah, I would say first, give it a try. You don't have to start in full fledge, just reach out to a few influencers, have a few conversations and see how it goes. Just get the feedback first and build the relationships. I mean, we have a system that we follow that will attract your ideal influencers to post more content for you so you get more sales. But if you want to start it yourself, you can do that. I'm here to help brands cut the learning curve, and I do that through my newsletter. So if you want to get my free newsletter, I send daily insights on how brands grow their sales with influencers and affiliates. That's a massive influence, dot co, dot co. And you also get my Influencers checklist, which is basically daily actions that you can take witHen your brand to start getting sales from influencers and affiliates. So

Brett:

Yeah, it's a really interesting angle where it's like, Hey, with some tHengs like YouTube ads, as an example, a few others, you kind of got to go a little bit all in. I mean, you can still test obviously, but you got to do quite a bit, or else it's not even worth trying. But the nice tHeng about this is you can try it, right? You can reach out to a few affiliates, you can try to get the ball rolling a little bit and see how it does. But I do recommend, obviously, this podcast is a great starting point. Dig into some of ER's content and his newsletter to really accelerate that learning curve and get you off to the races sooner. So Tomer, this has been brilliant, man. Thank you so much for taking the time, and you got me all fired up to build an affiliate program.

Tomer:

Thank you so much, Brad. It was great. And good luck to everybody.

Brett:

Awesome. And as always, we appreciate you. We could not do this show without you. There'd be no point, right? And so I would love to get that review from you on iTunes if you've not done so already. And with that, until next time, thank you for listening.

Episode 285
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Savannah Knight - OMG Commerce

Proven Strategies for Profitable PMAX Growth

In this episode of the eCommerce Evolution Podcast, I sit down with Savannah Knight, one of OMG Commerce's top Google Ads specialists, to discuss the often divisive topic of Performance Max. Savannah shares her secrets to success and busts common myths surrounding this powerful campaign type, helping listeners turn their "meh" campaigns into true profit drivers.

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Key topics and lessons covered in this episode:

  • Understanding the traffic composition of your Performance Max campaigns is crucial for making informed optimization decisions.
  • Utilizing best-performing creative assets and proper segmentation can significantly impact the success of your campaigns.
  • Savannah shares real-world success stories and the strategies behind them, including how to effectively use Performance Max for new customer acquisition.
  • Common mistakes to avoid when setting up and optimizing Performance Max campaigns, such as the "set it and forget it" approach and improper asset matching.
  • Exciting upcoming features for Performance Max, like asset-level performance insights and the "Bid for Profits" option, and how they can revolutionize your Google Ads strategy.

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Whether you're a Performance Max pro or just getting started, this episode is packed with actionable insights and expert advice to help you take your campaigns to the next level.

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Chapters

(00:00) Introduction
(04:07) Why Are People Frustrated With Performance Max?
(06:16) PMAX Success Stories
(07:38) The Importance of Good Creative
(10:58) Using PMAX For New Customer Acquisition
(18:32) Using PMAX For Branded Search
(22:53) How Does PMAX Fit In With Your Other Campaigns?
(29:58) Common PMAX Mistakes
(38:47) Conclusion

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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, Bryan Porter and more. 

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Other episodes you might enjoy: 

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Transcript

Savannah:

The other thing goes back to getting Performance Max to focus on new customers. It seems so simple, but the bid strategy itself that you're utilizing will kind of determine where your placements are.

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're talking about Performance Max, Google's flagship campaign type. It's a campaign type that really is a bit divisive. Some people love it, some people hate it, some people love to hate it. And so today we're going to be busting some myths and talking about how to make this campaign type profitable and incremental and worthwhile for your brand. And so what I wanted to do is bring on one of our top OMG commerce experts. Certainly I have experience in p max, but not like my guest today. And so I'm delighted to welcome to the show Savannah Knight. Savannah's been with OMG for over four, going on five years as a specialist. She's consistently one of our rockstar specialists. She's got a couple of internal records scaling YouTube campaigns with the lowest CPA. She's got some of the most successful performance Max campaigns that we've ever run as an agency. And so with that intro, Savannah, welcome to the show and how's it going?

Savannah:

Thank you, Brett. Going pretty good. Pretty good. Excited to be

Brett:

Here. Yeah. Yeah. This is also where you can throw in first time, long time type of thing. First time caller, long time listener. I don't know if that's actually true though.

Savannah:

This I try to listen to most of the podcast episodes you put out.

Brett:

Nice. Okay, great. Now, is this the first time you've been on or did you come on a panel one time? I think on the podcast.

Savannah:

This is the first podcast. Yeah, done some webinars. Wow. First timer,

Brett:

Maiden voyage. You've done speaking panels at Google. So we've done a number of events at the YouTube offices. You've done that before. We've done panels for the overall OMG commerce team. I know you've done several other things, but first time on the podcast, it's exciting times for short. So going to dive into pax, and as I mentioned, it's kind of divisive. A lot of people are actually frustrated with Performance Max. I know both D two C brands that are like, Hey, can we just go back to smart shopping? I know other agencies that kind of hate it. There's just been quite a bit of, it's just a divisive topic. And so what we found though is that for a lot of our accounts, performance Max is the top performing campaign type. However, you can't just turn it on and let it do its thing because there's some sneaky features.

There's some things under the surface with Performance Max that make it not a set it and forget it type of campaign, even though that's kind of what Google wants it to be. So a few things to watch out. For one, it will lean into brand and the idea behind Performance Max is it's going to find easy conversions. It's going to lean into those. And so brand is kind of the first place that it often starts, but that does not often add to true incremental new customer acquisition. And so that's something to watch out for. And so I think it's also one of those things where there's just not a lot of transparency. So seven channels rolled into one and people want more transparency, more control. We're kind of control freaks as agencies and as marketing experts. And so we'd a little more transparency. Some of that is coming, just came back from Google Marketing Live.

There's going to be some changes coming to Performance Max, which I think everyone will welcome. And then I think in some ways there's just a lack of trust in Google right now because of a few things in the news. And so we want to help you turn this from a meh campaign into a max campaign. That's what I heard someone say on online recently. As they say, it's more like performance meh instead of Performance Max. So we're going to help you dial it up a little bit, but from your perspective, Savannah, and maybe I touched on a lot of it, but why are people frustrated with Performance Max?

Savannah:

Yeah, I think the lack of visibility is one of the biggest things. So you don't know what's driving the performance, so it's hard to know what to invest in. So a video is working, you want to create more video. You can't tell in Performance Max if that's what's working the best or not. Also having lack of controls. So if you see, hey, maybe desktop is working really well, you can't make those bid adjustments to invest a little bit more into those areas. So not being able to control those kinds of things, no placement exclusions, that kind of things. And then the visibility that we do have, they're not always actionable insights. You can see, hey, this audience is working, but what can we really do with

Brett:

That? And what's really interesting, I was on a call with a large client recently and they said something really well that I think is worth repeating. The worst thing that can happen with a campaign is not that it fails whether a campaign succeeds or fails. That's not the worst thing. The worst thing is if it succeeds or fails and you don't know why. If you don't learn from it, if you can't say, okay, this is what worked and we know why. And so now we're going to duplicate that where this is what didn't work and here's our hypothesis to why. So what we're going to test next, both of those are valuable, finding what works or what didn't and understanding why sometimes the performance Max, especially right off the shelf, does not give you those insights and you need those. And so there's a few ways we can get into the weeds a little bit with Performance Max and uncover what's actually going on inside of the campaigns.

And then we can make adjustments. But yeah, natively it doesn't always provide the insights that we need. So I think to maybe set the stage because we do Performance Max if it's done properly, because we think it can scale and there's a lot of good things there. Also, Google's not going to reverse the clock. I think we can just, if anybody is hoping, Hey, let's just go back to the standard shopping days, I don't think it's going to happen. This is where Google is headed. They want more campaign types, performance Max as indicated by the launch of demand gen campaigns. So what are your favorite Max success stories, Savannah, without mentioning client names and whatnot, what are some of your favorite success stories?

Savannah:

One of my recent successes is with a jewelry client. We spent the last year or so just testing new messaging, new ad copy, getting better with images. They just really leveled up when it came to creative. And so over the last year we did tons of testing and comparing Q1 of this year to Q1 of last year, click-through rates were up about 40%. So that's one of my favorites. Just knowing that creative really does matter when it comes to p max. And then of course another one, I think we've mentioned this one before, back in the early days of max scaling to about 10,000 per day with a lawn care company with brand exclusions in place. So all that coming from new customers, I think that's one of my favorite

Brett:

Ones. That was one of the great ones. And what's really cool about that, and we'll talk about this more later, but that specific campaign leaned in pretty heavily to YouTube. So it was scaling to 10 KA day and beyond, and a large percentage of that traffic was from YouTube. And there's some specific reasons why there. And so we'll kind of dive into that as we go. But what you said about the jewelry client, brilliant, and I want to dive into that a little bit. So let's talk creative for a minute. I think the way a lot of brands approach Performance Max, and I think the way a lot of agencies approach Performance Max is they put a ton of time and creativity and brain power and human capital into good creatives for Meta because that's maybe where they're spending the most money. But then with Performance Max or with Google, they treat it search or just table stakes.

And so they throw creative assets at it and then never look again. And what is really important to understand is that you have to give Google your best. So Met Creatives, met Results. So thinking about what are my top performing image assets? What are my top performing video assets as I put them into Performance Max, am I watching performance and then dropping the losers and adding more potential winners for testing? Am I thinking about headlines and descriptions both for search but also for display and remarketing? Because again, that's another one where we audit hundreds of accounts every year and we look at sometimes, man, these headlines are boring, and these descriptions do not differentiate your product or your brand in the least. And so if you give Google Underpowered assets, the algorithm can only do so much. And so this is something we talk about a lot with our clients and we try to gain learnings frequently from images and things like that and then we can test it. But what is your approach to creative testing and how do you talk about creative assets inside of Performance Max with our clients? Yeah,

Savannah:

So I think Performance Max isn't the best place necessarily to start creative testing just because there isn't that visibility into those creative insights, see what's working. So whenever we start with Performance Max, I like to give it assets that we already know work really well, so we can kind of create that baseline and then from there we can start testing additional creatives.

Brett:

One quick note on that, Savannah, which is really important is right now basically as you upload assets or put assets into Performance Max, you can kind of see what's the best performing, what's good, what's average, what's below average, things like that kind of general stuff, but no specific metrics tied to assets, but that is coming so soon we'll be able to see performance at the asset level, which will unlock a new level of learning and then the ability to tweak and adjust and maximize.

Savannah:

Yeah, absolutely. Really, really excited to get a few more of those insights for

Brett:

Sure. So yeah, I kind of cut you off iStream there. So starting with the best performing assets, don't start with stuff that you don't have any idea if it's going to work. Start with the best and then what do you do from there?

Savannah:

Yeah, I think it's really important to give it every type of asset as well. After all its purpose is to go right place, right time. If you don't have all the creative to be eligible for all the different ad inventory, it can't accomplish what it was set out to do. So making sure you have all the aspect ratios, landscape, vertical, portrait images, giving it at least one of everything is really important as well.

Brett:

And I think that is important because the campaign type does want all the assets and certainly there are some interesting things we can do going feed only or starving the campaign of certain assets to try to push it one way or the other. It's a little more advanced strategies. We can maybe talk about that later, but I think in general that makes sense. Now let's talk a little bit about using Performance Max for new customer acquisition. I think this is one of the areas where people get frustrated with Google and Performance Max in general from the lens of, Hey, is this really incremental or is this just leaning into brand? So how do you look at Max from a new customer acquisition standpoint? And then let's get into some of the strategies and tactics we use to get the campaigns to lean more into new customer acquisition. Yeah,

Savannah:

PAXs can be a great avenue for new customer acquisition just because there are so many different options as far as settings go to make it lean into those new customers. So I know a lot of people are saying it just really focuses on brand and remarketing, but I think that's just if you have it set up incorrectly or just kind of do that, set it and forget it approach. Totally. So if you wanted to lean into new customers, I think the first thing is going to be the brand exclusions. So basically you just create a brand list and it looks at your website and it says, okay, we're not going to show up for any of these searches. Excuse. So for a haircare client that I have recently, we added in the brand exclusions and we saw using the script from Mikes, always shout out to Mikes for that. We were able to see in the search terms report for P max, about 36% of our clicks for that campaign were from branded searches After we added the brand exclusions, we see about 2% are from branded searches, so it's not completely excluding them, but we'll take 2%

Brett:

For sure. Close enough, close enough, absolutely. So let's actually pause a second and let's talk about that Mike Rhodes script because this is something that is a little more advanced or there's a free version, there's a paid version, but this script that our buddy Mike Rhodes created and shout out to Mike Rhodes, longtime friend. He and I spoke at Traffic and Conversion Summit way back in the day. We both talked about Google Shopping at the same event. We're like, Hey, we should maybe be friends. And so then been in touch with him ever since I was 16 something, but now he's got a script that runs for Performance Max to pull out some insights. But what does that script do for us?

Savannah:

So there are actually two, there's one script where it looks it can pull the spend from the different channels so we can see how much of our spend on Performance Max is actually going to display, how much is going to shopping, how much is going to video, which has been huge to be able to see what's really working inside a performance max. The second script is a search terms report. So it'll look at the last 30 days, the searches that were driving performance. So we'll see impressions, clicks, conversions, conversion value and all of that.

Brett:

Yeah, I would really not want to run Performance Max without these scripts. I think it gives a layer of insight that you just don't get otherwise and you're sort of flying blind without these. And one of the mistakes, and I've actually written some LinkedIn posts that'll be coming soon on Performance Max, but I think one of the biggest mistakes that people make is they don't understand the traffic composition of Performance Max. So okay, I'm spending a hundred dollars a day or a thousand dollars a day or $5,000 a day on Performance Max, but where is that spend going? Is it mostly going to search, mostly going to shopping, mostly going to display or YouTube? Where is that going? And you need to see that once, what makes sense to change. If a campaign is leaning into 85% search, then changing headlines, descriptions, thinking about search terms is really, really important.

If it's leaning in mostly to shopping, then that's where maybe some feed optimizations would make sense, or if it's YouTube, then thinking about creative for YouTube makes a lot of sense. And so understanding traffic composition makes a big difference. And what's interesting is since Performance Max was kind of the next evolution of smart shopping, and since shopping is at the core, it's foundational for e-commerce brands, a lot of people treat Performance Max just like, Hey, this is my new standard or my new smart shopping. And that's not a bad way to look at it, except that some campaigns lean way more into search than you might think. And we noticed that with a couple of our brands once we started running the script is that, Hey, we thought these were 60% shopping, but they were actually 70% search. And so then you know what to tweak or adjust, and then maybe I should start another campaign and maybe I should do a feed only campaign to really push it to Google shopping or whatnot. And so getting that traffic composition and that traffic breakdown is critical. Without it, you really can't make good decisions. So then how else are you getting campaigns to lean into new customers? We can exclude brand, we can see what's happening with these scripts. What else are you doing to lean into new customers?

Savannah:

Yeah, so we've got the brand exclusions. The second big one is going to be the new customer features that they have on Performance Max. So there's a couple of different options. We can bid higher for new customers or we can bid only for new customers. So I'll kind of dive in without getting too nerdy about how those work. If we bid higher for new customers, basically we say every new customer is worth a hundred dollars more than a returning customer or whatever value that we decide to give it. So whenever a new customer converts, we're feeding the algorithms more conversion value data, so then it starts going after those new customers a lot more heavily. One thing to note with that it does artificially inflate overall conversion value. So you have to keep that in mind when we look at results. And then the second option is bidding only. And

Brett:

Actually I want to just talk about that just really quickly just to make sure this is clear. So remember when we first started testing this feature a few years ago and we're like, oh, this is smart. Yeah, I'm willing to pay an extra 50 bucks or an extra a hundred bucks maybe even for a new customer. But when you give that change to Google, you put that in the settings, I'm willing to pay an extra 50, extra a hundred. Google just adds that amount to the conversion value of that purchase, and that's all just inflated. It's to kind get the algorithm to work and to show to weight that conversion higher than another conversion. And I remember when I first saw it, I remember a conversation with Greg specifically, what is going on? This is ridiculous. So then you have to get the numbers right. Then you can no longer trust the conversion value column or even conversion value over cost ROAS column if you do this. So then you got to run some custom calculations to strip out that extra fee, which really just becomes kind of cumbersome. So in theory, it's good because you're saying, Hey, go after new customers more. Then it messes up some of your data. So it kind of creates a problem there, but so you don't have to do that route, you get another option. And what is that? Yeah,

Savannah:

I typically lean towards the second one, which is bidding only for new customers. So basically you have to go into the conversion section on the account, define what your current customers are, so giving it the best info that you have going to be your customer match lists. You can create some conversion based lists based on purchasers and things like that in the account. Then it will understand who those people are and then kind of exclude them from the account. It's not technically an exclusion, but it's kind of excluding them from that campaign.

Brett:

And we have found that as we apply the new customer only to Performance Max, it does a better job of leaning into finding new customers. It does not do a perfect job. There's still going to be some repeat customers that come through there, but it does a better job. It keeps your data clean as well when you go that route. So we in general like that a little bit better. Now, an important note to make here. So let's talk brand a little bit. So now we've got a Performance Max campaign that's excluding brand. It's potentially going after new customers only. But then what are we doing for brand? Because it's still important that we show up for our brand name. And I know this is a tricky topic. I remember our friend and longtime client, Moiz Ali said, Hey, this is a tax, right? This is the Google tax that they levy, but you got to show up for your brand name.

I think it's important to note that, hey, just because someone saw your ad on YouTube or Facebook or elsewhere, someone recommended a product, it does not mean they're 100% sold on your product. So I don't think it's the same thing if someone searches for Savannah's Skincare, which has a nice ring to it and then they've never bought from you before, that's not the same thing as someone typing in Nike sneakers. If someone types in Nike sneakers, they probably know they want Nike. So if Adidas sneak in there with an ad, not likely to purchase, but if I type in Savannah's Skincare and someone else pops up, and I don't really know Savannah Skincare other than maybe just one ad that I saw, but another ad sneaks in with a good offer and it looks similar and it looks attractive, like, hey, I'm going to it out. So can't disappear from brand because otherwise we will see sales go down almost certainly. But you also don't want to overpay otherwise you're just giving all your profits to Google. So if we've got brand solutions and Performance Max, we're going to do customer only. What are we doing to make sure we're getting the right brand traffic and not overpaying for it?

Savannah:

So my favorite setup is if brand exclusions are in place on Performance Max still utilize standard shopping to pick up all of those branded searches. So we actually did a test recently on one of my clients sells haircare products. We had a Performance Max campaign with brand exclusions and then tried Performance Max to pick up that branded traffic. But we actually saw when we utilized Standard Shopping, we had a lot more control over our CPCs, so efficiency was way higher with a branded standard shopping campaign.

Brett:

I love that so much. I think branded shopping or standard shopping where you're bidding for a really high row as you're not excluding brand that allows you to show up for branded terms because with anything that's product driven, so anything e-commerce, anything D two C, you search for Savannah Skincare, you search for car accessories or you search for haircare products, whatever you're searching for, almost certainly shopping results are going to show up there. And they're almost always more enticing and more interesting to click than just a search ad. And so if you have a branded search campaign, great, you should, but without having some kind of branded shopping exposure as well, you are going to lose clicks. And that's a really powerful place for a competitor to snipe your branded traffic. And so got to have a solution for that. And we totally think that standard shopping aimed at brand is the way to go. And then any insights on, I know this about Performance Max, but any insights on search on branded search campaigns?

Savannah:

So branded search, I think they're still super important, especially if you're doing a lot of top of funnel targeting. We see that if you have those brand exclusions in place, you can still use search of course, an exact match to still have control over your CPCs on branded search. But having the combo of branded search and branded shopping is super important because a lot of times we see at the top of the search results page, there's going to be that shopping carousel. So if you're not there and on branded search, you're going to see competitors winning out on your search results

Brett:

Page. Yeah, what's really interesting is that when a brand shows up in both places, so when you've got a listing or a position or multiple positions even better in that shopping carousel, and then you have a search ad as well, the click-through rate of both increases because there's just something about that, Hey, I'm seeing now your name in multiple places want to have just more odds of clicking on one of your listings. But two, I think there's a little bit of validation there I'm seeing in multiple places, and we all know that what happens when Click-through rate increases, Google generally rewards that generally they want to show your ads more if click-through rate is high. And so you want to lift that rate for sure there. So very cool. How do you see Performance Max fitting in with other campaign types? And maybe a way to frame this is what's the ideal campaign structure? I know that's a really huge question, but for D two C brand, what's the kind of account structure look like and how does Max fit in with other campaigns?

Savannah:

So I'm still utilizing every campaign type. So even though Performance Max has placements across the board, I still like to have a little bit of that control and have search display, demand gen, all of it we see with Search, I still like to have it segmented brand and non-brand. We are utilizing Broad Match. So the best media buyers, they love Broad Match already. So definitely recommend that Performance Max.

Brett:

That's a bold statement there. There may be an explosion of activity on Twitter. Do we love Broad Match? We really, and actually let's just double click on that really quickly. So broad match, I think there was a time and place when broad match was just terrible, right? Google is almost forcing us into that path to a certain degree, but I think there's some other things behind it that actually make it worthwhile from a testing standpoint at least, but also probably from a new customer acquisition standpoint. Why are you bullish on Broad Match right now?

Savannah:

There's a few reasons. So we see Google's rewarding people with Broad Match. So you're seeing lower CPCs with Broad match than say Exact. So it kind of flip flopped as it was in the past. But they also say, I think they said 15% of searches every day are new searches they've never seen before. So we just want to make sure we're eligible for all the different ways that people could be searching.

Brett:

And this is a stat that's been around forever, but it just has not changed where you have 15% of all search queries done on Google every day by browsers, by people is the brand new. Google's never seen them before. And so it's just one of those things where I think people are just inventing new ways to search. And as we get comfortable searching, we search in different ways and we search with our voice and things like that. And so you want to be eligible for that. And then I think one of the other important distinctions is because now Google knows so much about shoppers and because they can see your previous activity leading up to the search that you just conducted, they can bid up or down, Google can bid up or down based on how likely they think you are to convert with this more broad search term.

So it's the combination of search term or keyword, and then the person behind it and their behavior, they can kind of influence where Google's like, okay, this may be a broad search, generic search, but the person making the search, we believe in them. And one just quick example is if my 19-year-old daughter who's taken a class at college, if she searched for some kind of supplement doing a research paper or something, she's not going to buy it. And so Google maybe knowing that, Hey, I just did all these research searches likely for a paper for school or something. Now I search for a specific supplement, let's not even show an ad. Or if 44-year-old Brett Curry searches for the same supplement and I've got a history of buying a lot of supplements, which I do now want to show that ad. So same search term but different person behind it. I want to bid for one, I don't want to bid for the other. That's what Google is wanting to do and that's what the smart bid algorithm can do. And so another reason that to give broad match a try, but with caution, it could still get of bounds a little bit. So okay, went to broad match search for just a second, but what else? Back to the question of structure of a D two C account and how PAX fits in, you want to continue down that path?

Savannah:

Yeah, for sure. So still utilizing Display Demand Gen campaigns, like we said before, performance Max is a little bit harder to test creative if you don't already have a baseline. So still utilizing display for remarketing campaigns to test creative, test new images, test new messaging, and then demand gen. I'm starting to adopt a lot more demand gen, it's gotten quite a bit better over the past few months. So definitely, definitely utilizing Demand Gen as well. Great for top of funnel Android marketing there. And then with YouTube performance Max, it does have a lot of YouTube placements, but it's not going to go after YouTube like a YouTube campaign on its own will. So still having all the different campaign types is important.

Brett:

And it's something that Google recommends too. Google still recommends like, Hey have specific campaigns for these channels. And at Google Marketing Live recently, they even talked about what they call the power pair, which is just Performance Max and search running together that in accounts where Performance Max and search campaigns exist, then both of them perform better and we've seen that as well. And so yeah, having specific demand gen specific YouTube specific search, maybe standard shopping for brand and stuff like that, all of that actually helps Performance Max work a little bit better. And I heard, actually, I think you were at the same event as me at the YouTube offices in LA where a product specialist was talking and she kind of used the analogy that Performance Max is sort of like the mortar. So you've got Bricks, which would be some of your other campaigns, and then PAX is kind of designed to go in and fill in the cracks.

Now I really like that analogy from one perspective, but from the other side I'm like, well, performance Max should be a brick too. If it's mostly Google shopping, like Google shopping is a brick, it's foundational for D two C brands. But I think what she meant there is as other campaigns kind of inform the algorithm, and Google gets a really nice picture of who your ideal customer is, performance Max should lean into opportunities you're missing. And that's what I believe. We saw Savannah with that outdoor products brand where they had YouTube rocking. YouTube was spending multiple six figures a month, really great ads. And so then we had Performance Max though with some of the same assets and it was leaning into YouTube well also and profitably. And I believe as we broke it down and looked at it, max was just finding opportunities we were missing in the other campaigns. So the other campaigns informed Google on who your buyer is, performance Max leans into missed opportunities. And that's in general the way it works with other campaign types. You have a really well built out search campaign structure, it's still going to get some of the traffic performance. Max isn't going to steal all of your search traffic, but having these other campaigns helps inform performance Max nicely. Anything you would add to that or any specific call outs like on Demand Gen or some of the other campaign types?

Savannah:

I kind of view Performance Max as I think two ways. It helps to pick up some of the traffic that you've, with Demand Gen and YouTube we're growing top of funnel growing awareness and performance Max kind of helps to close the deal for a lot of those sales. So we're driving that traffic performance Max is closing the deal. And then again, like you just said, it's kind of picking up where we're missing out so we can have great YouTube set up, but then maybe Max see some opportunities where with audiences we're not necessarily bidding on and it knows the right time, the right placements, all of that. So it's kind of closing the gap.

Brett:

Awesome. Let's talk about mistakes that we see people make. So you take over accounts and you're known for taking accounts and really ratcheting up performance and creating some pretty dramatic turnarounds and improvements. But what are some of the mistakes you see that either other agencies make or that D two C brands make when it comes to Performance Max?

Savannah:

I think one of the biggest things we kind of mentioned it earlier is just treating it like a set it and forget it campaign, really not Performance Max does like to get comfortable. So if you don't shake it up, don't consistently add new assets, change up your images, your copy, that kind of thing. It will kind of get comfortable and it struggle to scale. So if you set it and forget it, it is going to start going after just that easy traffic and you won't be able to see its full potential. So I always recommend changing the images every now and then adding new search themes, testing some new audience signals, that kind of thing. Another big one I see a lot of people make the mistake with is I'm going to call it just paint splattering. They just throw everything at it. No strategy, just here's everything I got, which can work. But you want to make sure you're being really strategic with who do you want your ads to be in front of? Who are you trying to talk to? Are you using really good creative or are you just throwing a bunch of random stuff at it? I think that's a big mistake I see

Brett:

Too. Yeah, and a lot of that comes down then to proper segmentation. So we could have a whole podcast about when to consolidate campaigns, when to break apart campaigns for better targeting and things like that. But at a minimum, we need to segment our asset groups, which so it kind of functions like an ad group, but in P Maxs they're called asset groups where if you throw everything together, the algorithm's going to have a hard time really matching up the right creatives to what a user is looking for. And so to give an example, we worked for years and years with Boom by Cindy Joseph, shout out to their Firestone and team, but a few of their products, they have Boom Bright, which is mascara a wildly successful product. They also have some skin moisturizers, boom, silk boom, cotton top sellers, and then they have their boom stick.

But all of those are a little bit different. Now, you could have the same headline, same description, same images to sort of sell all three, but then you just have to lean into brand and overall brand proposition. But really to sell a product to sell mascara, I've got a different headline than I've got for BoomStick, right? BoomStick is like a makeup bag replacement, cotton and silk or moisturizers, mascara bright as mascara. And so you want to kind of segment your asset group, so that same image, same headline, same descriptions, same listing inside of your feed all sell the same product. And that kind of goes into, I'm just going to throw all this in here and just let Google sort it out. Now, if you have an asset group, you have a campaign that you want to lean into shopping traffic, it's okay to have it all together, right? Because then Google does know what to do with the feed only. And so yeah, I think it's kind of lazy segmentation or not thinking about how are we pairing our different asset groups or how are we structuring our campaigns makes a big difference as well. Any other mistakes you see? Either mistakes in running it, mistakes in optimizing it, any callouts there?

Savannah:

One thing that seems like it will be really simple, but I see a lot when we take over new accounts is they'll have, you think this campaign has these certain products in it, the images, all this stuff just because of the naming convention. But then if you go actually into the listing, we see different products. So the assets and the products just aren't matching up, which is such a simple mistake. But I see it time and time again when we take over new accounts. So absolutely check your listing groups, make sure it matches your copy, your images, all that.

Brett:

Yeah, really good call out because a lot of times and someone that doesn't work in Google ads all day, they don't exactly know what's click around and what to see. And so yeah, okay, this asset group is labeled mascara, this asset group is labeled shorts and this asset group is labeled socks. And so clearly that's what they are. But when you dig in and look a little bit closer, that's not what it is. And so then you're not getting the performance you think you're getting. And I think another thing to kind of keep in mind, I'm curious you if you have a thought on this, Savannah, from an optimization standpoint, I've also seen some campaigns and hey, we've seen some P max campaigns just crush results and get to 35,000, $50,000 a day and spend on performance max, new customer acquisition focus, things like that.

One thing I've noticed though is that there are a few different Google campaign types that will do this. Performance. Max I think is one of them that does this where let's say you're rocking along at a 300% row as that's your target ROAS bid is 300%. You're getting a good performance, but you're like, you know what? I can really live with a 200% return on ad spend because there's a halo effect and other things going on here. So then you lower it to 200% and it's like, okay, well now it's getting a 200 to 2 25 we're so good. But if you dig a little bit closer, the only thing that happened is that your ROAS dropped. You didn't get more conversions, you didn't get more clicks, really, all Google did was like, oh, sweet, I've got more to play with. I'm going to lean into display and some other things that just totally crap out on you.

And so I think that's something to look at too. I'm not saying you shouldn't lower your ROAS targets to bid more aggressively. I think in a lot of cases you can and should. Then it goes back to some of the earlier points made. You've got to look at the traffic breakdown. What did that do to our traffic composition? Because the last thing you want to do is just blindly look at ROAS and say, well, we're okay, we were at 300, but yeah, we're still okay with the 2 25, but you didn't get anything additional from that. You just gave more money to Google. And so being mindful of that, as we're getting more aggressive with our bids, where is that extra traffic coming from? How is it performing? And really just having a keen eye there. So I dunno if you have any callouts there or not and no worries if not.

Savannah:

Yeah, nothing specific. I think you covered that pretty well.

Brett:

Sweet. Okay, good. Any other mistakes that you see people make or any other points of education that you make related to Performance Max that kind of create an aha moment for clients that you talk to?

Savannah:

Yeah, I've got a couple. So one is that Performance Max is going to really favor some of your top products. So if you have a huge catalog, it's probably only going to serve maybe 10, maybe a hundred if you're lucky. And so you probably have a lot of products that aren't getting any ad serves at all. So again, this goes back to just throwing it all into one campaign that can really, you're not going to be showing your whole catalog. So going back to the segmentation too little segmentation means a lot of your products aren't going to be showing too much segmentation. On the other hand, you risk not getting enough data struggling to scale, but you want to find that sweet spot of segmenting so that way all of your products are getting visibility. That's a big one. I think Micros calls it zombie products, but yeah, just making sure we break those out so that way you can really take full advantage of performance Max. The other thing,

Brett:

Yeah, and I think just to talk about that just a little bit is it's sort of the 80 20 rule where 80% of the conversions in site of performance Max and specifically the shopping portion Performance Max are going to come from 20% of your products. But we've seen that it's even more exaggerated than that most of the time inside of Performance Max inside of shopping where it's maybe like the 90 10 rule or the 95 5 rule. And so then it's like, okay, we're only selling this handful of products inside of Performance Max, but we want to get the other one some visibility too. So how do we break out campaign structure to attempt to get more visibility there? So yeah, great call out and what else are you going to say?

Savannah:

Yeah, the other thing goes back to getting Performance Max to focus on new customers. It seems so simple, but the bid strategy itself that you're utilizing will kind of determine where your placements are. So if we use Target roas, it's going to really lean into search and shopping, but we found if you switch over to a Target CPA bid strategy, it's really going to go after more new customers. You're going to see more image-based placements, more video placements, which of course are better at converting new customers.

Brett:

Yeah, super interesting. Sometimes the bid strategy mixes things up a little bit too. Target ROAS is definitely more of a shopping type bid strategy or search. It just kind of always has been. Target CPA has always been what we've scaled YouTube campaigns with and display campaigns with in the past. And so sometimes even just making that change can get a campaign to lean into one channel versus another. So that's super interesting. Savannah, this has been amazing, your first podcast, absolutely crushing it. Any parting words of wisdom, any insights related to either Performance Max or anything Google ads related or anything you're excited about that you've heard is coming down the pike related to Google Ads and Performance

Savannah:

Max? So as a marketer, of course, getting more insight and visibility into Performance Max is really exciting to me. But I guess parting words is performance Max can be a great avenue for new customers. You just have to make sure that you're on top of you just stay on top of it, whether that be the settings, the creative. So if it's only leaning into brand and remarketing traffic, there's probably something going on. You need somebody to take a little bit closer look at it. I would say,

Brett:

Yeah, I love it. I think it really boils down to understand the composition of your performance Max campaigns, make sure you're using your best assets, your best creatives, look at getting proper segmentation, and then as you optimize, really watch performance and see how all of those other things, shift traffic composition, things like that, and just keep working because yeah, I'm with you. Performance Max can be awesome. It can also be a real drain. And so the key is in doing it the right way. I know for me, getting the insights that are coming and coming pretty soon is going to be exciting. The other thing I'm excited about is bid for profits. And this is something that we're beginning to test, and I believe it's still in beta. I'm not exactly sure, but it'll be coming soon this year. Where Target ROAS was awesome as that got built up, and I think this is the next level, the next layer for Google where we can attach COGS data to shopping feeds and then bid to maximize profits. And that's awesome because some products in our catalog may have wildly different margins or different structures there. And so ROAS really only tells part of the story. Getting the machine to lean into profits I think is going to be a huge win. So if you want to learn more about that, reach out to MG Commerce. Excited to test that as well. And so with that, Savannah, thank you so much for coming on and we'll have to do round two soon.

Savannah:

Absolutely. Thank you, Brad. It's been so much fun.

Brett:

Awesome. And hey, if you're listening to this and you're like, dang, I need someone like Savannah running my Google Ads account, I know that I'm not getting what I should be getting out of Performance Max, or search or shopping or YouTube, then reach out to MG Commerce. We're happy to one, to a complimentary audit for you, a strategic review for you if you're a qualifying D two C brand. Happy to check that out. Happy to talk strategy with you and with that, until next time, thank you for listening.

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Episode 284
:
Matt Snyder - Brands Excel

When to Consider Seller Fulfilled Prime and AMC

Profits are elusive right now for many sellers on Amazon.

The game is getting harder, not easier.

That's why I brought on Matt Snyder, CEO and founder of Brands Excel, to discuss two powerful tools for your Amazon seller tool belt:

  • Seller Fulfilled Prime (SFP)
  • Amazon Marketing Cloud (AMC)

Matt's diverse background made for a great interview.

He spent six years with the Dallas Mavericks (and has a few great Mark Cuban stories).

He then transitioned into eCommerce, working with Woot.com and eventually Amazon after they acquired Woot.

Later, he joined Veridesk as the VP of online retail, where he helped grow the brand to a mid-eight-figure business on Amazon, primarily using Seller Fulfilled Prime.

In our conversation, we cover:

  • Understanding Seller Fulfilled Prime (SFP): what it is, how it works, and when it's the right choice for your brand.

  • The benefits of SFP: increased flexibility, control over inventory, and potential cost savings compared to FBA.

  • Criteria for determining if SFP is a good fit for your products, such as high-value items, seasonal or unpredictable demand, and products with many variations.

  • The importance of having the right infrastructure and partnerships in place to meet Amazon's strict SFP requirements.

  • Leveraging Amazon Marketing Cloud (AMC) to gain deeper insights into advertising performance and customer journeys.

  • How AMC can help break down data silos and optimize ad spend across various channels, including Amazon DSP.

  • Real-world case studies showcasing the successful implementation of SFP and AMC strategies.

  • Lessons learned from working with Mark Cuban during Matt's time with the Dallas Mavericks, emphasizing the importance of continuous learning and taking calculated risks.

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Chapters:

(00:00) Introduction

(02:06) Matt’s Journey with the Dallas Mavericks

(05:56) Transitioning to Amazon

(12:16) Understanding Seller Fulfilled Prime

(21:37) Requirements for Seller Fulfilled Prime

(26:17) Seller Fulfilled Prime Case Studies

(30:37) Utilizing Amazon Marketing Cloud

(35:26) AMC Case Studies

(39:28) Insights from Mark Cuban

(46:09) Conclusion

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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, Bryan Porter and more. 

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Other episodes you might enjoy: 

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Transcript:

Matt:

This is very much, again, it's about gaining control and flexibility over your products, over your logistics and understanding where can you move the right levers to improve your margins?

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're talking about seller fulfilled prime on Amazon. Is it right for you? Should you consider it? What are the pros and cons, how to make that work? We're also diving in to a topic that's coming up a lot for larger sellers, larger brands on Amazon, and that's a MC, Amazon Marketing Cloud, some really good stuff there. And so I have an absolute expert in the space joining me on the program today, Mr. Matt Snyder. He's the CEO and founder of Brands Excel, and we've collaborated on a few things together. He kind of heads up some content at the Prosper Show. I've spoken there a couple of times, and then we actually met when he was the VP of online retail at Veri. And you may know that brand as Varidesk, but they shifted to Vari because they're going to Onde now. But I have a Varidesk, it's my favorite. Really good stuff. And so just a wealth of knowledge and this guy is going to bring it on the podcast today. So Matt, welcome to the show and how's it going,

Matt:

Brett? So happy to be here, man. Really appreciate the invitation and look forward to the conversation here with you and the audience today.

Brett:

Yeah, man, really excited and I think this is going to be a timely episode for a lot of people because self-fulfilled Prime is a really powerful option on Amazon. It's not right for everybody. FBA is the way to go for many, many brands, but if SFP is right for you, it can be pretty awesome and so excited to dive into that and to pick your brain on Amazon Marketing Clouds. We're going to get into that as well. But first, Matt, this caught my eye immediately when I got on my first call with you. I'm a basketball fan and I'm a Dirk Nowitzki fan, and so when I saw Dirk Jersey on your, I'm such a Dirk fan that I was in DFW airport just like a week ago, and I ate at the Dirk Restaurant. I'm like, this might not even be good. I don't know. I'm going to support Dirk Nowitzki. It's got Mavs apparel everywhere and paraphernalia and whatnot. Actually, it was decent. It was pretty good. So anyway, what's the story with that jersey and what is your background that kind of led to you becoming an expert on the Amazon marketplace?

Matt:

Well, I appreciate your love of Dirk and I would say probably my all time favorite next to Jordan, but so I like you. I grew up as a basketball junkie, went to University of Kansas, thought I was going to be this great basketball player. Didn't make the team surprise, surprise, but I knew that I couldn't plan it. I wanted to work in it. And so shortly after I graduated, or right before I graduated actually was when Mark Cuban bought the Dallas Mavericks and Mark's pulling all these crazy marketing stunts around, want to hire a referee to run a dairy Queen, and then he's running a Dairy Queen the next day. All these amazing marketer, amazing sales guy. I was like, I'm going to go learn from this guy. So I begged and pleaded with the Mavs for several months to give me an internship. They ultimately did. I packed up from Kansas, moved to Dallas, and was fortunate to work with the Mavericks. Was this a

Brett:

Paid internship or just like, no man, I'll work

Matt:

For free non, they're like, we're not going to pay you. My wife and I was married at the time. We packed up, moved Dallas. I was like, we're going to make it here. And fortunate that it worked out, I had an amazing six years with the Mavericks, went of the finals in oh six with the team. So that's what this photo back here is from is Dirk and Anna. A quick story here on Dirk, just because I think it talks about this special person and player that he was, there's this lady within the MAs organization who was kind of like Call Dirk's adopted mom, and she noticed she ran the payroll and she knows that Dirk's checks were not getting cleared. So she went to Dirk and was like, Hey, see these checks that you are not getting glare. And basically he was like this young German kid didn't know what to do. She kind of had, whoa, we got to get your bank set up. We got to do this different thing. So

Brett:

He was getting these massive checks and just not depositing them

Matt:

Sitting the kitchen table.

Brett:

I'll just put it in the mattress. Yeah, I'll deposit that one. That's hilarious.

Matt:

But one of the things that, again, with Dirk that stood out is I was there for six years and every other week this guy would show up, he'd sit there for two hours, he would sign autographs, respond to letters, just, I mean such a humble guy. And something that I took away from my experience there of just like it doesn't matter how big you get in any space or whatever, it's to stay humble and to give back to those. And honestly, it's one of the things I love about working in this Amazon space is that there's some really smart people in this space who've had crazy success, but all of 'em are so accessible and willing to work and help anybody else in this space. And so it's why I'm involved with Prosper, and I try to do as much as we can to give back.

Brett:

Yeah, I love it, man. And the best, stay humble, and I think all of us can get humbled from time to time. It's sort of like the game of basketball. Being on Amazon is going to humble you at times. But yeah, I love that Dirk story. One of the all time great scorers and those finals when they beat the heat, man, that was just one of my redemption. There's not a basketball team close to me, so I've always just rooted for players because there's not a home team for me living in Missouri, but I definitely pulled for the Mavs for years and loved Dirk. So that was a blast. Yeah, loved it. Cool. And so then as we kind of dig into a few topics and looking at self fold, prime and stuff like that, how did you get to Amazon though? So you're working for the Mavs, this is your dream job. You didn't get to play Kansas, which big KU fan, so another affinity, but you're like, yeah, I'm going to work in it. So you go give your time away for free to get your foot in the door. Obviously that becomes a paid gig. And it was a six year run, you said working six year. Yeah. And then how did that kind of transition into, okay, let's become a master of online retail?

Matt:

So a few things that were kind of pulling me in the direction of Amazon. I had a good friend of mine that somehow he acquired this truckload of Apple accessory products back in the day, like the wired earbuds and power chargers. And he went and sold the stuff on Amazon. He's like, Matt, this is incredible. I'm just crushing it over here. And like, man, this is retail

Brett:

Arbitrage, man. Buy truckload stuff here. Yeah, sell it on Amazon, making a

Matt:

Spread. There's something about this Amazon thing. This is definitely going to be the next big thing. At the same time, mark was advising the founder of a new company that started up in the Dallas area called W com. And so for those who are not familiar with W or Throwback to the old e-comm days, W was this daily deal website and the whole concept was to help brands move their excess or end of life product. And we would do it this way that we would write this kind of funny story about the product, have this forum where you could come and hang out. It's very community driven. We wanted people to come have a good time talk about the product, talk about social events that were going on, but at the same time, then maybe they buy a product. And it turned into this just mass following, I think we had over at one point over a million followers who would come to the page, so we could just move massive numbers of products in a single day.

My role there was to kind of take this idea that we had with Whoop and go replicate that across different retail sites. So we worked with buy.com and once Deal day, all these other kind of daily deal sites that were popping up. And we had great success with this and ultimately caught the attention of Amazon. Amazon acquired the company in 2010. I had the fortunate opportunity to work with Amazon for a few years and kind of see the difference of startup mode, entrepreneur driven to like, okay, now we have these core principles and when there's how we leverage data to make decisions and make stark difference. But it also gave me great insights into the inner workings and the mindset and philosophies of Amazon, which have really powered the rest of my career. Going from there, and after following my time with W, the president of W myself started a business for a few years that was again focused on the state of the deal market.

We're trying to solve this problem, but how do brands who now are selling on W and on Groupon living social, like this mass explosion of the daily deal business. So we created this resource or tool, a platform that would allow you to sell your products across all the different retail sites. We would kind of aggregate your orders, your marketing sales, be a kind one-stop shop. We ended up being one of the top 10 fastest growing companies in Dallas through the SMU Dallas Business School and came in seventh. But that year, the company that came in first was Varidesk. And so I met the leadership team over at Varidesk and they had just been, had a phenomenal success with this product. They started as a direct to consumer brand, built this amazing product that was truly innovative, allowed people to go from just a static desk to having a standing desk and revolutionize the office space, but they wanted to expand the channels.

So I came in to help them think through how do we take this success you've had as a D two C brand and build this upon on the Amazon platform? And one of the things that we did early on was make this decision to go solar, fulfill prime. And it really made sense for Varidesk because at the time they had started as a direct consumer. They had all these kind infrastructures in place, they had a three pl, they had a carrier service, they had the technology to run their D two C business, so it's much easier for them to step into this SFP model and have some of these bigger barrier to entry or we solve for it. Initially they had a product that was heavy, bulky, so it checked a lot of the boxes for us. And so I was there for seven years and we took this to a mid eight figure business.

Over the time we've continued to run SFP for the last seven years through the ups and downs and the potential closings and ings and relaunches. It's been kind of a wild ride. But through that, learned a lot about around SFP, the band that could bring brands. And where we stand today, Amazon FBA is still the number one solution for most products, most brands. But as we know Brett, we've talked to a lot of brands that they're just getting crushed right now by inbound placement fees, low inventory fees, fees, fees, fees. So we as brands have to be smarter around adjusting our strategy. Andrew Ja, this last shareholder meeting, he talked about these costs. They're finding ways to improve their profits, they're finding ways to take these.

Brett:

Amazon is going to get their money. Amazon is going to make their margin regardless.

Matt:

And so just as Amazon is being strategic and making adjustments to their side to be more profitable, we as sellers have to be doing the same. And that's where I think this conversation around SFP is a good talking point at this time and where the market is and how things have evolved. And some of these big barriers to entries that I shared, there's really good solutions in place and it can be much more easier for brands who kind of check the other boxes to get started with SFP and it then opens up the opportunity for them to go beyond Amazon and just really opens up a lot of flexibility for these sellers.

Brett:

Yeah, I love it, man. And so yeah, excited to dive in there, but kudos to you guys. Kudos to the Verdes team. I love Verdes. I like the opportunity to stand some during the day and sit some during the day. And so it's really just a great mix of both worlds. As a side note, are you standing right now? You look like you're standing. I'm standing. Yeah, that's what I thought. So yeah, I stand maybe half the time, but probably a little bit less if I'm being totally honest. I sit though in the podcast room, we

Matt:

Always say it's not standing or sitting. It's doing both. It's the movement back and forth. You got to do both

Brett:

Movement. Exactly, exactly. So really, really cool. All right, well it's probably obvious by the name and also because you described it a little bit, but what is seller fulfilled prime for those that don't know?

Matt:

Great question. So seller fulfilled prime, what is this? We all as sellers know that the power of prime, we know that when our product has that prime badge, the customer has this expectation that it's going to be free shipping, it's going to deliver in one to two days if they have any problems. They get all these protections from Amazon to return their product, to make things correct. And to do that, we as sellers get the benefit of using Amazon resources for fulfillment and storage. And it has been the tool that has allowed so many sellers to achieve great success on Amazon. Yeah, because

Brett:

What are the stats, Matt? Once a product or once a company brand goes prime eligible, what sales lift like 30% or more maybe depending on the category

Matt:

In general it's like 20 40%. We would say it varies on the category and things like that, but tremendous impact to your sales. We all recognize the importance and value of prime. And so where self-fulfilled prime comes in is that gives you as the seller, the brand, all these benefits of Prime, but gives you the added flexibility or strategy of being able to keep that inventory within your own warehouse operations or that of a partner three pl. And in this case, what you're kind of eliminating then is you're limiting this period of time where you have to take the product, you have to prep it, send it into Amazon, get the receiving period of time, hope that they don't lose it or something else damage it, but then also all the additional fees that you didn't have to account. And we know that staying in stock on Amazon is rule number one.

We don't want to break that rule of going out of stock. And so you're really dependent on having a lot of things optimized all the way downstream to ensure that you're always in stock, always replenishing, not too much, not too little. It's a hard moving target. And for some brands who maybe they're seasonal, so they're coming to a season where their sales are within a three month window is 80% of their sales, there's a lot of these nuances that sellers have to consider when using FBA. So I would say for a lot of sellers, FBA will always remain their number one solution, but for those who maybe are kind of outside this model, FBA or SFP allows you to get the prime badge, allows you to leverage your own resources and gives you the flexibility to be more controlling over your inventory as well as your fees.

Brett:

Yeah, I think it makes a lot of sense for a lot of brands and first of all, fulfilled by Amazon, FBA is a magical system and it's allowed millions of sellers to make millions of dollars and be really successful. But it is becoming harder. There are rules, there are fees, there's low inventory fees, it's a complex system. And so who is self-fulfilled prime for obviously you need to have some of that infrastructure, you need to have a relationship with a solid three PL that's going to be able to hit targets or you've got to have your own warehouse and shipping system where you can hit those prime targets of delivery times and things like that. But walk us through who is this right for

Matt:

Great question. And so if we kind of think through just what's changed also in these last few months. So the program was closed for a long period of time this past October. Amazon came back, they reopened the program and kind of reset the benchmark in terms of performance metrics. And we'll kind of dive onto that here in just a moment. But with this, I think what Amazon's telling us, there's a few things they're kind of telling with us is there's absolutely some product groups that they have found are not as profitable for them to have an FBA is probably not as profitable for sellers to have an FB as well too. Those also recognize that their need to expand warehouse operations is going to be that there's a hard cost and if they can pass some of that on to or eliminate some of that by having SFP. And third I think is their approach to how do we get these established D two C brands who have built this kind of infrastructure to run the Shopify or BigCommerce, whatever platform they're on. If we can get them onto Amazon and not have to make them dependent on using FBA, it's another easy switch for 'em to come on

Brett:

For. It's a foreign world if you've built everything for D two C.

Matt:

If you looking at that lens then we say a couple of different options of where it makes sense for brands to consider. The first, as I shared D two C brands, they've already built a lot of this infrastructure, they have it in place, it's much easier for them to add this into it. Now there are the performance metrics that we'll get into and they have to make sure that they have resources and capabilities within their staff to provide that. And in some cases we've worked with brands where they have a system in place where Amazon SFP and their D two C is not quite to the same level as there are costs associated with that, but I say D two C brands are a great fit. And then after that, if you start thinking through what would be the other check boxes to consider, so do a self-evaluation of your catalog and if you have products that are, as we shared earlier, seasonal or sales that are not necessarily consistent, you have different periods of time throughout the year where they go way up or way down insurance, you have the right inventory levels, capacities and fee associations.

SFP can be a good solution for those products that are high in value. We talked about sometimes Amazon damage, they can lose your products through returns. There's a lot of opportunities for that to go missing and there's ways to get reimbursements for those. But we know that those reimbursements are always a hundred percent and there's efforts that goes into that and costs to get those fees back. And so if you have a product that's high value, and I would say we're talking probably $500 higher, things like that, those are products that you should probably should consider maybe looking at SFP for better security and lower cost products that are heavy and bulky. Again, if we kind of shared that's what was the case for VARIDESK and the fewer times that we're taking this product, putting it onto a truck, moving it around, less opportunities for that box to get damaged, less costs that we're putting into logistics and operations.

And finally the last one I would say are products that have high variance. So if you have something that's think of sometimes apparel, which can be tough because you can't necessarily be lower price points and you'd be kind of a higher in price point, but maybe example, we have one brand we work with sales footwear helmets, so they've got all the different sizes, color variations and so it's a lot. And so with that it can be easy for Amazon to either missay it, things can happen. So again where you're have these large varis, those can also be really good solutions for seller fulfill

Brett:

Prime. And with the large variations, Amazon's not necessarily wanting to warehouse all of that. They're not wanting to keep every single one of your skews in the off chance that one of them is going to sell because they've got restrictions now and they are being very mindful of what goes in their warehouses. And if you're not selling, you're going to be charged bigger fees and if you're not selling, you're going to be limited on what you can ship into a warehouse since Amazon warehouse later. And so any thoughts or insights there on the game that FBA sellers have to play and when things might be shifting you to SFP?

Matt:

Yeah, and that's generally one of the more frustrating is especially as we talk to direct to consumer brands who're kind coming into this space and they're not as familiar with FBA, they kind of have their own operations and s SOPs in place for their way of doing business. And when we come in and alright, well we have to do the prepping this way, we have to hit these time windows where we know that receiving is going to take longer. We know that right now we have low inventory fees over inventory, there's a lot of moving targets and can be a lot to try and plan and you got to be very precise and if you don't have the right tools or team in place, it can create a lot of either loss opportunities of sales or a lot of fees that can hit our margins. And in those cases, that's again where we can have more flexibility, more control over those type of factors on our seller fulfilled prime for these brands who check those other check boxes in terms of the product qualifications.

Brett:

Got it. Got it. So let's kind of review here just really quickly. So high value items, large bulky items that every time they're moved around there's maybe more reason for them to get damaged or there's just expenses in that you got seasonal. Seasonal or unpredictable demand. You got items with lots of variations, sizes, colors, other things like that, slow moving goods and then yet things that require special handling. So that's maybe if you should consider self-fulfilled prime, but FBA is not easy but s fp is not really easy either. There's little room for error, you got to be buttoned up, you got to have your systems in place and Amazon is very demanding. They want to ensure and in fact they demand that if you're going to be selling on Amazon, you have to meet standards. And so what are those standards and what do you have to have in place to be able to fulfill seller fulfill prime? So

Matt:

For sellers who are interested in taking the next step, there's kind of an evaluation process or some qualifiers you have to hit to get'em into the program. Before you kind of get into that kind of first step, what we would say is first you need to do an evaluation audit of your own capabilities. Resources determine can we do this ourselves or do we need to go find the right partner, a third party logistics company to help us with this? So the overall metrics that we're going to have to have, and Amazon breaks us down into three different size tiers. So you have standard, you have oversized and extra large, and those three categories then have different speed performances that you have to hit. But overall what you should think about is we need to be have national coverage for most of our products. Anything standard has to have national oversized and extra large can have regional. So kind of keeping that in the scope of your product mix, we'll help you think through what do we need as a solution. Most times sellers are not going to have the resources or infrastructure to kind of do this on their own because you really need to have two to three if not four locations across the US that you're shipping from the staff and all that. That's just not cost effective. And this generally was

Brett:

Just to meet those speed requirements because Amazon's wanting you to reach a two day shipping window

Matt:

Typically most

Brett:

The us.

Matt:

Exactly. And so that's just not economical and this generally was a big barrier. And also there was a lack of three pls in this space that could actually meet that requirement as well too. We were fortunate, we had a great relationship with a three PL called mainfreight. They've done phenomenal work for Barry over the years, but there's two other, I would say developments within this space we have found two really great partners, one being where to go, which is actually it's a UPS company. So they have the advantage of working with UPS to get you really good rates. They have a massive infrastructure. Now theirs is more of what's called a four PL model where they technically don't own these warehouses, but they have worked with them to get the right technology, the right personnel and the right operations in place to offer SFP. And Amazon's kind of edited 'em out saying, gave them the approval of like this is a company who can offer you SFP. The second thing is a company called DaVinci Micro Fulfillment, they operate as a three pl, a true pl. So they own the warehouses, they own the staff, it's all theirs, it's all their technology. And they have again gone through the approval process of Amazon, Amazon's given the approval they can manage the SFP and they've got six locations across the US And so these

Brett:

Are two, what are those two? The ones the four pl one's a three pl, what are those again? So

Matt:

Where to go? It's your four PL and DaVinci Micro fulfillment is your three pl. So again, as you and I were chatting earlier and we were talking about agencies and not every agency is the right fit for the brand and right vice versa. Same thing here. You should talk to different solutions providers out there because just because this one works for this brand doesn't mean it's going to work for your brand. So those are two great places to start and see if there's solutions for you there. So these two are going to do the heavy lifting of meeting the speed performance metrics, which is going to be on valid track, 99% valid tracking, less than a half percent of order cancellations, and then your on time delivery being 93.5% and that's usually the one that is really can trip people

Brett:

Up. It's tricky man. It's

Matt:

Tricky. It's tricky. And that's where again, having the right partner in place who has the leverage resources of your carrier solutions, who can go on your behalf and when there are problems with your deliveries can use their flexibility or the resources of multiple different carriers to solve those solutions. With that because the other kind of piece of this is there's what we saw, speed performance promises shown to customers and that's kind of determined on your shipping templates and again the number of carriers that you're using are you offering one day, two day ground services. So that's where I would really advise sellers who are kind of wanting to explore this further, talk to sellers who've kind of gone down this path and also make sure you're resourcing the right expertise to help through

Brett:

This. Yeah, it makes sense. So obviously very Verde was a great case study and self-fulfilled prime multi mid eight figure brand really an SFP heavily. Do you have other case studies you can mention? And I know a lot of Amazon sellers are pretty guarded about their brand, things like that. You can be very secretive, but category whatever brands that have transitioned from FBA to SFP and what kind of lift kind of improvements have they seen?

Matt:

So we have two examples I'll share and two different check boxes in terms of the product assessment and I'll leave the brand names out, I can give you some generalities. So the first being is seasonal. So they're a holiday type of product. 85% of their business comes and literally a six week window. So they have a very tight window to hit and they have been doing merchant fulfillment, but so they've kind of got the resources in place, they're leveraging in some additional solutions with some of the three PL solutions we talked about. So we're actually in the process right now working with 'EM to make sure we got all these check boxes in place, all operations in place before we hit this time window for them. So the expectations with them is that adding this into their program is going to lift sales going into their peak season anywhere from 20 to 35%, but it's going to be able to actually, in their case they're trying to just maintain profitability and with the offset of the increase sales. So that's one kind of example where the gold there isn't necessary to improve profitability, but it's more of we want to maximize more of our sales in this small window of time that we have the second. So have

Brett:

That inventory flexibility because Amazon's going to throttle that inventory and you're not going to be able to capitalize on the full opportunity of that seasonal window if they were going FBA only.

Matt:

Absolutely, and just knowing that in that period of time you've got these inbound delays that can occur and so there's a lot more variables to try and account for and if one of those misses, it can have dramatic impact on your top line sales. Our second is, and we're kind of in the final process with this one too, so we haven't fully crossed the line with them, but they sell somewhat of a seasonal, it's more of the up and down sales throughout the year, but consistently selling year round. And theirs isn't necessarily heavy products but they're kind of bulky in size, so I thinking maybe greater than 24 inches by 12 inches but in a higher price point range from like a hundred dollars to say $200. And so they have been doing FBA exclusively and it's worked well for them. It's year over year.

We're having great sales growth for 'em, but the profits were getting eaten up here is we're having these different fee structures come in. So we worked with the team at DaVinci and we did a cost analysis. We took their last 12 months of their sales, ran it through their system and kind of analysis and we came back to them and said, right now your shipping costs are 19% of your sales. If we can move this to our platform, it will maintain your prime badge so you'll still get that benefit of the sales left, but we can take this down to 11% of your sales. So that is a massive dramatic savings right there. And one again, you wouldn't typically expect that FBA to be beaten by SFP, but it's a great example of where if you partner with the right resources and kind of put the right plan together, it can be a great win. And as we tell brands in this case, we may not move their entire catalog over, we may find select products where it makes sense to put that at SFP and these other products make sense to keep an FBA. So if you're thinking through this, it's not an all or nothing, this is very much, again, it's about gaining control and flexibility over your products, over your logistics and understanding where can you move the right levers to improve your margins.

Brett:

I love that. I love that it's not all or nothing. You can look at your catalog and understand what makes sense to keep FBA, what makes sense to make SFP to really maximize control top line bottom line and look at that holistically. So if you're thinking about self-fulfilled prime, reach out and chat with brands Excel and Matt can help you out there. Let's transition a little bit Matt, because we don't have a ton of time left, but I do want to touch a little bit on a MC. So Amazon Marketing Cloud and it's become very obvious to Amazon sellers over the last few years that growth on Amazon is largely pay to play. You need to invest in ads in almost every scenario where it's at leased to launch a product but likely to maintain sales. And so what we do at OMG is we're kind of full funnel ads.

We're looking at sponsor brand video, which we be called video and search. We're looking at sponsored brand ads and of course sponsored product ads and looking at all of that. We're also, we do a lot with YouTube and Google and Facebook and so sending that traffic to Amazon on occasion or we're just advertising D two C, but there's always an Amazon Lyft, even if we're sending traffic to a Shopify store, there's some people that like to research there but buy on Amazon. And so Amazon developed a MC to try to help marketers get better visibility and better tracking and things like that. How were you guys using a MC vary and how are you consulting coaching brands to utilize A MC?

Matt:

I love this topic and it's one of the most interesting ones to dive into right now. And this question is coming up with a lot of the brands we're talking to and we're talking with some brands who are, maybe they're spending a little bit less, they maybe they're spending 10 to $15,000 a month, but even there we're running into these challenges with just focusing on sponsor products and sponsor displays. There's only so much you can do with those tactics and talking with brands who're spending 10 million a year on Amazon and beyond that on other channels and they're like, we know when we stop spending or reduce spending sales go down, but we don't know which of these tactics or what really is going on. So there's a lot of unknown.

You shared YouTube and DC all these. I think that for longtime brands have kind of operated in the sense of, okay, we have our paid search for our D two C page, we have our social, our email marketing and SMS, and then we have Amazon that sits over here and maybe we even have Walmart sitting over here, but they were all very siloed and there was budgets for each one in some cases. Some of these companies we've talked with, they have multiple brands and even each brand had its own kind of segment and budget and everybody was working independently of each other and everybody was kind of not knowing what was crossing over with all these different budgets and tactics. And I think brands are now realizing that are coming to a place where we need to break down these silos, but how do we do this in a way or how do we get the right insights and signals to help us make the right decisions?

And so it's exciting as a MC is to me where I tell brands is before you jump all into this, there's a ton of value you can get, but it's really before you even get to that step is really understanding what is it that we as a business and brand, whatever our biggest challenge we're, what is it that we really want to solve and what are those measurements going to be to base these changes on before we go into a MC, because as we dive into this, we'll talk some details is a MC can provide a lot of great useful information, but it's about being specific and ask the right questions to get the output that you really want that's going to be incremental and impactful for your business.

Brett:

Yeah, it's really great and it's one of those things where sponsor products, the bedrock, the foundation of your Amazon advertising strategy, but there's only so far that can take you for certain categories. It can be mostly what you need, but it does depend. So we've got a couple of brands we're working with right now, high growth brands. One is in the haircare space, one is the cleaning space, but they don't fit squarely into a category and there's not a perfect alignment with search queries in their products. And so sponsored products are great and they're high return, but we're hitting a ceiling, right? Because there's only so much search volume and still with a lot of, I mean most product discovery on Amazon has done through search. And so you got to kind of look at how do we get creative, how can we show maybe a sponsor brand video ad this product demo video ad and maybe some related categories or show it on related products or things like that. How can we do DSP, Amazon DSP and sponsored online video or prime video ads? Some of those things that kind of go a little upper funnel or get a little broader, but then we got to see, but is that driving incrementality? Is that driving a sales lift or is it waste? And sometimes that's hard to kind of piece together. And so A MC helps there any good use cases, studies, any examples of, hey, we used A MC and unlocked this insight.

Matt:

I think what you shared there, we've experienced, and I've seen it with some of our brands we're working with where we have been successful with the sponsored product placements, but as other competitors are coming into the space, CPC costs are going way up or in some cases the audiences are just smaller is we've got to grow beyond just pace search. And so as we get into DSP, what we've come across is some cases you can do targeted segments or you can do some audience modeling on DSP, but even within those two parameters of levers that you have on the DSP model, as we've done some models we've come in and we've seen where there's just a lot of wasted spend or overspend on certain tactics have just not be able to get UL enough in terms of your targets. Especially in these cases where maybe you have a smaller audience and you're trying to then go capture interest from lookalikes or comparable products using A MC.

We can use all these different signals of not just a, you think of the traditional A MC models, it's going to give, you can see the path to purchase where you get, okay, they sponsored product placement at DSP, but within the standardized reports that Amazon's provided for us, it only goes so far. Even with those, that's where we see working with the right providers in this space to help you really customize the sql. That's what's kind of the really powerful level here is that Amazon's created some great templates, but you can do anything. That's where I say it's about asking the right questions and then having the right resources and team behind you then to go and create those SQL queries and reports. So when we've been able to go with that next level of going even more granular in terms of really understanding well, how many different touch points do they have on S Spark products and how frequently do they get served up with our DSP ads to then really craft in that more specific targeted audience is when we really see the explosion of growth within the power of DSP and A MC working together.

Brett:

Yeah, yeah. It's the future to really get the most from DSP and others of Amazon advertising. You kind of need a MC. And so yeah, both in the attribution piece and kind of understanding what's going on, but also in this targeting and audience building, there's really nothing like A MC. So pretty excited about that. Now, any final thoughts on A MC? I've got a couple more things I want to wrap up with.

Matt:

I think again, as brands, if you're in this position where you're just not seeing the same level of impact with sponsor products and you're pushing to DS DS P should be looked at and measured differently. And that's usually the biggest challenge or roadblock we run into with brands of,

Brett:

And there's some flaws with how it's measured on its own just in the DSP platform. There's some serious flaws there.

Matt:

And so I think A MC where originally was thought of as well that's for enterprise level brands or that's for brands spending a ton of money on Amazon. I think that was true a year ago. I don't think it's true for brands today with where we are and the resources that are out there is that if you're spending 10,000 a month on DSP, you should definitely be looking at A MC and using that to help us build those better models. And we didn't touch on the fact of we're talking about Amazon performance, but if you're a D two C brand or you're spending money on these other platforms, wow, there is so much opportunity to bring this data all together and help really understand the full journey of your customers, not just on Amazon but across your D two C and across these other retail sites to just improve those dollars and get more out of it too.

Brett:

Yeah, super exciting man. Really excited to see how that continues to develop and we're excited to use it for our brands as well. And so I would be remiss if I did not ask you based on your time with Mark Cuban six years with the Dallas Mavericks, and this is a little bit off the cuff, we didn't really prepare for this necessarily, but any lessons or insights or takeaways as you observed Mark Cuban operate? What were some of the top lessons from working with him?

Matt:

It's interesting, you either have fans of Mark Cuban or you have the haters of Mark Cuban. Sure. Those who say he just got lucky. If you dunno the full story Mark made, he's had two big decent-sized exits, the second one being broadcast.com, which made him billions of dollars and just sold 'em MAs again for several billion dollars. So he's had success multiple times and I think one of the things I took away from him is just no matter how successful you've been in a certain segment or business, it's always about just continuing to learn. He would talk about back when he started his first company of billing network systems and he just would go home and just devour these resources around training manuals and he just knew more than anybody else when he stepped into a room. And I'm not saying that I know more than anybody else, but it just showed me that, especially as I've gone into the space of Amazon specifically, is you just can't rest on what you know today because this space is, we're talking to A MC, we're talking SFP and Amazon space has just continued to evolve and if you want to stay relevant and if you want to stay at the top of your game, it's always about just continuing to just be in the market learning and not just resting on your laurels.

This one and the second one, just being that we had all these different saying kind of Mark Cuban sayings up around the office and one of those being it's a little off cuff here, but it's called No Balls, no Babies. And the whole concept here just being that you got to be willing to take some risk and you got to put yourself out there. And that's one of the things I took with him is that I tell my kids all the time is if you don't ask, you don't get. And being able to go out there and just first you got to make sure you're in the position to be successful and to be able to bring value and to go up against some of the best in the industry, but then you also got to be able to go out there and put yourself out there and also be willing to ask for that sale, ask for that opportunity, ask for this promotion, ask for this opportunity for me to prove myself. If you don't put yourself out there and be willing to take some risk, then you're never going to reach your ultimate.

Brett:

Yeah, it's so good. I love both of those points. The first point being usually those that are accused of just getting lucky, there's usually a ton of hard work behind that and almost obsession. He was going home reading manuals, right? For fun. He's digging into stuff. And I think there's a certain level of success that requires that if you're going to be in the top couple percent of Amazon sellers or D two C brands or whatever, it's going to take a little bit of obsession for you to get there. And I love that second point, man, you got to be bold. You got to ask for stuff, right? I've been chatting a lot with my 22-year-old son. He's in direct sales and he is doing a great job and he just read the autobiography of, not autobiography, but the biography of Steve Jobs and was talking about how bold Steve Jobs was.

And I remember there's a story in there when Steve Jobs was like a teenager and he wanted to learn from Hewlett Packard and he is like, I bet I could just find the founder in the phone book. This is back when the phone books were a thing. And so he did, he found one of the founders in the phone book and just called him in the evening and got him on the phone. It's like, Hey, I've got some questions building this computer. I got some questions about whatever. And the founder was like, man, you want a job? You want to come and do a summer internship? And that really paved the way for Steve Jobs and Steve Wozniak in a lot of ways. And it was because Steve was like, I'm just going to call him at home in the evening. Where most people were like, well, I don't know. I want to do that. We sit and analyze, but just got to be bold sometimes. Got to ask for the sale, got to do the deal, got to start. Because a lot of times we get stuck in our heads and we don't operate so beautiful lessons. Any final Mark Cubans?

Matt:

So just to round down that, I told you at the beginning of this about my internship there, but I didn't tell you the full story is that to get this internship, I follow this mechanism is that I got the email address of the HR person and of the director of sales. And so I just would cold email these guys twice a week. I'd see some follow the game, Hey, you have a great game. Must I have just a call out? And then ultimately over my spring break I said, I'm coming to Dallas, will you guys meet with me? And they were both reluctantly, were like, sure, whatever, to really show them some sizzle. I made my resume on a PowerPoint with the CD Rom and sent that to them. This is cutting edge back in 2002.

Brett:

I've not heard the word CD ROM in so long. I'm so glad you said that. Age myself.

Matt:

And so I show up on my spring break and I can tell they're both just trying to do anything they can to talk me out of this. And so I was like, look, we don't have internships, we don't have any jobs. I don't have a way to pay you, so I don't know, you tell me where we stand. I'm like, say yes and I'll be here as soon as I graduate. And so the next week they're like, fine, if you want to show up, we'll find something for you to do. And just as I got there, one of their other account executives had just, and so they had just entered the renewal season. So I got to then step into this role of filling his shoes for the next three months as my internship of how do I can show myself as a salesperson? And I never would've had this if I just didn't take that risk of just, I'm just cold email, put myself out there and make an ask. Ultimately, that led to my first start.

Brett:

So cool, man, what an amazing story. And you didn't just ask one time and you didn't just ask in the same way each time you found a reason to follow up, great game, here's a call out, Hey, can I do this for you? And eventually you did that so much that they couldn't ignore you, right? They maybe didn't want to give you an internship. We got nothing, man. We got nothing for you. Whatcha going to do. And you just kept on asking. And yeah, I think if we can get to that place where we're impossible to ignore, that's really, really powerful and you just got to figure out a way. And so if you are willing to be bold to push for someone to find a way, it'll often happen. And yeah, man, such a good example. Such a good lesson there. Thanks. Thanks for sharing that. Awesome. As we wrap up, as people are listening and they're like, okay, I got to look at self fulfilled Prime or I need to just analyze my Amazon strategy, how can they get in touch with you, Matt? Yeah,

Matt:

So you can easily reach me. My email is matt@brandsexcel.com. You can also find me on LinkedIn. I'm sure we can maybe add my link here.

Brett:

Yeah, I'll look all in the show notes.

Matt:

I'd offer every lesson you here if you're interested. I just want to know some more. You want to go a little bit more in depth? I have a free guides, just a comprehensive guide to sell Fulfill Prime. It'll walk you through everything we talked through today with a little bit more in depth. And Brett, I'll share this with your team Thursday, we can just make this accessible or again, shoot me an email and gladly send it over to your free resource for you to review and help you answer some of those additional questions.

Brett:

Love it. And that's brands plural, Excel, ex CEL, correct.

Matt:

Brands, B-R-A-N-D-S-E-X-C-E-L.

Brett:

Awesome. Matt Snyder, ladies and gentlemen, Matt, this has been fantastic. Look forward to doing this again sometime, and thank you so much. Thanks

Matt:

Brett.

Brett:

Absolutely and always, and as always, thank you for tuning in. If you found value in this show, please share it with someone. If you know an Amazon seller that's kind of been wrestling with how do I make FBA work and should I do SFP, then send them this episode. If you've not done so already, we'd love that review on iTunes. And with that, until next time, thank you for listening.

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Episode 283
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Kevin Lavelle - Harbor

The Unconventional Success Stories of Mizzen+Main and Harbor

I love disruptor stories, and Kevin Lavelle, the founder of Mizzen+Main (and now Harbor), has an overlooked but incredibly inspiring one.

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Kevin revolutionized the men's dress shirt industry with performance fabrics. Under his leadership, Mizzen+Main grew from a great product idea into a company that has sold hundreds of millions of dollars worth of shirts and is now available in 500-600 stores, including 10 Mizzen+Main stores.

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Now, he's tackling a new challenge by creating a more secure and stress-reducing baby monitor solution with Harbor. His journey provides a blueprint for innovative product design and successful company building.

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Here are a few key takeaways from the interview:

  • Kevin Lavelle shares his entrepreneurial journey of founding Mizzen+Main and the inspiration behind launching Harbor, an innovative baby monitor solution. 
  • Discover how Mizzen+Main leveraged influencer marketing, including a highly successful sponsorship on the Tim Ferriss podcast, to scale the business rapidly. 
  • Learn valuable lessons about building and managing teams, giving feedback, and recovering from mistakes as a first-time founder. 
  • Harbor's unique approach to creating a more secure, reliable, and stress-reducing baby monitor system with remote night nanny services. 
  • Understand the importance of building genuine relationships and providing value to your target audience when launching a new venture.

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Chapters:

(00:00) Introduction 

(02:02) The Story of Mizzen + Main

(14:45) Sponsoring The Tim Ferriss Podcast

(21:14) Favorite Failures From Mizzen + Main

(29:26) What Is Harbor? 

(40:23) Conclusion

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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, Bryan Porter and more. 

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Other episodes you might enjoy: 

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Transcription:

Kevin:

The first aha moment for me from idea to, okay, this is a reality, is when I wore our first prototype home from a seamstress who had made the prototype for me and my wife didn't realize I wasn't wearing my normal button down white shirt and suit and tie.

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 delighted to have on the show today the founder, the former CEO now chairman of Mizzen and Main. Now, I've been following Mizzen and Main for years now. First heard about them on the Tim Ferris podcast. Of course, if you're a Tim Ferris listener, he gives great endorsements and I was immediately sold when I heard his pitch on Mizzen and Main. And so I've been following them ever since. And they've worked with some greats like JJ Watt and Phil Mickelson and others. For those that don't know, you'll get the full scoop in just a minute, but it's a performance dress wear performance dress shirt for guys, and they've branched beyond that as well. And so we're going to talk about lessons learned and what that journey was like, and also get to hear a little bit about the new journey. And so I am absolutely thrilled to welcome to the show, Mr. Kevin Lavelle. Kevin, how's it going man? And welcome to the show. Thanks,

Kevin:

Brett. Glad to finally do this. I say in person, glad to do this live together and appreciate the opportunity to share what we're building at Harbor and reflect on what I've learned at MIS and Main.

Brett:

Absolutely. And so yeah, really excited to hear about the journey with Mizzen and Main, but also talk about Harbor, the new venture baby monitors, but to the next level, which I was just telling you as the father of eight kids, I could have used your software, your technology back in the day if only you'd been available. So can't wait to hear the story there as well. But let's dive in, man. Let's talk a little bit about Mizzen and Main. And so why did you start an apparel company? Why Mizzen and Main? Just give us the

Kevin:

Scoop. So right out of school, I got a job as a management consultant, did that for a few years and then worked for an investment team within an energy company here in Dallas. Two great organizations and I learned a whole lot, but I just had this burning desire to start my own thing. And there are some people who are an idea a minute, and there are others who have one great idea. And I felt like I had this one great idea. I was a college intern in DC, which taught me I never wanted to work in politics in dc, but I watched a guy run into a building soaked in sweat, and I grew up playing golf. I wore performance polos. I watched them sort of take over on the golf course and wondered why no one made a dress shirt out of this type of fabric makes, and I knew nothing about textile design, manufacturing, branding, none of that. But I just couldn't shake this idea and stayed with me for years. And I got to this point in my mid twenties that I just said, you know what? If I'm ever going to do it, now is the time. And candidly, working as a management consultant and then an investment analyst doing due diligence on other companies, I just sort of had this realization that no one knows what they're doing. We're all figuring it out as we go. It's not like I didn't have some magic playbook.

Brett:

Dude, I just want to pause for a minute. That is one of my favorite quotes, and I remember hearing some really smart people saying that, and even Paul McCartney in from the Beatles, I heard this interview where people were like, Hey, how did you do it? How did you plan to create this great band? And he is like, nobody knows. We didn't set out to be the largest most successful band in history. We just started making music.

Kevin:

You do something you love and things can really work out. Totally. And I'll extend that. We'll get to point where El Caterton, the world's largest consumer retail, private equity firm and really the gold standard in PE on consumer invested in mis doMain. We were so excited to have them, huge stamp of approval. We got them in our first board meeting. I'm sort of ready for them to show me, okay, now that you're in, here's how we do it. Right's, the secret sauce, the playbook sauce. Here's the secret sauce that no one has allowed to know unless we've invested in them. And as it turns out, they don't know either. And what works for one of their companies doesn't work at all for another one of their companies. Now, to be clear, they're brilliant operators. They're great investors, they've got a lot of good advice,

Brett:

Amazing track record.

Kevin:

There is no playbook, there are principles and there are things that change over time. But ultimately it was a little bit of that. You know what, I might as well just give this a shot. And it was sometime around the early days of starting, I don't know if that's when Jim Carey gave this speech or someone sent me an older kind of commencement speech and he talked about his father and lessons he learned from his father, and he said, I just realized I could fail at doing something I don't love. Or I could try to do something I love and it could work out great, but you can fail at anything. And so it might as well be something that you are deeply passionate about. We'll talk more about it. But I spent about a year sort of tinkering, launched in July of 2012. I expected we would like the world on fire with our performance fabric dress shirt, and that didn't even sort of happen. We actually had to go build a brand and build a team and build a business. But it's been an amazing ride and we've done hundreds of millions of dollars in sales since I started the business and gotten to do some incredible things and work with really great

Brett:

People. Yeah, it's so good man. And I know exactly that Jim Carey speech you're talking about. And it is so good because we sometimes are, human nature is like, lemme just go the safe route. Lemme just do the safe pick the safe venture, the safe hire, the safe whatever, and really the quote safe way, you can fail at doing that as well. So do something that you have conviction in passionate about fail doing something you love. So yeah, really, really great advice. Okay, so 2012, you launched the business and so you finally this dream that had been banging around in your head for quite a while. You put it into practice, you make your shirts. When did you realize, okay, I'm onto something. This isn't just an idea that I liked and a product that I wanted scratching my own itch type of thing, but I think there's a real market here.

Kevin:

There were a couple moments as I reflect on that question. Certainly when we launched and we had a launch party and some people came and said, oh, this is so cool. That was a kind of real crystallizing moment for me. I had the idea for years, the first aha moment for me from idea to, okay, this is a reality, is when I wore our first prototype home from a seamstress who had made the prototype for me and my wife didn't realize I wasn't wearing my normal button down white shirt and suit and tie. And that was like, okay, if she doesn't know and I've been talking to her about this since I met her, then there's an opportunity here. Then we launched the first we launched, we had a launch party that was great. I would say then there was the kind of valley of doubt for a while because it was hard.

And I mean it was literally, I poured my life savings into buying the first batch of product and that was the only way I could do it. I didn't pay myself for a couple years and there was a moment, and honestly now I can't remember when it was maybe 18 months, 24 months in something around that timeframe where I realized, hey, I don't remember the last time we had a day of zero sales because I had Shopify's app on my phone and I would see every sale that came in for years. I packed and packed and shipped every shirt from the house. And when I was traveling for work, my wife would fill in and pack and ship for me. But it was a moment where I just realized that I hadn't seen a zero day in a while. It wasn't like, oh, we haven't done it in a week or 10 days or a month.

I wasn't keeping track. I just remembered that that was the case and that really was the first, okay, now we're rolling. And I remember talking with some former colleagues who had expressed an interest in investing and I showed them kind of how we were doing and not disrespectfully, but they were basically like, this isn't something that I can invest in. You don't have any form of traction really. I like the idea. I think it's cool, but there's nothing I can invest in. It doesn't feel like a real business yet from an outside perspective. I mean obviously I disagree, but I saw him maybe two years later and this, he's a great guy and he's a great mentor and a friend, but I saw him about two years later and he's like, how's it going? And I told him and he basically was like, well, shit, that's a real business.

Why didn't you call me back? I'm like, I forgot. But there were moments like that where all of a sudden now we're rolling and I'm not. One of the things Mark Andreessen talks about is with product market fit and product market, that's a little different in apparel, but this idea of you move from pushing a boulder uphill to the boulder is going downhill really, really, really fast. It doesn't mean there aren't a thousand problems a day or things that could put you out of business at any moment. Totally. But in the 2015 timeframe, we sponsored Ferris's podcast, we got an endorsement deal with JJ Watt. We were well over, I think 200 retail stores carrying a product. All of a sudden it was like we couldn't miss, which took off, came with its own set of problems because we didn't think through some of the implications of our decisions. But those were some key turning points where it no longer felt like, I'm just trying to make sure that we sell enough shirts to live another day. Now we're trying to figure out how do we build a business, how do we scale? How do we build out some of the key capabilities that we'll need to grow?

Brett:

How do we stay healthy and grow in a way that the whole thing doesn't implode, which is a real issue when you're growing at the scale and the speed that you guys grew up. Now, I know you don't disclose publicly revenue and things like that, but for those that don't know, and I know a lot of people are geeking out listening to this because they've followed you like I have, but give us some idea of the size of Misam in Main. Yeah, so

Kevin:

2012 we launched in July of 2012. We did something like $50,000 in revenue, and then in 2013, something like 250,000. In 2014 we officially crossed a million dollars in revenue, and that was when things really started to bend upwards. As I said, 2015, we sponsored Ferris's podcast, we did the deal with jj. It was like now we're rolling. And we were growing at multi hundred percent a year for many years. And since I started the company, we've done many hundreds of millions of dollars in revenue. And today we're in something like five to 600 maybe more points of retail distribution. We have 10 of our own stores and a vast majority of our business is direct to consumer through our stores and our website.

Brett:

It's so awesome, man, and kudos to you and you guys really started this trend because there's a lot of other brands that sell shirts that are similar, but really, you guys were the first, right?

Kevin:

Yeah. It's funny. We launched in July of 2012 and right around the same time that we launched it, no one had ever made a performance fabric dress shirt. And at almost the same time that we launched, there was another company that started and was doing some of the same things that we were, but then we were sort of alone for the next four or so years, and we were laughed out of every trade show multiple times by the same vendors who told us, no one will ever wear this product. And at first it was a little disheartening and you just as an entrepreneur, you just sort of have to shake it off. But then all of a sudden when they would say, well, no one will ever wear this. I'd be like, that's fine. We got 50 other stores that are carrying our product and we've sold over a million dollars worth of it. And they kind of look at you sideways. Clearly

Brett:

Somebody's wearing these

Kevin:

Things, someone's wearing it. And that comes to know your customer, not a fashion company. And for people who are apparel snobs who need to get perfectly bespoke suits and perfectly bespoke shirts where everything is exactly to the right millimeter, sure, well, we're not competing with that. We're competing with everything else where guys are going in and they need a shirt that makes 'em look great and feel great. And existing options just weren't cutting it. And now today, virtually every men's apparel company, and now lots of women's are doing some or all performance, everything that they do. And one of the more memorable moments, we got a great article in the New York Times in, I think it was 2014, may have been 13, and the writer doing his due diligence reached out to Brooks Brothers and said, well, what do you think about this? And one of the guys was, I mean, professional and respectful, but basically was like, we are a natural fiber house and sort of let the kids be kids, other kids will go do other stuff.

And it wasn't rude, but it was very direct. That's not what we do. And at first it was a little unnerving for me at the time, especially being a first time entrepreneur, I was a little nervous like, oh no, now they're going to be onto us. But then I realized I want everyone onto us. I want everyone to know about us, and if they don't know about us, I'm doing something wrong. And that sort of stuck with me for a long time. And then when I saw other businesses start to copy what we were doing, it really never bothered me at all. In talking with some investors, they have some investors and I'll overgeneralize here would say things like, well, a man has 15 dress shirts in his closet. Which one are you replacing? Which one is he taking out to put yours in? It's like, none guys don't

Brett:

Have

Kevin:

One in one. It's kind of

Brett:

A silly question,

Kevin:

Honestly, mentality on their shirts. Now they may stop buying something else, but unless you are Tiger Woods and even he left Nike, unless you're Tiger Woods, you don't have one brand in your closet, most guys are going to have five to 15 brands in their closet. And so there was an opportunity for us. We established a beachhead with our dress shirt, and then we were able to expand into different verticals.

Brett:

Yeah, so cool. So I want to talk a little bit about that expansion of the verticals in a minute, but let's talk about the Tim Ferris podcast and other inflection points. So that's just a frame of reference for me where I heard about you and I heard about him talking about how he could wad the shirt up, throw it in a bag, sweat in it, wear it three days in a row is all good. So I was like, wow, this is this magical shirt here. What was that process like? How did you get onto the podcast? What did that do for you? And talk about how that compares to maybe other inflection points.

Kevin:

Well, Tim, we worked with some pro athletes in 2014, and we started selling into pro athlete locker rooms, which gave us an opportunity to do the endorsement deal with jj. That was 14 in 15. We did the endorsement deal with jj. That was the first big, now we're being recognized.

The explosion point though, all of a sudden we doubled overnight and never looked back from a daily sales perspective. And we had huge pops was the Tim Ferriss podcast I remember pulled into, I used to go to Gold's Gym in uptown in Dallas, and I pulled into the parking lot and I saw on Twitter, he posted, I'm accepting sponsors for my podcast in q1. I've got one slot left, lemme know if you're interested. And so on. My phone just tapped in a whole bunch of details about Ms. Main said We would love to sponsor you. And I referenced the fact that Kelly Star, who is also known as the supple leopard or mobility wad, Kelly loves our product and Kelly and Tim are friends. So I mentioned Kelly and I got a note back from Tim, I don't know, within a few days, and basically said, Hey, this seems really interesting.

Send me your product. I'd love to check it out. I need to believe in it to endorse it. And a couple days later, he called me. And if you followed Tim, that in and of itself is a unique experience. He is very much like Async and manage my time. And I'll never forget he called me because he said, I want to be certain that the podcast was expensive. Now, probably, I don't even know, tripled quintupled in price since then, but at the time it was incredibly big bet for us. I'm sorry. And he said, I want to know that this isn't make or break money for you. I know you're a small startup and I believe I could do really good things for you, but if this is make or break for you, I don't want to do this.

Brett:

Wow.

Kevin:

And

Brett:

That's impressive, man. That's just some real integrity.

Kevin:

It does. And I think it is who Tim is. It helps that there was a personal connection he did. And he told me I called Kelly and I made sure that this what you said was true. And Kelly gave us a ringing endorsement, but I said, no, no, it's not. We're good. And I wasn't lying, but it was pretty close to being a makeup.

Brett:

It was a big bet. It was a big bet.

Kevin:

It was a huge bet, and it wouldn't have sunk us as a business, but it's more like, I don't know how many more swings or at bets I could have even taken. Yeah, yeah. So I could go through all the details, but I mean basically the podcast, the first one dropped on a Tuesday and by I think Wednesday or Thursday, we were a net positive ROI across all three podcasts within 48 hours or 24 hours or something like that of the first podcast advertising advertisement. And it was also absolute chaos for us as a business because our systems were not prepared for that level of influx we did.

Brett:

He talks about the kiss of death. If it goes too well, you could put someone out of business because like the Oprah Effect or whatever, you may not be able to handle this type of volume, and

Kevin:

We could not. It was a nightmare. But you do the best you can. You make up to customers that you let down, people would order things, and our inventory systems weren't correct. So we'd be out of stock. We just took care of customers the best we could. We were transparent about it. But one of the outcomes of that experience was I had read an article called the Tim Ferris Effect, and it was about an author who Tim mentioned his book and the author could see his Kindle, and he had a bunch of other big press hits and big moments that didn't move the needle on his Kindle ring. And then Tim mentioned it and he went from 1000 to 192. And so I thought from a thank you to Tim and a reality of how do I tell this story of what we're building at Visitor Main?

I'm going to open the book on what this experience was like. So I wrote a media article called the Tim Ferriss Effect podcast edition. And still to this day, Tim has my article linked in his webpage in his Tim blog about what it's like to work with him. Because while I didn't give real numbers, I gave total percentages like 400% increase in ROI. And it was a thank you to Tim, and it was a great opportunity for us to tell our story, and it has resulted in this long tail of awareness for many, many years. And to put a full circle bow on this, I hadn't talked to Tim in a couple of years, and when I launched my new business harbor, I shot him a text and I texted almost everyone I knew and said, I launch a new business. Will you buy a waitlist spot?

Will you tweet about us? Will you share it with your friends? I wasn't going to do that to Tim. And so all I said was, Hey, Tim, you changed my life with Ms and me. I just wanted to let you know I launched a new business. I'm really grateful for your partnership. By the way, I don't even know if this is still your phone number. And we ended up texting back and forth, and the next day we got on a phone call and he said, I want to invest in what you're building. And so Tim is actually a very significant angel investor in Harbor. That's amazing. Which is a really cool full circle moment and a testament to the power of good relationships.

Brett:

It's so cool, man. And it's so cool that you did that the right way, first of all, for you to recognize on your way to the gym, you recognize opportunity, you acted on it right? Then you direct messaged him, you had the connection with Kevin and you made it all, or I'm sorry, Kelly, Kelly. And it made it all work. And then that just led to this long time effect on the business and a friendship and really powerful, now very influential investor. And so kudos to you for doing that. That's awesome. I want to dig in a little bit, and before we talk Harbor, which I want to get to in just a second, any good lessons from failure and I think the way Tim sometimes talks about in the podcast, any favorite failures along the way, lessons that you're taking into your next venture?

Kevin:

Yeah, I would say not any specific failure, but plenty of failures around the product side. For a while, we just did so well at selling out of most of what we made that we weren't very good at forecasting, inventory planning, managing merchandising. What does it look like when you end up with 250 of these units at the end of the season? Well, we didn't really have that problem. And so we just were constantly underselling under buying what we should and not really sophisticated in merchandising. I had an interview with a prospective board member once Catterton invested, and she said, tell me about your merchandising team. And I said, well, I will when you tell me what merchandising is. And she said, at the end of our interview, she goes, I hope you picked me. I understand it, but I'm not the right fit for this.

And she was awesome, but she said, promise me you will go hire a merchandiser tomorrow. And the reality was, the way I described, it's we were tripping forward so fast downhill that we never fell on our face. We tripped a lot, but we just kept going. And our mistakes were, yes, our mistakes were always salvageable. And that's fine up until a certain point, right? When you have a hundred thousand dollars purchase order and you screw it up, you can survive that when you have a $10 million purchase order, you cannot survive if you mess that up because the ability to fill in underneath that gap is almost impossible. And so I think what I would say from a failure perspective in the lesson learned is I couldn't necessarily hire experts along the way. At MIS and Main, we had very little funding forever, and most of the industry experts I talked to told us why our idea wouldn't work and why we'd never be successful.

So I just sort of like, I'm not going to hire anybody from the industry then. And all of us outsiders changed the industry ourselves. Now that was misguided. I could have found one or two industry insiders who were excited about what we were doing and could have helped us build a more robust engine. And so as I carried that forward into Harbor, and also importantly, I have a track record with Mizzen and Main. So I've been able to get investment to Build Harbor, very expensive to build a consumer electronics business. And we have telehealth and software services. I have brought in some incredible partners. My co-founder is a chief product officer. We've got an incredible head of hardware, really sophisticated and technical people that are required to do something as sophisticated as hardware. And so surviving each of those crazy mistakes would be a, I'll say, a favorite mistake.

And then I think the other thing is the first time around favorite mistake was learning what it meant to hire, grow, and manage, including managing out a team. I made so many mistakes in that hiring process. When I started Mizzen in Main, I'd never even interviewed someone, let alone hired them or been a manager. And so learning a lot about what it means to be really transparent and direct with team members along the way. And there are some people who are incredible at another company and not the right fit for your company or your style or that role. And you're doing them a disservice to keep them in that role or even in the company. And letting someone go is always difficult. Sometimes people make it easier for you, but it's always difficult. And for all of the really great people that I worked with that we had to let go because it wasn't the right fit or performance wasn't there, I feel like I got better over time about coaching and feedback and all of that.

And even when it was a hard exit within three to six months afterwards, I saw where they landed and they were a happier person and their life was better. It was a better fit. And it doesn't mean it's easier to let someone go, but it gave me more as I moved through that. And as I think about building Harbor that you treat people with respect, you set them up for success, you give them clear, concise, consistent feedback, and if it doesn't work out and you've done everything that you are supposed to do, well, then they will be happier and more successful somewhere else.

Brett:

100%. I fully agree with that. And it's one of those things where we think we're being kind. We think we're doing someone a service if we either A, don't give direct feedback or B, just keep someone longer than we should. But really having that direct feedback is what people need, even if they don't love it in the beginning. And then you're promoting them to their next opportunity, which is a great way to put it. As long as you handle that with honor and dignity, man, it sucks. It sucks for both parties. I've had to do it a number of times, but I would agree with you when it's not the right spot, then they're going to be happier eventually somewhere else. A couple of books that they just come to mind that I really love that tie you into what you just said, I love the book Who, not How, and I cannot remember the author, but often the problem we need to solve and the fix we need in our business, it's a who not as much a how.

And I also love candid conversation, or I mean, I'm sorry, that's a good one too, but Radical Candor. Thank you Kim Scott. So good. And I love her quote. It's not mean, it's clear. And so just being very clear with feedback, I want it. I think top performers want it as well. And then quick side one is Five Dysfunctions of A Team by Patrick Lin, a great one, just like how to build and lead a team. And dude, it's hard. Most of your natural instincts are not right when it comes to attracting and leading teams. And it's a skill you got to develop, and really you don't get it until you do it. And so I'm right there with you. I've had many mistakes in building and growing teams, but thankfully, hopefully I've gotten better.

Kevin:

The thing that I have to remind myself when I don't want to give feedback is me not giving them feedback that is a reflection on me, not them. I'm uncomfortable. I don't want to tell someone something that they may not want to hear, but if they don't want to hear it and they don't respond, well, that tells you everything that you need to know because great performers will say, give me more so I can make better decisions, and I don't want to find out later that you wouldn't tell me something along the way. And then if people can't handle the feedback, then they're not a good fit for your culture, and that's okay. It's not a bad thing to say you're not a good fit for this company because there are a lot of other companies, and you deserve to wake up every day and feel like this is where I should be. And yeah,

Brett:

Hundred

Kevin:

Percent doesn't mean that that always goes smoothly.

Brett:

So true. So let's pivot. Let's talk new venture. Let's talk harbor a little bit. And so explain to us what this is, and again, what was the inspiration behind this?

Kevin:

Yes, I will say one thing as you were talking about books, the one that I will, I think it's my most gifted book from a business perspective, is Ben Horowitz. The Hard Thing About the Hard Things, and

Brett:

I've never read that one. I will absolutely get that.

Kevin:

The first time I read it, I felt like I had a new sense of calm and that I wasn't crazy for how unbelievably difficult building an organization really is. Ben is an incredible investor, a great human, and the book is every person should read it, whether you are a CE manager or an entry level team member, it's just absolutely fantastic. So the hard

Brett:

Thing about hard things by Ben

Kevin:

Horowitz, yes, hard thing about the hard things. It's somewhere on the left side of my shell. It's right there in the middle. Hard thing about the hard things next to George Marshall. Nice. So Harbor. Yeah. Where did this come from? So in the journey of building Mission and Main, my wife and I actually worked together for many years. She came on board full-time in 2014, and we had our first child, Jack in 2016 actually signed the term sheet with El Catterton in the delivery room. It was a momentous time,

Brett:

True like an entrepreneur. I was answering emails when my wife was in labor one time and she was not happy about that.

Kevin:

That is the correct feeling for that moment, yes. But when my son was born, I did a whole bunch of research and it seemed like the most innovative product on the market was a company called Manic. Nanit is a wifi camera, like a Nest or a ring camera wise, any of the just basic wifi cameras that runs an app on your phone, and they market it as a baby monitor. Importantly, it is not a baby monitor. It is a wifi camera that runs an app on your phone. And so how do you monitor your baby? You have to have your phone next to you all the time, and you need to be running that app in the background. But I learned that apps crash all the time. And if an app crashes, it can't warn you, I crashed because the app crashed. If you forget to plug your phone in at night or you plug your phone into a dead outlet or the cord doesn't work, rarely do we check that our phone is charging if we've plugged it in a routine that we're used to.

If your phone dies, there's no way for you to be alerted that you're no longer monitoring your kit. And I learned this the hard way because I woke up one morning, my son was a couple months old, and the app had crashed, and I rolled over and I realized there's no audio coming out of my phone. I don't want to sleep next to my phone. It's a problem for basically all of us. We shouldn't sleep next to our phone, but that's what I was doing. And so once that crashed, I did a little more research and learned you can't rely on a wifi based camera with an app on your phone. So I went out and bought an old school Motorola camera and an old school Motorola Monitor. So we had a dedicated, albeit very junky device that would tell us if we were no longer monitoring our kid, but we also kept a wifi camera because as my wife went back to work and we have babysitter and nanny's in the house, we want to be able to check in and you want some sort of record, absolutely anything got wrong.

Seven years later, no one has solved this problem to have the best of both worlds, a camera and a monitor that is a dedicated device that will alert you if it's disconnected or if it fails or any of those things go wrong. And I have wanted to build this since 2017 when it happened to us. And so what we built is a, I've got one of the monitors here. It's a camera and a dedicated 10 inch tablet that you can watch up to four different kids at the time, the camera and the tablet work without internet. They connect directly to each other, so you can use it if your internet goes down, if your wifi goes down, you can use it at a hotel or you're traveling somewhere that doesn't have wifi. Both devices also connect to the cloud, so you get the best of both worlds.

We built the device. Charlie, my co-founder, awesome guy, great dad, he's a dad of two young kids. We built the device that we'd wish we'd had when our kids were that age. We also did things that really prioritize security. And so the camera itself has a memory chip in the device. So all of your memory and all of your footage is on your device, and you can choose to save it down to your iPhone. Cute moment happens, there's something you want to say. You can save it down to your phone and manage it however you want to, but we don't have access to your memories and your feed. And that is a really important distinction because all the other wifi based systems are running through someone else's cloud. And if you are at home, your feed does not leave your home. Now, if you're out of the house and you check in on our Harbor app, of course it leaves the house going to you, but that's end to end encrypted and we cannot see it.

We cannot access it. And that is a fundamental distinction. We also are building both products, the camera and the tablet outside of China. And so from a security and a firmware perspective, we've heard a lot of concerns from parents about backdoor access from some of these wifi cameras that knows where they're built or where the clouds are, or if there's some sort of glitch in the firmware. So we feel we're really excited about that. And then the second kind of unlock, and the big moment for us is our camera and our tablet become the foundation for a remote night nanny platform. And the idea is to democratize access to sleep training. In Dallas, where I'm from an in-home night nanny costs three to 400 plus dollars a night in a city like New York or la, it could be 700 or more if you can even find someone.

And it's also a total crapshoot in terms of quality and reliability. It's an unlicensed, unregulated uncertified position. And I'm not suggesting we should be regulating night nannies, but it's just the reality that it's the wild west. You don't necessarily know what you're going to get. We work with some night nannies. They're incredible. We've worked with advisors who built night nanny companies, amazing people that have helped thousands of families, but most people can't afford that. And so what we are offering is for $20 a night, you get all night coverage where you remotely have a professional night nurse or night nanny, control the volume on your monitor and only wake you up when it's time for you to go in. So broad strokes, what does that look like? If you have a healthy four month old, it's about 10 minutes that you can let them fuss or cry before you go in, as long as nothing is wrong.

So they start to fuss or cry. Our team looks in remotely and says Nothing is wrong following safe sleep protocols, and they're not stuck, they're not flipped over, and you sort of let 'em fuss and cry for a little bit. 2, 3, 4 minutes goes by and they stop. Well, you won't wake up, but if that 10 minute threshold is reached then and only then we'll turn that volume on and send you through a reminder, Hey, your last feeding was at 11:00 PM We're trying to wait until 1:00 AM. Here's a reminder of how you do it. And so you bring that all night eyes on expertise and coaching and guidance remote. And so therefore, we can bring the cost down to like 95% lower than a traditional N nurse. So we've done this with about a dozen families. The results have been life-changing for the families that we've worked with. We launched our wait list in February, and we'll begin shipping the first a hundred units of our product this spring and begin shipping the rest of the products once we launched our presale late summer. So it's really

Brett:

Exciting. It's amazing, man. It sounds like the wait list has really taken off, so you get a lot of interest. Talk to me a little bit about, so obviously the focus has all been, I'm assuming, on the technology and the plan, and you're solving all the problems that parents of infants have. What's kind of the plan for how are you going to distribute this and promote it, and how are you going to get people interested? And maybe it's just taken off grassroots so far?

Kevin:

So we're doing a couple things. We did launch a wait list. Wait list is filling up, which is exciting. We'll convert that over to presale here in the middle of May is our current target. We'll be finalizing that shortly year one, it'll be almost all direct to consumer. We're in talks with a couple of great baby boutiques where we would have some sort of relationship with them that we're working through what that would look like. We have started from the launch of our website, building out really great clear cut value add content for parents. So if you have a question about sleep training and feeding and all the things that parents have in those first few months and years, we want to have the best answer available to you with unequivocal clear guidance. There's a lot of content out there, and a lot of it basically tells parents, you're the parent, whatever you think is best is best for the kid because they don't want to offend a parent with the idea that whatever that parent wants to do may be wrong.

Now, ultimately, parents are responsible for what should I do? What do I think is best for my child? You're the parent. But there are some things that are really just not up for dispute. Like kids need a significant amount of sleep for the first year of their life, and that will go down over time. Kids crave consistent structure and routine. And so every night before you put your kid to bed, you should try to do the same type of routine. Now, whether that's at six 30 or eight 30 because of your work schedule or whatever else is going on, yeah, you got to adapt, you got to make it work. But the idea that, well, I'll just put my kid down whenever they're tired. Well, kid doesn't know when they're tired. That's your job as a parent. And a lot of these websites will not offer that level of clarity.

Now, if you want to put your kid down whenever you want to put 'em down, more power to you. That's great. But parents seeking guidance and information and Hey, what are some of the best things I can do? Deserve to know science-based answers. So a lot of content to serve parents and create value. And then we've begun working with some great mom influencers. It's 2024 mom influencers carry a lot of weight. Super smart, super smart, no doubt. We're beginning to send some mom influencers product to try and share their experience. And it's cool. We've done about a dozen remote night nanny tests, and we're now working with some of these influencers to help sleep, train their kids remotely and have them share the experience of how much better it was to get that sleep. And then the last thing is kind of, I'll say a myriad of additional tactics.

Like we've partnered with a hospital to give a month of sleep coaching for free to all their parents who are going through and delivering at their hospital. We're looking to partner with corporations to offer it as a perk to their employees. We are forming partnerships with some PTAs and some mom groups. We've also brought in a number of obs pediatricians, lactation consultants to be advisors to the company. We've created the Harbor Council to provide guidance and insight where they can also write and share their perspective that they may not be able to share in their clinical setting. So all of those, I mean, it's early days. We officially launched our website just a couple months ago, and we began taking pre-sales in February. So excuse me, wait list in February. So early days, and excited to see, I mean, when I launched Mizzen and Main, Instagram was barely a thing. And now it's one of the most critical drivers of most consumer brands. So you got to adapt and find the right way to get the message out

Brett:

There. I love it, man. And you're scrapping, you're hustling. You obviously got great connections now because of your past success. But looking at all those ways that you're partnering with the people, the entities, the resources that have the ear of your customers, obs and hospitals and PTA groups, I think you're about to do a Facebook Live. As soon as we wrap up here, which I'm watching the clock, I got to let you go here just saying, doing a Facebook Live to a moms group. You're out there sharing the word, and that's what it's going to take. And yeah, man, I'm really excited, excited for you. Again, a little bummed that this wasn't around for at least one of the eight Curry kids. But yeah, really excited to watch this grow. So if people are watching and thinking, man, I'd like to get on that wait list, or I need to share this with my kid or family member, how can they check out? So we

Kevin:

Are online@harbor.co, H-A-R-B-O r.co. We're on all the socials at Harbor Sleep. I tweet at Kevin s lavell, and you can find me on LinkedIn. I've been posting some of the journey along the way. So those would be the best places to find us. And I think the other thing I'll say, just to put a bow on how we're launching and going about this, our focus, we are mission is happier parents and healthier families, one restful night at a time. And we want to lower the stress and anxiety of parenting. It's already an unbelievably difficult experience, the most stressful life altering thing that almost anyone will go through in their life. And so much of what's out there increases the stress, the pressure, the anxiety, the shaming, there's guilt, there's all of that. We want to try and lower that. And one of the ways that we're doing that is telling the truth about these baby biometric devices that are now prolific.

Some of these companies, some of the key players have created devices that are supposed to track your baby's heart rate, their respiratory rate, their blood oxs, all of these different things. Unfortunately, none of them are approved by the FDA and the American Academy of Pediatrics advises against using these devices because they're not reliable. They haven't undergone independent clinical tests. And that's why at the bottom of their websites, usually somewhat hard to find. There are huge disclaimers about do not rely on these devices to prevent, cure, diagnose any diseases. They cannot be relied upon for sids. They cannot be relied upon for R sv, but yet they market, Hey, as a parent, don't you want the ultimate peace of mind? Are you worried about your child's breathing? And that's just, it's shameful marketing, and it is not the,

Brett:

They're giving false hope, false sense of security,

Kevin:

Right? Absolutely. And this is part of why the American Academy of Pediatrics advises against it, because what you need to do every single night as a parent is be vigilant about safe sleep. Is the mattress the way it should be? Is it at the right height? Is it a tight fitting crib sheet? Are they in the right type of pajamas? Nothing else in the crib. That is how you protect your child in a physical sense. If you follow that, you've done everything that you can do and you've done everything that you should do. But when you strap a wearable to a kid, not only does it increase parental anxiety, it lowers the sense of vigilance that parents should have about what they should do every single night. So I have found this has been one of the things that people have been most responsive to in our early days of messaging. They're excited about our new product, but I just got invited on Cheddar News up at the New York Stock Exchange earlier this week to talk about why we are not going down that road. And it is a very different approach to baby marketing and parent marketing that we are proud to stand behind. We're not going to use the fear-based marketing. And I just want to make it easier to be a parent. I know what it's like. It's the most wonderful and stressful thing that any of us can experience. So let's make it a little bit

Brett:

Easier. I love it, man. There's this safety aspect you built in the privacy piece, which is becoming more and more necessary. We're all aware of, man, we don't really have any privacy. So making your product very secure. And then, yeah, there's just the good sleep portion of this, right? Because my wife and I always said, man, if we can get a good night's sleep, we can probably handle anything. But if you don't get sleep, man, there's only so much you can take. And so kudos to you, man. Really excited to watch how Harbor takes off. I'll be watching and cheering from the sidelines. So with that, Kevin, thanks so much, man. This was a blast. Appreciate the opportunity, Brett. Absolutely. And as always, thank you for tuning in. We'd love to hear from you. If you've not left us a review on iTunes, please do that. Or if you'd love this episode, which I'm sure you did, then share it with someone who needs to hear the harbor story, the mis and main story. And with that, until next time, thank you for listening. Alright, my man. Hey, that was

Kevin:

Awesome. Thank you.

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Episode 282
:
Emmett Kilduff - The Fortia Group

The eCommerce Valuation Landscape: Insights on Maximizing Your Brand's Value

In this episode of the eCommerce Evolution Podcast, Brett Curry sits down with Emmett Kilduff, co-founder and CEO of the Fortia Group, to discuss the current M&A climate for eCommerce brands and how to prepare your business for a successful exit. Emmett shares his insights from 25 years of experience in the M&A space, offering valuable advice for entrepreneurs looking to maximize their brand's value.

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Key topics and lessons discussed:

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- The current M&A climate for e-commerce brands and the impact of the COVID-19 pandemic on valuations

- Understanding the three main types of buyers (strategics, private equity, and aggregators) and tailoring your exit strategy accordingly

- The importance of focusing on bottom-line EBITDA margins and subscription-based revenue to increase your brand's attractiveness to potential buyers

- Common red flags and discount factors that can negatively impact your brand's valuation, such as poor manufacturing facility scores and supply chain issues

- The value of seeking mentorship and advice from experienced professionals who have successfully navigated the M&A process in your industry

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Tune in to learn how you can prepare your e-commerce brand for a successful exit and maximize its value in the current M&A market.

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Chapters:

(00:00) Introduction
(04:17) The Impact of COVID-19 on M&A
(08:19) The Current Climate of M&A
(10:00) Current Valuations and Factors of a Healthy eCommerce Business
(29:45) Common Red Flags
(31:48) The Value of Subscription Revenue
(36:59) Conclusion

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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, Bryan Porter and more. 

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Other episodes you might enjoy: 

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Transcript:

Emmett:

It's quite fluid, right? You want to be selling your business when the category is going well and to get the highest price. So timing is everything in business.

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're talking about m and a, something that I know every E-Commerce brand is either actively thinking about or it's in the back of your mind or it's your end game. And so we're going to be talking with a true expert in this space, especially DTC brands. And we're going to be talking about the current economic climate, where we've been on kind of an m and a rollercoaster over the last several years, and then what you should be doing to prepare and to get ready to maximize your outcomes, how to prep, how to think about this, how to be ready for anything. And so my guest today is Emmett Kilduff. He's the co-founder and CEO of the Fortia Group. I got to hear Emmett on an e-commerce fuel presentation. So tip the hat to Andrew Derian for Ka quasi making this introduction with that Emmett, welcome to the show, man. And how's it going?

Emmett:

Great to be here. Thanks for having me, Brett. It is going well. The light is at the end of the tunnel in terms of coming out of the doldrums of a tough two years for MA and e-commerce.

Brett:

Music to my ears, man. Music to my ears. So yeah, I heard your talk now a couple months ago. I loved it. It's not just your brilliant Irish accent, which I believe you could talk about anything and there'd be a certain number of people that would just listen to hear you talk, so that works in your favor, but that's not why I loved your presentation. Love the insight, love the perspective, and really it was helpful. It was helpful just to kind of frame how should we be thinking about m and a for e-commerce brands. So excited to dive in. Yeah,

Emmett:

Likewise. I can't operate an e-commerce brand. I wouldn't know what to do, but I do know m and a, having been working on it for 25 years and really enjoy working with interesting e-commerce entrepreneurs.

Brett:

Yeah, yeah. Super cool. So we're going to kind take this path of, hey, let's talk about where we've been and what we've experienced. I think your perspective on that will shed some light and set the stage a little bit. We'd love to talk a little bit about the current economic climate as well. What are we expecting? You talked about the light at the end of the tunnel. I think that's what everybody's feeling. And then there's always a few things it feels like, well, okay, is the rug just going to be pulled out from under us again or is there really a light at the end of the tunnel? So we'll talk about that and then we'll get into, yeah, how do you prep? How do you get ready? How do you make the most of your m and a activity? And so let's dive in. But before we do that, just a quick background. So you said 25 years in m and a. Walk us through that, just kind of the 32nd version, and who is the Fortia group?

Emmett:

So actually when I finished my degree in business and law, I selected a master's in e-commerce. This is way back in 1999. It was the first master's of its kind nearly globally. So I've always had an interest in e-commerce. At the time, it was more about the.com boom and then ultimate bust, and I wanted to get a piece of that deal flow. So I joined an investment bank called Credit Suisse, who had a banker called Frank Coron, a legend in the tech world. He was doing all the tech IPOs at the time, and so I joined that firm to get involved in the m and a and corporate finance deals. The Foria group then is, I saw a gap in the market a few years ago, Brett, to bring a Wall Street level of service and approach to smaller e-commerce. We're not a broker, we're not a listing website. We're trying to genuinely bring Wall Street. I worked at Morgan Stanley, one of the best firms in the world, best m and a firms in the world alongside Goldman Sachs and JP Morgan, and that's what we're trying to bring to your listeners.

Brett:

Yeah, I love it. That's awesome. So let's do this, Simon. Let's kind of walk through where have we been through this Covid madness, kind of lay that, not that we want to relive all the glory and the pain and suffering, but where have we kind of been on an m and a climate or m and a trajectory that's got us to where we're now?

Emmett:

Yeah, so I guess during Covid m and a was relatively easy. I remember one of the deals we had, we got letters of intent from several parties within five business days. In retrospect, that's just crazy. It's madness. Acquirers should not be moving that quickly, and entrepreneurs should not be looking for offers within 30 days. If you spent five years building a business, why try and rush an offer within 25 business days or 30 business days? One should be taking their time to get the right offer. So it was crazy. I think the peak was December 21. That's when some FBA businesses were going for seven x, which is crazy Amazon and DTC businesses, but lots of them are going for high teens. I don't think we'll get back to those levels. What's happened in the interim is global m and a across all sectors, one to two years ago was at a seven or eight year low and all these things, common cycles is the third cycle I've seen, and thankfully there's a great chart by Goldman Sachs, which shows that m and a has never declined for more than two years in a row.

It's never hit three years.

Brett:

Interesting.

Emmett:

So we've had our two years, we've had 22 and 23, we've had the declines in m and a volume. It should

Brett:

Be the bounce back year, then 2024

Emmett:

Based on prior data and with interest rates coming down, that should be the key catalyst to fuel cheaper debt, which is obviously key to drive m and a.

Brett:

And it is interesting. I'm actually, I'm looking at that chart now because sent it to me, you kind of see this trajectory of a few years, there's a peak, then it drops off, but a couple years and then it builds back up again. It's quite a pattern and interesting to be there. I really like that perspective that hey, we shouldn't expect those valuations to be what they once were. So if you're holding out for that, Hey, I've got an FBA business, I want to be at the seven to eight x multiple, or I've got a D two C brand that's doing okay and I should be at a 13 or 15 X multiple, that's probably not going to happen, right? There were so many unnatural things going on during the covid time period, the runaway valuation of homes. I remember we sold our used four runner. It was like three years old, we're just going to upgrade or whatever. We made money. The used car market was so crazy. I pocketed quite a bit of cash by selling a used car. When is a used car ever in investment? There's just so many unnatural things there, and I think we saw that with valuations as well.

Emmett:

And I think in this immediate six to 12 months post the correction, a lot of entrepreneurs didn't want to hear any of that. They still thought that they could get those high multiples and well, unless you were living under a rock, you eventually had to readjust your expectations. If you read the Wall Street Journal or the press, the markets were tough for acquirers all around the world. So I think today most entrepreneurs have realigned their expectations. There are still plenty who are waiting for 25 to do a deal, and we love working with entrepreneurs who don't want to exit necessarily today. We like to help prepare over a long period of time because when interest rates do come down, you would expect valuations will only go one way. They will not go back to 2021 levels, but if anything, they will increase.

Brett:

Totally makes sense. It's almost taking two years to reset some expectations. But I think most e-commerce brands, most agencies, most people in the space that I know, we've got our head in reality a little bit more right now in some ways, painfully. So. Let's talk a little bit about then, what are you seeing with the current m and a climate? Or maybe we just step back and say, Hey, what are we seeing in the economy in general right now, and what's leading you to say we're seeing the light at the end of the tunnel?

Emmett:

Yeah. Well, I think the m and a chart has proven that in history there are cycles and we should be towards the end of this cycle. So that's great context in terms of the here and now. Unfortunately, light head tunnel could have been sooner. We thought interest rates were going to decline in Q2, it's more likely to be Q3 or summertime due to inflationary figures in the states for the Fed and around the world. But the interest rates do look like they'll come down over the summertime, which is the ultimate catalyst to drive markets. So

Brett:

Cheaper debt just fuels buying.

Emmett:

Yes, and it increases the confidence at board level for corporates to do more deals for private equity to do more deals. So yeah, if you correlate interest rates versus m and a volumes, there's a relationship. So we're getting close, and if we were to talk again post Labor day, it'd be really interesting to look back at the impact the lowering interest rates is having, and I think we'll be set up for a good H two if not good fall.

Brett:

Yeah. So what are you seeing now then? So you're helping e-commerce brands right now, and you have throughout the peak and valley of Covid and post Covid. What are you seeing now? What kind of valuations are we seeing? What is the sale process like right now? What are you experiencing

Emmett:

In terms of valuations, the range for DTC LED brands, BigCommerce or Shopify LED brands? It's a little bit unhelpfully wide only because we're seeing such a wide range of quality. So today it's anywhere between, and excuse me, these are preferred profitable DTC LED brands. It's three X EBITDA up to 12 x ebitda. That's the typical range. Now, there are exceptions to the downside for distress and the upside if the stars align, and it's a massive business, a hundred percent subscription in an amazing category, that's a flavored du jour, but most is sort of three to 12, and there's a lot centered around the median. The median valuation for listed companies in the DTC space today is 7.1. So a lot of people would argue that unlisted private companies should be at a discount to the listed liquid big corporates, you can counter that by saying, well, if we're faster growth, et cetera, then you might want to premium. And we could go back and forth all day on that. But somewhere around 7% is doing quite well at the moment. Seven x, excuse me, for if you're getting seven x, that's doing quite well. We sold a business last year called J Flex Fitness for 7.1 times. It was a business out of Utah, DTC, doing single digit revenue, good growth, and it got 7.1 times and the entrepreneur was delighted.

Brett:

So single digit year over year top line growth,

Emmett:

The growth was double digit. Yeah, double digit growth. Single digit million revenue in terms of quantum.

Brett:

Oh, got it, got it, got it. Okay. Yeah, great, great. Makes sense. So if we're in a position where maybe it's a little bit of a fire sale or maybe distress is too strong of a word, but not a fully healthy business, then we're looking at maybe the three x, if we're going wild on subscriptions and crazy growth and super high profitability, maybe that 12 x, but around circling around that median of seven x

Emmett:

Is yeah, it's for a good business, it's for a very good business with hybrid purchase rate, and it's a brand with a capital B, not a product, all those metrics, and it's a competitive auction. Seven X is doing well today. Great,

Brett:

Love that. So let's talk about what makes that a healthy business. So to get in that median range or beyond, but let's not get greedy right away to get into that median range. What does our p and l need to look like? What does our EBITDA need to be? And then how do you look at this? Because you know how buyers are looking at this?

Emmett:

Yeah, well, I think before you get into things under the control of the entrepreneur, there's a few things. There's obviously the markets which you can't control, but there's also the category. So some categories are more interested buyers at different times. Right now, pet baby beauty are growing, they've high revenue growth and are put into price increases, whereas maybe home and garden isn't the category of most favor today. So you really want to, it's quite fluid. You want to be selling your business when the category is going well and to get the highest price. And so timing is everything in business. If you look at what you can control in terms of your own business brand metrics, the first thing is the quantum of revenue. How much revenue do you have? The more revenue you have, the more likely you've earned the right to sell to the three different types of institutional buyers who are number one strategics, sometimes gold corporates. Number two, private equity. Number three, aggregators. We talk about aggregators a lot in our world, but they only came into existence about four years ago. It's crazy. Before that, it was the other two. So if you've got big strategics won't look at a business unless it's doing in some cases 50 million or more. So now there are big and medium size, big medium and small strategics. Private equity won't really look at something unless it's doing at least 10 million. That's small private equity. So

Brett:

3 million top line and P is usually looking for the 3 million EBITDA or higher generally, or are you seeing some that are okay with two?

Emmett:

Yeah, yeah. No, most need to see a good quantum around three or more. Yeah, to bother. There's two types of private equity deals. There's platform deals and Boltons. So if it's their first entry into a category, it's a platform deal on top of which they'll do Bolton. So the platform deals need to be bigger, bigger than what we've just discussed. They need to be IT league tens of millions of revenue in, say if it's their first foray into pet on the back of which they might do deals that have less than 3 million EBITDA

Brett:

As a Bolton, right? Because you got a little bit of the multiple arbitrage. So now you're taking that 1 million EBITDA business and bolting it on and getting to a bigger thing to the platform, and now you're getting that increased multiple, which is certainly part of the game. Love that you backed up to the global. So let's just touch on a few things there and then we'll dive back into the specifics. So you said Pet Beauty and baby are kind of having a day right now, home furnishings, outdoor, not so much. Can you talk about maybe some of the reasons why and then anything we should consider in relationship to

Emmett:

That? Well, I think during Covid we were all stuck at home and we started to refurbish do some basic jobs in our house, in our garden. And so at that point in time,

Brett:

Lowe's and Home Depot breaking records, just crushing everybody's spending. That sty

Emmett:

Money there, like outdoor barbecues and outdoor heaters did incredibly well. But now that we're allowed out, again, beauty is huge During Covid, a lot of us bought pets, so pet supplies and accessories are huge and there's a lot of macro trends tailwinds there as well. It's fluid. So we work with a company called Grips Intelligence, who I think have amazing consumer transaction that data to identify the latest and greatest trends and movements. And we work with them to stay on top of the pulses, which categories are interesting or not interesting because we obviously want to try and invest our time into categories that are ultimately going to sell and

Brett:

Super interesting. And just one question here related to that data. We just talked about inflation. You mentioned that recently we're expecting some rate cuts here in q2, inflation, a little bit hotter here in the US than the Fed had hoped, like 3.2 or whatever it was. And so going to hold off on rate cuts. Are you seeing anything in the data that suggests inflation, even though it's been coming down, and I saw a chart you sent that, hey, inflation has been coming down steadily over the last what, year and a half or whatever. It's still high. And are we seeing how that's impacting consumer purchase behavior, especially with D two C brands?

Emmett:

Well, I think it's impacting growth rates at a very high level back of the envelope, Brett, it's impacting growth rates of e-Commerce Inc. And around the world. I think the like for likes have got easier, got over the comparing it to the covid years, but till inflation comes down and the interest rates come down, consumers are being cautious, still relatively cautious and are not spending as much as they might. And that's intentional. That's what the Fed is making happen, they're hoping

Brett:

For.

Emmett:

Yeah, yeah. They're doing a good job with that and hopefully will come out of that period of economic history or cycle in summertime as we mentioned.

Brett:

So back then to the specifics. So we're thinking about these three groups of buyers, right? Strategic PE and aggregator. It is crazy to think a little bit pre covid, like aggregators were barely a thing or not on anyone's radar. Is it useful to, as you're considering this process as a D two C brand, considering who might I be selling to most likely and what do they want versus what another buyer might want? Is that a useful process?

Emmett:

Yeah, absolutely. I mean, the best laid plans only survive contact with the enemy, right? Great expression. There's no point to developing your business and your exit strategy in isolation of the buyer will be or what they want. You might know what they want. They might want something you hadn't thought of. Different buyers look for different things. So a strategic will have much more synergies, revenue and cost synergies that can be brought into the equation. What

Brett:

Are they usually paying? A little higher multiples as well, right? Strategics usually pay the most in general,

Emmett:

Absolutely, but you have to be big enough to earn the right to pitch to them. But thinking through how their business is growing and what rationale, strategic financial and operational they might have for a deal is really important to find that right fit. It's slightly different with private equity, particularly if it's a platform deal and not a bolt on, which is more like a mini strategic. It'll be more financial than strategic in thinking. It could be about backing individuals to spearhead future m and a and give them the capital to do so. And then aggregators is different. Again, aggregators, it might necessarily be about strategic rationale. It might be just pure more financial and so on. So yeah, I bring it back, and this is a bit basic, but I bring it back to relationships, human relationships and marriage flirt date marry. You don't get married on your first date. You identify a potential partner, you understand how they work and how they think, and you try and flirt date, marry and see if there's a good fit there. That takes time and you need to identify who he or she might be and work towards a marriage.

Brett:

Yeah. Okay. So let's just pretend I've got a D two C brand and let's walk through how you would maybe advise me on who I should be thinking about in those three categories and maybe how I should be prepping my business. So let's say that I'm in the fitness apparel business. Let's say that I've got a 7 million top line and a million and a half in EBITDA or something in that range, or maybe call it anyway, let's say a 20% margin, so maybe 1.8. What would you be advising me on? How can I be getting ready for one of these three categories of buyers?

Emmett:

So the first thing we would do is what we call a valuation audit, which is a four week project where we look under the hood of the business in a lot of detail, look at all the data, all the financials, and we present back to the entrepreneur about how he or she can maximize the valuation for their business when they ultimately hit the green light on an exit process. And that includes thinking about who the buyers might be and what they might want and what they might pay for. So that's the first step. One is evaluation order. Step two then is flirt tape marry. So before we start flirting, we work with the client to identify all of the targets in those three buckets that you've mentioned. So let's take that example. There are plenty of DTC aggregators around the world that would take a look at that size business. And actually DTC aggregators are doing broadly better than FBA aggregators Brett,

Brett:

Which makes sense.

Emmett:

Some people just sort of say all aggregators are in trouble, which is not the case. There are some FBA folks doing well, but DTC generally are doing better. So I wouldn't discount that they might not ultimately give you the best multiple or the highest multiple, but you never know from a private equity perspective. The task then will be to analyze private equity firms and deal flow for who's got a bigger asset, a bigger platform asset that wants a bolt on, and that takes time. And then for strategics, it's too small to go to Lululemon with, so we need to identify the smaller competitors or folks in that field, or maybe an adjacent field that want to get into that field, or maybe someone in Europe wants to get into the states or maybe someone in FBA that wants to get into dtc, right? So there's all those things to go through.

Then we have our target list that we put into monday.com in those three categories, and then we start flirting. And flirting to us is a one page teaser. It doesn't include any sensitive information, but it includes enough to sort of get on the radar and get some feedback from folks, especially the oil tankers, the strategics who move slower to gauge whether there's genuine interest or not, and be quite frank saying, look, this deal's coming down the pipe in due course. What do you think? Does it interest you? What would you need to see for it to do? What should it do differently if to make it more interesting to you? If we have a two year window, we can make those changes or consider making those changes, and then we ramp it up. There you go, from flirting to dating and ultimately a formal process which gets you your marriage.

Brett:

That's awesome. Let's dive into the finances just a little bit because one thing that I've really seen, and this has become very clear as an agency serving D two C brands and we're all about accelerating growth. We want to take a good brand that's doing well and has some traction and just help them accelerate profitable growth. There was definitely a period of time when we would've leads coming to us and they're like, Hey, just we hear good things about you. Just do your thing. Just go, just grow the price. You quote, fine, let's just go. There's definitely been a shift over the last year and a half or so where e-commerce brands are saying, Hey, we got to be profitable, so we're focusing on our numbers, we're evaluating every expense, so we're looking a little closer at all our agencies. And so we've just been seeing this, right?

Brands are getting more, sharpening their pencils and looking at how do we become profitable. So can you give some recommendations as a D two C brand is looking their p and l looking at their balance sheet, what are some of the areas where you'd say, Hey, you should be in these ranges, these ranges for sg and a and these ranges for payroll and this kind of range for ebitda. I know going to vary. I know it's the buyer's going to different groups of buyers can have different perspectives, but what ranges or what guidelines would you give to somebody?

Emmett:

Yeah. Well, the first thing I'd say is, again, we want to come up a level because the buyers want different things at different times of the cycle. So pre correction, two years ago, people wanted to see revenue growth nearly at all costs. Right now, they want to see bottom line net margin is the number one thing. In two years time it'll probably be back to revenue. We'll have forgotten all the pain. And it's a bit like which sectors are categories come in and out of favor, he, baby beauty, et cetera. You need to sort of skate to where the puck's going to be if you want to sell today, its bottom line is the answer, Brett, as in EBITDA margin. That's the only thing I really care about. As an MA advisor in two years time, it's most likely interest rates have come down the world's normalized.

It's probably back to revenue growth. So that makes it tough for an entrepreneur because you actually need to be on top of the data points and be fluid. So if you're selling today, I would say it's not, it's not necessarily about gross margin or sg and a, it's about corporate EBITDA needs to be at least 15 to 20%. Got it. That's what I need to see. And a good trajectory not declining, obviously revenue growth, I'd rather see lower revenue growth and net margins, even incremental from 15, 16, 16 and a half 17. That's a good place to be today, but if you want to sell in two years time, that mightn't be the right answer. So you want to be spending more for agencies like yourself to chase growth and ideally have a good net margin, but maybe give up a little bit on the net margin so that you can chase revenue growth. It's tough, isn't it? Because it's fluid. It

Brett:

Is. It is. So what advice would you give to the DC brand that they've hit a blip, they've hit some bumps in the road. And so a few years ago it was almost unthinkable to have year over year decline in revenue or year over year declines, but now running into a lot of businesses, a lot of businesses are hitting us up that that's exactly what they've experienced. So it definitely makes sense that top line, slower growth or whatever is less of an issue than EBITDA declining. But how are you coaching a brand? So say within the last 12 months of that magical trailing 12 period, they've had some declines declining revenue and or declining ebitda. What advice are you giving them?

Emmett:

Yeah, my advice is depending on other factors, I would not go to market until you've got a clean 12 months and you're back growing again. Because otherwise it's a defensive conversation. If you're on the back foot explaining something negative like that, then it doesn't help you position the whole exit in the right way. So would, if you can hold things being equal personal scenario, business scenarios, wait until you've got better for

Brett:

Got it. So get that as much as you can get that trailing 12, clean, healthy, moving up into the right, you're going to be way better off. I've heard talking to a few other m and a advisors and m and a experts that as long as there's a narrative you can explain just about anything, but I like the way you put it. It's going to immediately put you on your defensive or on your back foot or from a posture of defense rather than posture of strength if that trailing 12 is not clean.

Emmett:

Look, especially in a tough market overall, it's a buyer's market right now today as we do this podcast, Brett. So yeah, the buyers have a lot of interesting deal flow and you want to package a positive story, and there's no better way to do that than having graphs that go that way across your

Brett:

Up to the right baby, up and to the right. Yeah. And so let's talk maybe about some common red flags or maybe discount factors would be a way to talk about this, but as you are diving into the numbers, you're doing your valuation of a D two C brand, what are some of the red flags or discount factors you're looking for?

Emmett:

If I think the biggest red flag to us from a due diligence perspective was when a US acquirer sent someone to order the manufacturing facility of it in China for a brand, and the score was 3.3 out of 10. It was the lowest score the acquirer had ever seen

Brett:

Of the manufacturing facility

Emmett:

Because they didn't live up to fire standards, human resources standards and other things, which I won't go into, but that killed the deal G, the investment committee at the choir said, under no circumstances do we want to be related with a business that might get us on the front of the World Street Journal or whatever. And that's one example of a red flag, that type of thing costs 700 books for an entrepreneur to go and do now to check how their manufacturing facility scores. If it's low, you change it. If you have to change it, you have to have a few quarters where you see everything washed through and business practice work. And so you've delayed your sell by nine to 12 months. So do that now so that you're ready for sale in a year or two years and diversify your supply chain. That's one example of a red flag. And there's 10 of these things that things that we've seen over the years that when we take on a new client, we try to ensure that they don't have these potential deal breakers.

Brett:

Yeah, totally, totally makes sense. What are some of the things, and I would assume that falls into this category, the manufacturer scoring so low. Are there any kind of surprising things where when you do your due diligence, you bring this to a D two C brand, they're like, whoa, I never even thought of that. That wasn't even on my radar. That would be an issue for a potential buyer.

Emmett:

Well, maybe on the positive side, a lot of brands, and it sort of surprises me that they're surprised when I explain, when we explain how much more valuable subscription revenue is to non-subscription revenue, and by subscription I mean proper recurring annual subtype revenue, not repeat purchase, which is also good, right?

Brett:

Good sign too, isn't it? Yeah,

Emmett:

Yeah, yeah. Proper subscription revenue, that's a game changer from a valuation perspective. And so when we say that to some folks, then they start to see, okay, well how can I double down on that and increase that stat? That's I

Brett:

Double my subscription rate. Yeah.

Emmett:

Yeah. And that's a massive impact on valuation.

Brett:

So what are some specifics there? So in terms of real subscription business, where does that start to get interesting? What kind of subscription rates or what kind of percentage of revenue or how does a buyer look at that, where they're like, whoa, this is a healthy subscription business?

Emmett:

Yeah, I mean, there's a supplement business that we're in contact with that is a hundred percent subscription, amazing. There's a business in the states that we're speaking with, and it has B2B contracts that are one year at the moment, and we're encouraging them, well, we're giving pretty strong advice that they should try and move those to three year contracts, which allows you to get a much better multiple on that portion of revenue when they come to market. I mean, it sounds so obvious, but a lot of the businesses don't think strategically. They're so busy just doing their day to day. I mean, an interesting point, Brett, when I worked at Morgan Stanley, every company we spoke to had a board at a cap table, had big shareholders, a lot of e-commerce folks I speak to, especially in FBA, because they're mom and pops, but even in DT dtc, they don't have boards, they don't have institutional shareholders.

So in a lot of ways they haven't been given mentoring or advice or they don't have a sounding board to sort of talk through a lot of the things, the advice that we bring to the table, whether it's working towards subscription or higher value income, et cetera. And I think mentoring and advice is really key. I'd encourage your listeners to, if they're in a pet business, reach out to someone who's sold a pet business and give here or she some share options to help guide a successful journey. We don't want every entrepreneur making the same mistakes as other entrepreneurs. That's not efficient. I'm rambling a little bit, but I think that's important. Advice and mentoring is important.

Brett:

I love it. And that's really what we've been on the m and a journey for about 18 months now, talking to PE groups and other agencies and strategics, and partially because we may want to be a platform and build something bigger, but also because all of our clients are considering m and a at some level, it's either the end goal three or five years down the road, or they're actively pursuing it or had a number of clients where they've partnered with PE groups and now they just buy a new business three or four times a year. And we get to help with that. We get to help grow the new business or the Bolton, which is super fun. And so, yeah, it's been a really interesting journey. Back to one more specific on the subscription business, because this is interesting to me. So we got the supplement brand that's nearly a hundred percent subscription. What about another supplement brand that was at 15% subscription rate or 15% of revenue is coming from subscription. Where do they probably need to get that to where that starts to become a real powerful narrative?

Emmett:

Yeah, it is a great question. And it's not as specific as saying 35%. I think it's at least majority with trends showing that you can convert the rest to subscription. In theory, I subscribe to a protein manufacturer, but they give me the option to do monthly or annually, and I always just go monthly just because sometimes I don't like being stuck into a long-term contract. If they said annually, and that was my only option, I'd go for it. I really like the product and then my revenue be worth a lot more to them from an exit perspective than not. So that's an interesting business question for folks and for people like yourself to think about.

Brett:

Yeah, we would shift, how do you shift the subscription model so that it doesn't tank conversion rates or take rates on the subscription? How do you keep people longer? All those things become important, but not just important to the health of the business in the short term, but it's going to have a pretty big impact on multiples in your ultimate valuation. Exactly. Which is really exciting. So Emmett, as we wrap up, want to talk about how folks can reach out to you, because I think it's become very clear to people that you know this game and you've done the Wall Street level, you work with D two C brands, you're just a wealth of knowledge and you can guide someone through this process. Before we talk about that though, how people can get in touch with you and stuff, is there anything else that we should have talked about that we didn't like? Questions that are coming up right now, or as you get calls or outreaches from D two C brands, what are they most wanting to know right now? Any hot topics we missed?

Emmett:

The most common question I get asked by entrepreneurs is when aware of valuations, which we've covered. My biggest piece of advice to folks is prepare early. If you fail to prepare to fail, please start to think early on about your strategic options and roadmap. And that's what s and p 500 companies do. That's what all companies with big aspirations should

Brett:

Do. Yeah, and what's so cool about you just beginning the m and a journey, and I think talking to someone like you early on is at a minimum, you are going to run a better business. You're going to start to view your business like an investor would, and you're going to make better decisions, better adjustments, you're going to improve the health of the business. Whether you decide to sell in 12 months or 36 months or whatever, you're going to run a better business.

Emmett:

And there's a great phrase in m and a that the best businesses get bought, not sold. So you want to make your business as viable as possible. And to do that, you need to understand how buyers work and have everything ready and how you know how to do that if it's your first rodeo. Yeah,

Brett:

So true. So emit then as people are listening, they're like, Hey, I got to talk to 'em and I need to talk to the Foria group. I need to kind of begin this process. How can they best connect with you?

Emmett:

Sure. Our website is www.theFortiagroup.com. Please email us at inquiries at the Fortia group do

Brett:

Com. That's FOR Tia a Fortia group, so the fort group.com. We'll link to everything in the show notes, of course, but do check them out. And Emmit, this has been a ton of fun. Really enjoy talking to you. I've loved getting to know the m and a space a little bit over the last couple years here or so, and you're one of the beacons, the shining lights in the space. And so thank you for taking the time and thank you for sharing your insights.

Emmett:

Yeah, thank you, Brett. Pleasure.

Brett:

And 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? And did you like this episode? Do you know someone who's considering selling their D two C brand or their agency or their whatever? Share this episode with them. That would mean the world to me, and I know probably help your friend as well. And also, if you haven't left that review on iTunes, we'd love that as well. And with that, until next time, thank you for listening. All that's a wrap. Hey, Emma, that was perfect, man.

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Episode 281
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Sean Reyes - Shock Surplus

800% Growth in 4 Years - While Quitting Amazon

We've all dreamed of quitting Amazon. And it's hard to argue with 800% growth in 4 years. 

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That's why I was so excited to sit down with Sean Reyes, founder of ShockSurplus.com. I wanted to discuss Sean's journey of growing his business by 800% in just four years, his decision to break up with Amazon despite it accounting for 70% of his revenue at the time, and the importance of thinking like a media company.

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While most brands should NOT quit Amazon, some should. And his thoughts around margins and building content are valuable for all eComm brands. 

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Key topics and lessons from the episode:

  • Sean's strategies for managing margins and advertising costs in a highly competitive environment with intense margin pressure.
  • The value of creating authentic, informative content on YouTube to build trust and authority with customers.
  • The decision to move away from Amazon due to high fees, lack of customer interaction, and increased competition on listings.
  • The importance of thoroughly understanding sales tax nexus laws to avoid costly mistakes and legal issues.
  • Sean's advice for eCommerce store owners looking to diversify their revenue streams and uncover new opportunities for growth.

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Quotable moments from the episode:

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"We've got to be more like a media company that sells parts rather than a parts company that does media. Because I always felt like once you have the experience of producing valuable content, you could direct it anywhere."

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"You need to get behind the product, use it to drive proper recommendations, and create a customer experience that no one else can give."

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Chapters: 

(00:00) Introduction + Current Challenges for eCommerce

(05:19) Maximizing Your Marketing Budgets

(17:12) The Power of Organic Content & YouTube

(21:41) Crafting Authentic Recommendations

(23:31) Creating Value

(31:59) Consistency is Key

(34:40) Breaking Up with Amazon 

(42:54) Leveraging TikTok

(45:26) Conclusion

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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, Bryan Porter and more. 

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Other episodes you might enjoy: 

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Transcript:

Sean:

I look back and I'm like, I don't believe the numbers. I don't think we were ever profitable on Amazon as a retailer with 25 points, 30 points, maybe of gross margin. Amazon's eating most of that.

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 have a merchant success story. We're talking to Sean Reyes, the founder of shock surplus.com. Such a unique story, so many lessons, so many nuggets, so many bold moves that Sean has made, and some really unique angles that I think you guys can learn from and apply to your business. And so we're going to dive right into his story. But Sean, first of all, thank you for taking the time. Welcome to the show, and how's it going? Thanks,

Sean:

Brett. It's going. It's going. A lot of other people is going right now. It's a war in retail and

Brett:

It's such a war, no doubt. Yeah, I remember when I first was introduced to e-commerce, so back in the early days I did SEO and I did other marketing. I did local TV and radio and stuff like that. When I got into working for e-commerce companies doing mostly search marketing, I remember someone saying, this is the big leagues. Everything, every dollar counts, every little detail matters. Like you win or lose in the margin. The tiny things, remember this quote from General MacArthur, Douglas MacArthur? He said, in war you win or lose, you live or die. And the differences in eyelash, right? So this tiny, and I was like, man, e-commerce is intense, but I love the challenge of that. I love the challenge of being in the big leagues, but dude, if anything, and that was 2015 or something like now, I would say things are even harder than they were, more opportunities for growth. So I think it's a great time to be an entrepreneur, a great time to be in e-commerce, but just difficult man. Tough sledding for sure.

Sean:

Yeah, the margins, everyone's been paying attention to margins a lot more in the past couple of years. I remember towards the end of 2019, going into 2020, I was really just starting to get a lot more concerned with margins at that point. The economy has just been growing for 10 years at that point, or just knowing the cycles of society, it's like you're expecting some kind of a downswing. So paying attention to margins, I think a little bit ahead of the curve has helped us out a bunch. But yeah, it's still number one priority for us.

Brett:

What are some of the practical things you do to watch margin to protect your profits, your contribution margin, things like that? Any specific tips or suggestions that you do?

Sean:

Our cost structure is pretty, we're extremely lean. We've got about 15 full-time people and we're doing low eight figures in sales, so highly efficient. But even then, margins are still razor thin. And so one of the things we've been really keeping an eye on is advertising cost and how that plays out. You can swing two to three points of your total income in advertising cost in a year, and so you don't watch that one bad month. How long does it take to claw back that one bad month to the bottom line? So advertising cost is the biggest thing. I'm very much, I definitely wear the hat of CMO, director of marketing here at Shock Surplus and just the brand voice. And so I'm always just live and die by our marketing and our ad spend. We are heavily supported by ads do support a lot of our sales. We're about 60 40 right now. I'm trying to really flip that balance to where

Brett:

We're 60% supported by ads, 40% by organic, organic or repeat.

Sean:

Yep. So I'm trying to flip that balance and really have the business a lot more supported by our organic traffic and kind of those sources.

Brett:

Yeah, I love it, man. And I'm a longtime ad guy. I've always loved the ad business. I was fascinated by it as a kid watching TV commercials. Then as I kind of grew up, worked in tv, worked in radio, I love it, but I would be the first to jump on your side of the table and say, yeah, man, but it's got to produce predictable return and in a few points, one direction or another can make a massive impact. So we can't not spend, but we also can't overspend because that leads to negative consequences as well. So any insights there? I'm sure a lot of what we look at is what a lot of people look at, but any insights on what are you measuring in terms of your marketing dollars to make sure you're not spending too much or too little?

Sean:

Yeah, our biggest thing, one of the big things for us is so many of our customers are outside the 30 day attribution window because we have very high ticket sales in the thousand dollars, $2,000, $3,000 window, and we're talking to that customer for months, sometimes even years. And so when you're trying to reach those customers and understanding a lead gen campaign from Facebook, how long that takes to pay back and how that translates to direct search and some of those things. And so we've been really trying to make a very, very slow migration, not to rock the boat too much, but trying to shift a lot of out of bottom of funnel stuff into more middle and top of funnel. So we really look at a blended ROAS over a long timeline. We've also breaking out our spend a lot more specific in terms of brand line, like a very specific type of product and tracking those sales over a 90 or 20 day window.

That perspective and that kind of tactic has proven to lift our A OV lift specific sales and new segments for us over the past couple of years. So that's been working extremely well for us, especially trying to, we're really trying to get out of giving Google all the freaking money in the bottom of funnel and Google shopping. They're the only ones winning there, otherwise just we don't want that price shopper. So we're really trying to move a lot more of our marketing dollars towards to win on brand and to really go after a lot higher a OV customer that we call our ideal customer profile.

Brett:

It's super smart. And listen, I love Google Shopping. This is one of the first things that I did to help our agency grow, and I wrote The Ultimate Guide to Google Shopping that Shopify published back in 2016 was huge for agency. But again, I would agree with you. You can't just be bottom of funnel. If you're just bottom of a funnel, then you are never really going to grow and you potentially just compete on price. And then yeah, you're maybe giving Google too higher percentage

Sean:

Unlimited. Yeah, unlimited competition. Every single day there's a new competitor that's just bidding on blue text on a screen, right? Yeah. It's just losing game's.

Brett:

Such a good point. And we're going to dig into a couple of things that are really unique for you, Sean. One is the way you approach organic content, and we would love to keep an eye on how you get from 60% ads and 40% content to the reverse of that. And so you do some really unique things that are going to unpack that you broke up with Amazon, so we're going to unpack that as well. And then you're going to tell that bold story, which is amazing. But I also liked the fact that you pointed out, Hey, this was a pretty long sales cycle and what I will say, it's clear in this case you're selling shocks and someone's maybe selling out $4,000 for new shocks for their truck or whatever their Jeep, and they're going to research that. They're going to think about that.

They're going to maybe make a couple phone calls, they're going to talk to people in their local market and check things out before they buy. But one thing we're seeing even with things like CPG or Simple Apparel or something is that there's a number, there's a cohort of new customers take longer than you think. You look in your ad platform and everything's going to show maybe not for you guys, but for other brands it's going to show less than a week or less than a day. But a buddy of mine, Jeremiah er from No Commerce k and o, they do post-purchase surveys. They did this study with classic true classic tees, and they found that even 30% of purchasers of true classic tees had waited three to 12 months after hearing about the offering before they bought the T-shirts. Just simple white, black T-shirts, right?

So there's always going to be a percentage there. I'm sure that the numbers are way more dramatic for you for people that last wait a lot longer. But yeah, understanding, hey, we got to feed the funnel a little bit, but we still got to measure because we can't just spend a ton of money and hope, fingers crossed that it's going to come back in a few months. So what are some of the things you're doing? So you look at a longer window for roas, how else are you measuring to both give the media time to close but still holding it accountable for results?

Sean:

Yeah, I would say we're not even doing a great job on measuring that. We do post-purchase survey and a lot of our $2,000, $3,000 customers have basically pegged at six months or more for the research, a lot of anecdotal stuff of, I remember looking at our live chat and a couple of weeks back I saw that one of the first conversations with one of our customers was two years ago in March. And so it's great to be able to stay top of mind with these people because we backtracking a little bit, we're just a retailer. We're selling so much of what other people are already selling. We don't have our own brand. That's the only place you're going to get it is from us. We don't really ever have exclusivity deals. And so for us, it's just been building brand from the very beginning of education and trust and knowledge and experience is our only product, and I feel like that's what we do the best.

So, but as far as measuring the long cycle, it's been one of our biggest challenges here in order to, we know it happens a long time, but through for the listeners, we grew 800% in the past four years. And so it's crazy. We've been just trying to hold on, not hold, yeah, we've been a little bit holding onto that growth and trying to transition away from bottom of funnel stuff where a lot of this growth came from and migrate more towards longer sales cycles, less addicted to the immediate cash cycle of bottom of funnel stuff and being more efficient on the long tail, but also not disrupting the business too much and pulling back too hard, which can happen. And we've seen those consequences before when we try to make shifts too dramatic. But there's so many attribution tools out there right now that just, they actually don't even bother to attempt to track these longer sales cycles or longer windows. They're just like, we can't do it officially. So they're not even attempting to, some

Brett:

Are even trying. And that's one thing I will say about third party attribution tools, and I do support them and we have a few that we like and so that our clients use and stuff, but they are not your savior. They do not make everything crystal clear. I think they can make things clearer or they can help you triangulate the truth. But to your point, they don't necessarily solve a six month attribution window does, but they can be useful in some ways. And so what we've seen some brands do that have a longer sales cycle is they're measuring engagements along the way. So what kind of leads am I collecting, kind of engagement am I getting with this video and how long are people watching and different things like that. That's often what we'll do when we're launching a new YouTube campaign and the beginning weeks or a couple months of a new YouTube campaign are a little rocky. And so we're looking at, okay, how do we make decisions then based on other engagement metrics? So if we're evaluating three or four videos, let's say we really want to measure both the view rate and we try to simplify that and we look at the retention rate on that video, we look at the clickthrough rate on that video, different things like that that can kind of begin to say, okay, this is appealing to our audience is likely sending people back to us. So any thoughts there on micro conversions or things that you measure? We've

Sean:

Been doing, I mean we've been getting a little bit more aggressive towards on YouTube channels, just having this seems like obviously a no brainer for anyone that is trying to craft a YouTube strategy. We never really our YouTube strategy out the gate when we started in 2019, which is let's just regurgitate all the knowledge we have into a video format with some parts in front of us. And that was our strategy. And we had a number of videos that have crested quarter million views and half a million views since the get go. But more recently we've been a little bit more targeted towards here's a landing page for this YouTube video, let's track the clickthrough rate to the lens. Doing some of these, in retrospect, very obvious things, but nowadays it's tracking all the efforts now because one thing that I never really took into account before was how much man hour, how many man hours and time has gone into the content in terms of backtracking all the way to the very beginning of the conversation of tracking margin is what is your true marketing spend and taking into account your manpower, all the content hours and all this stuff going into the true cost of your marketing dollars.

So thinking from that perspective, we're a lot tighter now on the true performance of this video is, and are we expecting sales out of it or is it just going to be one of those things that we're going to be hopefully that we start to start building audience? Some of the things we've been doing recently is really just trying to get into a new audience that we maybe not have talked to before. And so now this whole series is a trust building exercise to talk to a new segment that is not our usual bread and butter. And so in that regard, it's like we're not really tracking the performance there, but we're trying to build these organic pages on our site, build that audience and build authority there. Whereas others, it's like a product reveal or a product release. And then now we're doing discount codes and tracking the discount codes and all that kind of stuff. So we segment it in that regard. We're usually aiming for about a video a week on a review schedule, which feels aggressive. We may be pulling back there, but that's just kind of how much knowledge we just want to get out. And it's not videos, it's really just talking heads and some manufactured, not manufactured virality, but kind of manufactured a head to head versus this versus that brand

Brett:

Versus Got it. You know what I'm saying? So good. Yeah, yeah, yeah. And really, man, I think simple there is great. And one cool thing about your categories, I think it lends itself well to that people really enjoy the research process. Before I bought my new-ish, I guess I've had it for almost two years now, but a Toyota Tundra, TRD pro, I found myself just for entertainment after the kids go to bed, I'm on YouTube and I'm watching four by four videos and the Fox shocks are the ones that are on the TRD pro. And I was like, Hey, listen, most of the time I'm just driving in the office or driving around. I'm not using these shocks, but it was evaluated, I was looking at this versus that. It's fun, it's entertainment, but then it also does lead two purchases. And so I want to dive into this a little bit and hopefully my notes here ripe, but you guys have 25,000 subscribers, maybe more. You said you've got some videos that quarter million views, whatever, you've really built this channel. So yeah, I know you already alluded to it a little bit, but how are you deciding what content to create and then who's kind of in charge of that? Are you just doing all this content? Do you have a team behind it? How does that work? We've

Sean:

Got a pretty small team. It's literally been me and my creative director and a couple guys on staff that take part in the content. We've had a videographer on staff for most of the past five, six years, but we sell global brands with tons and tons of Google search juice.

Brett:

So they're already awareness. People are already looking for these shocks, they're looking for reviews on these products. So that's already kind of built in.

Sean:

So they're highly technical products, very much of a black box. Think as a gatekeeping as you can get behind the true guts of a product. That's exactly what shock absorbers are and suspension systems are. And it's why I got into the business. I really got into the business to change the industry and change the conversation around this segment of products because I just saw how clueless everybody was back in 2013 when I first started it. And it's almost become even more confusing with how many different brands there are and what the differences are. So starting with that in mind, there's always, when you're out researching, you're researching Fox or King or this versus that. And so we get those questions all the time through live chat and email. And so for us, when we see repetitive questions, we're just going to turn that into a video.

And when you already have a lot of search behavior on Google for brand A and a lot for brand B, you just put them together in a video and boom, your comments explode, your views explode because anyone searching for that is eventually going to see your video. So that's kind of one strategy that we've had since the very beginning. The other strategy is very much like you have a tundra and we know all the shocks available for the tundra, and so we can make a video that's a one-stop kind of research stop for your vehicle to explain all the differences, talking specifically to the tenure customer. So just those two perspectives have served us extremely well because you get the brand advocates on one side and the other and they go at it in the comments or what we hope to do and what we've helped brands do now is if you're trying to enter the market, put yourself up against the incumbents or incumbents because now you're getting all the exposure based on their existing search history.

And so we've done that with a couple brands and I would say we blew them up. I mean just through three YouTube videos and content pieces, we went from basically zero sales in 2022 to about $1.2 million in sales of this one brand with only $20,000 of paid advertising to promote that content and then the content pieces. And so we've kind of proven out that model and we use the strategies I just discussed here for that. And so we really try to keep it basic. We found that when we do really well produced stuff, sometimes it works, but oftentimes it's more of a brand building exercise and people like it, but it's a 5,000 view video or 10,000 view video and not like our 50 to a hundred thousand view videos when we do the really basic, here's your buyer's guide for a Bronco or here's your,

Brett:

Yeah. And I think a lot of times we overcomplicate things, one simple answers, and especially in this case where people are searching for things, they're searching for a head-to-head competition or they're searching for a solution for my vehicle, my Bronco or whatever. And so being simple is key. A couple of questions on how you approach things. So say you're comparing Fox shocks to Kenny or whatever, you're comparing two products and potentially you sell them both. What's your approach? This is a little different since you're a retailer and it's not like this is my product and these others are not my products. Are you trying to be a little more neutral or are you just going full on? No, this is great, this is not great. This is really useful. This is when you don't want to buy this thing. How transparent or ruthless are you in those evaluations? I

Sean:

Think we're both ruthless and transparent, right? One of our mottos is we're not trying to tell you what to run. We're trying to help you figure out what to run. And so that that's kind, we see each brand or option as they have their own pros and cons and how much does it overlap with your own thing? And so we're able to do that because we have so much experience with each of these brands that we sell. Any retailer can do this, and that's what we advise. I've been advising a lot of retailers that do do this. You need to get behind the product and use it in order for your sales staff to really be able to drive proper recommendations and create that customer experience that no one else can give. And so we do it from that perspective. We really try to remain neutral. Very rarely is there something that we steer people away from. And we have found that if we are doing that, then we're actually just removing it from the site site because it's very much like, well, if we can't recommend this product anymore,

Brett:

I recommend it. Why are we selling it at all? Then

Sean:

Why are we selling it anymore? Totally

Brett:

Makes sense. Totally makes sense. So if you look back at some of the early days of creating content, and I know one of the benefits of YouTube is you created a piece of content years ago, it's probably still getting traffic and closing sales today. But as you look at those early videos versus what you do now, how have you improved? How have you maybe restructured your framework or your approach to videos? How have you gotten better? And the goal here is how can we give people shortcuts or allow 'em to benefit from your learnings? How are your videos better now than they were before?

Sean:

Well before it was really, I knew that our team knew that we had experience. Our sales proved that we have experience, but a new person visit, I had conviction. So a lot of people just, there's a certain amount of people that are just going to believe you based on your

Brett:

Conviction. They can feel the conviction and they're like, okay, this guy believes in, he knows what he's talking.

Sean:

And then there's some times where it's just like, but then how do you went over those other people? The more recent kind of thing that we're always really thinking about is all the B roll, all the B roll to show and prove that we have that experience that drives these recommendations and why we have those recommendations. And so we've really gone, I want to say overboard, but as to extreme links of having all the B rolls of us in the dirt or on the trails or with this vehicle or any of the situations that we usually always talk about. And so our framework is very much just like we have three major use cases of our product, which is in the dirt on the highway or towing. And so we're always trying to cover those three bases with all of our experiments and tests and then getting it on video.

So anytime I'm talking about it or one of our staff's talking about it, boom, it's on the screen. So that just goes such a long way so that because so many people now are using stock footage in their faceless YouTube videos and just using borrowed knowledge and stock footage and affiliate marketers, it's that's flooding or Google right now. And so there's a desire for authenticity. And so I've always had that in mind just to try to be as genuine as possible, authentic as possible, because I'm also, one of the things, I'm really trying to take the audience and learning with us and not be like, Hey, I'm a pro and I know everything, but it's like we are just as clueless about this new product and we're going to learn about it and you guys get to watch us. And so going more in on the experience and the learning and bringing the audience along, it has kind of been where we've migrated a little bit to, whereas before I had a little bit more of an ego as far as I've done this all, you should just trust me. It works for a little bit, but my more genuine self is transparent in my ignorance and must be,

Brett:

Let's test this thing. Let's put this thing in the dirt, let's tow something with it, see how it does. And I think that adds kind of this little bit of tension too, a little bit of drama or intrigue like, Hey, how is this going to turn out? I want to stick around and watch and find out.

Sean:

Yeah, we've had some huge viral pieces of just blew up a shock, and it's on Instagram live and the brand's calling my cell phone to take it down. I'm like, no, I'm not going to.

Brett:

Absolutely not. This is gold. Can you talk about maybe some pieces of content that you created where you were genuinely surprised at how well it did, where you make a piece of content and you're like, why did this blow up? I don't get it.

Sean:

Well, I guess, let's see, in retrospect, I don't know why one of my very first videos blew up because I was deadpan just a bunch of products on a table, and we got a quarter million views in the first three months, and it's almost reached a million views at this point, but very basic, very just unassuming. I'm just sitting here talking about my vehicle and what I've done with it, but it's a Toyota Tacoma. So I knew that I already had a Tacoma and a surge in massive popularity. So I already know there's a huge audience there. There's other stuff where we put a lot of work into it. One of our more recent pieces, we put probably 3, 4, 5 months of work into it in terms of assembling the B roll and doing the script and recording and redoing footage and stuff. And right now it's only at about 10,000 views where we were expecting more of a 50 to a hundred thousand view kind of thing.

Brett:

And it just kind of shows sometimes you don't know. It's like the piece has to really land and it's got to be answering a question and media. And actually I want to unpack that a little bit more, see if you got any theories as to why that's not taking off. And I'll kind of contrast it with speaking of the tundra. I had it serviced not long ago, and when I got it realized that the dealership did not reset the maintenance light. So I was like, it still said maintenance due call the dealership. I'm not very technical. So I called the dealership and the lady, the answer was like, Hey, you're welcome to bring it in, so sorry. Also watch some YouTube videos. It's really, really easy. And so found this YouTube video of a dude with giant hands, he's holding his cell phone. He is like, click on this, you scroll here, you click on this, and then you click here and then you do this, and it's the worst shot video ever. But I solved it and it had, I don't know, 50,000 views maybe more. It was so simple, but it did. It solved my problem quickly. That's all I wanted. And so I was happy. Any thoughts on why did this video that took months to produce and B roll and really thoughtful creation here, why do you think it's not taking off some of the others that are more

Sean:

Simple? Yeah, it's a very niche kind of topic. We thought there would be a little bit more of a broad, so it's a brand versus brand on the new Ford Bronco.

Brett:

Okay, dude, love the new Broncos.

Sean:

Yeah, they're pretty sweet and we love ours, but I think part of it is the Bronco market and Broncos content is very saturated. And so that's one perspective. Another perspective is a lot of those Bronco buyers are not in the modification mood or cycle. Usually we see second, third, fourth owners to be the most

Brett:

Makes

Sean:

Modification makes sense. So we kind of knew expectations are the number one cause of disappointment. So totally, it was kind of a soft expectation, but also no big deal. It's going to live there forever and it'll be a good resource. It's going to live

Brett:

There, it's going to be better over time, likely yes.

Sean:

Where I knew one where I had I high expectations that matched the actual performance is A, B, A versus B versus C of the top three brands in our industry. And that right now is sitting at about 300,000 views. So I kind of knew that was going to kick off correctly, and it has. So yeah, but that one is very not produced at all, whereas the 10,000 view one is heavily produced, so many great shots, so much work. And so you see the dichotomy there and you're just like, I've made the decision now for the next year, just back to basics. Let's just translate all this knowledge that's stuck in our brains on simple talking heads and showing the features of the product because that's giving the most value to those people, totally to the broadest range of people. So yeah, that's awesome. Adapted.

Brett:

So you and I were talking about this earlier. You guys are just consistent. I think you said you're creating one piece of content a week, kind of that pace. I enjoy watching Alex Ozzi videos. He's cranking out hundreds of pieces of content across the various platforms and stuff like that. I don't think it's so much about quantity necessarily, or quality in the sense of it's got to be highly produced, but I do think there's something about being consistent and being authentic. How have you created this consistent schedule where you just create videos week in and week out? I guess it's probably just part of your culture now, but any tips there? How do you just create this consistent machine?

Sean:

Yeah, it does take a lot of effort to get effort. A few years back, I was very much like we've got to be more of a media company that sells parts rather than a parts company that does media. I always felt like once you have the experience of producing valuable content, you could just direct it anywhere, whether we're selling shocks or whatever. So we use Trello as a project management tool, and we have a pretty small team to execute. And I've never been afraid of just picking up the camera and just putting it on a tripod and pointing at myself and talking about the things, because we have so many customer engagements that I'm like, I'll look in customer service and find a really good live chat thread and be like, Hey, let's just go turn this into a three minute YouTube video because we're answering this question all the time, and they always, were going to get it in the future, and the parts are sitting right there in the warehouse, so let's just boom, boom, boom, love

Brett:

It quickly identifying this is a video, let's shoot it now. This is what we do.

Sean:

Exactly. So the speed and no one, so many people are scared of getting in front of the camera, but no one cares,

Brett:

Right? No one

Sean:

People that you think are going to care

Brett:

Way your hair looks or the tone of your voice as much as you are or none of that stuff. Yeah,

Sean:

Exactly. No one cares. Just really hone in on your expertise of the product or of your brand and just try to deliver the value to the customer in the best way, how It could just be a podcast or it could just be written a word. And so we try to do a bunch of overlap there, but speed. But when you're inspired to do it is when you should do it and just turn on the camera to do it because that moment is very fleeting and you try to plan for it. You're just like, I'm not feeling it, I'm not feeling it. And soon enough it's just like gone. You just lost it.

Brett:

Just turn on the camera. Love that. So I encourage everybody, go to the shock surplus YouTube channel, check it out, consume the content. Even if you're not in an off-roading, you're not in shocks, you're not into modifications, whatever. Still check it out and see the way they do things. Look sort by highest views to lowest and kind of just learn as you peruse there. And so next big topic, and this is a big one, this is going to cause lots of gasps. People are going to veer off the road as they listen to this, as they're driving and stuff. But at one time, Sean, if I'm not mistaken, 70% of your revenue came from Amazon. So 70% let that sink in. And then Sean, you broke up with Amazon, you made that 0% of your business. So tell us that story. Why did you do that? How did that go down and are you still pleased with that?

Sean:

Yeah, so backing up to 20 13, 20 13, I started on eBay and we got our start because automotive searching for automotive parts has always been a pain in the butt. And if you think about a vehicle and a shock absorbers, you got two different part numbers on the front, maybe one part number for the front, one part number for the rear. So anyways, the customers are having to search for two to three different part numbers for their vehicle in a catalog through some data that these brands just engineers never. So

Brett:

You're probably going to get something wrong, just so many.

Sean:

So I started listing on eBay back in 2013, just bundles, one click purchase for your vehicle, whether it's lifted or lowered or whatever. So I got my start making just bundles every single day, literally just making bundles until two o'clock in the morning and all these bundles were selling the next day. And so that's how we really exploded on eBay. And then in 2015 ish, 2016 is when we got started on Amazon and we were basically transferred all of our bundle listings on eBay over to Amazon. And we had a system in place to where we can scale up all these bundles and making these bundles in our catalog. And so we created probably, I don't know, 20,000, 30,000 fresh listings in Amazon that never existed before. And so we got a really nice headstart there, but then over 20 16, 17, 18 competitors caught wind and started jumping on all of those listings and 2, 3, 4 people on a same listing. And everyone's repricer is now fighting each other. So we were at using the buy

Brett:

Box now on something you created.

Sean:

Yep. So classic story there kind of occurred. And so we also started doing some experiments of like, well, let's just price Amazon at 1 99 and we'll price our website at 180 9 so that anyone price shopping obviously is going to choose our website. We started seeing thresholds there of like, well, if it's 1 94, they're still going to choose Amazon because that $5 delta is the Amazon trust, right? Easier trust. So we started doing some of these experiments, and then we started seeing just how much, once we got up on Shopify 2.0 or once we got over to Shopify in 20 18, 20 19 is when we launched Shopify, that's when we really started to understand how much Amazon and eBay was cannibalizing our website sales. And so once we made that connection along with Amazon is a 12% fee, and we were achieving five to 6% cost per sale on the website through Google. And so that's one obvious, well, the feed over here is better for sure, and then Amazon started doing this whole thing of don't contact the customer or penalizing you for too much contact of the customer, or you can't see the customer's phone number anymore, you can't text them. There's an intermediate intermediary phone number thing, and we're like, oh, that's no good. And then you start to see that Amazon's return rate is 12, 13, 15% on you. Yeah, you

Brett:

Can't contact, somebody can't confirm that they're getting the right product, right? Again, this is a product category where people make mistakes in ordering so

Sean:

Many mistakes.

Brett:

Now you can't help them or fix that, prevent that from happening,

Sean:

And they're trying to get you to give free returns. And we've got 20, 30 pound products. And so a free return means we just lost a ton of money on 15% of our sales, and so we have 5% return rate on our own website. So versus 15% plus all the other administrative hurdles on Amazon. I look back and I'm like, I don't believe the numbers. I don't think we were ever profitable on Amazon as a retailer with 25 points, 30 points maybe of gross margin. Amazon's eating most of that.

Brett:

Amazon is making money without a doubt. You are probably not. And so what was that like when you came to the realization that I think I just need to stop this, that feels like, and I guess if you realize you're losing money or whatever, but that seemed like a pretty big bold decision.

Sean:

There was just a string of $2,000, $3,000 A to Z claims that we just had to eat. And it was like, okay, well, we're removing that entire brand. Oh, well, if we remove that whole brand, we should probably remove this whole. So it was just like a slow slide. We were all competitors. Were also basically filing non-genuine product complaints. And so you're always fighting literally the administrative state of Amazon, prove this, prove this is genuine, prove this is A to Z here, A to Z there. You're like, oh my God, I don't want to deal with any of this anymore. And just the math was just so obvious too, where it's like, well, for all the only ones with this in stock, we would see nationals. I know we have stock here. Let's just remove our listing off of Amazon. People are going to buy from our website.

So we started making those connections a lot more frequently. And so we're like, eventually you just let your Amazon account slide so much that there's too many hurdles to get back in good graces and then good standings and all of that stuff. There's so many hurdles you have to jump through now as a, I don't even know. I can't speak to too much truth about it. We really just have not paid attention to it in the past couple of years. And we may go back when we have our own brand branded box, brand registry and all that.

Brett:

Better margins. Yeah, I mean, listen, Amazon's a wonderful place as a shopper. It's a way to potentially get growth fast as a brand, but I'm firmly in the camp of man, you got to have pretty hefty margins to make Amazon work. And yeah, I mean, I think one of the reasons why our Amazon practice is so successful and why we're growing so much as a brand, as an agency with Amazon is because that administrative toll of just keeping listings up and just fighting with fake reviews and competitors and getting listings back up when they're taken out, when they should have been taken out, that's a huge part of what we do. And it's just the tax cost of doing business on Amazon. So it can be wonderful for a lot of people, but it's also a bit of a slog. A bit of a grind for sure. And

Sean:

You've got to have a really unique product to not get copied also, because the sellers, I know there's companies out there that just monitor the sales rank, and if you break into a certain threshold,

Brett:

Outsource Totally makes sense. Totally makes sense. Well, cool, man. Well, this has been super helpful. So man, dig into the shock surplus content. Check that out, learn from that. Hey, don't be afraid to make some bold moves on Amazon. If you've got stuff that's not making any money, why are you doing it? What else, Sean, as we kind of move into the final portions here, the show, what else are you excited about? What are some things that you're about to test or where are you kind of headed as a brand here in the coming months?

Sean:

Yeah, TikTok shop, we're getting TikTok shop kind of, we've been approved for a while now. We have a pretty decent, I mean, we've got like 15,000 followers on TikTok, and TikTok was built more. We do a lot better on TikTok than we did on Instagram before Instagram, before Instagram copied TikTok as far as the interest graph versus social graph. And so our TikTok stuff, which is blowing up, which is just educating straight to the camera with some action in the background or product in our face. And so we're going harder in on TikTok. We're firing a TikTok shop for our own private label brand stuff. So we're getting going there for

Brett:

Sure. Are you running TikTok ads as well? Are you focusing mainly on organic and then TikTok shops

Sean:

Mainly on organic. We tried ads before and in platform reporting was showing absurd Tencent clicks. But what I think was happening, and we see this sometimes, I see this in our Facebook portal as well, which is like you get a thousand clicks, but you only get 700 page loads, right? Because 30 50% of your people aren't sticking around past 1.5 seconds for that page to load. And so there's that. I noticed that behavior with the TikTok audience quite a bit, and we weren't really getting sales and traffic there, but now, so we just use it as a brand building kind of situation. We're not doing any paid traffic there just yet. What we really want to try out is our private label and incentivizing through the affiliate. The affiliate. Now we're being able to give away 15%. I don't know what we're going to settle on, but try to really go in on the affiliate side of things because the products that we see right now that are available to us, no one else is selling on TikTok as a shop. Nice. And so I think there's open

Brett:

Door, open opportunity. Love it. I think it fits. I think your product is visual. People are researching it on TikTok, I'm sure, in similar fashions to what they're doing on YouTube and stuff. So I think that's a very obvious place to be. Sean, as you're trying to draw inspiration from other brands, other retailers, who are you paying attention to? Who are you learning from either other brands or other resources? How are you leveling up?

Sean:

Yeah, Alex or Mosey is, I think he's,

Brett:

What

Sean:

A legend. He's changed my business a lot just because over the past couple of years, new revenue streams have just been such an important part to uncover bigger revenue streams with bigger margins than what we e-commerce margins have just been pressed so much. And so as we try to uncover new opportunities, he's been a really big inspiration for me to uncover new opportunities, uncover new ways to provide more value to the customer, understanding, really looking at the business from different perspectives to challenge your beliefs and some stuff. So he's been a huge inspiration and legitimately changed my business. Totally agree. Yeah. So him and I don't know, I've been reading freaking sales tax books just describing, because

Brett:

That will get you some funny looks. I'm sure you're reading that after dinner. Some people are like, why are you reading a sales textbook on vacation? Funny looks.

Sean:

Yeah. If you think someone else is handling your business's sales tax, think again, never ever assume someone else is going to handle what is essentially a brand new system for the entire United States. No two states are the same on their sales tax administration for your business. And so can't have one playbook for the whole for all 45. And so that's really bitten us in the butt in the past couple of years. And I've, we've got people on it right now and it's a lot better going forward, but we're paying the price of past mistakes there. And I know, like I was saying before, I know nine figure brands that haven't been collecting correctly and they've got auditors on their door step. We

Brett:

Need $1 million in issues that they got to pay for now. So you got financial burdens, financial hardships, legal burdens and hardships. You combine those two, that is, that's not the game you want. That's not where you want to be focusing as a brand owner for sure.

Sean:

Yes, that's a big thing. I would just advise anyone that thankfully have it settled to triple check that wisdom is learning your lessons from other people. And I'm the other person that made those mistakes,

Brett:

Dude. I love it. I love it. Well, Sean, as people are watching this, listening to this, how can they connect with you? How can they go buy some shocks if they want to up their off-road game? How can they connect? Yeah.

Sean:

Shock surplus.com. We got live chat there, email, we're all over the place as shock surplus.com. I'm on LinkedIn if you guys, I get it after some podcast people reach out and ask a little bit more specifics. I'm super transparent on all the things we do, the marketing of things, operation side of things, always willing to help out. So yeah, hit me up anywhere you guys want and love to help out.

Brett:

It's awesome, man. Really appreciate you being transparent here. Love your story, love the success, and looking forward to watching you continue to grow on the organic side. And best of luck to you in the future.

Sean:

Thanks, man. Really appreciate

Brett:

It. Awesome. Thanks Sean. Tons of fun. And as always, thank you tuning in. We'd love to hear from you. What would you like to hear more of on the show? If you found this helpful and inspiring and other merchants who would benefit from Sean's wisdom, please share this episode. Also, leave us that five star review if you've not done so already. And with that, until next time, thank you for listening.

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Episode 280
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Christine Shiloni & Jonathan Finkes - OMG Commerce

Prime Day Prep: Tips to Maximize Sales and Protect Profits

Are you ready to make this year's Prime Day your biggest and most profitable yet on Amazon? 

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In this episode, Amazon experts Christine Shiloni and Jonathan Finkes join the podcast to share insider strategies and actionable tips to help you crush your Prime Day sales goals. From deal strategies to advertising tactics and inventory planning to post-Prime Day momentum, this episode covers everything you need to know to come out on top during Amazon's massive annual event.

‍

Key topics and lessons include:

  • Understanding the different Prime Day deal types (Lightning Deals, Best Deals, Prime Exclusive Discounts, Coupons) and how to select the right ones for your products.
  • Aligning your discount strategy with your margins and inventory levels to maximize profitability.
  • Crafting an aggressive but targeted advertising approach for Prime Day, including budget pacing, placement focus, and bid adjustments.
  • Leveraging increased traffic post-Prime Day to gain new-to-brand customers and drive long-term growth.
  • Preparing for a successful Q4 by capitalizing on learnings from Prime Day and gearing up for October Prime Day and holiday sales.

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Chapters: 

(00:00) Introduction

(04:13) What to Expect and How to Prepare

(07:26) Strategies for Success

(13:30) Types of Deals and Discounts

(27:50) Understanding CPCs During Prime Day

(30:18) Post Prime Day: What To Do

(37:35) Deadlines To Consider

(41:43) Outro

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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, Bryan Porter and more. 

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Other episodes you might enjoy: 

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Transcript:

Brett:

You don't want to get so excited about Prime Day that you smashed through your ACOS goals. And yeah, the sales numbers look great, but your ACOS just got out of whack and now you gave all that extra margin to Uncle Jeff Bezos.

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're doing a deep dive into Prime Day, getting you prepped and ready to make this the biggest Prime Day ever for you and for your brand. I'm confident it's going to be the biggest Prime Day ever. They all are, but we want it to be the biggest Prime Day ever for you. And so that's what we're going to do here. I've got two esteemed OMG commerce experts. These guys are in the trenches day in and day out, making dreams come true on Amazon. We've got some great coverage on the ad side, the full Amazon brand management and Amazon strategy side. And so we're going to bring you the full perspective here today. And so I've got with me a return guest, Mr. Jonathan Finkes, lead specialist for Amazon ads. He knows everything about Amazon though as well. And so Jonathan, welcome back to the show and is this episode is the second appearance or third appearance for you? Just

Jonathan:

A second one. I know it was such a great experience. It feels like I've been around more often. But yeah, just the second one.

Brett:

All the fan mail, all the comments, all the people we want more. Jonathan, it just feels like you've been here more. So thanks for coming back. Super excited to have you. And then first time Miss Christine Shiloni. And Christine is our Amazon director. She's an Amazon strategist. She's been in the game a long time. She's led multiple groups, worked with lots of brands on the Amazon platform. If you've got an Amazon question, she's got an answer. And so she's here to talk about overall Amazon brand growth and strategy for Prime Day. So with that, Christine, welcome to the show and thanks for taking the time. Sure,

Christine:

Anytime. Looking forward to it.

Brett:

Going to be super fun. I love picking your brain talking strategy about new clients or new brands or whatever, and so can't wait to share with a broader audience all that you guys know about Amazon. So to kind of tee this up, just to give perspective, obviously we know this is the biggest day of the year. Last year, July 11th, 2023 was the biggest single day in Amazon's history. I think they said they sold 375 million products that day, Prime Day, which now is more of a Prime Days or multiple days to 12.9 billion last year. Those are the estimates from Statista up from 12 billion the year before. And so in the early days of Prime Day, it was kind of like a doubling almost every year. Obviously the growth has become slower. You have to slow down law of big numbers, but needless to say, it will be a monster day. Now, what are we expecting as far as timing, Christine, when do we anticipate Prime Day will happen and what might be a little bit different about the timing or the duration of Prime Day this year?

Christine:

So is now saying it's Prime Day week, so we can assume that might be starting on Sunday or Monday prior and maybe going through the following Sunday like they did for Cyber five. Usually Prime Day in July is the second week in July. Usually the first day is that Tuesday. So usually Tuesday and Wednesday are the biggest days. Usually if you're getting deal placement, those are the days that you want your placement because they probably have the most traffic. That's what Amazon's going to be pushing most likely with all of their advertising.

Brett:

So this year could likely be July 9th and 10th, kind of that week. That's the second week of July. July 1st falls on a Monday. So the eighth is also Monday. So kind of that ninth, 10th should

Start earlier maybe. Yeah. What should we expect? So we know this is a big day. We know there's going to be a lot of sales regardless of what you do, but Jonathan, I know you've got good data. We keep track multiple dashboards. We're tracking sales and performance across all the OMG clients. And so we've got a lot of data to pull from millions in ad spend and then sales. And so we're able to look at that data, but what could we or should we expect, what's kind of the range of performance? How do Prime Days compare to a normal sales day on Amazon?

Jonathan:

So one way that I like to break that down is kind of into two groups. We do have a decent amount of sellers who choose not to run any deals on Prime Day. So in the group of clients who do run deals, and this is going, the average pretty much holds true to every Prime Day that we've seen. We have all of them on file. What we see is a range in terms of total sales for each day of Prime Day averaging around a two, again, I think I said for those running deals. But for those running deals average about a 200% increase to the daily sales for those days compared to the average daily sales. But there is a really big range there because obviously each vertical's going to perform a little differently how well you're ranking in that vertical and how aggressive your deal is and how aggressive your deal is compared to other people's deals in your same category. And so even amongst those running deals, there are some who only saw a 50% increase to total sales, which still nice, but if you factor in still good,

Brett:

That's a heck

Jonathan:

Of a bump. Yeah, it's a good bump, but of course it's maybe not as big as you might be hearing elsewhere, like, oh, run promo and you're going to get a 500% increase, but on the high end we have seen thousand percent gain or more. And those are definitely the outliers, and that's why I say the average is closer to that 200%. And then for that group, that's not running any promos. We do actually, if they're well positioned in their vertical, at least showing up organically on page one, we typically see between a 30 to 50% increase in total sales, which is still very nice. You're still definitely seeing a big influx of traffic even without running a huge promo. And so those are definitely things to take into consideration.

Brett:

Yeah, it's super cool. I mean, it really does have the flavors of holiday where people are just buying. So whether you're discounting, whether you're not discounting, there's going to be more people with wallet open, ready to buy. It's an event that people plan for or when it happens, they're just, the money is freely flowing and so they're ready to make a purchase. Now, let's step back a little bit. So you talk about those that don't run a discount, those that do, those that don't run a discount still may be seeing 30 to 50% increase in daily sales during Prime Day of those that do run a deal, maybe as much as a thousand percent increase, but the amount you have to discount does really make a huge impact on your bottom line and your overall performance. So before we get into some of the specifics, what deals to run, what are some of the requirements with Lightning deals, Amazon preferred deals, things like that, let's step back and talk strategy first and we'll just continue with you Jonathan. Then Christina want your perspective as well. But as you're talking to clients about overall strategy for Prime Day, what are some of the discussion points that you're

Jonathan:

Having? So again, there's a lot of things to take into consideration there, but you kind of start from the top. You have to know what your margins are. So if you don't know what your margins are, and it's surprising, sometimes it's surprising that client doesn't know, but there's a lot of sellers who are running a very small tight ship and it's just them, maybe one person helping them, but a lot of people just run it by themselves. And so maybe they haven't calculated all the FBA fees into their margin percentages, but yeah, so you need to know your margins that you can know. How much room do you have to run that promotion? And then when it comes to deciding a promotion and how much, what you might choose to run, whether that's a lightning deal or best deal, or maybe just a prime exclusive discount, thinking about a promotion or choosing, maybe I don't want to run a promotion, you need to take into consideration where you're showing up organically as I was mentioning earlier, because if you're already showing up organically in the top three or top five, you're showing pretty prominently you're getting in front of a bunch of eyes.

Maybe if you see I'm in front of a bunch of eyes that don't have a lot of room on my margin, maybe I don't run a promo because I'm going to get a lot of extra traffic already up in top of search. But if you're not and you're in a really bad position, you might need to be more aggressive with that promotion to draw in more eyes, especially if you have the room and then of course, and that's married to your PPC strategy. If again, if you're not showing up super prominently and you're running a promo, if you're not aggressive with your ads, nobody's going to see it. You're on page two going to see it and you're running a great promo, that's where you're going to be one of those low end factors of maybe only plus 50%, even though you think you should have gotten that 200%. And so then you got to take into consideration the PPC strategy along with the promotional strategy, with really knowing your margins, knowing your business inside and out.

Brett:

Yeah, it really makes a ton of sense. I love that. Start with knowing your margins because, and just to give a quick example, just some super fast math, if we're selling an item for a hundred dollars and let's just say that our margins after everything is 50%, so we're making $50 per $100 sale. I know for a lot of brands you're like, well, I wish I had those kind of margins, but just for easy math. So every item we sell, we make 50 bucks. Now we're offering, let's say a 25% discount, which would be kind of a normal type discount. Well, that means that we've given half of our margin away, so now we need to at least double sales or we saw no net benefit in those additional sales. Now maybe you could make the case that we made a sale and so now we can sell that person multiple items.

So you could make that case for sure, but unless you're doubling sales, then it didn't pay off. It could get worse though. What if you're at a 30% margin? So you're making $30 now for every a hundred dollars sale and you have to give away 20%. Now you're giving away two thirds of your profits. Now you got to triple what you're doing in order just to make the same amount of money. And so that's where you got to kind think about margin. Love that. Christine, how do you have these conversations with clients from the strategy level, and we'll dig into tactics, tips, tidbits in a minute, but from a strategy level, how are you coaching on,

Christine:

First of all, if you're selling a consumable, like something that people, a supplement or something like that, that you have, subscribe and save, it could potentially be worth your while to run very tight margins or potentially even a loss leader to get people into the fold because they're going to hopefully enroll and subscribe and save. So you're going to have that business for the future. You don't have to pay for ads anymore for these people, for these clients, they're already in the fold. So that's one thing that you should definitely consider. Another thing you should consider is your inventory position. Where are you in a position where you could potentially be running out? Okay, so maybe you definitely don't want to run, run any deals at a lower price where you're not going to make the margin that you need on that specific inventory. Conversely, are you experiencing really high FBA fees? Maybe it's worth you running it a little bit tighter margin because now you're going to save money on the longterm storage fees and not have to do a removal order to save money on the backend that way. So those are a few things that clients should really look at on their end, and if the deal does take off, which that's what we all want, do we have the ability to restock rather quickly? Yeah,

Brett:

Yeah, that's great. Now you mentioned subscribe and save. Can you attach the Prime Day deal to subscription and subscription only or does it have to be for

Christine:

One time purchase as well? It's a one time purchase as well. So the deal is a one-time purchase, but hopes that you know what they loved, whatever it is that they purchased, that Amazon's going to be continuously serving them. Would you like to buy this again? You bought this on Friday? Yeah. Oh, I love that. And now they're in,

Brett:

Yeah, we see that a lot. We got the Amazon Echoes in our home, we got the Echo Show in our kitchen, and it's always reminding me like, Hey, do you need to order an espresso pods or you need to order toilet paper or whatever? Exactly. You need to order hot sauce. So it's really given those recommendations. So that makes a ton of sense, and if you kind of know your stick rate or your take rate on subscription, that can help you as you push into a deal because we know, hey, 20% or 30% or 50% of all people that purchase do end up subscribing and saving. So we factor that in as we're running our numbers on discounts. So okay, really, really cool. Let's talk discounts now a little bit, and I'll continue with you, Christine here. What are the options? So if we're considering, okay, I want to be in that category where I can raise sales 200 to a thousand percent type of thing by having a deal, what are my options for deals in terms of categories and what kind of discount do I need to be looking

Christine:

At? So the first option is Lightning Deals or slash best deals. So recently in the last few months, not every brand now has deals populating in the console to book deals. So my thought process on this is not running deals consistently. Amazon's like, okay, so now you're not going to get a deal. So other times consistently just run once a month or twice a month or something like that just to stay relevant with that.

Brett:

Yeah, because from Amazon's perspective, they want to say, Hey, I want these Prime Day needs to be huge for us, so we're going to do deals that we know are successful at other times of the year or time of

Christine:

The month. It could be one deals we know it's going to be doing Here're not doing well, then maybe you don't have deals showing up that way. So a lightning deal, Amazon, if you have it in your console and you've booked it for the Prime Day week, that's great. Amazon will pretty much determine the pricing for the product based on the last 45 to 30 day pricing of your product. So if you do end up with a lightning deal and you're lucky enough, you have it on that Tuesday, it's prime time, it's between 9:00 AM and 6:00 PM continuously, check that deal, make sure it's running at the price you need it to run at because that price will change. It will fluctuate up until the day of. So first of all, you need to add your inventory in there, make sure you have enough, and secondly, check that price because if you've done all your numbers, I know I can run this at 1999 and I can still make my margin and you look in your console two days before and they have it at 1599, okay, now you need to make a decision, am I running it or am I not running it?

So that's one option a best you can

Brett:

Pull the plug, right? So you'll see, you'll be given a little bit of time to say, okay, this is going to be the lightning deal. Are you good or not? And yeah, if you're going to be losing money on every sale,

Christine:

And that's not part of Amazon's algorithm, whether you are losing money or not, this is just what they're determining. Maybe it's based on all the other deals out there in that category, it's not a hundred percent clear. Another option is a best deal, which is usually seven days long. So for that, you really need to check your numbers because you can't stop it once it starts and it's seven days,

Brett:

So you can stop it before it starts, but once that train has left the station, you're on it. You're doing that deal,

Christine:

So you have to get that part. Another option is prime exclusive discounts. These don't have a cost, I didn't say lightning deal and best deals do come with a cost. They're between 300 to a thousand dollars a deal to run. So that also you have to factor that into your numbers to make sure you can cover that additional whatever Amazon deems a cost is thousand dollars say at the highest level,

Brett:

And they're going to let you know that upfront as well. So they're going to show, this is a lightning deal. This is what the price is going to be, and this is your cost to run it.

Christine:

Hop in your spreadsheet,

Brett:

Spread that out over how many units you think you'll sell and see, okay, how does this change the economics?

Christine:

Prime exclusive deals do not have a cost. That's a great option, but they do need to be at least 20% lower than your minimum price in the last 30 days. So that's number one. And if it's not, it's going to push you with referral price errors, and until you lower the price to what Amazon thinks it should be, then again, then it's not going to run. You can.

Brett:

So we can't play the game of we're going to hike the price up the day before by 20% and then do a 20% discount or whatever. No,

Christine:

That hasn't be done 45 days prior to that to let it really get through the system because that's what they want to avoid. And I completely agree with that.

Brett:

Totally understand. Yeah, it's

Christine:

20% the lowest price in the last 30 days. You have to have three and a half to four stars. You have to have seller feedback. And one interesting tip about a prime exclusive discount is if you're running that and you also are running the same product for a lightning deal or a best deal, the prime exclusive discount will automatically pause when your deal starts. Conversely, within a day, Amazon will now say, well, that's your lowest price in the last 30 days. So then your prime exclusive price may get hit and go down a little bit. So all things you just need to keep your eyes on. Lastly, an option. If you can't get a prime exclusive to stick, you didn't get a lightning deal, you can run coupons. You have a tag on your listing, it means you're participating and then a coupon, you can decide the discount, you can decide the ASINs that you're targeting, and at least you're in the game. Coupons, they do charge for every redemption. So that's something that you need to keep in mind, but for a coupon, you're controlling your destiny way more than you are with the other options. Or you say, let's just see what the traffic brings me. You can always add a coupon, take six hours to populate.

Brett:

So just have to do that basically day before, and we're in pretty good shape in that situation. Cool. So Jonathan, from the ad side as we're preparing for this, how are you coaching or when you're managing an account, growing an account, how are you doing things differently and maybe the strategies are slightly different between Lightning deal best Deal type of thing, prime exclusive and then coupon, whatcha seeing from our clients, and then how are you executing on the ad strategy based on

Jonathan:

That? Yeah, so the main point that I talked to with clients is kind of, Hey, what are you guys doing in terms of your promotional strategy? And so I can best align the advertising strategy with that promotional strategy. And if they don't necessarily have a promotional strategy or they wouldn't call it a strategy, they're just saying, oh yeah, it's 20% off on everything. Then the question is, okay, well do you guys have perhaps a budget that you want to hit or keep under a certain budget for the days of the event? And the main thing that I always recommend to all my clients is know, like we were saying earlier, if you know all your margins, you know exactly what you want to be hitting in terms of performance, you should really, if the funds are there, you should have an unlimited budget for the event. As we were saying earlier,

Brett:

If you're hitting performance targets, you're hitting your ACOS goals, you're making sales, it's growing, you're exceeding that 200% growth. You're approaching the thousand percent growth

Jonathan:

Keep. And especially with everyone is being more competitive on the events and striving for just getting another inch of market share. So if you, let's say you burn through that initial budget that you had set for yourself, but you're at good performance mark metrics that might happen by halfway through the day of day one or maybe three quarters of the way through day one. And if you just have set super tight budget restraints, stuff's going to turn off. And we typically see the normal cadence of a daily sales on a normal day. Normally peter's off after about 6:00 PM Eastern, but on Prime Day it can stay at the peak levels well until like 10:00 PM Eastern.

Brett:

Yeah, it's an event, man, where I'm getting home from work, I'm maybe eating dinner, putting the kids to bed, whatever, and then I'm shopping. That's my, it's

Jonathan:

Huge event. And really the budget really follows very closely in line, or sorry, the ad spend follows closely in line with what you see in the total sales side in that range. As I was saying, with deals, we'll see anywhere from 50 to a thousand percent growth in total sales. We'll equally see anywhere from that 50% to a thousand percent increase in ad spend for the days of the event. And with it, like Christine was saying, with it being Prime Day week, I'm not expecting the rest of any extra days to be that aggressive. I'm sure they'll see some lift, but really just the two big days that we historically have just called Prime Day one and Prime Day two, those two days would typically a very large lift again in ad spend. And so that's why I say if we can have that unlimited budget, but we want to hold and make sure we're really tight to those performance metrics, then budget rules are your friend right now, they're still only applicable to sponsored product ads.

Amazon hasn't pushed those out to sponsor brand or display ads, but for sponsored product, you can say, Hey, my budgets maybe I don't want to manually increase them too much just because I don't have the time to be checking in on the account every 30 minutes throughout Prime Day, but I'm going to say the budget is allowed to double or quadruple as long as the ACOS is under 30% or whatever that target metric is. So you don't have to be holding the hand of your campaigns all day long. If you're that super busy solo business owner who doesn't have time to be doing that, right? Or you

Brett:

Get a lot of campaigns running or whatnot, just hard to keep

Jonathan:

Track. You can let that budget rule do the work for you. But me on the agency side, I will be checking my accounts very frequently throughout the days to make sure that they're pacing well in line with budget goals. And there can be unexpected spikes. It's not just a perfect little bell curve in terms of total traffic. There could be a huge spike for one reason or another. It could be you're the first one to get a promo live because your lightning deal had the best slot in your vertical, or who knows, maybe there's a blog article that's writing about your product that you had no control over that, but it just explodes in some random hour that you thought was going to be really slow and then your campaigns run out because you get this huge flush of engagement. But that's a big thing,

Brett:

But that's a really good call out though, Jonathan. We kind of expect that, oh, okay, so it's Prime Day, so all the hours will be elevated, right? It's just going to be this consistent lift across the day. That's not really true. There's going to be spikes. There's going to be ebbs and flows. There's going to be pockets when people are shopping from home. And yet to your point, people will call out deals on blogs or my wife is part of a couple of Facebook groups, and so she gets notifications when certain things go on sale or whatever. And so yeah, someone mentions your product or your category at 3:00 PM Eastern on Tuesday, you could see a huge spike in sales. And if you're not paying attention, if you don't have the right budget rules and things in place, you'll burn through budget ads will pause, you'll lose opportunities

Jonathan:

For sales. And then kind of the final key to that in terms of the ad strategy again, is aligning it with your promotional. So if you're one of you want to run a deal, but you're kind running bare minimum deals or you're being really aggressive with your deals, syncing that up with your advertising strategy in terms of where and how aggressive you're going to be showing. And again, that also ties back to where you've been ranking organically because again, if you're ranking on the second page or the third page, you're going to have to be more aggressive with your ads to get your deal showcased in front of more eyes. And so the biggest, most important area to go after in that is the top of search placement, rest of search and detail pages. Those are good spots to be getting sales, but really you want to be getting people on that top of search.

If you have unlimited budget and you're able to spend more aggressively in all those categories, that's definitely the most aggressive hyper way to go after it. But if you need to focus in on go for that top of search, I don't recommend you hear online a lot, especially on a lot of YouTube videos talking about Amazon top search. They're like, oh, go plus 900% be crazy aggressive. You can set the bid low, but 900%, so it's like 1 cent bid becomes that exactly. But yeah, that's a little too much for my liking. And also almost eliminates the detail page and the rest of search targeting, which we still want to go after that of course. But I tell my clients to go more for a 30 to 50% for top of search. If they're wanting to be more aggressive, I might go to a hundred percent, but I like to fine tune it a little bit more so that we're still being aggressive against competitors on the rest of search and detail pages, but mostly focused on that top of search placement, but also knowing a lot of other people are going to be doing that as well.

And so of course you got to be closely watching the performance metrics, especially from the agency side on the day of in the lead up in the after, because you're making all these little tweaks and things can get a little hairy sometimes.

Brett:

And yeah, that's where if you go too wild on the percentage increases for top of search or whatnot, it can really have a compounding effect. And you don't want to get so excited about Prime Day that you smashed through your ACOS goals. And yeah, the sales numbers look great, but your ACOS just got out of whack and now you gave all that extra margin to Uncle Jeff Bezos, which you want to keep that in your pocket. And so I've got a couple more kind of nerdy ad questions here, and then I want to bounce over to Christine to talk about what to do after Prime Day, because I think we want to leverage as much as we can during Prime Day, but what do we do after Prime Day? And then we'll kind of close out with some tips and tidbits and little things to keep in mind. But Jonathan, on the ad side, what are we seeing in terms of how are CPCs increasing? How are conversion rates increasing? And those usually kind of go together, so you're paying more per click and you got to be really aggressive. You're spending more total, but conversion rates usually go up enough that it balances it out. So what are we kind seeing there?

Jonathan:

Yeah, so on the CCP C side, it really

Brett:

And more about the CPC side. If you don't have conversion rate metrics, that's not as important necessarily. But yeah, how much does CPC

Jonathan:

Increase don't have? Well, I do have conversion rate, but I don't have it on the, sorry, big spreadsheet here. So on the CPC side, typically we'll see about a 20% increase on the account as a whole, which that is skewed a lot because in a big account with a big, there's potentially a lot of products that you're not running promo on. Maybe you're just focusing on your hero product. And that's usually what we see is that clients will focus on maybe the top two to five hero products, depending on how many variations they have, but on a whole, usually about 20% increase in CPCs. But of course that can vary drastically for those top terms for those top products. When you're running big promos and competitors are running big promos, it's not uncommon to see the CPCs double in that time, especially with being more aggressive on top of search.

And if other people are similarly being aggressive on top of search, it can be a bit of a bidding war. And that's where you got to kind of stay on top of it because you could see, say you've set up to be a little bit more aggressive top of search if you're not actively watching the account, especially during peak hours, which is I would say starts after about 9:00 AM Eastern, if you're not checking in, it could be that there's a really aggressive competition in the start of the day or in the middle of the day or in the afternoon, maybe aligning with when another competitor's lightning deal is going active because it's just starting at some other random hour and you see the CPCs explode. So that is something to definitely keep a close eye on because of what you're saying that'll destroy margins. Conversion rates similar, we kind of have it on the account level data, but whichever product you're running the promo on, of course you're going to be seeing increased conversion rates, but I don't have an exact percentage jump there for you.

Brett:

Got it. Yeah. All good. So yeah, you just want to be really vigilant because you don't want to just see your margin evaporate with high CPCs. You want to make sure those CPCs are being counterbalanced by more people purchasing. So Christine, let's talk about what to do after prime base. We got all this traffic, maybe it's 50% increase, maybe it's 200% increase, maybe it's a thousand percent increase. How do we leverage that and get some longer lasting benefit or ongoing benefit? What do we do after

Christine:

Prime? So the first thing I would suggest, well, there's two things they can, it won't run simultaneously, but there's brand tailored promotions where you can target your brand cart abandoners for the last 90 days. These have to be set up about seven days prior. Set that up to target people that visited your page, but they abandoned the cart. There's that option. So those customers would receive on their product display page a discount, the minimum is 10%. That's probably not going to drive a lot of conversion, but you can go up to as high as you want. They're not costly to run at all, and they only show up to these customers that have done it. Now, Amazon has also added that feature for coupons. So there's a brand cart abandoner in the last seven days coupon that you can set up. So a coupon, you can target ASINs, it won't be account wide, the brand Tailored Promotions, it's for the whole account. You don't have any control over that at all. But the coupon, you can target ASINs, you can do it for specific ASINs, you can retarget the last seven days with a specific discount you can run.

Brett:

And again, that's going to be based on cart. So the brand tailored Cart, abandoner discount, that's where we're saying anybody added a cart during Prime Day or whatever time period. Now we're sending them a discount where if they now go to purchase, they'll see that discount and they'll be the only

Christine:

Ones discount, correct. The coupon I would think is probably going to run the same because it's the brand card, so it's probably the same exact data.

Brett:

Got it. But that's just where your specific products with

Christine:

Coupon around this product a deal. Maybe you run a lightning deal and you didn't get all the conversion that you wanted. You can opt in with another coupon for 'em. Another thing to keep in mind is shortly thereafter, Prime Day is October Prime Day. So you literally have until the end of August to get yourself in line for October Prime Day. That's about 45 days before the October Prime Day window is going to start. I would think that probably Amazon's going to start populating the deals in the ads console very soon after the July Prime Day is over. So keep your eye on that. I would say select as many deals as they're going to offer. You see what they end up giving you, and then you decide if you want to take it or not. But if you never pick it, opt out, you never have an option to have it. So pick it and then see where you are, inventory wise, margin wise, et cetera. And then you can discern if you want to run it or not. And then right after that, guess what? It's Christmas, it's Cyber five or Cyber 10. So this is really the start of the fun.

Brett:

It begins. It's so wild after Prime Day, basically you have 45 days before October Prime Day, then we're peak holiday shortly thereafter. Yeah, so it's going to be a fun ride for anyone selling on Amazon, starting here July and then moving forward. So Jonathan, what about for you? So on the ad side, what are we keeping in mind right after Prime Day or kind of the final hours of Prime Day and then ongoing, what are we doing with budgets, bids, making sure we continue success, but also making sure again, we don't burn through

Jonathan:

Budget. So first thing that I always do is make sure that any of those more aggressive adjustments, I'm thinking like top of search. And I mean that's really the main one is top search and maybe any manual bid adjustments themselves, reducing those, but not necessarily going all the way back to pre Prime Day levels. Because as Amazon always tells us, there's typically more traffic post Prime Day as people are still kind of seeing if maybe there's any deals still hanging around or they're bummed seeing something that somebody else got with the promo and then they're coming to see if that's again, still got the deal or maybe they're just checking it out. So you still want to try and capture some of the extra engagement that we see after Prime Day. But no, knowing that those shoppers have a lot less intent to buy just because they kind of built up to the hype of Prime Day.

There were a bunch of promos, and now they might be thinking, man, if I come a couple of days earlier, I would've saved like 30%, and maybe they're a little less likely to bite the bullet on that product. Now that being said, if you have longer promos running, of course you want to still be being moderately aggressive with those ads. Again, not as aggressive as on the event itself because getting back into, let's get back to our margins that we want to be operating at for the rest of the year. And then there are some ad types in terms of display ads and the views remarketing, purchase remarketing. And I like to, especially if you have a consumable product, setting those up knowing of course, what's the likely frequency repurchase rate, because if it's a 30 day supply of a supplement versus 180 day supply of a supplement, you're going to want to fine tune that targeting for that in terms of, Hey, I'm not going to show this ad to this person until it's been at least 160 days if they've got 180 day supply so that they start thinking about it again and knowing that and kind of aligning with that.

And then because there's so much more audience data, the display ads in terms of, because you can obviously target those audiences that saw or purchased your product well, you can also target audiences that saw or purchased competitor products, similar vertical products, and really that's an insane amount of audiences that they let you go after. And again, I do like to run those ads, but we have to align that with the client's strategy and goals going forward because those aren't necessarily going to be huge return on ad spend going after those. But that is how you grow getting more new to brand shoppers and continuing to feed that flywheel, and I like to call it a snowball. Keep snowballing that brand further, further and up.

Brett:

That's awesome. And this is one of those things where, man, you got to be diligent ahead of time to really get things laid out and prepared properly. You got to pay attention to all the details during Prime Day to make sure you're accelerating sales and not missing opportunities, but make sure that's not waste. And then have your game plan in place to make sure you can get an ongoing effect in more new to brand shoppers. Obviously, you won't keep the elevated sales of Prime Day going, but you'll get that elevation and then the new normal will be higher than it was before pre Prime Day. So let's do this. Let's talk about a few deadlines. We're basically out of time. You guys have done a fantastic job. It's been so fun. Let's talk about deadlines we need to be aware of. Let's talk about just tips or tricks or tidbits, kind of a grab bag of anything we need to know for Prime Day. So Christine, why don't you go first,

Christine:

Your prime exclusive discounts. Set them up as early as you can because you're going to have to deal with a lot of the referral price errors so that you can have it all set and ready to roll. You can get it to your ads team, you don't have to worry about it. Check your pricing for your lightning deals and best deals. They will adjust continuously. So just make sure you're really checking that and make sure you keep your eye on the prize, which is going to be October Prime Day and Christmas. So set yourself up, build your organic rank, make sure your listings are ready to go. If you don't have time and you can't really optimize your entire listing, all your infographics and everything, do some keyword research, drop some new search terms in the backend, do something just to give yourself a little bit more of an advantage of the next guy. If you can do some other title optimizations, et cetera, start working on that. Get yourself ranked in the algorithms for maybe some new keywords and you're ready to go and enjoy the ride.

Brett:

Love it, Jonathan. Sorry, I enjoy the ride. I think, what was last piece? Enjoy the ride. Dude, it's so fun. We get so excited when holiday rolls around. It's like our Super Bowl for the whole D two C space for Amazon sellers. We get a couple of Super Bowls, right? We get July Prime Day, October Prime Day and holiday. So I geek out about this. We have a little dashboard we watch internally. We're watching how the sales grow and what clients are crushing it. And so yeah, I'm excited to watch how things go, and I know all our clients are going to be ready. All the OMG clients are going to be ready to take full advantage. So Jonathan, from you, any other tips, tricks, tidbits, any kind of last bits of advice?

Jonathan:

Yeah, from PPC side, it's really not anything fancy or flashy. It's really about, as I've been saying in a common thread throughout the call is like it's a cohesive strategy, but the whole brand PPC can't stand alone. Just perfect brand management in terms of your listings and detail pages can't stand alone. You have to know your margins and align that with your promotional strategy and your PPC strategy. From the ads side, it's really about consistency, being consistent with making sure the ads are pushing in the direction in terms of performance that you want to be going towards. But also you have to know that if you're just going for purely an ACOS number, you're probably going to end up bidding yourself down and down and down until you're getting no impressions and your ad sales have dried up and you're wondering why you're not getting any new to brand orders. And that's a delicate balance of give and take because of course, you can't just infinitely scale your ACO because of course that's going to eat into your margins at one point or another. But yeah, it's just about being consistent and staying focused on your goals and using the ads to help you get there. Got

Brett:

To be ready to play ball, man. You got to be ready to step up a little bit or you're going to miss out on Prime Day. And hey, I would say you got to choose the right partners, and that's where shameless plug for team OMG. If you're listening to this and you're like, dang, I need people like Christine and Jonathan managing my business on Amazon and helping it grow, then we would love to talk to you. And so obviously, based on when you're listening to this, maybe a little bit late for Prime Day, kind of depends on when you're listening, but reach out to us mg commerce.com, click on that. Let's talk button, request a free strategy session. We'd love to talk to you. If you're a growing brand, successful brand and just looking to get bigger and more successful on Amazon, we would love to chat with you, Christine and Jonathan, ladies and gentlemen. Hey, you guys crushed it. That was super fun. I'm so impressed. Thanks, Brett. There's going to be calls for people to be like, Hey, we want more. Christina and Jonathan, get this bright guy out of here, new co-host Christina. Jonathan, you're going to have to go

Christine:

Through my agent for that, most likely.

Brett:

Yeah. Okay. Get me in touch, connect me with your people and yeah. Yeah, that's awesome. Alright, thanks guys. And as always, thank you for tuning in. We'd love to hear from you. If you've not given us that review on iTunes, we would love that. Makes our day, helps other people discover this show as well. If you listen to this and you think, Hey, I know somebody that could really use these insights, please share this episode with them. And with that, until next time, thank you for listening.

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Episode 279
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Dave Kline - MGMT Accelerator

Level Up Your Leadership: How to Hire, Manage, and Lead a Thriving eCommerce Team

I first heard Dave Kline speak at E-commerce Fuel Live in New Orleans a few months ago. It was an awesome event, and Dave's talk was a highlight for me. 

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Dave is a seasoned leader with over 20 years of experience working with teams at Bridgewater and Moody's. Dave shares his candid take on how to level up our leadership skills, spot great talent, hire the right managers, and build a team that drives business growth and success.

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Key topics and lessons discussed:

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  • The importance of simplifying processes and avoiding unnecessary hiring by focusing on the most critical problems in your business.
  • How do you identify the right roles to hire for and avoid compromising on character when bringing in new talent?
  • The benefits and challenges of promoting from within versus hiring external candidates for management positions.
  • Strategies for maintaining a flat, collaborative culture while introducing a management structure to support business growth.
  • The significance of setting clear incentives and codifying cultural values to encourage desired behaviors and decision-making processes.
  • Creating rituals and intentional moments for feedback and idea-sharing to counteract the potential drawbacks of a hierarchical structure.
  • Balancing the measurement of managers' performance based on team output and the sustainability of the team they lead.
  • Embracing the concept that being a good manager now requires leadership skills, such as being kind, direct, developmental, and coaching team members to reach their full potential.

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Here are a few insightful quotes from the podcast:

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"Leading is just being kind and direct. Leading is being developmental and coaching. Leading is helping people be better than they, maybe themselves, even believe they can be."

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"People will cut a lot of corners for short-term gains, and you end up eroding the long-term  sustainability of the team."

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Chapters: 

(00:00) Introduction

(02:35) Dave’s Background at Bridgewater

(17:13) Minimum Viable Management Explained

(20:12) Common Hiring Mistakes to Avoid

(35:54) The Benefits of Maintaining a Flat Organizational Structure

(43:01) Strategies for Creating Clear KPIs for Managers and Teams

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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, Bryan Porter and more. 

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Other episodes you might enjoy: 

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Transcript:

Dave:

But my real goal was I think you could manage excellently with eight post-It notes.

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 diving into what could be the most important topic for the future and the success of your brand. We're talking about leveling up your leadership, how to spot great talent, how to hire good managers, how to build a team and lead a team. So we're not going to get into the tactical business growth stuff on how to improve with Google ads or YouTube ads or Facebook or things like that. But this will permeate every aspect of your business, impact your growth. Now, if you want to sell your brand one day, which I know a lot of you do, this is going to be critical for that as well. So my guest is Dave Kline, and Dave has 20 years experience leading teams. He spent 10 years at Bridgewater, he was at Moody's, so he worked for Ray Dalio's team at Bridgewater.

And I first met Dave at E-Commerce Fuel Live, Andrew Ian's event in New Orleans. We're both speakers there, got to hang out at the speaker dinner and really just loved his content. It was one of the highlights of that entire trip. And so we're going to unpack some of his wisdom, as much of the wisdom as we can cram into 45 minutes or so here. We're going to do that. Dave, now he and his wife lead management accelerator and they've worked with over 800 leaders, built a community of 200,000 leaders. And so with that, Dave, welcome to the show man, and thanks for coming on. Hot Damn,

Dave:

Brett, first of all, you must be a terrible manager because you just raised the expectations on this podcast so high. There is no way that I'm possibly going to clear that hurdle, but I appreciate,

Brett:

I'm a hype man, dude, that's what I do. Have you ever looked at the working genius? Patrick Lencioni and his framework

Dave:

Know, I know some of his other stuff, but I don't know the working genius.

Brett:

Yes, it's pretty cool. So anyway, there's one working genius that's called the Galvanizer. Someone just galvanizes the team and motivates the team and that's my genius. So if the whole marketing thing owning an agency, if that ever fades, I'm going to be a hype man. That's alright.

Dave:

You're my Michael Buffer. Let's do this.

Brett:

Awesome man. Well, so love to kind of dive into your background. I know a lot of probably Ray Dalio fans out there. I confess to you, I read a lot of the book that book Principles man, that is a tome man that is not an easy read, but it's rich with great content. So everybody knows Ray Dalio. What was it like though working part of his team working at Bridgewater? What was that like?

Dave:

It was pretty wild. I mean I spent a decade there and honestly probably one of the stories that catches a lot of people's attention was before I even showed up, and I know we'll talk about recruiting a little bit later. So I did my first round interview there and three different interviews. The third one was with two people, including a recent undergrad and sort of a mid-level manager. And the topic was, should there be a market for human organs? And they're like, okay,

Brett:

You're applying for a management job and they want to know, should we be harvesting kidneys? Yes,

Dave:

Well should there be a market to trade kidneys? And they look at me all seriously. I'm like, okay. They're like, we'll be back in five minutes to discuss. And I'm like, well, what's the rest? What else is there? The direction was should there be a market for kidneys? So we then spent the next hour debating it. I had to make my case, they were taking the counter. Part of the reason they have a junior person in there was to sort of be needling and obnoxious. Could you take feedback from someone who might be 10 years your junior, but twice as smart as you? And if I'm being honest, I sucked at that process. You do not want me making the case for human organs if we need one. And so anyways, the day ends, I'm debriefing with my recruiter and he's like, how'd the day go?

And I was like, I crushed this interview. Love this guy. Great conversation here. I think we're really aligned. The organ market one, I sucked. Here's what I could have done better, blah blah, blah, blah. Here you go. And I thought we were done. You don't bomb an interview at Bridgewater and keep going. And so the next day I get an email and it was my feedback on the interviews. They were now transparently sharing all the raw unvarnished thoughts from the three interviewers and it says they want you to come back because your self-assessment and their assessment of you was identical. So I had this brutal

Brett:

Feedback. This guy is self-aware is one key thing they identified.

Dave:

And so it was just interesting to sort of see them showing versus telling, right? That it wasn't necessarily that you had to be perfect all the time, but and understanding how you fit into the overall machine, where you would call your own number because you're strongest versus where you'd rely on your peers because they're et cetera. They valued that way over my ability to decide whether livers should have futures anyways. And that was before I even locked in the door. And then 10,

Brett:

Give us your top 10 headlines for selling human livers go. But it turns out their thing wasn't so much, how are you going to defend that? Although I'm sure they were looking at how quickly you think on your feet and how can you be persuasive and how can you be logical and handle criticism and stuff. But it was almost just as much the feedback and can you handle the feedback. I know that was a really rich part of the culture there is everybody gives and receives feedback. So yeah, maybe it was as much, it sounds like it was just as much on the feedback portion as it was how you did it. It

Dave:

Was, and I tell this story all the time, a lot of people dunno, but we had a tool in-house where everyone had an iPad and you could rate each other real time and it showed up on the other person's iPad and not only the other person's iPad, but it showed up on, well, it's effectively a Twitter feed of feedback to anybody in the company. So if you're bored at lunch one day or if I'm bored and I'm just curious, what's Brett been up to? Can just go into your profile and be like, whew, Brett had a tough podcast this morning and

Brett:

Nobody liked that intro. Dave liked it, nobody else did. Yeah, exactly.

Dave:

Which while you're in it, it feels like a fire hose, right? You're just constantly good, bad, good, bad. It's so overstimulating, but it's also working five years in every year. So many other people who are smart and see the world differently cheering you on, calling you an idiot when you're an idiot. But you just get really clear and get really good at metabolizing that and saying, how can I use this to be better so I wouldn't trade it?

Brett:

Help me understand this. So you are leading a meeting, right? You're standing in front of a group, you're leading a meeting, you've got your iPad, other people are rating you in real time on what they liked, what they didn't like. This was convincing, this wasn't, you really didn't handle yourself well here. That joke was terrible, whatever. You are getting that feedback as you go or you're unpacking it later

Dave:

In the meeting there's a grid and down the left side is givers and down across the top are receivers. And so there you would be as a receiver and you would just see this red column just like, because the expectation is if you were in a meeting, you were giving feedback. And a lot of ray's belief is that we constant, everything was another one of those. Everything was a case to be studied and learned from. So a lot of times he would have a meeting with six participants and invite 80 observers. The only expectation of the 80 observers was to constantly give feedback as a way to test whether they were seeing the things the same way. So you could make one gaff and get 80 people hammering you on that one thing within 30 seconds.

Brett:

Dude, that would be so nerve wracking. Did it take quite a bit of time to get used to, okay, this is not just a meeting, this is a meeting plus a performance I've got to be on because I'm going to be judged in everything that I say here.

Dave:

It did. I would've said it was funny. You're making me harken back to a story I hadn't recalled in a while. First week there I'm in a meeting and I don't know, I think I checked my Blackberry or something because it was kind of a meeting for context, but I wasn't an active participant and my boss took me aside and he was like, I don't think you understand the expectation of a meeting here. And I was like, okay, well what's the expectation? He's like, the expectation is you're so mentally engaged actively that the person running the meeting could leave and you could step in and no one would notice a difference. And I was like, okay. And then realizing super meeting rich culture, because a lot of that culture was premised on this idea of, well, we're trying to uncover alpha. Alpha is a highly competitive zero sum game.

And so the best way to do that is to get really smart people with dissenting points of view and have them debate until we figure out what's true. And then that permeates everything. So it's like a meeting rich culture heavy in debate. The expectation is I could run any meeting that I'm in, if someone stepped out and my wife would talk about it for the first six months, I'd come home and she'd be like, how was your day? I would just be like, I don't think I have another word in me. You know what I mean? I don't have, I've been on for 12 straight hours.

Brett:

I can't think. I can't process, I don't remember my name. We're going to have to talk

Dave:

Later. So the good news is by the time this app shows up with all the red dots, you're already used to playing every meeting as though as your last, so a little bit performative, crazy. I dunno. Just another piece of the puzzle.

Brett:

So interesting. So what of that do you think is applicable to most businesses? Because some of that I think would borderline be unproductive impossible in a lot of organizations. What translates, what doesn't?

Dave:

Look, I think I've talked to a lot of folks who've spent time there and we're all now in the world working in different domains, working for different companies, running our own companies. The consensus seems to be that 65 to 70% of it sort of seems to be the number was pretty broadly applicable to some degree. There's this one idea that we should have shared mental maps and say, okay, well that's Bridgewater code, but what does that actually mean? It means if we're going to accomplish something together, we should at least agree on the core concepts of what we're trying to accomplish and how we're trying to accomplish it. And we should decide what that looks like before we do it. And then that way we both know what we're going to go do. We would just shorthand that as clear expectations, good communication, but there was a lot of rigor put into it.

There was a language around it, there was value. So I'm like, oh, well, that you tell it to most CEOs and they're like, oh, I'd more of that in my company. I'd like my team to have the shared mental map so they operate together better. So you're like, oh, that's exportable. And then if you ask people, well, do you give feedback was prevalent, should it be the 11,000 pieces of feedback that I got publicly put inside of every meeting? Probably not. But if you ask again, most CEOs, most executives on a scale of you guys give way too much feedback to you. Give way too little. Almost everybody's over here 100%. And even in the feedback they give, they have a tendency to sugarcoat it, couch it, Hey, the famous sandwich.

Brett:

I've been guilty of that one before, Dave, of the, Hey, you're doing really great here. This kind of sucks, but you're really super great over here too,

Dave:

So bad. So I think that part is also exportable that the test, a lot of the leaders we'll work with will say, well, I want to be able to give feedback more, but I'm a really empathetic person. I'm a really kind person. I don't want to be seen as mean. And so I hold back or I don't tell 'em the whole thing or I surround it with a lot of other stuff. And I said, well just play a game with me for a minute. Imagine you're working for somebody and you are constantly coming up short in some way and they notice, but they don't tell you and then you come up short again and they notice and they don't tell you. And right now they're forming a picture of what you're like. And then three months down the road, that picture has hardened you are incompetent and incapable of this thing that they're imagining they've never told you once, but now they don't even have this observation that you could have a conversation about. They've decided and then they share that information with you and you're now mad at two different things. One, why is this the first time I'm hearing of it? And two, you are the person who's supposed to be most invested in my career after me and you're not even willing to tell me when I'm screwing up. Does that feel kind? And then everyone's like, well no, that's not kind at all. And I'm like, well, that's what you're doing.

Brett:

Yeah, it's so good. It's so good. I love, there was a quote from Steve Jobs, I actually heard it in the book, radical Candor, which actually is a funny story that you were just telling me before we hit record, which I want to explore in a second. But there's this quote from Steve Jobs where he was talking to Johnny Ive and the head of design and stuff, and Steve was like, Hey, this sucks or whatever. He probably used more colorful language than that. He like Johnny W told your team. And John was like, well, they're working so hard, they're overwhelmed. I'm empathetic or whatever. And Steve said, no, Johnny, you're just vain and you want them to like you, which is pretty direct. But I'm like, yeah, that's probably true. In a lot of cases we definitely, I want people to feel loved and accepted and things like that, but there's also probably an element of that that I'm just being vain and I just want to be liked, right? But we have to get past that and say clear is kind and giving feedback is kind withholding it is actually the

Dave:

Opposite. It's funny, I thought the quote was going to be different. I thought the quote was going to be, why are you letting them work so hard on something that sucks? Do

Brett:

You know what I mean? That's good too, actually. Yeah,

Dave:

Because we all want to do things that matter. And so please don't hold back and tell me I'm pouring myself into this thing that is terrible. I'd rather know as soon as possible so I can actually pour into something that's going to

Brett:

Be used. Totally. Yeah. Really, really great feedback as well. So yeah, we had Steve Jobs feedback, Dave Kline's feedback. You mix those together and man, got some powerful stuff there. So yeah, I was telling you before you record, I'm a big fan of the book, radical Candor by Kim Scott. Read it multiple times. Our team has gone through it. We talked about it because we tend to be, we're a work culture. We're big, we hire on culture, we talk about culture a lot. We tend to be too nice. I think as a culture that probably starts with me. I'm sure it starts with me. We give feedback. We need to give more. And so we've kind of gone through some of the trainings and stuff, but I believe you got maybe into a bit of a Twitter, Twitter feud or a back and forth with Kim Scott. So we got to hear this.

Dave:

We sorted it out. We sorted out. Eventually. I had have to dig it out. It was a couple of years ago, I wrote a thread when threads were the thing, and it was very much about feedback and very much premised on my time in Bridgewater. And then at the end, I think I included a framework from Ray, and then the next one I included a framework from Kim and sort of tagged her and just sort of, I think for most people the truth is somewhere in the middle I would say the primary, the difference between the two Ray is probably more extreme. Where he would actually thought, and you'll see this in the book, sometimes it was necessary to dial it up that he called it, put some pepper on it. Or if you have to choose between function and style, choose function, it's all very much like it's true or it's not true. It doesn't even matter if I think about how my words are, I just transmit it up to you metabolize. And I would say I didn't really land there because the thing that always was in my mind, managing teams, even within that organization is it's not about my transmission, it's about their reception. The reason I'm giving feedback is because I want them to improve in some way. And so if I do it in such a way that they shut down, then I'm wasting my breath and I'm wasting their time. You missed

Brett:

The point. They can't metabolize that feedback and now you've just wasted your time and yours.

Dave:

And I thought radical candor is a little bit more of that balance between challenge directly and care. Personally. Funny, I had it in there, but she went line by line of my whole thread and commented on each individual one to be like, yeah, I'm with you on this. No, you're an idiot here. Back and forth. And we, it was this crazy Christmas tree. It's like

Brett:

Dave, I'm saying idiot, but it's not mean. It's clear.

Dave:

And I care. I care personally. I care about you even though you, yes, I care about you Strange Twitter man, but all as well ends well. So

Brett:

Yeah, it's awesome. But it's just really cool that you got into a back and forth Twitter debate or discussion with Kim Scott, which is awesome. So let's dive in. Let's get practical here. So listening to your talk at ECF Live, loved it. You introduced a concept that I'd never heard before called Minimum Viable Management, heard of MVPs, minimum viable products, but never heard of minimum viable Management. What is that? Why is that a thing? Kind of lay that out for us.

Dave:

You haven't heard it? I think I made it up the night before. I'm either, oh, did you really? Yeah, I'm either the best of the worst.

Brett:

That's

Dave:

Awesome. But

Brett:

Hey, okay, so we got to pause for a minute. So I'm notorious, I get to speak a lot. I say a lot, 7, 8, 10 times here or something like that. I always, always, always 100% of the time tweak my deck the night before and the morning of when I speak every time, I don't know why. I'll plan it out. I get there, kind of read the audience, or I'm more inspired when I'm in the moment. I always change it. It drives organizers crazy, but I feel like I deliver. So it's okay.

Dave:

Well, I I'm glad to know that because sometimes you come in the night before or the day before you get to start chatting with some people. And I was chatting with a bunch of the folks at ecf and the thing I kept hearing was this somewhere between reluctant and accidental manager. A lot of people started to side hustles and then became a business, and the business had employees. And all of a sudden they're like, I have all these people who are responsible running team, be managed, and somebody wants to be promoted and someone's not good. I might have to fire them. And so there weren't that many people being like, I want the all singing, all dancing masterclass of management. It was like, what is the least I could do to manage well? And I'm like, oh, okay. And I'd be like, well I, I'd probably do these five things.

And they're like, okay, but if I could only do three and then I'd be like, okay, well maybe these three. And they'd be like, okay, but which one? And that's when the light bulb went off. And I'm like, if I really had to strip it down and say, I think you can out manage 90% of people if you did these things. And I just sort of jotted it down and on eight post-it notes everything from should I hire to what should I hire to, how do I hire them to then once I've got set the expectation, give them the work, oversee the work, give them feedback and decide if I need to hire more. That was sort of the super simple version. We can click into any of those where it's helpful. But my real goal was I think you could manage excellently with eight post-it notes.

Brett:

Yeah, isn't that great? And I do think the ability to simplify is such a rare skill and a valuable skill and I think it takes more brilliance to simplify than it does to make things more sophisticated or more complicated. And so I want to definitely double click on a few of those things. Can't unpack all eight, although I wish that we could. But let's talk a little bit about the hiring process. And maybe you want to dive into, I'm evaluating the need because I know that's something you talked about in the event, or I'm actually trying to choose the right person. But where do you find brand owners, CEOs or just company owners, where do they make mistakes when it comes to hiring managers?

Dave:

Perfect. I'm going to go one step back. You said something that connects to the very first one too, which is it takes more elegance, it takes more thought, it takes more courage to simplify than to add. And so even in that first step, which I think most people would skip, it's avoid hiring. I think a lot of us naturally we run out of capacity in our automatic instinct. Your first instinct is lemme hire somebody, lemme get some help. And I'm trying to get people to flip it and say measure of last resort. And so what are the alternatives if that's your last resort? Well, one measure is to stop doing some stuff. We worked with a company, I'm an advisor for teams overwhelmed. They're growing gangbusters. The word burnout was popping up way too often. And so we sat down and just like, well, what could we stop doing? And the first place I started was like, lemme see your client book and show me profitability by client and effort by client. And what you saw was a very common phenomenon, which was some of the most demanding clients were unprofitable. And I was like, great fire them. And it was like heresy because these were like, this company

Brett:

Was, can't do that.

Dave:

Yeah, the company was now eight years old, but these people have been around a long time. There was loyalty. What do you mean fire a customer? I'm like, you're literally losing money them by them being

Brett:

Losing money and burning at your team. Why are we doing this?

Dave:

And I was like, and you don't have to be cute about it, you can fire them with price. So just take that little tranche of 10% and double the price. And what ended up happening was most of them left and the remainder that say were now profitable. And all of a sudden the team got back like 20% of their capacity, they were making more money. And they're like, oh. And I'm like, you didn't have to hire

Brett:

Anybody. So brilliant. And what's so cool, they made me think of a Peter Drucker quote that I think you'll like if you haven't heard, you probably heard it. But he likes to use this test of, Hey, knowing what you know now, would you hire this person, start this project, keep this client, take this client on knowing what you know now, would you do those things? And if the answer is no, then why do you persist? So if now knowing all the details, why are you continuing to go down this path? Just make the

Dave:

Decision a hundred percent. And then there's all some of the common pieces beneath that. So maybe you can't quit things, but automation can you streamline, et cetera. And it's shocking the number of things that just because of that natural tendency to add is sort of build up barnacles on the front of the boat. And occasionally as the leader you just come in and scrape 'em off. And let's get back to the basics and you'll be shocked sometimes that's all it takes. I've seen countless teams where actually the move to add capacity was to remove the one person who was underperforming and toxic.

Brett:

Wow. So rather than hiring, it's actually getting rid of somebody to free everybody else up mentally, emotionally, time

Dave:

Wise, it's one of those people, when you let them go, the rest of the team is like, what took you so long? And so anyways, I know your question was about actually finding good talent, but it's more the

Brett:

First step is do we actually need somebody or what else do we need to change? Maybe there's just a whole bunch of stuff we need to stop doing. Maybe we've overcomplicated our lives so much that we're spending 30% of our time checking off tasks instead of doing actual work

Dave:

Or whatever. Exactly. Then I think when you're like, okay, yes, I've done all that, but I do need to hire, I'd say probably the most common mistake is people hire off what I'd call a very squishy visualization. They haven't really taken the time to say, what is the system that I currently have? What is the most important place for me to put new talent? And I might want to, the distinction I make is every company has a bottleneck at any point in time. I think I may have told the story at ECF, but we sat down with these people who are sort of in the training consulting, same business we are, they're 20 years ahead of us. And it was over lunch and he's like, what's the plan for the next year? And I was like, oh, we're going to social media and newsletter and courses and programs and coaching and speaking.

And he was like, yeah, what if you had to get rid of one of those? And I was like, oh, it's all interconnected. It's a flywheel, it's beautiful. He's like, yeah, yeah, yeah, but humor me. It's just lunch. I was like, well, I guess I'd cross this one out. And he is like, what? Okay, but if you had to get rid of another one. So anyways, where the story goes, we cross out everything but our cohort program, which is kind of our flagship, it's where we impact the most people. It's very profitable for our business. It's great. And he was like, well, how hard is that? You teach that full-time for a month? And I was like, oh no, we teach for four hours a month or four hours a week for a month. And he's like, oh, so you could do two a week.

And I was like, yeah's, like that's actually only eight hours. He's like, you could probably do four a week. And I'm like, I could, I guess. Yeah, it would be a lot, but I could teach four times a week. And he was like, so your business problem is demand. He's like, do you have 200 people waiting in line to fill up four of these next month? And I was like, well, no. And he was like, so the only problem in your entire business is you don't have enough people who want to take the course. And I was like, how dare you? How dare you dare you

Brett:

Make that so simple and

Dave:

So clear over lunch. I bring that up.

Brett:

I think you

Dave:

Even, sorry,

Brett:

Go ahead. Sorry.

Dave:

No, I bring it up because it's so easy to miss in your own business. Everything that I had was just elaborate, beautiful plan, flywheels and all the right things. And in 20 minutes he sort of reduced it down to you only have one problem to solve and all the rest of the problems you're trying to solve don't matter until you solve that one problem. And so I think that to me is like, can we all get that ruthless about our teams, our business and say, what's the one problem? And then am I going to solve it by freeing up somebody I have to focus on it? Or am I going to solve it by bringing in someone who has the expertise to solve it for me? And that's how I, yeah, it's so

Brett:

Good. I think sometimes we just jump right ahead to, okay, well give me the tips and tricks to hire somebody or what's the best tool or the best website or the best whatever to hire somebody. And you're like, well, wait a minute, do you need to hire someone at all? And then you're like, well, okay, but you're going to hire someone. You sure you need to do that? But what is the problem you're trying to solve? And get super, super clear on that. Take a few more steps, take a little more time in the beginning because man, this is one of the biggest decisions you make. That's one of the biggest expenses you make. You get this wrong. It's so hard to unravel when you've got the wrong person. Even the process of firing them or letting them go is really painful and really hard. And you got to make sure everything is buttoned up, especially as you get bigger. We've over 50 total team members. You got to be careful when you fire someone. So getting this decision right man, you better take the time upfront to make sure you're crystal clear. So love that. Other mistakes you'd point out,

Dave:

I think the other one is you sort of work backwards from your point of like, okay, you had to fire the person. Why didn't it work out? Almost? I would say the 70%. One is not, this person didn't have the skills or the credentials. It's this person didn't fit to the culture, they didn't align to our behaviors, they didn't operate the way we operated. And so often when people are hiring, it's from this point of desperation, it's like the team is burning out, everyone's overstretched and you're like, I just need the capacity. And they make the trade off, they trade off. I need to bring in the credentials and I'll give up on the character. And every time I have yet to make that move and be surprised on the upside, I always pay for it down the road. And then I'm in that expensive death spiral of managing them out, having to do that thoughtfully, start the recruiting process over all, it's six to nine months when you get that wrong. And so I dunno, the other thing I encourage people is to be very clear what are the behaviors that are non-negotiable for your team? And then B, devote sufficient amount of time to assessing for it. And then C, don't compromise. If they are showing you signs in the interview when they are trying their absolute hardest to convince you to hire them, it is not going to magically become better when they come in two weeks.

Brett:

Totally. One of the things we've adopted, and this is not mine, I heard it on a podcast, I think, but if it's not a hell yes, it's a no. And so we've tried to let that bleed to hiring as well. And one thing we've done pretty well is hire for culture. We have very clearly defined culture values. We talk about them a lot. So we hire for them, we fire base on them, things like that. But on occasion, there have been a few people, and I'm thinking of one very clearly where this young lady, she applied, she kind of impressed me. She was very smart, she impressed my COO. But the two team interviews she had, they were not a chance, do not hire this person for these reasons. We're like, no. And this was me being like, no, I've got a pretty good pulse on things.

I've got a pretty good read on people. I understand people. She's going to be a winner. And so we ended up one girl who's been with us forever, she's like, okay, I want, if you end up firing her, I want you to buy us a cake. And so we made this wager and we had to fire her and it worked out just as the team predicted. And so what that's taught me is there's several checkpoints along the way, so our gut is right a decent amount of the time. But if I had just listened to my team and just said, okay, you're right. They're like, these things are impressive, but you're right. Or I'm trusting, right? So this is going to be a no. Anytime I've tried to force through that, always bad things happen. Always.

Dave:

There's this Adam Grant wrote a book give and take, and there's this amazing study he cites in there. It's about this school in California. And it just ties to this exact point where this company comes in and is like, oh, if you let us interview all of your students, we can identify the high potentials so that you can appropriately support them. And so the school's like, great, we we'll totally do that. They go through the thing, they come in, they deliver the list to the teachers. They don't tell the kids who the high potentials are. They tell the teachers the year plays out, they come back, they look at the test scores, engagement, happiness by every dimension. These kids were thriving. They had cracked the code, they had been able to predict who was high potential and then they revealed the methodology for identifying 'em. And it was a random selection. The only thing was yes, the only thing that was different about them was the teachers believe,

Brett:

Wow, the teachers

Dave:

Shifted. The teachers started to assume, oh, this high potential student didn't get the explanation. It must be me explaining it, not their ability to retain it. And so they gave them the benefit of the doubt they operated differently, et cetera. And so I share that because in some ways this ties to your team. As soon as your team had decided that this was not a high potential hire, it had basically been decided.

Brett:

Interesting.

Dave:

And so to your point, it's like if it's not a hell, and again, I'm not saying it has to be consensus, you don't have to have every single person, but it sounded you like you had a couple strong yeses and a couple vetoes going on, and there was

Brett:

A lot of nos, like an overwhelming amount of nos except for me and my COO and we're like, Trump card, it didn't work out. But other hires don't have to be unanimous, but it does have to be, there's strong

Dave:

Support here. Yeah, we said two. Hell yes, and a novito. I didn't want anyone to say absolutely not, but I would take maybes and yeses as long as there were two people who would fight over the person.

Brett:

Yep, yep. Love that. Love that. So good. Cool. So one question that comes up a lot and something that we've even wrestled with, and as we grow, we're looking at different things, but you're hiring a manager, do you favor promoting from within? Do you favor going out and finding the expert? I know for some teams it's like, well, there's only me on the team, so I've got to hire externally. But if you've got a team and you've got a bench, and do you develop talent? Do you recruit talent? Is it both? What's your opinion?

Dave:

I hate to say it depends, but it does depend a little bit. Let's call it all things being equal. If I could promote from within, I would promote from within. I think that for a couple of different reasons. One, there's just sort of the probability of success. You already know that this person fits into your company. You already know they work well with the team. Lots of things that no matter how much you vet an external hire, it'll be a way lower fidelity. And if you just do math, the expected value of that new hire is lower. The second thing is I think it just creates, if you want to have a higher performing organization, you want to have this belief that I can be rewarded, I can grow, I can thrive. And you could say that all day long, but if you're not showing that, it doesn't matter.

And so I get the benefit of the rest of the team from them seeing that happen. The reason I say it depends a little bit is I think the common mistake is to say, who's my highest performer in whatever function it is, they should become the manager. And they may be a high performer for capabilities that are different than the capabilities of a manager. And a lot of times if you get those really high performers, to be honest, they don't want to manage. They don't. They've developed a pride of craft in software development and graphic design and whatever it is. And we're saying, take half that time off, succeed only through other people, devote yourself to their improvement, their growth. And you sort of lay that out and you just usually see the body language. The people who genuinely want to lead and manage are like, yeah, I know. And the ones who don't are kind of like, I would endure that for the race.

Brett:

Well, it's kind of like, yeah, you take the best salesperson, you make them a sales manager, you take the best coder, you put them in charge of the development department, and that often does not work. The best player doesn't often become best coach. It's a really unique skillset to lead people and manage people.

Dave:

And something that I see people do more and more is sort of say, well, how can I actually get both? And so you have this expert salesperson and you might say, well, there was something in my instinct of wanting them to be in charge. And it's like, well, maybe it's their approach. Maybe they have really high standards, maybe they're good at evaluate. There's things that they're

Brett:

Good at teaching but not good at managing or something like

Dave:

That. And so you could say, well, maybe I'm going to promote the manager and then I'm going to say, Hey, manager, this is like your subject matter expert and I want you to work together. You get to have more impact on the team because the subject matter expert gets to have more impact because their approach, their methodology, their evaluation cascades through and the manager gets to do manager things, people development and development plans and assessments and et cetera. And you can sort of make it where one plus one equals three. And so you don't even have to, I'm seeing more and more companies be a little more agile with how do you combine the capabilities as opposed to, I've got to be holding to a title, love that.

Brett:

Or, okay, this person's going to be the director, they're going to be the manager. So they have to have the entire package. They got to be the smartest, they got to be a teacher, they got to be a manager. That's pretty rare, pretty unlikely I would say. One question that I did not prep you with at all, but I know I can tell you're fast on your feet. So this is something we've been talking about a lot. How do we have managers in place, leaders in place, but also maintain a flat culture, right? Because it just seems like as we've grown, as I've watched other companies grow, things can become kind of hierarchical and then where people are disconnected and the person at the very top doesn't hear feedback from the rest of the team, how do you like to structure teams? Any rules of thumb or anecdotes on how do we put in place but avoid being this bureaucracy or hierarchy that really slows things down?

Dave:

I will answer, but let me ask one question to clarify. There's some inherent goodness you're seeing in a current flat hierarchy. What's the goodness you're hoping to retain while adding in a little bit more management?

Brett:

So I think the best parts of a flat structure is that ideas come from anywhere. And often the best ideas to improve our Google ad service, our Amazon service comes from the people actually doing the work. And so how do we make sure those ideas are surfaced and those ideas then are spread throughout the organization rather than a situation where the manager is expected to come up with a solution or whatever. And so I think that the collaboration and the more ideas coming from all over versus just from leaders

Dave:

And what's the badness you're trying to correct by having more managers?

Brett:

So just in my experience, and this isn't always OMG, just observations. Sometimes having managers in place slows things down. How can we, I'm trying to think of the saying, but if you have more marketing people, they want to have assistance and you have more salespeople, they want to want to add these layers to the organization, whatever. It seems like as we add managers or leaders, things become slower. The manager's like, Hey, my goal here is to create a really well-defined process well, but it's also to get this thing done for the client and then to make this thing work. So I think speed and still without the wheels coming off the bus speed, then how are we still accomplishing our mission and serving clients? So So collaboration on the flat piece is what you want to preserve. And I think speed and speed to innovate on the things we want to avoid with the hierarchy. Got

Dave:

It. Super helpful. I don't want to just give you the one size fits all.

Brett:

Yeah, I

Dave:

Love it. I think in that this is

Brett:

Live coaching, Dave, people are sitting in on a live coaching session, this is awesome.

Dave:

So look, if I'm in your shoes, I think, and you sort of pattern match to companies that have tried to do this. And again, I don't think that there is any optimization that gets you everything where we have the simplified communication and decision making of a three person company while having the structure and organization of a 60 person company. So there's going to be some trade-offs. I think as people get to this 50, right, around 50 employees, they feel this need. It's like the founder can no longer touch everybody and really understand each person Ray would talk about at that level is when he couldn't send gifts the holidays and know what people wanted anymore. So it's just very natural. So you need that to be in there so that people do have a go-to person who's caring about them, who's helping their career, who's helping them make sense of the bigger org.

I think the three things that you would look at to set that up well, and one will be incentives. And so you need to be careful about how you incentivize these managers. If you incentivize them competitively, then they're going to hoard things that give them power. And what gives you power in a knowledge business is going to be ideas. So if you want the ideas flowing very flatly, you can't incentivize them to sort of be in a winner take all you need to incentivize them to promote ideas and things like that. So I would think about one, what's the incentives that these new managers have? Two would be, and you sort of talked about, you probably already have this as I would just go back and make sure they support it. It's like what aspects and behaviors of your culture have you codified? So an example that comes to mind, snowflake, Frank Sluman was the CEO.

He took over and sort of helped them go through the scaling. He had done it two or three other companies, they added a value of go direct. And so the idea was even as we get bigger and create different fiefdoms, the first place you should go to make a decision is direct to your counterpart at your level in the other part of the organization, not up love that they thought when people didn't go direct, it was a break worth diagnosing. And so if you think about the transmission of information, and I'm an analyst and it goes up through my manager, to my vp, to my director or over to this director, back down through the vp, like holy moly, and even the semi, you're

Brett:

Never going to get an answer fast enough to do anything.

Dave:

And so the idea was they codified that. So people were very clear like, oh, when in doubt I should see if I could figure it out with my counterpart. And only then if we can't do we escalate and get help. And so I would look at how do you codify that within your values and then connected to that, I see this a lot with remote work, but I think the same thing. It's like anytime you have transformation, things that may have been happening organically, you have to reconstruct with intention. And so when people went remote, just take feedback as the example. You and I were walking back from a meeting, we're going to grab some lunch. I'm just like, Hey, I thought this part of the thing was great. I think you kind of missed the note on this. It's super casual and feedback's flowing and happening.

But it happens today and you and I are in two different countries and we finished the zoom meeting. That feedback has nowhere to go. And so I now have to intentionally create a moment where we're back together hopefully relatively soon after the thing, while it's high fidelity in all of our minds, but it's just the thing that could have been accidental now has to be on purpose. And so I'd say you need to think about the reason I was asking you what is the goodness you want to keep is because you'll probably have to put some sort of ritual in place to catalyze that goodness to push back against the hierarchy. Do you know what I mean? And so that could be

Brett:

So good, so good.

Dave:

So if it's ideas and you're like, I really worry that the best ideas are going to get tamped down, you're like, we have a ritual where every Friday it's a all hands and everyone comes with an idea. There's no hierarchy in that room or we're riffing fast. But I think if you have incentives, you have it codified in your culture and you have some sort of ritual to push back, you probably keep most of it.

Brett:

Dude's so good. I am looking at the time and I want to book another hour with you. This has been fantastic, but I do have one question that we'll kind of wrap up with you. I know you're up against it, I'm up against it as well. But how do we create clear KPIs, key performance indicators or measurements for our managers and for our teams? I do think a lot is tied into that, being aligned on direction, being able to give and receive good feedback. A lot of that ties to KPIs and measurements. And so how do you advise people construct those

Dave:

For measuring the quality of managers? That could be another hour.

Brett:

Lemme just throw the biggest question. The day out here as we're

Dave:

Nearing the, here's the two minute version, I would say whether you're setting goals, using OKRs, whatever else, there is probably some set of objectives you're going after as a company. I'm not a big believer in the perfectly cascading OKRs where someone else's key result becomes your objective and it's perfect because by the time you get that plan together, it's obsolete. But call it loosely coupled versions of that I'm a big fan of. And so if I'm then going to translate that to managers, I would say mostly I want to measure my managers on the output their teams produce. I don't know, that might be 80%, the other 20% might be the sustainability of the team they run. Do the people feel developed? Do they have good retention? Do they have good velocity, et cetera. Again, you could sort of play with the reality of your org and how you would weight those. But I find when people put too much emphasis on the craft of management, bureaucracy runs rampant. And when you basically say only the objectives of the team, and I don't care about how you manage people will cut a lot of corners for near-term gains and you end up eroding the long-term sort of sustainability of the team. So that's

Brett:

Love that. So it's to 80% output, 20%, how are you managing, how sustainable is the team that you're leading? That's brilliant. We will have to do part two because I've got a lot more questions, but this been so good, man. It's been so good and so fun. As people are listening to this and like, dude, I got to get more Dave Kline in my life. I got to connect with this guy. I got to understand the management accelerator and things like that. How can they connect with you and what are some of the ways that you help?

Dave:

Three easy ways. We're busy on social. So Decline II on Twitter, Dave Kline on LinkedIn. We have a weekly newsletter called the Management Playbook. It's always under a four minute read, super practical. And then we do run our management accelerator publicly three times a year. Next one is April 30th, and otherwise we're in-house running our program at a lot of companies. And so big, anyone has questions, we would make it very easy to reach out to us. You can do it on any of those platforms.

Brett:

Love it. And what's the u rl one more time for the management? It's

Dave:

GMT accelerator.com.

Brett:

Awesome. I'll link to everything in the show notes as well, but Dave, this was brilliant. Thank you so much serious about part two. We'll have to do that. Any parting words of wisdom? Anything you want to close the show with

Dave:

That's even more pressure than the OKR thing? No, look, the last thing I'd say is this. There's all this like, oh, I can be a good manager, but I don't have to be a leader. And those days are gone. The expectation table stakes now for people who are in manager roles is like you have to lead. And like you said, leading is just being kind and direct. Leading is being developmental and coaching leading is helping people better than they maybe themselves even believe they can be. And so I think once we embrace that, then we can start to get good at it.

Brett:

Got to lead in management. Dave Climb, ladies and gentlemen, Dave, you nailed it. Thank you so much. Thanks for having me and I look forward to doing this again. And as always, thank you for tuning in. We'd love to hear from you. Give us that feedback. Hey, give us that clear, candid, no holds barred, Ray Dalio style feedback. Maybe do that privately, not publicly if you got anything that you don't like about what we're doing here. But in all seriousness, do want the feedback. Love this community. Thank you for tuning in. And with that, until next time, thank you for listening.

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Episode 278
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Aleric Heck - AdOutreach

Does YouTube Really Beat Facebook Every Time?

You probably know him from the YouTube ad that begins with "YouTube beats Facebook every time…" 

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In this episode, I interview Aleric Heck, founder and CEO of Ad Outreach and KeywordSearch.com, to discuss how eCommerce businesses can leverage YouTube ads for growth. 

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Key takeaways include:

  • Aleric's journey from creating a successful YouTube channel to becoming a YouTube ads expert, focusing on coaching and consulting businesses.
  • The importance of crafting compelling YouTube ad creatives using a "hook, educate, call-to-action" framework.
  • Leveraging YouTube's unique audience targeting capabilities, such as custom intent audiences based on search behavior and affinity audiences based on interests and URLs.
  • The power of Google's vast data in audience targeting and the potential for even more advanced targeting options in the future.
  • An introduction to Aleric's AI-powered tool, Keyword Search, which streamlines the process of finding the right keywords and creating custom audiences for YouTube ads

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Here are a few quotable nuggets from the podcast:

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"If you can give people an "aha" moment in the ad and actually provide them genuine value, they are far more likely to take action." 

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"Google knows everything about everyone, essentially. And so I do think they're holding back on targeting somewhat to protect the user and to protect themselves." 

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Chapters: 

(00:00) Introduction and Background

(08:26) Pivoting to Coaching and Consulting 

(12:22) How To Approach YouTube Ad Creative

(34:52) Targeting The Right Audience

(42:06) 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, Bryan Porter and more. 

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Other episodes you might enjoy: 

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Transcript:

Aleric:

The goal is if you can give people this aha moment in the ad and actually provide them genuine value, they are far more likely to take action.

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 have I got a treat for you. We're talking about YouTube, what's working now, and I have an absolute expert in the space, someone that I've known about for years and then known for quite some time as well. We were in the same mastermind together. Shout out to War Room, made that mastermind group rest in peace. And so we've seen each other's work and it's been super fun. We have different areas of focus where e-commerce is kind of e-commerce focused. My guest today, Aleric, is focused on larger ticket items, lead gen coaches and consultants. But I think the synergies of what we do, bringing those together, going to create some powerful insights and results for you. And so my guest today is the founder and CEO of Ad outreach and keyword search.com. None other than Aleric Heck. Aleric, welcome to the show man. And how's it going?

Aleric:

Awesome. It's going great. Thank you so much for having me on. I'm excited. This is going to be great,

Brett:

Dude. It's going to be a lot of fun. When you reached out recently, we were talking about leads and stuff, and I was like, oh, why have I never had Arik on the podcast? And so then we made it happen, and here we are. And so thanks for taking the time. I know you've got some really great insights. We're going to have fun kind of riffing on some YouTube thoughts, and so super excited to dive in. I want to know though, this is part of the story that I do not know, how did you become a YouTube expert? Why did you choose YouTube and how did you end up here?

Aleric:

Yeah, yeah, and that's a great question. It actually is a really natural evolution. It's probably different than a lot of other people that get into different ads and that side of things. I actually started organically on YouTube 15 years ago with the YouTube

Brett:

Channel. Interesting. Yeah.

Aleric:

Back in 2009, I created a channel called App Find and I was reviewing mobile apps, tech tutorials, and what really helped the channel take off was I was teaching people how to use their iPhone for the first time. So I've got some of those basically for every iPhone iteration. I think after the iPhone four, I was doing a complete beginner's guide to the iPhone and those videos.

Brett:

Wow, super interesting.

Aleric:

Yeah, got millions of views. So millions of people watched them. One of the videos, I think the most popular one was the iPhone seven complete beginner's guy. That's when a lot of people were getting an iPhone for the first time. It has over 8.6 million views. It's crazy. So

Brett:

No way is it still getting views to this day? Did you pay attention? So are people still watching an iPhone seven video for whatever reason

Aleric:

They are, believe it or not. And actually it's a lot of other countries outside of the United States, so it's actually really interesting to see.

Brett:

I got this used iPhone seven and now how do I use it, type of thing.

Aleric:

Exactly, exactly. And so it is really interesting because the back catalog of all those, the videos that I made years and years ago on YouTube, still get those views. And I saw recently the term iPhone tutorial, we rank for several of the placements on the first page including, and it also kind of depends on where you search and stuff, but generally it usually pops up first, second result, which is pretty interesting. So some of the videos that I'd created a long time ago are still doing well. And actually today I have hired somebody out of this guy in San Francisco who I've known for a while in the tech kind of space, just to take over the channel, keep it going, and still putting out content every week. It's just not me anymore, but amazing man. Yeah. So keeping that alive, which is

Brett:

Great. It's so cool. It's one of the things that really differentiates YouTube from any other social platform is that content, good content, organic content gets better over time and sometimes it can get more traffic over time, and it can last for years. It can last way. Beyond the point that you think this could ever be relevant, your content may still live on even an iPhone seven video in 2024, still getting some views because a pocket of the world that wants to learn that and wants to see that, of course, we're focusing on ads. I know you pivoted to ads as well, but understanding the way people work within YouTube is super important. So how did you make that leap? So you saw the power of YouTube organic, how'd you make the leap to ads?

Aleric:

So I had all of these different people that were wanting to sponsor the channel, these mobile app developers. This was also the heyday of mobile apps. So think like 20 13, 20 14, 20 15, 20 16, around that timeframe. And I was actually was in college at the time and I had all these different apps that were reaching out and I was doing YouTube videos to promote some of these different apps. I would either put it into the existing videos or do dedicated videos and I was turning it into more of a business and then I got a video editor, script writer, all that stuff. So I was turning the YouTube channel more of a business, and I remember one day, and normally I would just do these app videos. So let's say it's a dedicated video, people would watch it on the channel, it'd be great. And maybe they'd come back later and they'd do another promotion or they'd work with other influencers.

Well, at one point I had one social media networking app that had hired me to do a video or pay me to do a video. I post a video, they get a bunch of downloads that this is great, can you post that same video again tomorrow? We want to double the results. Then I said, well, hey, it doesn't really work like that. You can't just post the same video to the same channel the next week and double the results. That's not how organic works. And they said, well, how can we get more people to see this video? And I said, well, what about YouTube ads? And I was aware of YouTube ads, but I hadn't really done it at that point. And this was kind like 2014 going into 2015, I think that was in the beginning of 2015. And basically like, well, what did we take this mobile app or the video that I made, just the standard video on the channel and just run that as an ad to get more people to see it.

So I set it up just from scratch. I just went in, set it up the first campaign, and then we ran that as an ad. They ended up getting thousands of downloads from that and they loved it. They're like, this is great. So then they go and tell somebody else that it was kind of a performance marketing company that hired me. So there was another developer that was working with them, which is a bigger company, which ended up becoming later on becoming a unicorn company, which was pretty cool. But there was another app that they're like, all right, we're doing a big promotion now. We've got a bigger budget. The second YouTube ad campaign I ever ran was a thousand dollars a day budget for this mobile app that ended up totally blitzing, but that's again, now today we look at that, we're like, all right, there's obviously bigger clients we have than that, but that was the second one.

They're like, you did so well with this here, we trust you to do that. And then I just learned just from doing it what worked, what didn't work. And I think I realized I had a natural affinity towards media buying. I understood how it worked. I was going in reading Google documentation, so it wasn't like I was doing completely blind, but I was just kind of diving in and it was in the earlier days of all this. So I ran that promotion and then that company and I ran that for a while, and a company calls me up, and again, like I said, I was in college at the time. They were like, they want me to drop out of college, fly out to Silicon Valley, join their team. They're like, you can run our ads, YouTube ads and all this stuff. And it was tempting, but I decided to turn it down.

I'm like, I want to build this myself. I see the opportunity here. And so then I tapped my network. So by that time I had worked with hundreds of app developers, had sponsored the channel because at one point it was the top app review channel on YouTube with half a million subscribers, all that stuff. So essentially I had all these apps, and so I just reached out to 'em and said, Hey, here's what I did with this company. I would love to do that with you as well. And I've, since you mentioned, gone away from apps and into which actually I'll get to into more of the coaching, consulting and high ticket space. That's how I got my start, was doing those YouTube ads for apps. Then I discovered ClickFunnels in 2016. I was at HubSpot inbound. Shout out to Russell Brunson exactly. Shout out to Russell Brunson. I was there. ClickFunnels had a booth. They were still early on. And I remember signing up for that. I'm like, this is awesome. Then I said, wait a second. I can go and promote things that are more than just a free app with in-app purchases.

And so that brought me into a whole nother world. I joined my first mastermind also in 2016, and the natural evolution was this mastermind was really designed for consultants, agencies and coaches. And originally I created a webinar for how mobile app developers could promote their app with YouTube ads, and it was designed to get potential clients for me. But what did I run to the webinar? Well, obviously I knew YouTube ads, they were talking about Facebook ads and this mastermind, but I was like, yeah, I'm just going to do YouTube ads. I did YouTube ads to the webinar and it worked really well. And what started happening is everybody else in the mastermind was like, wait a second. How are you getting these results? I quickly became one of the, I got some pretty good results and I said, oh, it's using YouTube ads instead of Facebook ads. And that's when they all started asking, okay, what are you doing?

Brett:

Show me the way. Help me do this for my coaching and consulting business.

Aleric:

Exactly. That led me to really pivoting over to helping coaching and consulting businesses with YouTube ads. And actually for a long time, we have clients that we run ads for as well, but one of the big areas is we also train a lot of coaching and consulting businesses in how to run YouTube ads, helping, that's like a hybrid process, so helping them set it up, but then kind of handing over the keys. And then of course we've got clients that we'll run ads for as well. And we've also got some training programs and things, but really focused in that coaching consulting area. And it's something I love just because a lot of people that are going out and they're creating some kind of impact on people's lives or businesses and it's really rewarding to support those, support

Brett:

Them. Super cool, man. I love that background story. And so we're going to dive into content in just a minute. And the creative that works on YouTube, because the creative that works on YouTube is different than the creative that works on Meta or on TikTok or on other channels. And so what I love about your background though is that you really got to know the platform. Your goal wasn't to become an ads expert. That just kind of happened, but you created great content and people were consuming that. And it was one of the top tech review sites and app or channels and you were talking about apps and stuff, and it just took off for me. My background is from a different perspective, but still kind of the background just led perfectly to YouTube. I did TV back in the day, so I did TV ads kind of pre OMG, and so I really learned what makes for a great TV spot and how to target and things like that.

And what's interesting is that there are some similarities between TV ads and YouTube. I think YouTube is more TV than certainly Meta or TikTok or other platforms are. And then I really knew SEO, I really knew search, I knew query based traffic. And so you kind of bring those two together and that is YouTube or that certainly was YouTube back in the day. And so we were all e-commerce, and I remember, I still remember where I was, I was at a Google Marketing live, I believe it was in New York City. So I guess I mostly remember where I was when they talked about video action campaigns where you can run YouTube but bid to hit a CPA target customer, a cost pro acquisition target. And I was like, this is it, man. This is where this is a new opportunity for us. We can crush this. It's like all my world's colliding. And so then it just worked. And so super cool to hear that. Let's talk creative though a little bit. I think this is where most people go wrong. I've heard Google say that 50 to 70% of your success on YouTube is driven by creative. I think that's true. I think that's true across all platforms, but how do you guys approach creative and what's your framework for creative that works on YouTube?

Aleric:

So we really take kind of a three part framework of hook, educate, then call to action with the ads, especially since we're working with a lot of experts that have some type of value and expertise to share the educate portion we found is really important and it's essentially the key. So you talked about the similarities with television ads. I think that also there's kind of a similarity here too with the expert based ads to maybe those more infomercials or a short form one, not like a super long, but I remember watching some of those types of things growing up and obviously seeing the evolution to ads and essentially really hooking people and capturing their attention. And there's different ways to hook them. It could be identifying a problem that they have showing that you're going to have a solution. It could be more of a pattern interrupt, something to capture their kind of attention.

It could be the answer to a query that they're looking at. So it's like you kind of jump right in and it's almost like that's the video that they were meant to find, which works really well. But basically there's ways to hook people at the beginning to capture their attention, get them to decide, okay, I want to watch this ad. And then from there the educate section is really providing that value. I say I call 'em golden nuggets because we do want to keep them relatively short but worth their weight in gold. So they're small but really valuable. And so you might give a few golden nuggets, a few key points that's going to help somebody. So again, we work with a lot of coaches and consultants, so they might share a couple of keys to losing weight or to selling on Amazon or things like that, or a few keys to going and changing their life or personal development, whatever happens to be.

So share a little bit of that. And the goal is if you can give people this aha moment in the ad and actually provide them genuine value, they are far more likely to take action, the end, which is the call to action because we are sending people to a different kind of place. So whereas you're on the eCommerce side, usually going to be sending more to, and there's obviously different ways to do it, but more to have people purchase a product, what we're going to be doing is usually sending to some kind of training or lead magnet. And we found with YouTube it's the best to actually send it to a video based training because they're watching video on YouTube. They'll go from video to another video and they can go and opt in for that training and then kind of continue. And usually it would be going to book a call and then become a client, or the video might, or webinar might lead to a course or some kind of thing along those lines.

But essentially the hook, educate, call to action providing real value inside of the ad. And I think that's really, really key. And I'll give kind of an example of one of these aha moments, which I think is really, I don't always do this, but I think you'll appreciate this as somebody who I know you've created some been behind the creation of some pretty remarkable ads. One ad that worked really well for kind of a nutrition coach and fitness based person is he had a kind of cup measure you can see through, so you can see filled with oil. So just imagine this kind of measuring cup with oil in it. And he starts off the ad by saying, if a calorie's a calorie, why can't I just drink 2000 calories of oil every day and stay fit? And then he said, okay, now that we've established a calories and a calorie, why do you think that you could just eat 2000 calories of pizza and be healthier than 2000 calories of salad, right?

Because everything that you know about calories is wrong. There's actually more, let's talk a little bit about macros and then diving into that. And so basically then there's education. So it gives this aha moment. It's a visual representation. It's saying, okay, this now makes sense. And if you watch that, and I know that was a big moment for me, I had my own weight loss journey when I kind of realized that there was more to it than I had thought. And it's like how can you distill that into an ad then teach a little bit, provide value? So you've changed their worldview, now you provide value, now you have a call to action at the end to get them to go and sign up for the training where they're going to actually learn. So now you have the what and the why, but what's, how do I actually do this? So it's like, okay, calorie's not a calorie. I need to figure out macros. I've learned something, but I don't know what to do, what actually how to do it. And so that's what is behind the training that people opt into. So that's just an example.

Brett:

Yeah, it's so good. And I want to talk about the middle piece. I want to really dive into the hook because I think that's where a lot of people go wrong. So we'll spend some time there in a minute. But the educate piece, this is where you want someone to feel like my life is better just from watching your at. How weird is that? I feel like I got some value from this ad. In fact, I could probably take what you just said, A calorie is not a calorie. I can go quote that to my friends. I can use that at the next dinner party that I'm at and I'll sound super smart. So there's a little bit of value there. I believe it was John Caps in the book tested advertising methods, although I may have this wrong, where he talks about creating fascinations, these little elements of an ad where it's like, oh, I didn't know that.

That's super cool, right? Super cool related to your product or your service or your offering. And it just gets me intrigued and it also delivers some value. So that's really cool. And we've got a couple other layers that we add there for e-comm. But yeah, it's a similar approach where it's like, I want to teach you something you did not know about this because it's going to change your world and then you'll want to buy my product. And so I do want to talk about hook though for a minute because I think this is where a lot of people go wrong. I think this is where we want to contrast a little bit to our TV brethren and our TV friends and compadres tv. Historically, Madison Avenue type TV ads are great at hooking and getting people's attention, but often getting attention in the wrong way, getting attention in no way that relates to the product itself.

We've all seen TV ads we're like, man, that was funny. Monkey jumped out of a trunk and this thing happened and that thing happened. And you're like, I don't have a clue who that ad was for. And so I think you've got to hook someone in a way that's totally relevant to your product. And so you can do things like pattern interrupt, you talked about that. My buddy Ryan McKenzie from True Earth Laundry detergent strips, they've got this ad that was wildly successful that started with, hey, what should you never mix with water? And then it's witches and electronics and super silly stuff. And then it was also laundry detergent. You're like, what shouldn't mix laundry detergent with water goes on to explain it. So pattern interrupt can be really valuable. Sometimes it's just like a thought provoking question. My buddies at William Painter sunglasses, I kind of help them with media planning and stuff.

There was this great ad created by Raindrop where the spokesperson came out and he is like, your face is your moneymaker, so why would you cheapen it with cheap sunglasses or whatever? Why would you put cheap sunglasses on your moneymaker? And so coming up though with a hook that fits your product so that when someone is leaning in and paying attention, it's related to your product or related to your service or related to the webinar you're about to send them to. And so any other insights you would have on hook? When is that done Well, when is that done? Poorly? Curious how you guys test hooks, just any insights there. Yeah,

Aleric:

And we'll usually on the hook side test several different hooks. I think that's really important. You got to see what is going to work, what's not going to work, and I think having some type of curiosity is really valuable. Also, a great hook pushes away people that aren't a good ideal client and pulls in ideal clients. Now in the past, that was even more important. Back when, and we were talking about all the changes that we've both seen in the YouTube ad platform, but back when it used to be more of the paying per the CPV and it was more based around the 32nd view is what you paid for, then it was like really like, okay, let's get you off this ad if you're not relevant. Now it's more of an algorithm as we both know in terms of bidding based on the CPA.

And so it's a little less on that side. However, it still is important to train the algorithm. So you want the wrong people to skip and the right people to watch the ad. And so one of the things that is also valuable is calling out who that ideal potential person is or using language that they're going to resonate with. So for instance, one of our top hooks is actually around YouTube ads versus Facebook ads. Like YouTube ads beat Facebook ads every time. Let's face it, Facebook ad costs growing through the roof and even when you have great ads, they're almost impossible to scale. In this video, I'm going to show you how you can use YouTube ads just like the one you're watching right now to scale your coaching consulting business to seven or even eight figures.

Brett:

You've done that a few times. You said that

Aleric:

A few times.

Brett:

I have done that, a few. You have seen that ad so many times, but it's so good. And what's crazy is the way you structured that that was fitting several years ago, it's just as appropriate today. And I'm assuming that video is still crushing for you. Oh

Aleric:

Yeah, it's still crushing the original. And so we've done new, we filmed the video a few other times the educate section has changed, but before some of the changes to the platform, we had that one video. That one video was an eight figure ad. We did over 10 million revenue track from that one specific ad that we ran millions of views to. And since then, and

Brett:

That is one interesting thing too, and just as a side note here, Arik with Facebook, I do know some people that they have outliers with their Facebook ads as well and one ad that will vastly outperform the rest, but it still seems like on meta or other platforms, there is ad fatigue and that ad fatigue can sit in kind of quickly. Well, we continue to see with YouTube is if you find one or two or three ads that really hit, you may be able to run those for a year, sometimes for two years, right? Because the audiences on YouTube kind of turn over quickly, and so sometimes you get that winning horse and you can ride that thing for a long, long time.

Aleric:

Exactly, and even when we decided to phase that ad out, it was still working. It's just the content in the middle of the ad was not relevant anymore. We were talking about the old way of doing YouTube ads, which is more keyword and placement targeting, and it's shifted over into audience targeting, which I'm sure we'll talk about a little bit shortly. But basically that ad just continued to perform really well and then it's okay, well this is a good hook. Let's pair that with other new educate section, but with clients that maybe are going into YouTube for the first time, they don't know what hook's going to work or not. What we like to do is create four or five, six different hooks and actually just put those together. It doesn't mean you're filming that many videos. You want to film the videos, segment them out. I'm sure you probably do something similar.

Brett:

More modular type content. Exactly. Mod we can mix and match.

Aleric:

Yeah, so let's film half a dozen hooks. Let's film a couple educate sections, maybe a couple call to actions, maybe one goes to a training, one goes to a webinar or a PDF or whatever, and then put those all together. Now we have 24 different videos in the time it takes to film just two or three videos.

Brett:

I love that so much and awesome. So we got the hook and we found that that is the biggest lever to pull, the most important lever to pull. If you nail the hook, the rest becomes much easier if you do not land the hook than really none of the rest matters either. But let's talk about the educate piece. Some of the ways we look at this slightly differently, although I bet these components are also in your formula as well. We look at things like product demonstration for e-comm, I got to see the product in action. I want to see the sunglasses, I want to see the yard tool that I'm using. I want to see the automotive accessory. I want to see it. So that's important. I also want some social proof. I want to see, hey, are other people like me using this, enjoying it? Maybe there's some UGC or maybe it's just reviews on Amazon or on the.com or whatever that really bring to life this product works. And then I want to overcome objections because all skeptical, we've all been burned by ads in the past, so what am I doing to overcome objections? And so we kind of blend that into the middle part that we call kind of the product demo, but what are a few of the pieces there and the educate portion of the video that really makes that effective?

Aleric:

Yeah, yeah, that's a great question and there's similarities there. It's a little bit different in this side of things. One is you actually want to start the educate section by providing a little bit of credibility, but you don't want to go too over the top in that, and this is especially with expert based businesses because you want to demonstrate before you teach people that you are somebody to pay attention to,

Brett:

Why should I listen to this

Aleric:

Person? Exactly, why should I listen to you? Now, the mistake people make though is they say it right at the beginning and that's not a good hook unless it's something completely ridiculous where the coach behind this famous athlete, and that's going to be a hook in of itself. In general, what you want to do is you want to have a hook. Then you go into, we call it the why you, okay, so why should they listen to you? And that's really going to kind tout the expertise or credibility that you have. Sometimes that's more positioned around yourself and what you've done, or it could also be positioned around results that you've gotten, clients track, record, whatever it happens to be. So you do that relatively quickly. Once you do that, then we like to do either one kind of bigger teaching or three golden nuggets.

So it depends on, and actually we'll usually recommend split testing this. So like I said, there's two educate sections. So one is to teach on one particular topic, maybe to pull back that example, it could be on macros or it could be on our alpha AI targeting strategy and how that's different. It could be basically just one kind of general topic or it could be three tips or recommendations. One of the biggest is myths. So busting myths. So if people had a preconceived notion about something, how can you actually tear that down, tear that apart, and potentially addressing problems or mistakes other people have made in the past. So maybe they've tried something similar before, like you said, and here's why they shouldn't do this, shouldn't do that, shouldn't do this instead, here's what they should do. So I think that when you're looking at the educate section, there's a few different ways to do it, but you want to provide credibility, then you want to provide value, and what we talk about with our clients is to focus on the what and the why, not how is way too long. It's also what's gate kept behind.

Brett:

That's what they're buying, right?

Aleric:

Exactly. And ultimately it's not even behind the opt-in, it's really that's what they're buying at the end of the day, but we want to give them, it's like what and why should they care? What is it? And then they're going to go and get more information, more holistic picture by opting in than they go to training, which we've found. What works really well, this is actually interesting, is so what we do is call it a video conversion funnel, and it's like a cross between a VSL funnel and a YouTube video that people might watch instead of the classic VSLs that I'm sure both of us have seen, many people who are listening or watching have seen the ones with the text on the screen. It's like white background, black text on the screen, maybe a couple images pop up more slideshow. What we've found is going from YouTube to a training, it actually is good if it feels like a YouTube video, so a 15 to 20 minute long YouTube feeling video.

So where you're talking to the camera, if there's slides, you're in the bottom corner, maybe it's a demo, maybe it's even just you kind of talking to the camera and things pop up on the screen as you're talking right alongside, you have these little callouts or things, and so it feels like a YouTube video, but you follow the framework of A VSL to take people again and rehook them. You're demonstrating credibility, you're taking them through, you're teaching them something. You're then stacking what they're going to get from either an offer that you might be selling or in a lot of cases more booking a call, like a strategy call. Here's what you're going to get. And then tying back to that, so kind of following that strategy, but doing it in a way that feels like a YouTube video, so it's produced a YouTube video. That's what we found. I

Brett:

Like that because one of the things we look at a lot, and again, it's a little bit different with e-comm, but you want someone to feel like they just clicked and they ended up in the right place. I just saw this product demonstration. I saw some kind offer. I saw some person demonstrating the product. Now when I click and land on the lander, it feels like what I just saw in the video. So you don't want someone to click and then they're like, wait a minute, that right place that I clicked that I clicked the wrong thing, I got to get out of here. And I think it's a similar thing what you're talking about. I just consumed a YouTube video. I've already shown that I like YouTube. So now when I land on this page with some education or a deep dive into something that feels like YouTube as well.

So that landing page, that landing page experience is super, super important. I want to talk briefly because I want to get into some audience targeting in just a minute, and I'm trying to be mindful of time here. I want to talk about the call to action just really quickly because I think this is a place where people fall short. If you don't ask someone to take a specific action, guess what? They will not take it right? I think we assume too much. We think, well, I just showed this awesome product, or I showed this awesome training, and so they'll just click and they'll go consume it, but really we need to spell it out, click here, get the free trial, order the sample pack, watch this video so you can see this product in action. Sign up for a free whatever. And so anything you teach or help people, one thing we actually just did recently, we do quite a bit of YouTube for retail support. So hey, this product available in Walmart near you, it'll be the best price you can find. So what do you specifically want them to do? Do you want them to click and buy? You want 'em to go to Walmart, you want 'em to target? What do you want them to do? So anything you teach on call to action.

Aleric:

So what we teach on that side, and that's a really good point. You need to tell people to be able to take action, and that is what's going cause those conversions. And so we like to recommend saying the call to action three times at the end of the ad. Now, sometimes it is time sensitive, so it depends on where people are at the length of the ad, but in general, three times is really valuable because it's the repetition. And so I'll give you an example in a second. I don't have it as quite as rehearsed as my hook, but I'll give you an example in a second. But what we say is we want to restack the value that they just received. So now that you've seen just how powerful YouTube ads can be, now that you've seen why it's more than just counting calories, I want to invite you two, click the link right here on the screen or below to go and register for our training.

We're going to walk you through exactly how you can X, Y, and Z. So what are they going to get? So remind them, we just gave them value. Attention spans are short. It's like, all right, we just gave you this value. We want to give you more value, and then you tell them exactly what to do. It's not just like, oh, sign up for my training. It's click the link right here on the screen or below the video, and that's going to get you access to our full training where you're going to learn how you can X, Y, and Z so you can achieve the result that they want. And when you go and sign up by using the link right here on the screen below the video, you're going to be able to get instant access. All you got to do is put in your name, email, phone number, and you're going to be able to get full access to our training where we're going to show you how this works and there's only so much we can cover in a quick video like this. That's why we have this training available. And that way you can bookmark, you're going to be able to have that as your resource. So something like that, again, it's going to be different depending on the person, but basically it's another reason that they want to do it. They want to take action reminding them that if they already got value here, they're going to get so much more and then add a little bit of urgency.

It's going to depend. If it's a webinar, that's an easier one, right? It's like we're watching this, there's a webinar coming soon, et cetera. And then at the end, once we say click the link again, we'll actually go into a screen. I'm actually very curious if you do something like this because, and I will say it's been a little bit since we really more in depth tested this, so now we just kind of do it. We just kind of rolled it out. But basically at one point we tested putting a picture on the screen of the opt-in page that we're sending people to and not doing it, and it actually increased the conversions by small, but one 2% on the overall, not necessarily on the, but basically it actually increases the conversions by just showing, okay, here's where you're going to go. You're going to get to a page looks just like this, just putting your name, email, phone number, you can get instant access to the full training, and at the end we actually just show the page. And it's also part of a squeeze too because yes, YouTube will give you a little bit of a countdown, but it's not always the exact same. You don't want your ad to abruptly end people are entranced and then the ad ends

Brett:

Give them time to go and click. Yeah, it's interesting. We've seen a couple of different things work for e-com. Sometimes you'll do outtakes like this, William Painter do this and a number of others at the end, they're like, it'll do outtakes. And they'll be like, why don't you just click the link? Why don't you just go check it out? I think what's valuable about what you're saying where you show the actual page or you show the actual product is again, it creates that consistency of what I saw in the ad is exactly what I see on the landing page. And so now I know I'm in the right place. It's also kind of priming me to take that action. We don't generally do that where you show the actual page that may change over time, but I like that approach and it totally makes sense that that would work well.

Cool. So let's talk audience targeting. This is one of those areas where pretty unique to YouTube the way you can target audiences here. I know on meta most the advertisers I know in the agencies, I know they're doing more broad open targeting, letting the algorithm do all the work. The YouTube algorithm is powerful, but we're still finding, for the most part, we want to give the algorithm a little bit of help and we want to lead the algorithm into the right path to eliminate waste and to get us rolling into results faster. I love the connection that Google own YouTube and Google's got tons of search behavioral data, and so why not tap into that? What are people searching for? And so building custom segments or custom audiences around that, but would love to understand how do you guys generally think about audience targeting?

Aleric:

And that's a really great question there, and that's what I love too about Google and YouTube and Google owning YouTube is just, there's so much data and I think that's what people don't really think about as much when they think about running ads on YouTube is like, wait a second, Google has all the search data. They also have Google Chrome, so they know basically the websites people are going to Google Analytics install more than half of every website. They're tracking all that details. There's a reason Gmail is free. There's a lot of data they're getting. So there's so much data that Google is utilizing and pulling into the overall platform. And so essentially what we found is the best way to target is what we call alpha AI targeting. And so a lot of people when we look at what they're setting up is they're building using prebuilt Google audiences, and those could be good.

I'm sure both of us have examples of campaigns that do really, really well with prebuilt in market audiences, especially things like that. Google also has started pre-populating certain audiences too to make it a little bit easier for people that aren't building their own. However, what I've found is getting more granular and building your own audiences is going to produce the best results. And so what we do is we recommend our clients really do some research, and I'll talk about my software. Keyword search actually does a little bit of that for us for our clients in just a second, but basically doing the research to figure out, okay, what are people interested? And there's a few different types. So there's custom affinity, it's what are people interested in, what's their general interest? And this is different than Facebook and other platforms where you have to go through the pre-populated list.

Like I said, yes, Google has that, but this is where you can put in interests that people already that people have, and it could be a more granular interest. And Google's AI is going to find who those people are. Now, I know you of course know this, Brett, on your side, but just in terms of the listener, the person watching, just so you know, you can actually build your own audience. This is what they're interested, but then we can go deeper because we talked about how Google has all of the search data, both on Google and on YouTube. What you can do is target people with that custom intent based on what they're actually searching for on YouTube or Google. So people are looking up how to lose weight or how to run, how to use YouTube ads or best ad platform or whatever for these different examples. And there's so many examples here. You can target people that are actually searching for that exact thing and then get in front of them with those ads. And we found that that's really powerful, especially people have Google search campaigns, they can kind of carry over some of their best keywords into these custom intent audiences. People running the old type of YouTube ads, which is more targeting direct keywords or maybe placements. They can turn those into custom intent targeting.

Brett:

And it's just so valuable to capture that search data because yeah, you know what non-brand search terms are converting Google Shopping or Performance Max or search. And so build an audience of those people. So those people searching for those keywords on Google or on YouTube now you can kind of bundle them into a segment, target them with YouTube ads. A couple little variations we like to use there. Well, and one other quick call out, so we got that custom intent audience. I believe that the amount of time is, those are refreshed about every 14 days or thereabouts. I think that's another reason A where sometimes you can find a winning ad and it just keeps working, right? Because that audience is always being refreshed and renewed there. On the e-comm side, we like to use keywords, especially if it's a larger ticket item where someone's maybe buying an expensive pillow or mattress or something, automotive or whatever, where it's like competitor X versus competitor Y as the keyword or competitor X reviews, competitor X demonstration where you can tell if someone's typing in these keywords, they're in research mode, they're trying to decide which product to buy.

And so now we build an audience, and that usually works on the affinity side where you're, and this is totally unique, and I 100% agree with you, we rarely use the the shelf audiences from Google. They can work, but I would rather give Google like, Hey, here's my top five competitor URLs. So Google build an audience and affinity audience based on those signals, and those often work very well and can scale at least to a certain degree. So really good stuff.

Aleric:

Exactly. The URLs is another area that we found on the affinity side that works really well. The intent based is still our top performer there because it's what People're searching for. But the URL audience is performing better than the standard affinity or like you said, prebuilt or even just typing in just individual keywords. Going in and doing those URLs is really powerful because Google has a lot of this knowledge. I've had people ask me, how can that even work? How do they know? Well, they know because people go to Google search and they click on a link and they go to the website. People don't just always type it in or they're using Google Chrome, most popular, one of the most popular browsers, and then they're also Google Analytics isn't on half of the website, so they have all this data. It's just waiting for you to tap into it. And it's interesting, I was talking with somebody else in the space as well, another person at War Room Coum as well, and one thing that he was telling, love

Brett:

Kum, shout out to Kum. Oh

Aleric:

Yeah, exactly. Shout out to kasum. Yeah, Kasum ISS awesome, but they're again rhymes then too. So look at that. Anyways, I was talking with him and he thought, and I would agree that I'm curious your take. I think that he was saying that he believes that Google just has so much more targeting capability. They're holding back because they realize if they gave access to the full thing, it would just be almost ludicrous, your ability to leverage and

Brett:

Open up privacy issues, and they're really concerned about mitigating lawsuits and stuff like that. So yeah, I would 100% agree. Google knows everything about everyone essentially. And so I do think they're holding back on targeting probably somewhat to protect the user more so to protect themselves probably. Yeah,

Aleric:

Exactly.

Brett:

Yeah, super interesting. Cool. Let's talk about your research tool then and keyword search.com. Correct? And how does that work?

Aleric:

Yeah, so one of the things that I found is one of the biggest things that we were doing consistently, either for the clients we were running ads for or the clients we were training to run ads, we were teaching them how to do this, where we were just constantly doing this research, figuring out, okay, what are the different keywords to either put in affinity audience or especially for custom intent, what are all the things people are searching for on YouTube and Google? What are all the different keywords and especially long tail keywords, what people are looking up? Also, what URLs could people be going to UR L audiences? Maybe they're typing in specific channel-based keywords. So we were doing a lot of this manual research, and even when we were leveraging other tools, it was still a manual process. We had spreadsheets, we had templates, all this stuff.

We were going and putting them in the spreadsheets. So we were doing research, we were using a combination of YouTube's auto complete for the YouTube side because that's a little less out there. And then we were using some of these other, there's obviously a lot of the big tools out there that get Google and some YouTube keywords and things like that. But again, it was still a process where we were having to take it from that, put it into a spreadsheet, then go and add it in and create custom audiences. This is a lot of time, why not go and just build our own software? So I set out to do this three years ago, even before the AI side of things, it was earlier iteration, which I won't get into as much, was kind of finding these keywords on YouTube. What we did is we wanted to actually set it up to get more YouTube data, so it's a little more complicated, but basically we're going in and there's certain data that we're actually scraping based on search results and what people are potentially searching in addition to leveraging the existing data based on Google based keywords, which is more available through APIs that Google has.

And we're combining that by looking at what are people searching for, what are they searching for on YouTube? What are they searching for on Google? What potential interests do they have and what websites might they be going to? And what we have done is actually built an AI wrapper around it. So essentially what keyword search does is it allows you to go in and just type in your business some details about it, put in the URL of your landing page, and it'll go and scan that and it will go and give you all of the different affinity audiences to potentially target. So it'll give you like, all right, here's all the different things to set up. It'll give you all the different search terms and keywords for Google and YouTube, categorize by topic with the ability to go and expand each topic. So if I was to put my business ad outreach in, it could go and grab a topic, YouTube ads, and it'll have some keywords like how to use YouTube ads, YouTube ads tutorial, and if I wanted more, I would just click expand and it go and find another dozen keywords.

You just keep clicking that as much as you want, and then it'll go and have other areas, lead generation, I have lead, how to get more leads for my coaching business or et cetera, et cetera, want more. Go and expand that. And it'll actually have a bunch of these different categories. These categories could potentially become a custom intent audience, or you can just choose which keywords you want, you select which ones you want, it'll get all of the different affinities, and you can just choose, okay, which affinities, which keywords do you want? And in one click sync it to Google Ads and it'll actually build the audience for you inside of Google ads through the connection with Google ads that we have in the software. And so it's an ability to go and instead of take all this research, which could take hours, especially if you're doing more robust research, we found the average time it takes to go from performing the search and the AI to actually syncing an audience is 2.6 minutes, which is pretty exciting. So essentially we put it all into the software keyword search, AI ad targeting for YouTube and Google Ads, and now it's starting to do more features as well. We're adding some more features around different targeting and also agency features as well.

Brett:

Super cool, man. Excited to check it out. Sounds really smart, sounds efficient. And also probably going to guide someone through the process, especially if you've never built these types of audiences before. It's different than what you do on Meta or on TikTok or anything else. And so this tool is going to guide you through that. So Alrick, love what you do, buddy. Keep up the good work as people are listening and thinking, okay, I need some Alex's training, or I need to check out this tool. How can people connect with you and your team?

Aleric:

Absolutely. Thank you so much. So yeah, the tool is keyword search.com. There's also a free trial to go and check that out over there. And then I also have a GIF for anybody who's listening. I've got our 19 page YouTube ads strategy, PDF. This is more focused on coaching consulting businesses, but you can go to add outreach.com/gift, that's A DO UTR EAC h.com/gift, and you can go and get that free gift. And then if you are interested in talking with us about whether it be YouTube ads or something like that, you can just go to add outreach.com and there's some details on the page and links to all the social, you can look me up everywhere, of course on YouTube as well. It's Eck.

Brett:

Love it, man. And so we've, so listeners kind of get the inside scoop. We've kind of created this little arrangement where his legion or coaches and consultants come to OMG or come to me. I'm like, you need to talk to Al Rick, right? Go talk to him. His team knows what to do. Same on your side as e-commerce companies come to you. You're like, Hey, go talk to Brad in omg. And so it's a really good relationship that way. I love what you guys are doing because every time someone sees that ad with Arick on there in his Austin office talking about YouTube beating Facebook every time, it may nudges someone a little bit closer to saying, I should test YouTube. I should test YouTube ads. So keep up with the good work, always fun to riff with another YouTube expert. So ton of fun, man. Really appreciate it.

Aleric:

Awesome. Thank you so much, Brett. Really appreciate it as well.

Brett:

Awesome. And as always, thank you for tuning in. We'd love to hear from you. Let us know what you think of the show. If you know someone who would benefit from this show, please share it. Please review it. Please rate it helps other people find podcasts. And with that, until next time, thank you for listening.

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Episode 277
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Jimmy Sansone - The Normal Brand

10 Siblings, 11 Retail Stores, 1 Amazing Brand

I had the privilege of interviewing Jimmy Sansone. He’s the CEO of The Normal Brand - one of my favorite clothing brands - and the oldest of 10 children. While his brand is Normal, his story is anything but. 

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It’s a story that’s definitely worth telling and chock full of great entrepreneurial lessons. Jimmy grew up in a family of entrepreneurs, so this was in his blood. What started as just an idea when Jimmy was working as an investment banker has grown into a thriving retail, wholesale, and online business. 

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Important lessons:

  • How growing up in a large family shaped him and helped him become an entrepreneur.
  • What it’s like partnering with your family. Jimmy runs The Normal Brand with two of his brothers, Lan and Conrad.
  • How culture shapes brands and the power of culture cards.
  • How did launching their own retail stores (they have 11 now with more on the way) increase their wholesale and online businesses?
  • Lessons learned from mistakes.

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Chapters: 

(00:00) Introduction and Jimmy’s Background

(11:42) Early Days of The Normal Brand

(15:51) Working with Family 

(22:09) Expansion Into Retail Stores
(25:03) Benefits of Having Your Own Stores

(32:25) Mistakes Made Along The Way

(34:46) Culture and Core Values

(39:34) Future Plans & Merchandising Strategy 

(42:28) 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, Bryan Porter and more. 

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Other episodes you might enjoy: 

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Transcript:

Jimmy:

It was during my investment banking time where I kind of had this idea of making these normal shirts I was calling where the normal brand came from.

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 have how I did it, how we built It, story. I can't wait to dive into this. I'm visiting with Jimmy Sansone of the normal brand, a brand I've been falling for years now. Love what they offer, love their clothing, love their style, love their logo, love the story. And so we're going to unpack how this came to be and how they did it and what they learned along the way and what it's like working with family and all kinds of really fun stuff. We'll see what's next for the normal brand as well. So lots of good stuff to unpack here that Jimmy, welcome to the show, man, and thanks for taking the time.

Jimmy:

Thanks for having me, Brett. Excited to be on.

Brett:

Yeah, really pumped about this one. I love the clothing and I'm wearing a normal brand shirt, which I will say I feel comfortable in this shirt. I also feel powerful in this shirt, so it's a great mix and I'm probably going to be 30 to 50% more interesting wearing this shirt, so I got to thank you for that. Well, if

Jimmy:

You could write that down into review, we'll repurpose it as an ad and that'll be great.

Brett:

We'll just chop this up. I'll send it to you and you guys can use it, so that's awesome. But in all seriousness, love the shirt. Love what you guys are doing. It's funny, I actually, I got on your SMS list somehow. Email list. I signed up for it somehow some way, and then you guys opened a store in my hometown, Springfield, Missouri, talking to a buddy of mine who owns the local barbershop. He's like, oh man, normal brand. They're from St. Louis and they've got a huge family. I'm like, I got to meet these guys. And so that's how we connected. But this is one of those rare scenarios and one day I'd love to meet your parents because they are one of the few that have more kids than my wife and I have. So my wife and I famously have eight kids, but Jimmy, you come from an even bigger family. So tell us the size of your family and tell us what it was like growing up in this dynamic family.

Jimmy:

Yeah, I'm the oldest of 10 kids, so I have nine siblings, got 40 something or above 40 cousins. So I have a huge extended family and now they have their own kids. And so the generations keep getting bigger and bigger. A ton of fun. It was growing up on a team, we played team sports our whole life, but really we're, when you're kind of born on a team, I honestly, I think I wouldn't have it any other way. And I think it teaches you a lot of life lessons. I think it teaches you how to get along with people, management, things like that. And so childhood was awesome, and still to this day, my siblings are my best friends. So it's a great

Brett:

Blessing. I love it, man. And that's my hope, that's my prayer for my kids that they'll remain close. But I heard another guy talk about, he comes from a big family as well say that kids of big families, they don't grow up thinking it's all about them because it can't be, there's too many other kids and too many other priorities. It's not just all about one kid. And so I think, yeah, that environment can really shape character and make you a unique individual, but also someone that appreciates the team and appreciates the whole, which is pretty cool.

Jimmy:

Yeah, I think definitely you've got to learn humility. It's not all about you and frankly, you're judged on how you treat your siblings. Making life better for your parents really is what we should have been trying to do older when we were younger, and sometimes we did, sometimes we didn't. But yeah, super blessed with our now

Brett:

I'm going to clip that part and show that to my kids, so thank you. Thank you for that

Jimmy:

Reciprocate. But yeah, our parents were just incredible, just phenomenal role models and kind of really showed us the way and how to do things. And so yeah, it wasn't very hard. It was pretty easy.

Brett:

That's amazing, man. So do you guys still get together for dinner, like family dinners on a somewhat regular basis? Oh yeah.

Jimmy:

If you miss Sunday dinner, you've got real problems. And I mean, I live five minutes from my parents' house, so I mean, I'm over there. We work out together a lot of us. So we've got an 18-year-old brother who's a senior in high school. So we go to all of his games we're at,

Brett:

He's a quarterback, right? Plays football,

Jimmy:

He plays football and then he plays lacrosse. He playing lacrosse right now. And so those sports definitely keeps us together. But I mean if we go even a day or two without seeing our parents, I would say that's an odd couple of days.

Brett:

Love it man. Love it, man. The sand zones are my role model, so hopefully we can do something similar in the curry household. Curious, so you're an entrepreneur, it sounds like most of your family, they're entrepreneurs. Did that come from your parents? And if so, how?

Jimmy:

Absolutely. Or even before them, our grandparents were entrepreneurs also big time. And so they definitely inspired us. We were very tied with them. So my dad's dad kind of came from nothing. His parents were immigrants and he built a great business and we got to see what he had built. And then there was a family rule where the third generation is not allowed in that business, which was really a great blessing. It gave us the ability to kind of think on our own and what are the things we want to do. But since the time I was maybe 12 years old, our parents really kind of encouraged us to think outside the box entrepreneurially. So when I was 12, me and my brother Conrad started a sports camp. That summer camp continues to this day, my youngest siblings run it. It was basically glorified babysitting, but that was something that I did every single summer until I graduated college in high school I sealed driveways in college. During exam time we sold point settas like the Christmas flower. And so it was those types of, and then I went into investment banking. But I would say that those little ventures that we had earlier taught me more than banking for a few years did, and definitely shaped the type of people we are and helped influence normal brand in a lot of ways.

Brett:

That's so cool, man. So just help me understand, and this sounds awesome. So the third generation not allowed in the family business with the motivation to say, man, get out, build your own thing, do your own thing.

Jimmy:

That's right. Yeah. I think my grandfather was a very, very thoughtful guy. He passed away a few years ago in 2020 and April of 2020. But statistics kind of tell it all. I think when you get to third generation family businesses, it's like single digit percentages of those that prosper. And even there, there's still so you break apart companies, you break apart families. It was never worth that risk. And so we knew that from the time That's really smart. It was really smart. And so we knew that as a time from a young age, and it really gave us the, and then being able to have a front seat of a family business that's a family business that my dad, my uncles are end that my grandfather started. But being able to have a front seat to see how that works and how it works well, it helped us so much. And that lifestyle of we talk about work all the time now and we grew up with that as well. Yeah,

Brett:

I really enjoy that. And I've got a couple of close family members extended who are in business and we always get together and strategize and talk business. I'm actually the first in my close family to be an entrepreneur, which I don't know where it came from, but it just happened and I love it, but I'm trying to foster that environment for my kids. So we'll see. There's a couple of them that are definitely leaning that way. So as you started these ventures throughout your childhood and kind of the teen years, what was your parents' role in that? Were they kind of cheering from the sideline? Were they giving you direct advice? Were they just kind of standing back and watching and stepping in as needed or what was that?

Jimmy:

I think first it was just from a practical standpoint, I think the beginning, the impetus for it all, I asked for a gift of some sort. I think it was a bike. And my dad just said, sure, you got any money? And I was like 12 and I said, no. And he said, okay, we'll go get a job. And then at that point, you're too young to get a job anywhere. And so he said, okay, start something with one of your brothers. And so he's like, you got all these siblings, why don't you start a camp? So I think even from that, I mean a long time ago, 25 years ago, he helped even just kind of ideate and encourage us, you can do this. Just kind of think outside the box. And so I think just encouraging that mindset from a very young age, you probably can't overstate enough how much that has

Brett:

Helped. That's amazing. That's amazing. Okay, so fast forward a little bit. So you get into investment banking, which is a world that I respect. I've been kind of on a journey over the last couple of years meeting private equity groups and learning m and a and investing and doing different things. And so fascinating world. Was the goal to be career investment banker or did you always view that as a stepping stone to then launch your own thing?

Jimmy:

I always knew that I would eventually work for myself or hopefully with my brothers. That was a goal from the time. I mean, I think it's written down when I was in high school, but I didn't really know what that meant, honestly. And so I would say it was during my investment banking time where I kind of had this idea of making these normal shirts. I was calling where the normal brand came from, and it was this idea of something comfortable. Well-fitting durable and versatile was kind of the three main pillars at the beginning. And so I started getting these shirts made, people were asking me about 'em, and I was like, well, maybe more people would want these. So I quit my job.

Brett:

And was the idea because you didn't have a shirt that you fell in love with or you'd kind of always been drawn to fashion?

Jimmy:

I had a big passion for clothing my whole life, again, kind of inspired by my grandpa and my dad. So in the nineties they were all wearing suits to work really buttoned up. And so when I was 16, I remember I asked for a custom suit. So the formal wear was a big thing, but I loved clothes and just I'd lay out my outfits, I'd think about how does this color work? I'd really kind of shop with my hands. So when I go into stores, I was really really into clothes. I also kind of had a creative inkling. I like drawing and writing and doing other things, but honestly, the idea of being in fashion for a profession never even came into my mind, ever. It was never even a consideration. I thought maybe real estate or I went into finance business, stuff like that. Anything else was kind of stupid talk. But it wasn't until I was in banking and kind of had this idea. And again, I remember talking to my dad and he was like, yeah, you can do it. Why don't you just give it a shot? And so I think that kind of confidence that they would instill in us was

Brett:

Phenomenal. It's amazing. It's amazing. So that was 2015 ish. You're making these shirts, people saying they love 'em, and you go for it, and you start in the basement. Basement of your house is where you're either making clothes or packing 'em and shipping 'em or whatnot. So talk about those early days.

Jimmy:

Yeah, that's right. It actually took me a few years to kind of figure it out. So I left my job in 2012, didn't sell my first shirt to 2015. So there were some kind of, I would say that I had to do some growing up in those times in that three years. But finally got to the point where it was like I put myself in a position where it was kind of back against the wall. It's either do it or don't. And that was a really important thing to get it going, I think. And then I saw progress, and then once you saw progress, then you could kind of believe in it a little bit. But yeah, I had a bunch of mistakes on the initial, I didn't know anything. I didn't know what a tech pack was or how to work with factories or how you could Google as much as you want.

But I was trying to get these made and man, these shirts were coming in really busted up. I had my one that was good for myself and I couldn't make any others for anybody else. So it was sort of a disaster. So I actually started with hats. So the first thing that I ever sold was March 10th, 2015, and we launched with some hats to get some money in the door to pay for our first deposit, for our first run of Cut and Sew, which came in August of 15. My brothers joined me and then it was more of a business and then this kind of glorified lemonade sand.

Brett:

Nice. And so you start with hats because they were easier to produce, easier to get a quality product.

Jimmy:

And there were some people, some mentors that encouraged me to do that. And I also needed some capital to literally pay for a deposit to get the first run of shirts. I didn't know there's big MQs, minimum mortar quantities, things like that. It was a lot of money to kind of do this. I just didn't have that. And so this was a way to kind of get the name out, Hey, this is what's coming in a few months, but this is the brand, this is the story. I got super lucky that brands like Shopify were coming about right around this time. So I was able to build a website for nothing really, really cheap. And even, I'm not a coder or anything, I don't dunno how to do any of that stuff, but I can drag and drop a picture. And so I got really lucky that things like that were happening. And then also just kind of utilizing my siblings and our family network of people sharing things for me. I wasn't running any ads or anything like that. We were able to sell out of our hats a few times and then I was like, okay, maybe this is a thing. I got enough money for the deposit. And then we had to wait a few months. But then you started selling again.

Brett:

Yeah. That's amazing. And so in the early days, were a lot of your sales in person through the family network or were most of them online or combination? Oh

Jimmy:

Yeah. I think I know this guy. I wrote a thing on it, 102 people bought on the first day. I think I personally knew like 85. I mean maybe. That's

Brett:

Awesome. That's

Jimmy:

Awesome, man. So yeah, I mean it's a phenomenal thing to have your tribe come out. So it was family, it was friends. Sometimes I'll go back and I'll look at those names like, God, I forget he did that. Even distant friends and stuff like that. But those are things that you don't really forget when people step up, when you're in a vulnerable position, you're starting something. It's a public thing. It could really go poorly or it can go great and you'll never forget those people. So I got really lucky with 102 from day one in 2015.

Brett:

It's amazing, man. And that's what I've heard. I've heard the advice from, Hey, if you're a friend of an entrepreneur, don't take their product as a gift. Go buy it. Buy it at retail, buy it at full price, leave a review, help them out If you want to be a friend, that's how friend to an entrepreneur buy their stuff. And it sounds like a lot of people do that, which is amazing. So let's talk a little bit about working with family. This is a unique thing and I've always, I've tried to recruit my wife to work for me and she's busy raising a bunch of kids and doing other things, so she hasn't. But I love the idea of working with family, but curious, when is it really great and when is it challenging? And share with us some insights there.

Jimmy:

Well, I think business partners are super important regardless of if it's family or not. So if you just think about business partners, what do you want? I think you want somebody that you can depend on no matter what. I think you want someone that you can be radically honest with and fight with and get over it. And I think you want someone that's as incentivized as you are to kind of perform and takes as much pride. You want to make sure that when you hand something off to your business partner, you can forget about it. And so I'm just lucky that I have those in my two brothers. I have all of those qualities. It just makes for phenomenal business partners. I think that definitely we had an unfair advantage in that we were able to grow up with a front seat to another family business. And so you can kind of learn what to do, what not to do, learn from great successes, learn from things that didn't go according to plan. And so not to say that we're perfect, but for the reason I stayed at the beginning on what you look for in a great business partner, I mean, that's what I have in my brothers. And then you go a step further where it's like I would literally die for them that it makes going to business. It's like, okay, sales are down a little bit. We'll be okay.

Brett:

Yeah, and I love that. Perfectly aligned incentives. You're all trying to accomplish the same thing. You grew up in a family that communicated and hung out together and spent time together. So you're able to communicate clearly. I think in some ways, a lot of the reason families can't work together in business is because there may be dysfunctional outside of business. So if you can't be close as a family outside of business, you're going to be able to do it in business either. And so growing up, being able to communicate, able to do things, run projects, run summer camps with your siblings, I'm sure made that transition to another business much more doable.

Jimmy:

And I think we read books about company culture and stuff like that on trying to learn on best practices regardless of family business or whatever it is. And so I think we try to take, there's still so much that we can learn and try to learn as much as we can, but I mean those best practices, I think you said a lot of it, but it's like direct communication, passive aggressiveness is kind of like a killer. So try to keep that out. Ego is a killer, so having a healthy dose of humility. So I don't know if these Patrick Lencioni books we're big on those.

Brett:

Yeah, dude, I'm a huge Patrick Lencioni fan. Love at the table podcast. We did, I'm curious if you guys have done this too, the six types of your working genius.

Jimmy:

We just sent it to all of our people, so they're all doing their tests right now. Yeah.

Brett:

Yeah. That's awesome. So what are your working geniuses? Just curious.

Jimmy:

I've got to go back and look at it. I remember I was like, I don't remember all of 'em. And I was like, oh man, is that really what I'm like? And it really is, but I forget what they all are now. I did mine. Yeah,

Brett:

It's hard. I had if look at it several times, but I'm a galvanizer and a wonderer, so galvanize, I can rally the troops, I coach sports, I can get people fired up and excited. But then the wonder is you always ask me, well, what if we did this? So I dream a little bit too. So that combination can be great. It can also drive my team crazy and my family as well. But it's been so helpful us just understanding even with our leadership group, like, okay, what are your working genius as well? This is why we don't communicate clearly in these meetings because I'm trying to wonder and you're trying to be tenacious and get stuff done. Anyway, super helpful tool. Yeah,

Jimmy:

Actually, so we've been reading him since 2015 and the craziest thing happened. I had never met him. He shopped normal brand and then had a great interaction with our customer service and he wrote a note in and saying, giving a shout out to Colby D, our head of customer service. She sent it to us and I was like, no, wait. Patrick Lencioni, I reached out to him and now he and I have talked a few times. He's going to do some consulting with us and do some, it's amazing. Amazing.

Brett:

It's

Jimmy:

Amazing. It's crazy how that kind of stuff can happen.

Brett:

Yeah, we attend the Global Leadership Summit almost every year. I'm not sure if you've ever done that, but whenever he speaks, he's my favorite guy. He's my favorite presenter. So what a cool deal, man. That's sign. You guys are doing stuff, right? If Patrick ion's impressed, that's a good sign. Good sign for sure. So cool. So when then, is it challenging to work with family and just curious, any insights there? Well, I

Jimmy:

Think we're all very much alike. Sometimes when you can get frustrated, everybody can get frustrated, frustrated about the same stuff. So it's not like, oh, this guy's like that, but this guy kind of calms you down a little bit. We can kind of be at the same level at the same time, but the great news with that is once we fight, which happens 20 minutes later, we're fine. There's a good balance to it. We've been doing it our whole lives anyways.

Brett:

Yeah, and there's no question, do we love each other? Yes. Do we have each other's back? Yes. He

Jimmy:

Coming back be long term. Yes, yes. I mean it's all those things. Yeah,

Brett:

But we can fight about this one thing. Yes. Yes. And that's actually, that's another Patrick Lucci thing. This wasn't designed to be the Patrick Luconi podcast, but it's becoming that a little bit where he's like, good meetings should have tension. If you're in a meeting with leadership or with your executive team and there's no tension, there's no disagreement ever. Something's wrong. Either the meeting's not necessary or somebody's not necessary. There should be a little bit of tension. And so having that is super productive. So cool man. Let's talk about store expansion. So your online experience is great. I know we skipped a lot of years there, but you grew online from the site you developed on or that you built on Shopify to now you got a beautiful site. But when did you make that decision to launch your own retail stores and why your own store versus just selling through a traditional retail?

Jimmy:

Yeah, we started online and then we got into wholesale really heavy and wholesale meaning sell through other retailers. That was a majority of our business for a year or two. And then the online caught up. But I think it was through that wholesale expansion where we were able to see really great performing retailers. We were able to also see ones that failed you could and learn things about what made one store in one town great. And another store or across town, not good. Right. What's the difference?

Brett:

And were you guys selling all over the country or was it more in the Midwest initially over, yeah,

Jimmy:

We were sold all over the country. Yeah, southeast, northeast, Midwest and some west coast too. But a lot in the southeast, northeast, Midwest. I mean, we're in like 400 some odd doors right now. And so wholesale is still a big part of our business, but we got to definitely learn a lot and then mean to have a major brand, which we want to have, you have to have your own stores. And there's only so much of your brand that you can experience in somebody else's store or even online. Whereas to walk through a physical space, we do as many meetings at our stores as we can with people to, if we want 'em to really understand who we are, really. Like you're walking through something that was once just in your mind, right? In the physical space. And so our first one we opened in August of 2019 in St.

Louis, and that's been voted best men's store a few years in a row. That's amazing. Then 2020 happened, so we were about to do one, and then the pandemic happened. So we were like, okay, let's hang on. And then we opened our first out of town one in August of 21 in Nashville. And my brother Conrad really runs all of our store expansion. My brother Lan runs all of our wholesale stuff. So it's really like those guys being able to kind take it and run with it and be working on product and some of the creative stuff. It's a really good balance. But once we proved that, the store could kind of like, okay, well will people buy it outside of St. Louis? And then we saw that it performed really well in Nashville and we're like, okay, let's go. And so last year we opened five stores, so we're up to 11 now. We'll open a few more this year. And it's been a great venture for us.

Brett:

Cool. What are some of the benefits that you think you've gained from having your own store? And I will attest to, because there's one here in Springfield. I've shopped at it a couple of times. It's just got such an amazing look and feel. Oh, and I also want to ask, did I read that your mom designed the stores or was key instrumental in designing the

Jimmy:

Stores? Yeah, big time. Yeah. Yeah. She's a key part of the overall design, the aesthetic. She helps us source these crazy antiques from all over the place to really give it that extra level. She was big on, Hey, it's got to smell a certain way. Yeah. Yes. Our mom is a

Brett:

Beast. That's amazing. It's amazing. So what all are the benefits from owning your own stores? What are some of the probably obvious benefits, but maybe some of the unexpected benefits, intangibles, things like

Jimmy:

That? Yeah, I think unexpected may be that you really get on the customer service standpoint. On the customer service side, when you meet with our people there, we really want it to feel like it's an extension of our family. It's an extension of the, and so we want people to feel like it's a second home. We want them to feel at home, they're a part of the family and walking in so that there's a ton of training that we do on our side. I mean thick handbooks and a lot of formulaic stuff to make that be a thing, you're going to be greeted within two and a half steps of walking into our store. You're going to be offered a drink within three and a half steps. It, it's things like that from a training standpoint, but then manifests itself in hopefully a real authentic way.

But we want people to experience the brand in all the senses. So we want to be able to touch the clothes, smell it, hopefully it's a great smell. We've got candles burning from sound wise, we've got good music on, be able to try on the clothes of course. But I think it just gives you a chance to have a real personal connection. And what's really cool is we've seen that our managers and team members at these stores have been able to foster these great relationships with the local community where they'll text, they'll have dinner with them and things like that. So it's a little bit different in that we're a part, we're trying to be a part of the fabric of that community wherever the store is. And so it's an extension of our brand getting a lot more local,

Brett:

And you guys do an excellent job of it. And even the partnership here in Springfield with Hudson Hawk Barbers, you're connecting with other local brands that are a good fit for your brand. And yeah, it's just a good experience, man. And it feels like you're kind of stepping into your catalog and you have beautiful photography and the furniture just feels cool and looks cool. And I've got pretty long arms. I've got pretty broad shoulders, so I wanted to come in and try a few things on, ended up buying online. But it was great just to be in there touching and feeling. And I remember when my executive assistant who helped kind of structure and organize the podcast, he's like, I went to the mall and I went to the normal brand store. And it's amazing he was going on and on about it because he experienced it in person. And so that's cool. Did you see other parts of your business accelerate once you started opening stores? And once you got to a tipping point of stores, did online take off more? Did other areas take off more? Just any interesting insights there?

Jimmy:

Both. Yeah. So we actually saw, so wholesaler, maybe you would get worried if you open a store in a town where you've got a wholesaler, another retailer that you're selling through a third party, is that going to hurt their business? And we were very sensitive of that. We really came up through wholesale and online, but through wholesale. And I mean we would bend over backwards for our wholesale partners and still will. And whether it's showing up for trunk shows or showing up or, Hey, this wasn't right. Okay, let me swap you out of that. Let me get you this. So my brother Lan really kind of spearheads that and he just does a phenomenal job. He can be kind of everywhere at once, but we were worried about those stores. And what we found was that in cities where we open a store, our other retailers that are there actually do better, which was awesome. I think it's just the name gets out there and then their customers are shopping there and they're like, oh yeah, I know what that is. Lemme grab this. So our business got better within those, which is awesome. And on the online side, the same thing happened. We have found that in the markets where we have a store, our online presence grows, those people come shop in a store, it's a high percentage of 'em will buy online later. So it's a good kind of customer acquisition tool as

Brett:

Well. Totally makes sense. And did you have any of those retail partners that were a little bit resistant at first? Hey, we don't really want you opening a store in our town, type of thing.

Jimmy:

Yes, absolutely. There were some uncomfortable conversations for sure, but we were very direct about it and very honest about it. And we said, just hold on. Just wait. See what this does to your business. We had done a bunch of research and talked to other brands and things like that. It's not just unique to us. That happens. And then it's always a great thing where after a season or two and you have the conversation, they're like, you're right. We're killing it now with you guys. Yeah,

Brett:

Yeah. Now you've got the data, now you've got the proof. You go to the next city. Now you can really tell this compelling story to your retail partners, your wholesale partners, that hey, this, it's going to be a good thing. And

Jimmy:

We still go. We actually still go to, whether it's trunk shows or events at those retailers where my brother will show up or whatever and promote their store. They're a very important part of our business.

Brett:

That's awesome. So really, and we're going a little bit out of chronological order here, but so you, in the very early days, wholesale was a staple of the business, would you say? Was that the majority of the business in the early days? Yeah, for sure. Got it, got it. And did you identify that as the best path to take it? Or you knew that online was going to take some time to build up, so you wanted to go wholesale or what drove that

Jimmy:

Initiative? It was a need. It was was a capital need. We were a bootstrap business, and so we had to order all this inventory to, because of MOQs things that we talked about earlier. So we had to get on a schedule where we could sell that stuff. Pre-book is what we call it nine months in advance, because we didn't think we could sell it all online, but we had to buy it. So we were like, okay, where else can we sell this stuff? Where they were like, and somebody said, Hey, you should go to this trade show. So the first trade show we ever went to was called the Chicago Men's Collective. It's our biggest trade show by far. I mean, we'll be booked for every single day, morning till night. But that's where we met kind of our first retailers. And we wouldn't have had a company without the wholesale business because we wouldn't have been able to sell the inventory online. And from a cashflow perspective, we wouldn't have been able to pay for the inventory.

Brett:

Yeah, yeah, it totally makes sense. That's so cool. So cool. Well, you guys have done so much, right? Clothes are awesome. Store experience is fantastic. Online shopping is good. Even the text marketing is good. The SMS marketing is good. But what have you learned from failures, right? Because we all trip ourselves up as entrepreneurs and make mistakes, and those can be the best learning tools. So what mistakes have you learned from along the way?

Jimmy:

Oh man, tons. I think as the business has grown, we have more people now on the team. And so that's where we manage a lot more people than we ever have. So there's tons of failures there where it's not just enough to just kind of, okay, lead by example, and there'll be no, there needs to be processes and well thought out structures of how this is going and how that's going. So as the business evolves and matures, you need to kind of mature with it with kind of your procedures. So I would say we'd be here for a long time to tell you how many times we've kind of failed there. But I think the one thing that we've done, we've always had a good culture. We kind of knew that from the beginning. So we've always had a good culture. So that can kind of make up for some of the procedural things that go wrong, but just building processes and things like that. I would say that with store expansion and things like that, you have to, it radically changes the way you do business. So even getting inventory to the store on time, making sure it's merchandised appropriately, let's make sure we're getting them the right inventory. Well, this store actually behaves differently than this store in a big way. And so I think that we've had to add people to the team who can kind of specialize in these different verticals, but we're the type where we don't really, we make the mistake first and then try to fix it

Brett:

In some ways. That allows you to go faster, make a mistake, fix it, iterate, rather than trying to get it perfect out of the gate, which you'll never do anyway. Let's talk a little bit about culture. And we're big believers in culture as well. We have been fortunate enough, we won best workplaces through Inc. Three years. We won the number one place to work in our area, 4 1 7 biz, 4 1 7, 1 number one two years in a row, which is awesome. Wow. But we'd love to hear, thank you. What's your approach to culture? What do you guys think about, how do you approach

Jimmy:

It? Yeah, I mean, we build it. So we have, let's just take it out. We've got culture cards kind of on what our core values

Brett:

Are.

Jimmy:

Nice while I fish that out. So we build it basically off three core values. And this is a Patrick Lencioni ripoff, and we're not afraid to say that, but humble, hungry, and smart are kind of the main three things. Love it. I would say that that humility is what I would rank number one with coming to this business with just the way the business was started with really kind of no experience in it and making a lot of mistakes. You can't afford to have an ego. And so I think that that ego kills all teamwork and the simple transaction of, Hey, my bad, I messed that up. I'm sorry. And equally as important on the other side is all good, let's move on. That transaction is grease on the wheels for a team to move forward. So that's a super important thing so that we all carry one of these with the core values, but that's

Brett:

Awesome.

Jimmy:

Positivity, ownership, solution driven, humble, and hungry. So

Brett:

Good.

Jimmy:

That's kind of how we build it out. But if I was to pick one, kind of depend on the role I guess, but I would say that an ego doesn't have a place within our teamwork.

Brett:

Yeah, so good. Have you read the book? Ego Was The Enemy by Ryan Holiday. That's awesome. Yeah, so good. Love all his books. Yeah, I've gone down

Jimmy:

Stoicism Path for a year. I was reading 'em all. He had me reading Marcus Aurelius.

Brett:

So Good man. I've got The Daily Stoic, which is really good. And actually I think Discipline is Destiny. That may be my favorite book. I've read that too. Awesome is I love all of them, but that may be my favorite. But yeah, similar culture values here actually. So our kind of core three, we think and act like owners, we take ownership and what we do, we constantly help each other level up or we constantly improve and then we have fun solving problems. And so we kind of want to have this attitude of like, Hey, every problem is an opportunity for something. And so we talk about that and we would talk about owning our stuff, good and bad and giving transparent feedback. And so those things, when you communicate those things clearly, then you're living it out from top to bottom. And then when you are hiring based on culture first and skills and aptitudes second, just eventually, eventually that culture kind of permeates. Now it doesn't take much to puncture that culture to start to lose that culture. So you got to be really vigilant. But man, when you've got a solid culture, I've heard, I don't know, the old saying, culture eats strategy for breakfast or whatever that saying is. And it is true. If you've got the right culture, people will solve problems. I

Jimmy:

People will

Brett:

Get tough done friend

Jimmy:

Who's got a big HVAC companies, got a ton of employees and known him since high school and he actually gave us some ideas on, and we've got note cards with the different core values on it, one each, and then how it's demonstrated. And then we task our managers with once a month giving one of these cards out with a note on it to somebody in their team that demonstrated that core value. So find the good. So we really try to an emphasis on finding the good. And of course you can coach people up or whatever on when it's not being demonstrated. But giving a shout out to when it is demonstrated, I think reinforces how important it's

Brett:

Finding the good. And I love that it's a simple call out, here's a card, culture card, but you exemplified this, you model this that has so much meaning. I remember when I was in college, I worked at Lowe's and I worked in the plumbing department. I'm like, I'm not handy at all. But I learned enough about plumbing to be somewhat helpful. This was good at customer service. I was good at talking to people. And so I helped this dude out and he's like, I'm going to tell your manager. And so he did. But my manager immediately walked over, gave me a gift card to some restaurant. I don't remember what it was, but I will never forget that interaction when seeing my boss walk up and say, you did an awesome job. Handed me the card, which is great. So made me want to work even harder.

Jimmy:

If you walk around our office, you can see on the different, our team members will keep these cards on their desk by showing 'em. So yeah, it's a cool thing. That's very not an original idea at all.

Brett:

A lot of times the best ideas are not original. And that's one of those where I think being an entrepreneur, you just borrow good ideas from where you learn them and apply them. And it's more about the application, the execution, rather than coming up with brand new ideas that really sets you apart. So that's awesome. What's next, man? So what's next for normal brand? I know there's probably some top secret stuff you can't talk about, but what can you share with us? What's on the roadmap ahead?

Jimmy:

I think our merchandising strategy is definitely product is what I love. There's no better feeling to me. I'm staring at you and you're wearing one of our shirts. I'm making sure it's draping and things like that. So I love clothes. And so I can't talk about anything with nor brand without talking about what we've got coming up. We're always a few seasons ahead. I'm thinking fall 25 right now, but fall 24, I would say just with the new fabrics we've got coming out and the merchandising strategy of giving people more what they want and having, now we've got the data behind it where we can make a lot more educational decisions on this. It's not as much gut. It used to be like, I don't know. I mean, I like this. You think they'll like it. That's how it used to be. And so I'm pumped about the collections we have coming. I'm also excited about some of the different initiatives we've got at our stores. I think we're really getting out with the community and connecting with the community, and we're onboarding a bunch of new people that hopefully make that experience, make people's days better. I dunno if there's one thing I, I'm always excited about the future

Brett:

And usually it's a lot of little things. And one thing I'll kind of mention, because I think this ties into the physical store thing, shopped at Supplement Superstore a couple times, and actually I think you know the owner, right? Because he's a St. Louis Guy as well. Yeah, yeah. So the first time I went in the store's, been here forever. I think he opened it when he was MSU or whatever, opened the store. So I went in, talked to this girl, she must have been in college or whatever, told her what I was working on and my family working out and stuff. And so we picked a product, I bought it, kind of end of story. I get a card two days later from this girl that helped me. She's like, Hey, hope workouts are going good with your wife and your daughter. We sometimes go to the gym together and stuff. And it was just really cool, man. So it was an awesome experience. So I was like, well, can't buy this online now I got to go back to the store. And so now every time we go to the store, I get a handwritten thank you card that says something about the interaction that we had. So those little touches, man,

Jimmy:

We copied off them in that. We do that. So anytime you shop our stores, you get a handwritten note that gets sent out by the next day. Those guys supplement Super source, first form, total studs, an incredible culture, a great product. They've been phenomenal friends.

Brett:

First form is really good. I would've just skipped the story if I didn't like the product. Product is really good, so I keep buying it. And yeah, the in-store experience was

Jimmy:

Awesome. Yeah, we've got it all here.

Brett:

Yeah, that's awesome, man. Really, really cool. So pay attention to normal brand. I encourage you to shop for it or shop for it for your husband or significant other, whoever. Check out the website, get on their email list, an SMS list. That's one of the things that I do. If there's a brand that I really like and admire, even if I don't plan on buying something, I'll get on their email list. I'm just going to check out what they're doing. And so you guys do a great job there as well. So how else can people connect with you, Jimmy, I see you're somewhat active on LinkedIn. Are you active on any other socials?

Jimmy:

Yeah, I'm somewhat learning LinkedIn, I mean Instagram or on Instagram at the normal brand. And those are the big ones.

Brett:

Cool. And I noticed you don't post all the time on LinkedIn, but when you do packs a punch, that's what I actually just celebrated and just celebrated nine years. Right, so you just had your nine year anniversary post.

Jimmy:

Yeah. I always get my feelings on those anniversaries. So yeah, I just did a post talking about our parents, which

Brett:

That'll mess. It was really good, man. Really good. Worth going to LinkedIn to read that. If you enjoyed this story, go check out the post and I think you'll really, really enjoy it. So Jimmy, this was awesome, man. Wanted to do this again sometime and really appreciate it.

Jimmy:

Thank you, Brett. Thanks for having me on. And this was a lot of fun.

Brett:

Absolutely. And as always, thank you for tuning in. We'd love to hear from you. We love that review on iTunes. If you got value out of this, also share this story. If you know another founder, someone else in fashion or D two C or trying to break into retail or something, share this episode with them and let the sandstones inspire more people. And with that, until next time, thank you for listening.

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Episode 276
:
Jeremy Horowitz - Let's Buy A Biz

Let's Buy a Business

It’s a good time to be in eCommerce. Just ask Jeremy Horowitz. 

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Jeremy is a long-time DTC and SaaS rockstar with a keen sense of what it takes to run a successful, profitable business.

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He’s one of my favorite follows on LinkedIn and his newsletter - Let’s Buy a Business is a weekly must-read for me.

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In this episode, we break down the difference between a business we would buy vs. one we wouldn’t and why. 

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We also talk about key financial benchmarks for eComm and unpack a few publicly traded companies that we would buy or not buy.

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Here’s what we cover:

- Amazon and Shopify will soon combine for an estimated $ 1 trillion in annual GMV. Mind blown!

- The P&L benchmarks that make your business a must-buy vs. a must-pass.

- The incredible performance of Crocs (and what you can learn from them).

- Why (legal) stalking your customers is about the only “non-clone able” thing you can do.

- What it would take to save Solo. 

- Why LVMH is unattainable but still teaches the rest of us mere mortals some valuable lessons.

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Chapters: 

(00:00) Intro

(01:58) The State of eCommerce

(12:39) Constructing a Healthy P&L

(22:48) Would We Buy This Business? 

(38:38) The Importance of Focusing on Core Customers

(43:29) LVMH: The Ultimate Luxury Company

(48:44) 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, Bryan Porter and more. 

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Other episodes you might enjoy: 

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Transcript:

Jeremy:

They truly are playing compounding game of just wait every year, make more sales, drive more growth. It is very possible that within the next decade to 15 years, they'll be a trillion dollar company.

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 I've got a return guest. This dude is smart. He's blowing up on LinkedIn, everyone's talking about him and commenting on his posts and signing up for his newsletter. But I got Jeremy Horowitz back with me today. He's the founder of Let's buy a biz, check it out, let's buy a biz xyz. Love that top level domain, by the way. But today we're talking about businesses we would buy versus businesses we wouldn't, and I am so excited to dive into this, but Jeremy, welcome to the show, man. And how's it going?

Jeremy:

Thanks, Brett. It's great to be back. I always love jumping on the OMG podcast and catching up. Things are going really well, I think. I'm sure we'll dive into this in a little bit, but it's a great time to be in e-commerce. I know it's been a slog for a lot of brands the past couple of years. We rode the rollercoaster of Covid Up We Road, the Post Covid pullback down, and then now it feels like we're starting to level set back to somewhat saying as normal, but it feels like predictable and understandable growth again. So yeah, really excited to dive back into everything. I know that we usually talk about big predictions, the big bold bets, and I have some of those today, but also really excited to talk about for someone who wants to exit a business, what does that look like? Especially from the vantage point of someone who looks at acquiring a business all the time and then has an operational background of what would we go do if we were to go acquire and run that

Brett:

Business? Yeah, I love that so much. And so it's the first point. It's a great time to be in e-commerce. I 100% agree. We've had four years strung together of very abnormal economic and societal and health stuff going on. And so it does feel like we're reaching maybe a new normal that I think can be very healthy. I was talking about it with my buddy Sean Frank from the Ridge and there, and he said the same thing. He feels like this is going to be a year of more stability for e-comm, and it's just a bright time man. Things are growing. We're going to look at the global picture of e-comm. You've got some good data that we'll unpack. So that's super interesting. And man, I love this perspective of let's buy a biz because as we look at some of these things, at a bare minimum, this is going to help you build and operate a better business.

Even if you're like, I'm building this for the long haul. That's what Sean at the Ridge is doing. I'm building this for the long haul. It's going to be a cash cow. I'm just going to take massive distributions as I grow this thing to multiple millions in EBITDA every year, or I want to have an exit. And you and I, before we hit record, we're talking about our journey. We're actively looking to acquire other agencies. We're actively looking at m and a half for about two years. And it's a super fun space, but so many benefits even if you never buy or sell, lots of benefits to this discussion. And so let's first start with the data that backs up. It's a great time to be in e-commerce. I know you've got some interesting data looking at Amazon and Shopify from kind of a GMV perspective, but yeah, what is exciting to you about Amazon and Shopify and just the state of e-com?

Jeremy:

Yeah, so I think the first thing, and so for quick context where this all comes from is every week I go through a public company's p and l and there are 10 K. And then basically tear it down. What would I do if I ran this biz? What does the financials look like? How can we really get this to the next level? All your usual suspects, Lulu Lennon, LVMH, all those types of brands. And I also like to look at the biggest boys and girls in the space, you primarily Shopify and Amazon. And when you look at their 2023 earnings, they did 936 billion in estimated GMV between Amazon and Shopify alone. Same. So you're thinking about all the sales on Amazon, all the sales on Shopify, it's going to cross trillion dollars. Yeah, it's going to officially cross a trillion dollars in consumer spending in those two categories.

And then when you take a bigger step back and you think of the total, at least US market as is percentage of consumer spending, e-commerce in total is about 15%. So still 85 cents out of every dollar is still spent in physical retail. And these two companies are going to do a trillion dollars in total sales on their platforms across. It's very, very different between Amazon one P three P and then also Shopify and all the new areas that they spend and they play in. But Amazon's GMV is growing at 11% year over year. Shopify is growing at 19% year over year. When you just think about the just raw of dollars, how many Brinks trucks need to drive through to a bank for a trillion dollars in GB, which is going to be even more than that this year, it's a great, well, I would say it's a tail of two.

Brett:

How much money can a Brinks truck hold? I think that's something that's worth unpacking. Yeah,

Jeremy:

That's a good Google. I'm not sure I actually,

Brett:

Yeah, I'm going to Google that. How much cash? Yeah, so how many of those would it take? It looks like four to $6 million according to Google if I'm looking at the right thing. So that's a lot of Brinks trucks.

Jeremy:

Yeah, that's a fleet of brink trucks. And so what I would say is I would say it's a tale of two cities of e-commerce growing. It's growing really well and it's growing really fast. I would say maybe where I may take a nuance or a counterpoint to Sean's course, the point is I dunno if it's going to be stable. I actually think it's a really interesting tumultuous time where it's great for e-comm, the trend line is going up. But I think with the current economic conditions and everything that's happened with interest rates now kind of three big bold bets for this year is it's going to be a wider valley between the haves and the haves, not in the spaces. I think a lot of consumers are just kind of going back to their familiar brands. Going back to the places that you see, I dunno if you also look at the earnings of fast food chains over the past six to 12 months, I have not. The fast food is killing it really. Everybody tried to get healthy during Covid, everybody tried to eat better and now everybody wants those kind of indulgences and guilty pleasures,

Brett:

Comfort food, and it's a little more predictable cost to really eating healthy can be more expensive. And so inflation has been a real thing. Maybe save a little bit of money and I'm getting some comfort along the way with some Mickey D's or some Chick-fil-A or something.

Jeremy:

Yeah, exactly. Just not apparently they're going to change their prices more fast than Uber does upcoming, but I think that's a major part. I think the other big piece and coming as someone who wrote a couple of early stage checks over the past three years, VC funding is not coming back. Private equity is not really coming back in the same way and there's a whole complex macroeconomic reason for all of that,

Brett:

Not what they used to be and things like that. And that's not likely not going to return.

Jeremy:

Yeah, the amount of dollars flowing in through those sources and the valuations are just really, really different. And then also unfortunately, we're just seeing a lot of m as and bankruptcies from the people who dig out too far out over their skis over the past couple of years are now those loans are coming to maturity. They need to figure out how to pay back all of that debt. So I'd say for the brands that kept, and I know we're going to kind of dive into good biz, bad biz, but for the brands that really kept the clean, they didn't take on too much debt, they didn't overhire or take on too much inventory and really stayed in that good healthy place. This is a great opportunity where things can really just pop off. You just find that one good channel, that one right product and things really can because go very well because the dollars are coming in, the customers are spending the money.

I would say it's probably the greatest time to be a 20 to $200 million and up. It's probably really hard to be a new business. It'd probably be very unique to stand out now just because ad rates have gotten so competitive. But I will say, I mean I've been very long on this industry. I've spent basically a decade plus in this industry and mostly in the Shopify space. And I think it's only going to get better, but you really need to be a lot smarter. I think the aperture and the window has closed a little bit where it's not everybody can get through anymore. It's like you need to be a lot more precise in how to build a proper e-commerce and physical products business.

Brett:

And I think the stakes for winning are bigger. The overall pie is expanding. It's at UBS at 15% of total retail, but that's only going to increase. But I like the way you said that. Yeah, the valley between the haves and the have nots, it's widening and we'll likely continue. So yeah, I fully agree. I think there's mountains of opportunities this year both for e-commerce brands, for agencies, for those that support the E-com space, but some challenges too. So one thing that's been interesting, I've seen this trend and I'm curious what your perspective has been, but there was this grow at all costs during the height of covid and then there was a we're figuring out ship again and another supply chain issues. We're just figuring it out, all these other things. There is definitely a renewed interest in just profitability, e-commerce companies saying we need growth, we need marketing, we need to customer acquisition, but we just got to be profitable and there's definitely this ruthless quest to be profitable. I'll fire my mom to be profitable, whatever. That's the sense I'm getting from e-commerce brands and I think that's healthy. That's the way that the industry needs to go.

Jeremy:

And I think the interesting thing, because I know you and I have been from the pre 20 18, 20 19 super boom. That's what this game has always been about. It's always been about profitable growth. And I would say for sure we had a temporary people move the goalposts a little bit and we've kind of returned back to normal, but the goal has always been profitable growth. And I think looking through, I've looked through about 31 public company brands and that's every valuation we can talk about price to earnings ratio, PE ratios, we can talk about revenue multiples, everyone on Wall Street is just how much growth do you have and is that growth profitable? And the past couple of years, they would really, if you're not that profitable, okay, we'll give you a little leeway now. It is just no mercy. You either are profitable or you are not. And then are you growing and how fast are you growing? And everyone has also returns. You're hearing people talk about Warren Buffet a lot more recently than a couple of years ago instead of people on Twitter talking about Bitcoin as per financial advice and how much future cash is this business going to throw?

Brett:

I'm so glad we're moving away from Bitcoin to more buffet. We need more buffet, less Bitcoin talk.

Jeremy:

I feel like it's a 10 year cycle where everybody moves away from buffet, they forget the good fundamentals and they come back and boring as possible.

Brett:

All we need is this crypto. That's how we'll become.

Jeremy:

But yeah, and I think this is probably a good way to think about, and I think more e-comm operators need to think this way is your business is worth the amount of cash it throws off at the end of the day after all of your expenses. I think a really important piece there is you should think like an investor, you should do the analysis every quarter, every year. How much is that cash throwing off? How much is that worth? And then do your own analysis of what we call it discounted cashflow. But you can do it personally of like, Hey, I made a million dollars in net income this year. Should I put that back into the business? Should I take half a million dollars and go on a crazy vacation, buy a sports car, put a down payment on a home as the owner of the business that you are the biggest investor in it. And so thinking through that and thinking through how you want to operate your money, usually operating cash from your business is really important instead of just always grow, always grow, always grow. And then that's also what will determine the value of your business when you exit. Because the bigger that pile of money is, the more someone else is willing to give you their pile of money to take on the future cashflow from your

Brett:

Business. Love it. So we're going to unpack here in a minute. Businesses we buy versus business, we wouldn't, it's kind of like the hot or not I guess, of businesses. And so we make that analysis. But before we do that though, you've looked at so many companies and you've been in the VC space and private equity peeps, as do I, let's set some benchmarks for a healthy, profitable, growing e-comm business. What should we look at in general in terms of constructing a p and l? Now, obviously on a podcast, I'm going to go every single line item of p and l. That would be a little bit boring, but from a larger context, how do we construct a healthy p and l for e-comm?

Jeremy:

Yeah, so I'm going to keep it super high level and this is also actually how public companies have to report their p and l. So it's probably a good practice to start doing the fundamentals. Now obviously you don't go through gap accounting and pay E and y $500,000 to your books this year, but just really simply what you should be reviewing every month, if not even more frequently, definitely every quarter, every year, start with your revenue. How much total net sales did the business bring in? Then what are your cost of goods sold to get to gross profit? Hope everybody who's listening to this podcast, super familiar with that part, really comfortable. How much should we make? How much are we keeping after what we outweighed to buy the product? Then from there, you want to break out opex. Now I think this is the trickiest part, and I've seen after analyzing close to 300 pcom p and ls over the past couple of years where this just goes all over the place. So I'm going to give you Amazon structure because if it's good enough for Amazon, it's probably good enough for your

Brett:

Biz, good enough for Uncle Jeff, probably good enough for us.

Jeremy:

Right? So marketing and sales, that should be pretty straightforward. What are you spending to get people to buy your product then your GNA, so your rent, your team

Brett:

Administrative? Yeah,

Jeremy:

Just all of the backend stuff to keep the business going, your fulfillment and supply chain, and then if you have it, your r and d and why it's super important to break those four key components out. And what I see so much of the time is people will bundle in sg and a or they'll bundle in fulfillment into GNA as well is really all an e-com business is how much around money do I spend on marketing to get someone to buy something and how much does it cost me to make it and get it? And you really want to break those two things out because no offense to all the three pls and people who fulfill, but you are almost always losing money in that part of your business. And then really where the most cash is probably going to come out of your business is in marketing and sales.

And so there's a huge fluctuation, and I'm sure you probably know better than I do, but depending on where a brand is in their growth curve and how much they want to grow, that is really going to be the biggest lever and the biggest place where you push or pull back. Whereas you may not, may not love your three PL and they may be charging you 15% of your revenue to ship out a product, but you're not pulling that back tomorrow or you're not pulling that back next week. And so you really need to understand where are my softer and where are my harder expenses? Because at the end of the day, everything that I see is that is what makes or breaks the profitability of an e-commerce

Brett:

Company. I know every E-comm brand is going to be a little bit different. And we have a lot of visibility obviously, into the marketing and advertising spend with our clients as an agency. And often that's 25, 30% of revenue that's going right back into marketing and advertising. I know it varies for every e-comm brand. What are some benchmarks from your perspective, where should these percentages be with the caveat that it could be different a little bit from business to business, but what are the benchmarks?

Jeremy:

Yeah, so I think this is a really interesting, especially when I was, earlier in my career, there's always seemed to be words of wisdom that I always ask like, Hey, where did you get that math from? And it was just always, this is how it is. And now I've actually pulled enough data to know it kind of reverts back to this

Brett:

Consistent, it's how it's, yeah,

Jeremy:

Yeah. So I would say if you want to be a top tier brand that can really grow and scale and get to significant level 50, 200 billions of dollars in revenue, you want to target about a 50 to 60% gross margin. Now, I've seen some super successful brands that can dip down into the 30 40% and then some crazy high brands that are up in the 80, 70, 80%

Brett:

Sales. Yeah, 50 to 60% gross

Jeremy:

Margin. Yeah, so, so once you get to your gross margin, I think that's the most important determinant for your brand because that will determine your entire strategy. And what's really interesting also is it's kind just a function of math. If you only have 40% of your revenue after your cogs to spend, you're probably not going to spend as much on marketing as if you were spend percent gross percent on

Brett:

Marketing at that point, right? Then you

Jeremy:

Yeah, I mean you can

Brett:

Can't, but it's, yeah,

Jeremy:

Yeah, right. It's much tougher to spend 30% of your marketing at that level versus if you're an 80% gross margin brand, you can spend 30% and you still have 50% of your revenue to go spend on fulfillment operations, sg a. And so it really is interesting how it shifts and changes. I would say there's usually what I would call the pop dip and then rise on sg a. So right, your team, really, really high growth top tier brands can usually get to about 10 million on five people. I haven't really seen it on fewer. There are some brands who can do it on two or three, but that's truly special unicorn edge case. I'd say usually around 10 million in gmv, you're probably at maybe five people with a bunch of agencies and other freelance resources. And so your sg a can be super, super low. A lot of super high growth brands that I see their sg a is around, especially up into that 10 20 million in GMB, usually about 5% of their revenue now that will then grow over time.

So as you get to 20, 50, a hundred million, you will have to hire a lot more people. And then when you go to a public scale, it's usually somewhere around 50 to 20% unless you're Warby Parker and Allbirds and then you're at 40 or 50% and you're not making any net income. So that's a super important component. I would say fulfillment is usually around 10 to 15% of revenue. And this is the one area that I think is super important to break out from your sg and a of how can you whittle that down because every percentage point there could be going to marketing, could be going to bottom line, could be going to all these other areas. And I dunno, from what I've seen economies of scale is nobody's really figured out economies of scale and fulfillment for e-commerce yet. And so I think that's another major component.

And then we're always nets down to, and what's to me the most interesting is a lot of the retail OGs and people who are really successful building malls, physical brick and mortar retail presences always said your net income is going to net out at 10 to 15% of your revenue. And it holds true. The DTC darlings, the retail heavy brands, the hybrids, I mean it all will fluctuate, but you kind of always net out at 10 to 15% of every dollar you make in top line nets out as net income. And it's a really interesting trend and also makes it it's, that's probably the best benchmark. Everything in the middle, your gross margins, your opex is going to fluctuate based on your business and your dynamics, but you kind of always want to net out at that 10 to 15% in net income if you want to be high, if you want to take out more cash out of the business, raise it. If you're comfortable with growth, you can lower it. But it really seems to be that words of wisdom that really does always net out from

Brett:

The data. Got it. And yeah, maybe if you are in the agency world, we're generally seeing the high teens to say 24%, that window is what a lot of agencies shoot for and PE groups that we know they specialize in agencies, that's kind of what they look for. But it's still not far off from what you just said, but the idea there is if you take a higher percentage of profits than your are likely pulling away from something that's going to impact future growth. So you're pulling away from marketing or sales or RD or something to get to that higher margin. Are you seeing many of the e-com rockstar businesses that are hitting 20% net income or that's pretty rare?

Jeremy:

That's very rare. And I actually think the interesting thing that I'm also seeing and hearing a little bit of through the rumor mill is a lot of financial companies don't want you to be that high because actually

Brett:

It's not hitting the accelerator hard enough. It means you're not advertising enough.

Jeremy:

Yeah, I mean I think reason I was looking at this as a percentages and a pie is you got to take something from somewhere else to put it in another pocket. And when you think about an e-comm business, like your cogs and your fulfillment costs are fixed isn't the proper accounting word, but they're a lot harder to move. You buy your product, you commit to those prices, you ship it, you're kind of committed to those things. So really when most brands want to take more profit out of the business, they're cutting their marketing or they're cutting their GNA, which is team or their variable marketing spend, which is almost always an investment in growth. I will say the one caveat for the past couple of years is a lot of people just over hire and just brought on too many people and you're seeing a lot, unfortunately the layoffs are pretty painful and tough, but also Shopify got dragged in the markets for their rounds and they reduced their SG a by 31% year of year and had no meaningful impact on their business. And so I think that's also a little bit of market dynamics and corrections of people got a little too high on the hog in 20 20, 20 21, and now we just need to get back to everybody getting in shape and getting

Brett:

Fit. And I think it is just healthy, and this is something that every business needs. We've got these benchmarks and we're going to ruthlessly attack those. So right sizing, I mean it was easy for e-comm businesses and agencies. We all went through this period. Shopify did it right of just adding too many, getting a headcount way too high for what you really needed. And so the right sizing is painful but necessary for sure. So awesome, man. So love that. Not everybody likes to talk about a p and l, but come on, that's poetry in motion, baby. When you've got a good p and l for your business, you're hitting that 10 to 15% net income, you're growing. That's a beautiful business and it's attractive if you want to sell it or if you just want to cashflow it, you're likely really good. So let's do it, man. Let's kind of buy this business. Would we buy this business? Would we not buy this business? Who's kind of first on the list for us to break down?

Jeremy:

So my favorite one that I looked at and kind of actually where I started this whole journey was Crocs. And Croc is such a

Brett:

Fascinating, it's such an odd resurgence, such an odd resurgence post like yeah, they're ugly, but I love it and it makes me feel good, and so I'm going to wear it. And I love this trend. It's awesome.

Jeremy:

Yeah, yeah, I mean they were probably too early to the comfort economy and then yeah, COVID was a really good bump for them. So just a quick stats on Crocs, they're currently training $124 a share. They have a market cap of 7.5 billion, and when you look at their revenue and net income, they're trading at essentially two times their revenue and 9.7 times their, what's called the PE ratio, which is basically just what is their net income, what is their market cap divided by their net income, which is 9.7 times. Why I always like to look at this and I look at both SaaS and eCom businesses is really important is I feel like too many headlines recently have been this company traded at X on their revenue

Brett:

Or 30 x earnings or 15 x revenue or something. And it's like, yeah, that should only apply to a few business categories, not eCom.

Jeremy:

And I think the difference is if you're an 80% gross margin business and you have high recurring revenue, investors will give you the leeway of saying, okay, this will be a multiple of revenue versus we just talked about it in e-comm business. There's all of these other expenses that are pretty tied to the business. So I think a really important level set there is to always look at what are the PE ratios of public eCom companies, because that's actually the determinant that the financial players are using to get to whatever that market cap should be. But CROSS is a really strong business. They're doing 3.9 billion in revenue in 2023. They have 1.7 billion in cogs, so they're at about a 56% gross margin, and they did about 2.2 billion in gross profits. They have an SGA of 1.1 billion, which puts them at about 30% of their revenue, which they actually are at 20% net income.

So when you think about that, it's the silly brand that everybody loves to make fun of, but they really are building a meaningful business. And every year, because I've been posting about them for a couple years now, every year everybody's like, oh, it's just a covid fad. They'll slow down. They're growing just as fast as they did before Covid, and they actually have this brilliant business model, which I call ludicrous stunt collabs. So I don't know if everybody remembers the Balenciaga Crock from a couple of years ago, 2022, they did over 66 collabs with different celebrities and different huge other brands like Hello Kitty Crocs and all these other things. They're doubling down. They did even more than that in 2023. And I think it's also just a really good lesson in creative marketing as well is they make plastic clogs that our guests are super comfy. I don't own a pair, but I have, the guests are super comfy, but really,

Brett:

I owned a pair in forever, but they are comfortable.

Jeremy:

Okay, yeah. Everyone I know owns 'em. Like I am the outlier in my social network for not having a pair of Crocs. But yeah, I think it's a really compelling and really interesting business case where I think the other really important part is they're a traditional legacy retail brand that then also had a kind of renaissance of e-commerce, and now the two are really blending the business model. They've found a good way to blend those business models well together. I think the other thing that I really want to make sure this little period ends is this whole D two C or dye mania of just, it has to be D two C, we have to go to a hundred million, 500 million, whatever direct to consumer. No, if you make a product, your job is to sell that product in as many channels as possible through different vehicles. Some of those will be owned, some of those will be rented, some of those will be partnered, and I think they're one of the best examples of just really running the playbook well and always having something fresh. Really, they don't have that many products. Yes, they've extended in some other categories, but to me that's a really, really strong business where it's not a massive product catalog. They don't have 15,000, 20,000 skews, but they're selling in multiple places. Their strategy on

Brett:

Amazon, I wasn't sure, but they're selling on Amazon and they've got a pretty awesome Amazon store.

Jeremy:

I think that was one of their, I think that was a covid, we need to get on Amazon because we have to shut our physical retail down and now they don't break out their Amazon and their earnings, but I would assume Amazon is a meaningful part of their business now and their digital presence between D two C and Amazon is a bit of a flywheel that also then fuels their retail businesses.

Brett:

You get the Hello Kitty collab, the NASCAR Crocs, you got other stuff that I don't even understand what I'm looking at.

Jeremy:

And I think that's also part of the brilliance of the strategy is it's the same product, but the designs are bringing in different customers where I'm going to go on a limb and assume that the Hello Kitty crowd's not the same as a NASCAR crowd. People were probably buying their NASCAR product, probably aren't buying their Hello Kitty product and vice versa. And I think that's a really brilliant design way to acquire more customers. Now I'd say on the flip side, let's take a brilliant market, buy

Brett:

More right now maybe if I'm a NASCAR fan and I've got a daughter, I'm going to buy her Hello Kitty. Or there's the Pixar integration here on some of this, like the Woody Crock here from Toy Story. Yeah, so just brilliant.

Jeremy:

I would say on the flip side, a different example of brilliant marketing use case that didn't work out of not buying a biz would be solo solo brands. So I know everybody loves to beat up on them. They had a pretty tough quarter. I think the more important piece here is really diving into why that business didn't work. So for anyone who isn't familiar, solo Brands is essentially a portfolio company of four different D two C companies. The largest one is Solo Stove, so this is kind of basically the Yeti of fire pits. It's a portable fire pit, super high end targeting the outdoorsy people who want to do Campfires Grill marshmallows. They acquired Chub's, the short shorts company, huge fashion like Shopify 1.0 D two C Darling. Then they also acquired oru Kayak and Aisle Paddleboard. So very much trying to live the outdoor lifestyle, big products people buy.

I think here's my two main problems with it. First Shies makes no sense in that product portfolio. I'm not the customer, so I'll take this with a grain of salt, but someone who bought, I can't just imagine someone going camping, bringing their solo stove and their oral kayak while wearing their American flag, overall short shorts from Chubby. I'm struggling to see that being the same customer base, but I think the other bigger component is we have to stop shipping heavy stuff. It just doesn't make sense. They're an unprofitable business. They actually had a pretty painful year over year net loss and then obviously bring them up of the whole Snoop Do thing. I think it was brilliant marketing. I don't think it was the right strategy at the right time.

Brett:

Yeah, I mean that whole, I'm giving up smoke from Snoop Dogg. Brilliant. I think the execution was really interesting as well. It didn't work maybe for a few reasons, but yeah, quick note on that. I met one of the founders of solo solo stove, brilliant guy, just awesome guy. I know a couple of founders from Chubby's, also, brilliant guys, really cool brands. But yeah, there's been some challenges and maybe some missteps along the way and everybody does sort of love to hate on him, which probably isn't totally fair. But to your point, really good lessons here as we unpack them. And I think, yeah, to your point, I love Chubby's and Preston Rutherford's a friend. Actually I think you and I were commenting on one of his LinkedIn posts. Yeah,

Jeremy:

He's great.

Brett:

He's so good. He is one. He was on the pod recently. So if you're listening and have not listened to the Preston Rutherford podcast episode, you got to go do that. I'm not a Chubby's customer either, even though I got mad respect for them and love it, but there's going to be some crossover there, but yet it's not just this brilliant marriage of all chub's. Customers buy stoves or stove people buy chubby. It feels like kind of a different crowd.

Jeremy:

And so I think because I completely agree with you, all of those are great brands. All of those should be doing much more successful than they should. I don't mean to, I think Chubby should be divested and run as an independent apparel brand or sold to a different apparel brand and will be incredibly successful. And it's almost one of those things of if you set it free, it will do better. And then I think more of the point of where I think the midst of the original strategy was is we're going to aggregate a bunch of DDC brands that are kind of similar and try to run that as a big portfolio versus really there are three large heavy high A OV physical products that outdoors people will buy and a fashion retail apparel brand. And I think

Brett:

Which wildly different when you look at it like connection of D two C and maybe people that like to go outside, okay,

Jeremy:

And we're going to kind of make it work together. Versus Chubby's is a true D two C brand that should be in Appar, that should be in physical retail, a nine figure brand. They're at the scale in size where there's only so many dollars you can torch on meta before you have to move into retail. And then I think the other brands need to just be retail brands, the physical expense to ship. If you buy Brett and Jeremy buy a solo stove and an or Kai, you're spending 60, 80, a hundred dollars to ship something that heavy to a customer all over the country and all over the world. That's where you want to piggyback off of the retail supply chain infrastructure because it was literally built to do that. There are REI, home Depot, these companies ship much heavier things already to their physical locations, and so it shouldn't really be this D two C as an innovative disruptive channel, but really those are retail brands that will probably do much more successful and be much more profitable in a retail channel. But it feels like they're clinging to this. We have to be D two C

Brett:

Thesis. Got it. Your fix for solo stove is we divest Chubbies and it appears actually chubby is profitable, successful, all those things, but let it live and breathe and work on its own. And then we're keeping solo stove and or kayaks and stuff. We're keeping those together or are we splitting those up potentially as well?

Jeremy:

Yeah, I don't know enough about or root kayak and the aisle, but to me those all make sense together. To me, those are all the millennial REI customers. I'm going to buy my solo, so go on my camping trip or we're going to go paddle boarding or kayaking. And to me, those all make sense that urban millennial who wants to get out of the city kind of branding there, I don't know enough about the specific entities, but to me that makes more sense. And then solo brands should be going all after that customer versus let chubby, maybe there's another fund or another retailer that makes sense to have that brand live under its umbrella, but I also assume it could probably, their founders have also been amazing. I was at an event last year where their founder shared their p and l right before they exit up until where they exited. And it was a growing profitable

Brett:

Kyle as well. Kyle, that's legend as

Jeremy:

Yeah. So he presented on the main stage of a conference that I was organizing and retained.

Brett:

That's where I met him in.

Jeremy:

Yeah, Brett also dropped a lot of knowledge on YouTube ads at that conference as well. But to me and Wall Street, it's not a unique appear because Wall Street is taking the stance as well as it's not by that company. I think there are too many of these, like D two C aggregator is not the right word. It's not raio that try to buy 50, but a brands is in a similar boat where they bought three apparel brands and then Culture Kings was your retailer and somebody, everybody was just trying to aggregate revenue to just get to the size to go public. And I think a lot of companies are now unwinding that strategy and just going out really mastering who are our customers, what can we get to buy them to buy more of from us and really focus on that versus this kind of like, I call it spreadsheet math. We're really good at this, so let's just add this new market and that will increase our percentages by X and we'll be a big brand really staying true, really staying focused because the super successful brands are really nailing that really well and just have the patience to let that momentum build and that revenue and those profits compound over

Brett:

Time. And when you're just bolting on ebitda, when you're just buying revenue and trying to piece it together with kind of a loose association, that's not a recipe for synergy and true integration and ultimate long-term success. So yeah, I really like that. Awesome. Any other thoughts on how you would fix solo?

Jeremy:

It's a good question. I think honestly it's probably cut costs and ride it out as high as outdoor and home and goods rose, it fell and it's really just a demand pull forward problem. I don't think there's anything wrong with their business. I don't think that people are going to stop going product

Brett:

Sound from what I hear, products are great.

Jeremy:

Yeah, I don't know anything bad about them. The whole snoop thing generate a lot of buzz and that will always get a lot of thought boys to give their opinions on it. But I think the core of the business is really strong. It just needs to literally ride out the winter. The crazy idea that I have is they should actually go raise more money or go private and scoop up all of the other more struggling outdoor brands because I think it's that classic Warren Buffett we're going to talk about a bunch of times today. It's cost like Warren Buffet, right? Of when others are fearful, be greedy, and when others are greedy, be fearful. If outdoor is really struggling, could someone private or a larger company buy solo brands and acquire all of the other relevant brands right up the storm for two years, three years maybe?

And then you come out of it the other side, you own the entire category. And going back to the reason why I think they should divest Chubbies is if you have seven or eight products that one core customer buys, you could be Home Depot's largest outdoor recreational supplier or someone like that where it's just, it could be six different names, but you're still buying one end product that's really difficult to do. And like I say that pretty easily, it's one of the most complicated strategies to execute and it's actually one of the highest failure rates. But that would be my last crazy out of the box idea of where solo brands could go if they had the resources. And I actually think there's a lot of smaller examples of that across many different industries in e-comm right now where there are 400 lugging brands out there, there probably don't need to be 400 lugging brands, but a lugging brand can maybe get into what's the workout thing that they use or what's the beauty and cosmetics and really start to master what's that one core customer, what's our core competency and figure out that right ecosystem.

If everyone is struggling, I think a lot of consolidation will solve a lot of those problems.

Brett:

Consolidation is definitely going to happen. We're seeing it with D two C brands with agencies as well. One of the things you talked about is understanding who is our customer, what do they buy? How do we then assemble this collection of brands that are and products are going to meet their needs? And you made a post on LinkedIn. I'm just going to encourage everybody. You got to follow Jeremy on LinkedIn. He's awesome there. But one of my favorite posts recently that you, I'm just going to read it because this is powerful. You said the best businesses stalk their customers don't break laws. That's an important caveat, but you need to be in their social feeds following what they fall consuming, what they consume. You need to be in their heads more deeply than they are, do this over and over again across the entire customer base. That's when you'll have the algorithm down. That's the only way to know what they want before they do. That's going to set you apart for everybody else. Everything else is clone, which I love that. And so any other things you want to riff on there? But I think that, and that applies to the D two C brands that applies to agencies, that applies to software companies, obsess about your customer and stalk them, know them inside and out.

Jeremy:

So for anyone, I guess I should start all my statements on things now is this is not financial legal tax advice. Don't break any laws. I was never here. But yeah, this basically came from back in my time at Lumi, which was basically Kim Kardashian's favorite selfie case. So our core ICP was 18 to 34-year-old women who wanted to basically look nicer when they took photos because it was basically a phone case, light rails on either side. It made you look really beautiful. It was basically a photography level spotlight on your face or on anything you were taking a photo of when you went out in any dark scenario for everyone who isn't watching this live, I am a white guy bald with a beer. So I couldn't have been farther away from that demo if possible. Actually most of my career I found most success marketing and selling products that I don't buy and that I also don't fit the core customer base of. And so when I got asked like, Hey, how are we going to sell this to more women? I was like, cool. I don't know. So I mean it's a fun way to basically say do deep, deep customer research, I think

Brett:

Mill, right? Because you can't just rely on your, oh yeah, I know because it's me. You have to get in and know the customer and then follow the fundamentals and actually probably made you a better

Jeremy:

Marketer. Yeah, it really did. I think the important piece now that social media is just, everyone has it and it's everywhere and every brand has some relation to it is I think when most people think of customer research, they think of surveys or they think of pulling data. And really what I found to be the most successful is I would go spend hours reading people's Instagram posts and I would go look at their profiles to see what they posted. It was a little bit different. I was trying to look at what photos they take to understand how they were using the product. But what I actually discovered in doing that was I actually understood what were their interests, what were their passions. Great salespeople will always say, I know what my clients do on a Friday night. And I think that having that level as a marketer at scale is so important because from anything from your messaging, your positioning, we invented new products around a lot of what we did and what we found out there.

It's so easy. All it just takes is effort. And now anytime I look at a new brand, the first two things that I do is I go look through the reviews and then I go look through their social media and what people are saying and what people are posting and then go dig into some of those people because it's the best I found. At least it's the best way to truly understand what the person's actually like and what the person's actually interested in. And then after a certain number of hours, you just do it enough that it's like, okay, this is our entire customer base. And I mean we had hundreds of thousands of customers at Lumi and we get to profile level and personas. This is what the customers like, this is what they do, this is how they talk. And then a lot of the best marketing I've ever done is copying and pasting customer quotes and then putting in ads, putting in emails, putting in all those other components.

Brett:

Yeah, yeah. Did a podcast with the founder of Tushy and she was talking about such a great Mickey aal, such a great brand bidets that you attached to the toilet or whatever. And so some of her best marketing headlines and stuff were just lines taken from somebody. And so one was like tushy is eye candy and butt bliss. So it such a weird line, but it's like it looks beautiful and butts bit happier, whatever. Some of those lines you may not think of but your customers are and that can become your best ads. And so love that strategy, stalk your customers, but don't literally stalk them. As we wrap up and we're just about out of time, but you also had a really, really great post. I think it's worth highlighting a little bit and then people can dig in and look online a little bit closer, but talk to me about LVMH potentially going to be the first trillion dollar product company. Who are they? What do they do? What makes them so special?

Jeremy:

Yeah, so for anyone who isn't familiar, LVMH is the ultimate luxury company. They own 75 different, what they call luxury houses are essentially just brands. And most of them, Louis Vuitton Moat and Hennessy, they bought Tiffany's the famous New York jeweler. They've also bought Fenty by Rihanna, her beauty and cosmetics brand. They're basically the luxury aggregator really. Actually they are over 50 to 80 years. They've basically just rolled up 75 different luxury companies and they've just mastered this playbook because I don't buy any of these products, so I can't really speak to it, but my assumption is they have a very, very clearly defined ICP. They really know who's going to buy their business or buy their products and they're doing 80 billion in revenue. It's really hard to really, I started when these numbers started getting so big, I started like a country's GDPs, their GDP. If LVM H was a country, they would be bigger than Uzbekistan is the 72nd largest country in the world, which feels a little silly

Brett:

And gross margin, 86 billion in revenue on 69% gross, but 69% gross margins. Insane.

Jeremy:

Yeah, absolutely insane. Their net income, when I looked at it, their net income was more than I think 70 or 80% of all the other companies we analyzed last year combined. And so I think the really important lessons here is one, they have a really simple, yet hard to execute business model of they know exactly the type of company that they want to buy. They wait for it to get a certain size, they acquire it and then they just plug it into their machines and it's really aspirational. Also, they just traded a hundred billion dollars. So when you think about their growth rate, when you think about how much profit they kick off and when you think about they truly are playing the compounding game of just weight every year, make more sales, drive more growth, it is very possible that within the next decade to 15 years, they will be a trillion dollar company.

Anyway, the craziest thing is I actually don't think they need to acquire that many more brands. Maybe in that 10 to 15 years they'll be at 78, 82 maybe, but they've done a really, really good job of just consistently growing. And they have about six core categories of spirits, apparel, jewelry, I think they have an other category and then luggage and travel and accessories. And they just acquire a couple brands in all of those spaces, really run them well and then just let them go. I think the other really important piece where it's really hard coming from our end of the space where we're constantly disrupting and we're constantly trying to challenge people is they have a legacy to protect. So they have an incredible focus and I think it's so easy to get wrapped up in, we're doing this today and that looks really shiny and I have worst shiny object syndrome, but the greatest lesson I took from that is just wait 20 years, literally just do the one thing you're doing really, really well.

Let it compound, let it grow. I think they really take that approach really well to everything that they do. They're in luxury. So yes, they can really support. I mean, I don't know any other company that supports 69% gross margin at that scale or even really at most any scale, which you could past like 50, a hundred million in sales. But I think they've also just done a really great job of building the layers of their house brick by brick, layer by layer and just being very patient with it. I know for a bunch of entrepreneurs who are like, I need to hit 50% growth next month, that is the worst thing to leave you with. Absolutely. But I think really not getting distracted by the side quests, just really focusing on that core thing and sticking with it for a long period of time because there is really my buffet quote number three, there is no greater value than compounding growth. And just really having the consistency in the patients to stay on that course is why I think they're not attainable, but it's really something that every brand should go study look at and think about how they can take it away for their brand,

Brett:

That focus and longer time horizon, the patience that's there. Because if you're trying to ruthlessly hit a profit number or a revenue number, you're going to be really tempted to discount and do some things that have a really short-term, great short-term payoff, but a long-term net negative for the brand. And that's the type of stuff that LVMH and their premium brands don't do. And of course we would all look at that and say, well, of course they sell luxury items, easy for them. No, no, no. It's simple, but it's not easy. They are focused and they are just, they're cutting out everything else and they know who their buyer is and they're not worried as much about short-term profits as they are protecting and building the brands over the long haul. So really, really good man. So as people listen to this and like, dang, I want some more Jeremy Horowitz in my life. I need to follow him on the socials, I need to get on his email list. How can people connect with you?

Jeremy:

Yeah, definitely. So if this was helpful, if you want to hear more of my crazy thoughts and ideas and then hopefully some helpful macro analysis of the space, just follow me on LinkedIn, join the 20,000 other e-comm heads who decide that my crazy ideas are worth reading every day. I do try to post helpful stuff and tips as well. Jeremy Horowitz, H-O-R-O-W-I-T-Z. And then if you want to get the weekly teardowns where we do go through public company p and ls, then out of the box growth strategy as on how we would three x five x, 10 x our money running those brands, just go to let's buy a biz BIZ xyz and subscribe to the newsletter where you'll get all 32 p and ls that we've analyzed so far. And you can look through all their businesses, see what all their revenue costs of goods sold, all those other components are, so you can better understand what your p and l could look like.

Brett:

You'll be a better operator, better business mind and thinker if you get on Jeremy's newsletter. And Jeremy, man, love hanging out with you. You are a beacon of truth in a sea of craziness. You speak the truth on business and D two C growth and p and ls, and I love what you're doing. So keep it up and thanks for coming on the show. And yeah, dude, I'm smelling like round. Is this the third podcast you've been on at least two? So anyway, next round, we'll definitely schedule it here in the not too distant future. So thanks for coming on. Super fun.

Jeremy:

Yeah, appreciate it as always. Always have a great time, Brett.

Brett:

Awesome. And as always, thank you for tuning in. We'd love to hear from you what would like to hear more of on the show. And if you haven't done it so far, we'd love that review on iTunes. That's my big ask for you. Review it, share it with someone else that you think could use this. And with that, until next time, thank you.

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Episode 275
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Jeff Cohen - Amazon

Amazon Ads News & Trends with Jeff Cohen of Amazon

No one is a better fit to serve as an Amazon Ads evangelist than my friend, Jeff Cohen.

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Jeff is a founding member of Seller Labs and has been keynoting, exhibiting, and attending Amazon events for the last decade.

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If you’ve been to an Amazon event, you’ve probably seen Jeff. Now, he’s serving as the official Amazon Ads Tech Evangelist.

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I wanted Jeff to join the pod to talk about what’s new and trending with Amazon Ads. 

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This is important even if you’re not selling on Amazon. 

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Amazon is now the 3rd largest digital ad platform behind Google and Facebook. And it’s growing rapidly.

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Here’s a look at what we cover:

  • How vertical videos are improving shopping experiences and making ad performance better
  • What is the new integration with Facebook, and what it means for shoppers
  • How Sponsored TV ads are democratizing TV advertising and utilizing Amazon’s rich buyer signals
  • Prime Video Ads and what they could mean for your brand (and when to consider running them)
  • Amazon Marketing Cloud (AMC) what is it, how and when to use it to unlock new actionable insights about your business and advertising effectiveness
  • Plus more!

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Chapters: 

(00:00) Introduction 

(07:54) Vertical Video for Sponsored Brand Video

(15:43) Amazon’s Facebook Integration 

(19:27) Prime Video Ads and Sponsored TV

(31:33) Amazon Marketing Cloud (AMC) 

(39:22) AI’s Role In Amazon Advertising 

(42:15) The Importance of Your Feedback

(43:46) 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, Bryan Porter and more. 

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Other episodes you might enjoy: 

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Transcript:

Jeff:

Because every time you advertise, you're making an investment in yourself and your product and your brand, and you want to be gaining some insights from that so that you can learn, you can iterate, and then you can reinvest.

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 first for the e-Commerce Evolution podcast. We have someone directly from Amazon joining us on the pod, and I am absolutely thrilled. This is actually a gentleman that I've known for a long time. We go way, way back from his entrepreneurial days and now he is at Amazon and Gee's, a close Amazon ad partner. I've got to visit some Amazon offices and so love our partnership with Amazon and thrilled to be diving into some trends, some new things, some stuff you need to know about as it pertains to Amazon and Amazon advertising. And so my guest today is Jeff Cohen, and you may know him from Seller Labs. If you went to any Amazon show, any Amazon conference, you saw Jeff. Jeff was there, and so really appreciate taking the time. Jeff, welcome to the show and how's it going? Oh,

Jeff:

I'm doing fantastic. It's obviously great to be on the podcast with you. We have known each other for a long time. We're both fellow Missourian. Yes, we have those extra bonding moments and I think ultimately I've always appreciated everything you've done for the community. We've kind of grew up in two different slight areas of this overall community of Amazon, but we definitely get to run into each other here and there, and it's been great to see the growth of your business over all these years as well. So thanks for having me.

Brett:

It's cool, man. Yeah, really appreciate saying that. And yeah, we're big fans of Seller labs and cool to watch that evolution and so kind talk about that, Jeff. So you're an entrepreneur, founder, owner of Seller Labs, but now you're working with Amazon. So tell us what that connection is like and tell us the story that kind of made that all happen. Yeah,

Jeff:

I guess technically I was a founding member of the company. I wasn't the actual founders. That gets kind of weird at times, but I like to be truthful. I think when it came down to it, somebody recruited me to try to leave seller labs and I made a joke with her and I said something like The only job I'd ever take is if Amazon would hire me to be an evangelist because that's what I already do. I run around and I talk about how great it's to be on Amazon to sell on Amazon. So I liked to joke. So then she came back and she was like, Hey, this position's actually available. And I applied and was hired, and I like to say I didn't come to Amazon and drink the Kool-Aid. I was drinking the Amazon. If you followed me for any length of time, you'd known that I've been strong advocate of Amazon and the community behind sellers and supporting sellers for the last eight to 10 years.

And so it's great to kind of be at Amazon representing all of the partners that I worked with who were all of my competitors. And so today I work with agencies like yours, tech providers, everybody within the Amazon partner ads partner system to really understand how to integrate in with Amazon, where priorities should be, where Amazon is putting their investments and maybe where advertisers should think of putting their investments. So it's really cool. It's been kind of an interesting journey. Amazon is definitely a more entrepreneurial company than you would think for the size that it's so, it's a great place, it's a great place for entrepreneurs to be.

Brett:

Yeah, it probably does not feel like a foreign space foreign entrepreneur, and I think Amazon treats their people like, Hey, you're owning this thing, and so operate like an entrepreneur would. And so that's funny. So you were talking to this recruiter, so you didn't know the position existed. You were just making up like, Hey, if Amazon needed an evangelist, I could do that. And then turns out that actually existed.

Jeff:

Yeah, I mean, you come from the SEO world, and so I had always Danny Sullivan, Matt Cutz, those are the people from the Google world that I always looked up to, and I always wondered, why doesn't Amazon have somebody like that? And so that was my vision when coming here was that's who I could be and that's how I could serve the community and what I strive for every day. I mean, I take it really as a responsibility because I know that the community wants representation at Amazon and they do have ways of being heard, and I know that they consider me as another way of hearing through things like this as well as being heard through the feedback that I get.

Brett:

That's awesome, man. Yeah, I can totally vouch for you that you've been preaching and evangelizing for Amazon for going on a decade now. And I agree with you. I mean, there's never really been a platform. There's never been a place for merchants to sell their wares and to build a business, and you may know off the top of your head, but the number of millionaires and the support that Amazon has given to brands, it's a pretty phenomenal opportunity. You have to approach it the right way, and there are challenges there and things like that, but it is an unbelievable

Jeff:

Opportunity. I mean, listen, it's not a golden ticket, but for the people that do it the right way and build upon it, you and I have seen the success stories over the years of the companies just like my buddy Mike Brown over at Death Wish Coffee when I met him, he was just an average guy. He's still an average guy, but he was just an average guy running a small business and now he's got worldwide distribution his products. So there's cool stories like that within the s and b world that we hear about all the time, and I think it's really an awesome opportunity for people that have great products and want to build brands. And I think that's really what you need to be successful on Amazon today. That's the

Brett:

Key one. That's the key building brands and coming up on the pod, actually interviewing one of the founders of Simple Modern, which just a phenomenal story and really they launched on Amazon, so they are great. It's a great brand. They've really built it over the years, but now I think I heard somewhere in we'll find out on the podcast, but they sell more drinkware than almost anybody else on the planet, which is crazy. That's cool. Then you got Anchor. So if I'm buying a replacement charger for my iPhone or MacBook or something like that, if I don't buy Apple, I'm buying Anchor. And that was kind of a brand that was my understanding was born on Amazon. And so, but this is what we're telling everybody. To be successful on Amazon, you got to build a brand there. Don't just sell products, build a

Jeff:

Brand, right? And that takes time. That takes time, it takes energy. And as I like to remind people, I shared this the other day, it starts with a great product anchor is what it is. I just bought one for my daughter yesterday because their products are good, they're quality, they have a reputation behind them that drives people to want to be raving fans. And ultimately as marketers, that's our goal. Our goal is to drive and create raving fans, and you need good products to do

Brett:

That. A hundred percent. So let's dive in. Let's talk about some new things that are here and that are available to marketers and will help us sell great products and build great brands on Amazon. So one of the first ones, and I'm pretty excited about this vertical video for sponsored brand video. Tell us what that is and why is that exciting?

Jeff:

Yeah, so you'll see that vertical video has kind of come in a couple of different areas. So sponsored brand ads is one of 'em also within Post. And the biggest problem that we're trying to solve with that is that people are shopping on their mobile devices. And so when you have horizontal videos, they don't play well on mobile devices. So the move to vertical was really to make that ad unit, to make that free unit through post a better shopper experience for people who are viewing on mobile devices. Now, it also solves another problem, which is that as marketers, we're creating content for all our other social media channels. And so when there's some consistency of how that content needs to be created, that's helpful to you as a marketer. I know for myself as a content creator, I might sit there at a show and I'm sitting there and I'm videoing it horizontally and then I'm flipping it and I'm doing another video vertically because I'm not sure where I'm going to be using that content or how I want to use that content in the future. And so being able to port your content from one social media channel to another is something that we want to make easier for our advertisers or for our brands because Post, which is another place you can use those videos is actually a free tool that brand builders can use to expand their audience. And so it's not just about ads and selling ads, it's about just overall that viewer experience and that sharing of content across the social media channels.

Brett:

Totally makes sense. And for those that don't know, can you explain what posts are and how they impact the shopping experience?

Jeff:

Yeah, so the easiest way to kind of describe posts is that, again, it's a free tool. They sit within the stores function of Amazon, of Amazon ads, and what they do is you put an image or a video within the post and then it will show up in different places throughout the shopping experience. So it might be on a thank you page or on a a product detail page. And they're really set to be an inspiration for people to say, oh, I'm interested in this, but what are other cooking things that I could do? And then within the post, people can either interact by clicking on a product and going to buy or by following your brand. And so what it allows is it allows your brand to create followers. And then as you do other activities throughout Amazon, through both the retail and the advertising side, there's ways to use the signal of followers as a way to make promotions. So on the retail side, you can create coupons that are specifically for those who are following your brand. You can do emails through your customer experience piece on the retail side, and then on the advertising side, you can set signals through the Amazon DSP and through other channels to say, Hey, this is somebody who's made a signal that they want to follow my brand, they want to get more information from me, so therefore I'm going to present an ad to

Brett:

Them. Yeah, it's been really great. And on the agency side, we advise all of our clients and help all of our clients create posts, and we've been kind of surprised by the thousands and thousands of followers that some products and some brands get through their posts. And then, yeah, it just makes it easy to talk about new products or to send an email or to really connect with that customer. And so it's an awesome free tool and it's one that if you're not taken advantage of, you absolutely need

Jeff:

To. Yeah, and it's similar to any social media. You have to post consistently, create, generate creative that's engaging. You just have to think of it in that same way, and no, on day one, you're not just going to post and get 10,000 followers, but the brands who have been doing it habitually for the last couple of years as it's kind of risen up and its popularity is probably the easiest way to say they're the ones that are benefiting today because they're seeing the amplification of the audience that's able to see it. Then the other cool thing you can do got away from vertical video is you can see what images are working well within your post, and you can then integrate those into other ads that you're running. So you can almost use post as an AB test type of environment, and if a post is getting a lot of engagement, then you may want to use that image to create additional ads because it's engaging, it's got high CTV stuff like that.

Brett:

Yeah, really glad you mentioned it. That's one of those under-leveraged, underutilized areas of posts. Use it to image test and use it to understand what can I build my next ad from, or what image do I need to add to my product carousel images or what image do I need to use for DSP ads? And so yeah, love that aspect of it. And circling back to the sponsored brand video, the vertical video piece, we were early adopters of sponsored brand video back in the video in search days when it first launched. And that's always like the number that's always like the number one or number two most effective ad type for our clients is the sponsor brand video. And what's great about it is because of the way Amazon shares that it's often below the fold, it's often on more category searches. We find a lot of new to brand shoppers buy from a sponsor brand video ad because they're usually scrolling a little bit further because they don't have a brand preference yet. They're still exploring this category, this product type, and so they see those videos. It's a product demonstration video with the listing next to it. It's just a super compelling ad type. I love it. But yeah, there was a gap. Most of the content that we're creating, even for YouTube shorts that OMG commerce is using or other social platforms, Facebook, Instagram reels, TikTok, vertical video. And so most brands user generate content or your demo video, it's often vertical video. And so now we can use that on Amazon and it's making a difference.

Jeff:

That's awesome to hear. And I think one of the things you said there that I think is important for people to pick up on is that when you're running video type ad units, you're not looking at straight performance metrics. You're not just looking at how many sales that video's generating. You want to be looking at things like how long was the video viewed for, right? Did it get to 25%, 50%, 75%, very, not everybody gets to a hundred percent, but did you get enough of the video view there? And that's going to start to give you a signal back to tell you, do you need to change your video? Do you need to make something more compelling? Did you get their attention in the first three seconds? And so think about all these things in a test and iteration type of mode that gives you the ability to be building upon the investment that you're making because every time you advertise, you're making an investment in yourself and your product and your brand, and you want to be gaining some insights from that so that you can learn, you can iterate, and then you can reinvest.

Brett:

Yeah, so great. Yeah, anytime we can get that data, make the next video ad better just gives us a chance to improve and more effective. So let's talk about, this next announcement doesn't really shift anything for advertisers, and there's not really anything we can do differently here, but I think it's just good for folks to be aware of, and there's been a bit of a splash about it, so would love to hear directly from you, but Amazon announced Facebook integration and so explain what that is and how that's working.

Jeff:

Yeah, so the Facebook integration with, I'm sorry, the integration with Facebook, what it does is it allows a user on Facebook to create a connection between their Facebook app and their Amazon app. And then when the user makes that connection between those two, it allows them to make the purchase within Facebook. And so the problem that it's solving for is that somebody sees an ad on Facebook and then they have to click on a link, go to Amazon, buy the product check out. But if you think about it, if the connection's made and Facebook knows what you want to buy and they know you have an Amazon account because you've given the permission to create the linking, they can create almost a one click checkout from the ad to the acquisition. And so this is really about user experience. And if you think about it, Amazon's always about removing friction from the checkout process.

It's why Amazon OneClick checkout has become so popular, and you can use it both on Amazon and off of Amazon, and we'll see how that program grows over time based on consumers and their desire to want to make those connections and want to do that. But this is just, I think social media in general trying to become more of an acquisition type of play. And if you think about the types of ads that were run on Facebook a year, five years ago, it was more about drawing into the lead funnel. And so they're just trying to remove hurdles, they're trying to make a better customer experience. They're trying to be able to tell you when you see this ad on Facebook, you can buy it on Prime. I was buying something the other day, it wasn't on Facebook, but I was buying something the other day and literally with my phone I was able to use two clicks and buy that product. Overall, it's, it's a super clean, easy checkout process, and when you're able to deliver that, you make customers happy. And at the end of the day, that's who Amazon wants to serve as the end user and the customer, and they want to make them happy, which then gets them to be happier about their purchase, be happy about the product, give better reviews, all that other stuff.

Brett:

And this is super interesting to me because we've seen some success with TikTok shops and Facebook and Instagram have tried some direct checkout type things over the last several years, but really this to me feels different. This is Amazon. We all have our Amazon account set up and our wallet set up. We trust Amazon. Just so easy to say yes to that. And so I'm very excited to see how this progresses and how this evolves. But for right now, this is Amazon choosing to run an ad and place it on Facebook,

Jeff:

Which is nothing new. Amazon's been running ads on, they've been running ads on Google, they've always kind of done that. Even for your products as a seller, you might not even realize that they're doing it for your products. It's remarketing, right? They're remarketing people back to Amazon in the same way that if you owned a website, you'd be remarketing people back as well. They're just trying to remove the friction so that they're able to convert more of those people into shoppers or into buyers.

Brett:

Yeah, can't wait to see how that unfolds more. So let's talk about another area of video ads. And I'm a huge video ad fan, grew up loving TV ads and actually did some TV for a little while, and now we do a lot with YouTube, but also as an agency, we're investing in streaming TV or STV, as you like to say in the business. And then a newer offering is Prime video ads. And so can you talk about those two and why you are so excited about those offerings? Yeah, I

Jeff:

Think, well, my excitement comes in really maybe two or three areas, but the first is that streaming tv, if you're not familiar with the numbers, overtook linear TV as the primary source that people are using for television. Now, what's interesting, there's two interesting pieces about that fact. I think the data was from e-marketer. The interesting part of that fact was that when you add up the number of streaming TV users and the number of linear TV users, the total number is higher than what the market was before at its peak. So they're not just taking away from linear tv, which they are because linear TV is declining, but the overall market is increasing. And what we're finding from that market increase is that the demographic of the people who are engaging with streaming TV that make up that Delta, they're not watching linear tv. So it's picking up a whole new audience that you didn't even have access to before. So I think that's a really cool, interesting kind of fact about this. Now, the second part is that streaming TV or linear TV used to be very difficult for brands to access, especially a linear TV where you had to create, generate the creative, you had to do buys, you had to have all these tests,

Brett:

And usually a pretty big buy. There's often pretty large minimums, especially if you're looking at any regional or national, you're talking about some pretty big minimums. So

Jeff:

What Amazon's done is they've democratized that. And so they released in October a new product called sponsored tv. It's inside the ad console and sponsor TV allows you to do streaming TV ads with no minimum. Now you still have to create your own creative. And so there is an investment that's there, and it's not for everybody. So I like to say that if you've been investing in, we'll call it middle to upper funnel ads, you've been investing in sponsored brands, you've been investing in sponsored display, you've been doing a dsp, streaming TV may be another avenue for you to expand to reach a larger audience. If you primarily are focused on pure performance based advertising, you've just been doing sponsored products, this probably isn't the medium for you to be using today. You need to kind of build up your knowledge, your experience, your understanding of the metrics that indicates success before you just jump into it. Yes,

Brett:

100% agree.

Jeff:

So the democratization of streaming TV I think is super exciting. Then I think the last thing that I think is super exciting,

Brett:

And one thing to just add to that really quickly, Jeff, we really recommend you need a very strong foundation. Make sure you're doing all you can with your other sponsored ads, sponsored product brand sponsor brand video, make sure you got some remarketing in place, make sure your listings are optimized and make sure you're in a category and with some margins where it makes sense to go top of funnel. If all of that is true, then I love sponsored tv. But yeah, it's not the first thing you do. It's not something you do if budget is really tight, right?

Jeff:

Because think about this, right? Think about this, that you put an ad on sponsored tv. So now your question is where does it show up? And I'll answer that in a second, but then they come to Amazon and they search for your brand, and you're not running a sponsored brand ad for your brand. You've just given your competitor

Brett:

Driving sales,

Jeff:

Potential sales, and so you're very right. There is a proper build to be ready for something like sponsor tv. The third thing I'm probably most excited about is around the type of inventory that Amazon's making available. So if you look at the investments that Amazon's been making, the type of inventory they have available with streaming television ranges from free V-I-M-D-B, which would put you onto shows like jury duty or judge duty, my son's favorite, which is really weird, but we can talk about that later. So funny. It can also put you onto devices like Fire tv, which are in, I think over 200 million homes was the last data point. Crazy.

Brett:

We have a fire tv. Yeah,

Jeff:

They're great. So fire TV or the Fire Stick or something like that, or Prime video, which recently went to an ad supported format or even potentially something which the buy is a little different, but something within the Amazon sports arena, which is around Thursday night football. And if you think about Amazon and the properties that they own from an intellectual property perspective around streaming television and shows, it's the MGM library, it's the Amazon Prime originals library. So whether you're a fan of the marvelous Miss Mabel or whether you watch the Boys or whether you're watching the Kelsey Reacher or something like that, right? Reacher, I mean there's a whole range all the way up to oh oh seven, James Bond, Rocky Creed, all the things that sit within the MGM library. So all this is just super exciting because it's creating access for brands to be able to place their ad in of people, but more importantly, they're not just putting their ads in front of people like you would in linear tv. They're able to read the signals and Amazon generates billions of signals that allow you to put your ad in front of the right person at the right time based on the buying behaviors that you are trying to generate. And that's working for both brands that sell on Amazon, the traditional brands that we think of, as well as brands that don't sell on Amazon, who are able to now tap into this market and able to tap into this inventory.

Brett:

And think about it, nobody has more behavioral shopper data than Amazon. Amazon knows what we shop for. Amazon knows what we're in the market for right now. They know what we're looking at. And so being able to tap into some of those signals for our ad targeting is a total game changer. And what's interesting to me about this, Jeff and I got my start in offline, so I did some TV back in the day in the local regional arena. And what's so interesting about TV is I remember helping a couple of a car dealership, a furniture store, jewelry store, get really going with their TV investment. And I remember not too long into the investment in tv, the owner would stop me and they would say, I can't go anywhere. I go to the gas station, people say, Hey, I sat on tv, and I go to the store and people are like, Hey, you're on tv. And it's like, I'm feeling like a celebrity here. And that's something that doesn't happen with other media. Nobody, and I'm a big Google ad fan, but nobody sees you in the grocery store and smacks you on the back. And man, I saw your Google ad. Whoa, big time. It just doesn't happen. But somebody sees your product on tv, they're like, man, this is legit. Yeah,

Jeff:

There's definitely a cachet to I can be on television. So there's definitely a little bit of an I made it, hopefully we're democratizing that, right? And maybe we're not losing that immediately, but we're democratizing that to where more people who didn't think that was something they could use is something they could use. I wanted to go back to the behavioral signals because I think it's important to talk about, I don't know if we have the most, or I've never seen a lineup of chart of who has what. I'm just right. But I think what's important is to say that Amazon is able to aggregate these signals across the board, and a lot of times use machine learning to make predictions around potential buying behaviors. And so it's not necessarily that Amazon knows who's shopping for your product that day. It's more like, oh, there's a signal that would say you've bought this, therefore you might be in the market for that.

You're buying baby food, therefore you might be in the market for baby products. And so it's more at this aggregated level that starts to really, and I think this is the part that people should understand, is when you're just using sponsored products, you're targeting only people on Amazon who are doing search. When you go to sponsored brands, you're targeting people who are searching for more category type based. When you do display, you're showing up in this bigger world, and as you move up into sponsored tv, TV or streaming tv, you move to this giant world of people who are in category, not necessarily just in aisle for your product. And so it's a huge multiplier to the potential audience that you can target, but it still goes back to what you said earlier. You want all those other pieces in place so that you can maximize that investment.

Brett:

And we would call that kind of in aisle, we would call that more demand capture. I'm capturing the demand that's there, but as we go broader and look at STV or other things, that's demand generation, I'm finding the ideal shopper who's likely to buy from me, and I'm generating that demand. And yeah, I mean, I saw the power of video and of TV when all we had at our disposal was age and gender, and hey, we think our shopper watches this shit. Where's going to run our act? Where now it's like, no, we know what they're shopping for and we can reach them individually. And then we see on the backend how many people are watching it, how are they engaging with it? Is this the right creative? Do we need to switch our creative? Where before it was just like, yeah, let's hope that this is the right program, and then let's see if anything happens.

Jeff:

There's a couple other things that happen within streaming television too. One, it's a captive audience. So think about your own behaviors on streaming tv. You're not flipping channels in the same way you are on linear TV two, especially on prime video, the amount of advertisement content to viewer content is very low. So traditional tv, I don't know all the numbers, but it's a lot. Just think about how often you get commercials on streaming tv. It's low. We want to put that customer experience first and foremost, and ensure that the customer is getting what they want. The next is is that you can build interactivity into your ads. So you can have QR codes, which I think are okay, but even more importantly, you have the ability to interact through the remote. And so as more and more devices are working through the remote, you'll be able to click a button and say you're interested, click a button and add to cart or speak into your remote. And then finally, because of all this, but were

Brett:

Prompts for Alexa too, I think I've seen some ads say

Jeff:

That

Brett:

Ask Alexa to do this add to cart.

Jeff:

And then also think of this is you can create dynamic creative. So one of the things that we tested this year within on Thursday night football was that you buy a spot and you could run different creative for different markets. So the easiest explanation for me is think about a car dealership and you have a different type of persona that's going to buy an EV than it's going to buy a pickup truck. You're from Missouri, so I'll go pickup truck,

Brett:

Pickup truck in Missouri. Absolutely.

Jeff:

Because everywhere bigger, the

Brett:

Bigger the better

Jeff:

Baby. That's right. And so that's a different persona, but the car dealer in this instance, the car dealer can have one ad spot, and that one ad spot can then be shown different creative to different audiences. And that's something that just, again, it's allowing for a better user experience, it's allowing for a better advertiser experience. And those are the things that I think are super exciting.

Brett:

That's amazing. Well, this perfect segue to talk measurement now because that's obviously something that we have gotten a little bit spoiled by or come to expect in the online marketing world. And again, comparing to the offline days, the tools we have at our disposal are amazing, but there's still challenges that pop up. And so let's talk about A MC Amazon Marketing Cloud and what do we need to know about that, and then how does that unlock new opportunities for

Jeff:

Measurement? Yeah, so I'll go back to, you'll see a theme, but I'll go back to what's the problem we were trying to solve And the problem that we were trying to solve with a MC or Amazon Marketing Cloud is that one, cookies are going away. Identifiers are becoming more and more difficult to identify cross channel, cross product, cross device type of activity. Two marketers need to be able to see what happens in a multi-touch attribution environment. And so a lot of advertisement that you're doing on, I'll say traditional Amazon ads is using what's called last touch, which means the ad that touched the consumer last is getting all of the credit. And then three, our brands are getting more sophisticated, and so they're asking more questions and they're wanting to bring in their own first party data to help answer those questions. And so we needed to create a tool that would allow us to solve for all these problems.

So a MC is built on what's called a clean room. And the easiest way to describe a clean room is that there's three components of a clean room. And you as the advertiser can come into the clean room and you can ask questions of the data that's inside the clean room, but what you get back is not customer identifiable information. So it's a real rich privacy safe environment. It's allowing you to ask it questions of like, well, what are the age of the people that are buying products from me? And you can then come back and you can see what the ages look like, and then you can say, how many people at this age buy this product and then buy this product? And then you can get that information back, but it's never going to tell me where does Brett Curry live and what does Brett Curry buy?

So that's where it's kind of protecting the consumer within that, what this allows us to do is it allows us to create a more sophisticated, multi-touch attribution type of model that looks at the customer journey. And so that's just one of the many things that it can do. And so now instead of just seeing that sponsored products drove the sale, I can actually see that the customer that was the customer who only sees sponsored products will see an X percent conversion. But when they see sponsored products and sponsored brand conversion turns to Y, and when they see sponsored products sponsored brand and A DSP conversion turns to Z, and I can start to see what the optimal path is, I can also start to see frequency. So a big thing within DSP is setting frequency, how often you want an ad to be shown. And so you can see like, oh, well, when a consumer sees my ad more than three times the conversion rate does this, I don't want them to see it more than three times.

I can then set my controls by having that aggregated data to understand how my consumers are shopping within their panels or within their path of purchase. And so A MC is like this giant, what questions do you have about your business? And then it's going to spit that back out to you. And we make a lot of templates available. And then a lot of our partners like yourself who are integrated into this will develop their own templates, their own reports, their own way that they want to be able to use this. And it's really kind of created this new paradigm for how marketers can understand how their advertising is working and understand where they want to continue to make investments. And then one last thing, and then I'll let you jump back in and ask a question, but then you can also bring in your first party data. And so if you want to start to see incremental to your web sales, you can bring in your hash data so you're not bringing in customer identifiable data either. And AMC is able to marry that information together and give you an understanding of how Amazon's doing in addition to maybe your own site or addition to another third party or another first party data set that you're bringing in to give you more rich information for the types of reports that you're trying to generate.

Brett:

And it's really a game changer and almost necessary, especially as you grow, if you've got a really robust D two C business and you're investing in Facebook and you're investing in YouTube and you're running Google Ads and you've got the full Amazon suite of ads running to be able to have some of that connected so you can see, okay, what's the true lift or how many new customers am I getting on Amazon that I'm not getting in my store and things like that. And so really you don't get that data unless you're connecting it with something like A MC and bringing in your first party data there. And so then who should start exploring a MC versus when does it not really make sense to invest the time and effort?

Jeff:

So today you have to be running DSP to have an A MC instance. Now, I would say that if you are running DSP, you should have an a MC instance. So you can see more holistically how your ads are running. Again, there are basic templates that can start to give you information, but anything, it's a whole bunch of additional information. So the question becomes, what are you going to do with it? What's your agency doing with it? And that's where the turning the insights into actions become kind of the critical piece and the critical component to the success. So I'd say AMC is a complicated tool. They probably don't want me to say that, but it's a complicated tool. It requires some programming background to understand. You have to understand SQL to be able to ask and write the queries correctly. You have to be able to understand what the insights mean and how to turn them into actions.

And so when you're able to do all of that, you can get to a much higher granular level of how you're trying to turn the dials on the pieces of the business that you're trying to do. And so there's lots of tools and tool providers that are out there that are giving you some of these insights. And there's many agencies like yourself that are able to turn these insights into the actions that are driving what you do. And all this comes back to this idea that advertising should be a test and iterate type of mindset and mentality. And you want to use data to understand, are you reaching the audiences? Are you hitting the KPI metrics that are important to you? Where are you going to make additional investments? At the end of the day, you have to be figuring out how these different investments are going to stack upon each other to get you to the end goal that you're trying to get to. And we're just trying to make that all easier for you, and we're trying to provide you more information so that you can be more sound in your decision making.

Brett:

And you nailed it there. It's actionable insights, actionable data, but really as you get bigger, it becomes more complex and you need to have everything connected as best you can so you can make sense of it. And yeah, we're big believers in Amazon DSP, we've been one of the fastest growing Amazon DSP agencies and help a lot of people with DSP. And so that totally makes sense. As you're pushing into DSP, you need to look at and consider A MC as well. Well, we are coming up against it a little bit. Jeff, any other new things, insights, other comments on what we've talked about so far that people need to know? Yeah,

Jeff:

I mean, the other thing, and obviously we would behoove ourselves if we didn't mention AI just real quickly, and I think there's a lot of excitement for brands around AI and what Amazon's doing on the retail side around helping you optimize your listings better or review sentiment analysis or on the advertising side around image generation. And I think one of the big things to really keep in mind specifically to Amazon ads and how we look at ai, AI is, I think part of it is part of our DNA, right? There's a lot of AI that goes into how goal-based advertising works within sponsored brands and within sponsored display and how you connect audiences to find new audiences within your DSP and within A MC. And so yes, all the good talk of AI and generation and all those things is fun and exciting. But I think for us, to us, AI is not about generating and creating new tools.

It's around solving the problems that our advertisers are having to help them be more efficient, to help them be more effective, to help them place the right creative with the right background and the right setting at the right time to the right customer. Those are the problems that we're trying to solve. And I think it's a super exciting time for brands. There's some great case studies coming out about how brands were able to use the AI generator to add holiday images and saw an uplift in their sales. So little tweaks that you could do that would've taken you a lot of time and a lot of energy you're able to do very quickly now through the types of technology that we're developing. And I think there's a lot more to come in the future. I mean, everyone's investing in ai, and I think you can see where Amazon's investing and what we're building into and what that means for the future, and I think it's super exciting for our advertisers.

Brett:

Yeah, I'm very excited to see how this unfolds. And yeah, we've seen the power of AI and machine learning on the goal-based advertising, and now to begin to see generative AI and potentially image manipulation, what can be done there? It kind of goes back to the point you made about, Hey, we're running one TV spot. We can customize the creative based on where you are. Am I showing you a truck or am I showing you a Prius or am I showing you a chief's gear or a 49 ERs gear? What am I showing you? And that's sort of what AI is potentially going to enable on the image side. Can I just easily, quickly and at scale change images to fit a promotion or a seasonality or a use case? And so yeah, pretty exciting to see that unfold.

Jeff:

Yeah, definitely. I think there's a lot to be excited about as Amazon brands and Amazon advertisers. And I think ultimately as a consumer of the product, remember that your feedback's critical to us. We want to know what's working for you, what's not working for you, how it's working for you. That's all that Amazon works backwards from. That's the customer that we're trying to solve. And so hit me up on LinkedIn, share it with me, let me know. Let me know your thoughts about vertical videos, about posts that, it's kind of funny, I don't want to say LinkedIn's a big source for us to do customer information, but I think that over the last two years I've demonstrated that there's some great conversations happening on LinkedIn and our product managers do appreciate a lot of that feedback when they see those conversations and they're reading the feedback from the end user who's talking about what's working for them or what else they would like to see. So that's really what drives a lot of the innovation that we have here at Amazon ads. And so I think you and your team for adding to that as well, because I think that's a big part of how the flywheel circle all occurs is that that feedback's necessary.

Brett:

And speaking of which, I'd love to hear that you're taking that feedback sharing with Amazon. I know you guys are very well, your goal is to be the most customer-centric company on the planet. And so you are an amazing follow on LinkedIn. So if you are not following Jeff Cohen or Jeffrey Cohen on LinkedIn, you need to, is that the best place to connect with you? If someone wants to say, okay, I need to stay up on all the latest and greatest from Amazon ads, so I need to follow Jeff. Yeah, I mean,

Jeff:

If you see me in the grocery store, say hi, right,

Brett:

Chicago land. Yep. Shout out.

Jeff:

I have had a few random, Hey, wait a minute, are you Jeff at the museum? Which is kind of always weird. Yeah, LinkedIn's the best place to connect with me. It's where I spend a lot of my time. I'm also at a lot of trade shows and events. And so I encourage you, if you do see me at an event to come up and say hello, I'm often surprised at sometimes how many people say like, oh, I've seen you, but I haven't wanted to say hello. I'm sure, Brett, you feel the same. We want to to hear from you. We want to engage. Absolutely. We want to talk. So please come up and say hi and yeah, connect on LinkedIn. But I always say I remind people don't just connect on LinkedIn. Say, Hey, I heard you on Brett's podcast. I heard you on e-Commerce Evolution. Find a way to break that Ice city. You're not just one of however many people have connected with me on whatever period of time. Yeah, I mean, I thank you for having me on. I thank you for being an awesome partner to Amazon, and I think that the growth of Amazon and Amazon ads has been largely driven by our partner population and companies like yours. So we thank you guys for everything you do and everything you do for your partners or your advertisers, your customers as

Brett:

Well. Appreciate that, man. Yeah, it's been a fun ride. I guess we're almost eight years in now as an agency, but excited about future. This year's going to be amazing and beyond still, I think one of the best places ever in the history of marketing to build a brand and so pumped about it. But Jeff, really appreciate it, man. Thanks for taking the time. This was super insightful and we'll have to do it again sometime.

Jeff:

Appreciate it. Thanks for having me on.

Brett:

Absolutely. And as always, thank you for tuning in and we'd love to hear your feedback. Would you like to hear more of on the show? And if you've not done it, would love that review on iTunes helps other people find the show. And hey, if you're listening and you're like, man, so-and-so that I know would really enjoy this episode, please share that with them, share it on LinkedIn or on the socials, that would be greatly appreciated. And with that, until next time, thank you for listening.

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Episode 274
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Bryan Porter - Simple Modern

How to Sell 1/2 Billion in Drink Ware in 8 Years

Building a brand is hard. Really hard.

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Building a brand on Amazon carries some unique challenges. Sure, Amazon has built-in traffic, but grabbing attention, selling a great product, and then getting customers to buy again and again is hard.

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No one knows that more than Bryan Porter, co-founder of Simple Modern. They launched on Amazon in 2016 and are now the 4th largest drinkware brand in the US. You probably own one of their tumblers or know someone who does. 

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This episode is a masterclass in:

  • How to build a brand on Amazon that people seek out. How to rise above the noise of "me-to" products and drive discovery and repeat purchases.
  • How to successfully go DTC when you're born on Amazon. This isn't easy, and most Amazon sellers fail outright or are only moderately successful. 
  • How to use product variation to increase conversion rates and drive search volume.
  • Branded search or no branded search and Bryan's rule of 20x ROAS.
  • Competing in a hyper-competitive category.
  • Eliminating every weakness your product has.
  • Why negative reviews might not be the only sign that you need to kill a product.
  • And much more!

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Chapters:

(00:00) Introduction

(04:11) Simple Modern’s Founding Story

(17:42) Demand Capture and Paid Ads

(24:40) Building A Brand On Amazon

(40:40) Transitioning To a 1P Seller on Amazon

(46:23) 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:

Bryan :

The way that we win at Amazon is we take a customer who's searching for a water bottle or a kid's water bottle or a Tumblr, we convert them and the next time they're looking for something drinkware, they're searching 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 today we're talking to Bryan Porter, co-founder of Simple Modern. We're talking about how they did it, how they became just a drinkware phenom, one of the top sellers on the planet, a brand born on Amazon that is just crushing it now in the omnichannel space. And really just a brand that I've admired and watched from a distance and now super excited to dive in and learn firsthand how they did it. So with that, Bryan, welcome to the show, man. And how's it going? Thanks

Bryan :

For having me on, Brett. It's going great. I'm excited to talk with you.

Brett:

Yeah, I've been following you on LinkedIn and of course Twitter and you and one of the other co-founders, Mike, you guys post great content and so I've been consuming that, enjoying that. And then there's also a connection. I know Mike is one of the co-hosts of the Operators podcast, A quick plug to the Operators awesome podcast. My buddy Sean Frank is also on that podcast and so had some connections and so finally able to make this happen, and so super, super excited about that. Now before we dive in, Bryan, I think this will be important before we talk drinkware and building a brand in Amazon and D two C and all of that good stuff. If anyone's watching and seeing the video now they're potentially looking behind you and seeing some bottles, but they're like, those are not simple modern bottles. That's some kind of other, it looks like you're sending messages in a bottle or something there. So for those that are intrigued, namely me, what are those bottles sitting on your desk?

Bryan :

It's something that a coworker from over a decade ago started doing. Every time he went to the beach, he would bring back sand from the beach and put it in a glass bottle like this. I just ripped his idea, but I think it's super cool. I've had the pleasure of going to places, beaches across the world from Hong Kong to Greece and the Caribbean and places in Israel. And so bringing it back, having it on the desk is really fun thing to remind me of those adventures and fun to talk about with people who come in.

Brett:

Super cool. Yeah, super cool to be transported back to that experience and also need to see the comparison, right? Because sand is very different in different places, and so it's probably asking to pick a favorite kid, but do you have a favorite or favorite top one to three that you could mention? Not Kids Beaches.

Bryan :

It's funny because places in the Caribbean, that's what I think of when the Turks and Caicos is probably my favorite beach, but the most beautiful sand on my desk in a bottles from Destin, Florida or 30 a, that sands walking on powdered sugar. It's just the widest, softest. So I hate to say America, but in terms of just sand, it's hard to beat that.

Brett:

It's pretty amazing. And I'm not the international traveler that you are, but I've been to Rio, which those beaches are amazing. My family, I go to the west coast a lot, so we go to Southern California a lot. Love those beaches. But we do go to the Destin Panama City Beach area every year, and it's true, man, San, it's the best. It's the softest, it's the widest. It's fantastic. So very cool. Well, thank you for that little diversion. Super fun. Let's dive in because I think a lot of people are wondering how the heck do you do this? First of all, guys started in 2016, but why a drinkware company? Why Amazon and how have you achieved this runaway success? And so can you kind of tell the founding story we'd love to hear?

Bryan :

Absolutely. So the founding story really starts at my previous job I worked with Mike previously. We were coworkers working on an e-commerce brand that was really more of a marketplace than it wasn't like creating a consumer product brand. And then we have a third co-founder. The

Brett:

Focus was more just selling products on marketplace.

Bryan :

We were more trying to compete with Amazon, which there's a reason why we wanted to start a side business. Amazon was crushing everyone and still is. So yeah, we have a history and we like to think of our previous job is really kind of the foundation that we've built simple, modern with, and we really wanted to create products that could contribute to people's everyday lives. We didn't feel a ton of value out of running more of a marketplace, so we felt like who better to try and create an Amazon brand than people who have been writing search algorithms for another website and have just a great understanding of how customers shop on marketplaces and how algorithms would decide to show certain listings the highest. Yeah, so we started simple modern as a side gig.

Brett:

So actually lemme just double click on that really quickly, Bryan. So you guys were creating the search algorithms for this other marketplace?

Bryan :

Yes, yes. We ran several different websites and one of them in particular was purely a model that's very similar to an Amazon where we had to figure out how to show the most relevant best things to customers whenever they search

Brett:

Any key insights. I want to get back to the story, but you're a guy that has written search algorithms, so I think a lot of people are fascinated by that. Any key insights or learnings that you can tell? I know you didn't create the Amazon algorithm, but any insights there that you can share as a creator of algorithms?

Bryan :

Sure. There's a few parts to creating an algorithm. One is how do you index listings? What do you use to decide what's relevant to a search? And there's nuances too that are hard, like the difference between water bottle and bottle of water. Those are two completely different things,

Brett:

But the words are, one, wanting to buy water. One you wanting to buy a container,

Bryan :

The words are essentially the same just in a different order. So you need to be able to pick up on nuances like that. And really most of what you have to go off of are titles from listings, and that's what Amazon does. It mostly indexes off the title and some content within the listing. Maybe you give the option for sellers to feed you keywords, but that's dangerous because who knows what they're going to put in the backend so that they don't want customers to see. So there's kind of indexing side. And then you have to decide once you get your group of relevant products, the order that you show them to customers, and obviously you need to optimize towards the click rates. You need to have the products that are going to grab the customer's attention and get them into the listing and then ultimately convert. So you have to weigh that. And then the thing we thought about a lot is how much do you weigh profitability of listings versus revenue if you're the marketplace? And so there's kind of a balance there. So yeah, it's kind of all those factors tie into it

Brett:

Super interesting and that totally makes sense. And yeah, obviously we try to understand, you try to hack, so to speak, the Amazon algorithm or the Google algorithm, and it does come down to relevance and click through rate and conversion rate and things like that and sales velocity. But yeah, just thought it'd be super interesting to hear from most people. Just try to figure it out. Most people have not written them before in the past, so that's awesome that you did that. So cool. So you guys, you decide to launch a brand on a marketplace, but yeah, why drinkware and why when you did it and yes, so continue the story.

Bryan :

Yeah, so I think one thing that makes us a little bit different is, and I dunno, there's a lot of people who decide to sell on Amazon and then figure out what product they want to get into. But the genesis of our company is that we have more of a channel insight than a product insight that we started with. So we just wanted to sell on Amazon, we're analysts at heart, and we felt like if we tested as many products as we could that would give us a better chance of finding whatever it may be that is best for us to kind of center our brand around

Brett:

Super smart.

Bryan :

So yeah, if you throw enough darts at the dartboard or I guess the more darts that you throw at the dartboard, the better chance you have of hitting the best possible option.

Brett:

So you didn't just start then with drinkware, you tried a few things and drinkware was what checked a lot of boxes and was taken off for

Bryan :

You, correct? Yes. And we did this all at night on the side. So we ended up being able to test I think five different things. They were all things that you could airship to not mess with sea shipping right off the bat. They had to be cheap in terms of nominal dollars per unit and costs because we didn't have a ton of money. So there were parameters that we use to decide what to test. So outside of drinkware, we tested things like a tea infuser, french press, silicone baking mats, a few other things. And this was in 2015 for context, right when Yeti 30 ounce Yeti Rambler was really

Brett:

Actually taking off

Bryan :

At that point doing doing what Stanley is right now. So drinkware was a young category and really starting to blossom at that time. So I think that testing a 32 ounce insulated bottle, the timing was really great. We didn't know it at the time, but choosing the vacuum insulated drinkware category was really the best thing we could have done because that category has been the fastest growing category in home and probably across every category, one of the fastest growing in the last 10 years.

Brett:

And who would've predicted Bryan with drinkware? You'd think you could survive with one or two of these things, but that's not the case, especially for moms for whatever reason. And so my wife, God bless her, she buys a million of these, but there's never enough. There's never enough drinkware because you need different sizes, you need different straws, you need different handles, you need different everything. Everything's got to be different. So you guys really you chose well. So congrats on that.

Bryan :

Yeah, it is funny how much wear has become more of a fashion accessory than a practical thing that you have in your life that you just want one of. And that is really the insight that we doubled down on that contributed to our success whenever we decided to go all in on drinkware after we tested different products. The question then quickly pivoted to how do you create the best drinkware brand on Amazon? Yeti existed, hydro Flask did swell, you have a bunch of these high margin competitors and then you have the factories at the lowest costs and there wasn't really anyone in the middle in terms of price. So that was one observation. So

Brett:

You found that gap of people that want quality but don't want to pay through the nose for it and people that don't want cheap. And so you found that gap and filled

Bryan :

It. Exactly. Typically brands don't like being in the middle. They'd rather be at the top or the bottom on price. But what we found is that we could provide value with the fashion elements, just the number of choices we give customers in our listing. A company like Yeti isn't really incentivized to sell more than eight or 10 different colors because they need to sit on a physical shelf and stay in stock. They're not e-commerce first and manufacturers aren't incentivized to have a ton of different color options because they're not wanting to have all their money sitting in inventory. They want to be buying manufacturing equipment. So they don't want to necessarily run that playbook. And that's really where we found our value prop was to, we got up to 45 different colors at one time, which is, I acknowledge that's way too many. And we've come back down to about 25 D

Brett:

Colors. I sure I can name anywhere near 45 colors, just be making stuff up at some point. That's

Bryan :

Amazing. It's decision fatigue well beyond that. But the beauty of offering all those different options to customers was that it mattered to them. When drinkware is becoming more like shoes or purses where customers want unique things, that's a value add. It also helped us to create a higher conversion rate on our listings, just a better chance for customers to find what they want. If we offer more variety with e-commerce, it does a cool thing where you create more front doors to your listing, more search terms you can rank on. So if we're the only company that sells yellow water bottles, not many people search for them. And so when a hundred percent of that search volume can be helpful, especially things like Mickey Mouse water bottle or licensing, it really helps to bring more customers into your listing.

Brett:

Yeah, and just curious, when did you start going down the licensing path? Was that fairly early or did that come much later?

Bryan :

It started pretty early on. We ended up having success adding more variety into our listings and we doubled down on that as much as we could until it just became ridiculous. And a part of that offering customers variety was with licensing. We started with a local license for the University of Oklahoma, which is where we live, and you can get local licenses, like local fan shops can do this a lot to be able to sell product from teams in their area. So we got that and we got a local license, we Oklahoma City Thunder, and we're able to leverage those local licenses basically into one. We leveraged into a Sam's Club deal, which this is something that Mike spearheaded and did an amazing job. We didn't have the licenses for most of college football or college sports, but got Sam's Club to commit to a PO that was across all the schools. So we leveraged the PO with Sam's Club to get the licenses. So essentially we didn't have anything but leveraged

Brett:

The PO first. That's brilliant. Takes away the risk completely, right? Yeah, almost.

Bryan :

So that's how we got our foot in the door. Ultimately it led to the NFL and Disney, which are the biggest ones and it's really hard to get in with Disney, but obviously it's really helpful, especially if you sell kits products. Yeah,

Brett:

Yeah, I love that. Looking at product differentiation, both as a way to drive conversion rate, but also just as a way to grab more traffic. Because you mentioned this in one of your posts, you guys are demand capture first, and that's sort of the thing of Amazon, it's search driven query-based traffic for the most part. Any things to point out there? Why did you guys choose demand capture type product versus something else?

Bryan :

So that goes back to our experience before simple modern, that e-commerce business that I was telling you about was very dependent on paying for customers and it was great until it wasn't. And our experience really is kind of like, I don't know, a scar that we carry with us that maybe to a fault, we do not want to be dependent at all on advertising and it was really kind of the one main strength of our previous company. And once that goes away, you are in trouble. So we built the business to be 100% organic, not dependent on Amazon ads, not on Facebook ads or meta, whatever. Our whole mantra is we want to be able to win when we're sitting on either a digital or physical shelf next to all of our competition, we're building a product that a customer is going to pick up instead of the other ones. So it's works to this point, although ironically we're trying to figure out how we can add on paid advertising now.

Brett:

And you guys did, now you did Amazon ads for a while, so it seems like I read a post about that, but it hasn't been a central part of your strategy.

Bryan :

So heading really, I guess the first five years of the business, we used Amazon ads as much as we could to grow the brand and it wasn't a dependency as much as an accelerant for us. Makes sense. And we spent about 8% of revenue on ads and we actually got to a point in 2020 where we weren't sure how helpful ads were. It felt like there wasn't fully a correlation between our ad spend and our top line revenue. Certainly there is some benefit, we just didn't think that we were getting all that Amazon says that we were getting. So we turned it off for four months just to see what would happen. And I could talk for a long time about this, I'll spare you from that. But we essentially learned that probably about half of the ad spend that we were doing was driving incremental traffic and the other half of it was just fat that was not providing value to the business.

Brett:

It goes back to that original John Wanamaker quote. Some people attribute it to PT Barnum, but he said, I believe that half my advertising is wasted. I just dunno which half. And that's kind of been a consistent feeling throughout the ages

Bryan :

And that is our experience. So we've trimmed down to about 4% of our revenue we spend on ads, so

Brett:

4% tacos

Bryan :

And we've tried to root out as much as we can the spend that is just lighting money on fire and it's led us to focus a lot on spending on competitor keywords, spending on keywords where we're just not as relevant or as strong with our product offerings or we do spend on branded search when someone searches for simple modern, I'm just not willing to run at lower than a 20 row ads to counteract the lack of incrementality that those sales tend to have.

Brett:

Yeah, it's super interesting. I think it is really necessary to run some branded ads, otherwise you are going to miss out on sales. And we talk about this a lot on the Google side, of course our agency focus on Google and YouTube also, but also Amazon. But on the Google side you can actually segment where you can say, Hey, I'm just going to bid on people that search for my brand name who've never bought from me before. So you can separate those out from say a repeat purchaser and that's kind of nice. But if you just disappear altogether, there's still a percentage of customers that they'll just click on whatever they see and they'll think that if I search simple modern, then what I'm seeing is simple, modern and they'll click on it without ever noticing and they'll buy something else because somebody else is going to, especially at your volume or your size, someone else is going to bid on your term, but if brand doesn't have a wildly successful ROAS or MER or ACOs or however you want to, whatever your metric of choice is, then something's wrong. You got to restructure if that thing's not just crushing it. But it's good to hear you say that because yeah, I think you are going to miss opportunities and especially those first customer opportunities. I think if it's a repeat customer they're probably going to find they're probably going to buy, but you may miss some first time customers if you don't do it.

Bryan :

Yeah, for sure. And with branded ads specifically, we've run a bunch of on off tests and Amazon has started to give us insights on market share and click share for different keywords. So we'll look for all of our branding keywords, how many clicks were we getting when we were running ads, how many clicks did Amazon ads say that it was generating? And then when we turn it off, it would make sense that you would lose the amount of clicks that Amazon ads is taking credit

Brett:

For that you were getting right.

Bryan :

But it turns out we don't. It's about

Brett:

Nice. Interesting. About

Bryan :

20% of the clicks that Amazon ads is attributing we see lost in our total clicks. So

Brett:

That kind of led you to the 20 roas so that math checks out. Yeah,

Bryan :

That's exactly how we got there. And our strategy of what we advertise on branded search is not our best stuff that's going to rank number one. We want to merchandise show customers things that they probably dunno we sell and that they probably won't click on. We love to do that or a new product launch. It's a way where we can try and get some juice to something new.

Brett:

Yeah, super insightful there. Kind of the merchandising component of it. You want to control the SERP and be able to show the products you want to show. So that's really, really smart. Let's talk about, this would be a good jumping off point to talk about building a brand and and I talked a little bit before we hit record. This is something we started as an agency, as a Google YouTube agency first. We've been doing Amazon since 2016, but because of our D two C background, a lot of our Amazon clients would come to us and say, Hey, how do we diversify? We're crushing on Amazon, how do we launch our Shopify store and sell direct to consumer? And it's really hard, most of the brands that we saw attempt to do that only had moderate success. Now we've seen a lot of people have success the other way, we worked with a native deodorant for a long time now p and g brand and still do their Google and YouTube, but they were D two C first and then went on Amazon and that crushed it.

Boom by Cindy Joseph, long time client, shout out to their Firestone, we managed their Google and YouTube and Amazon and we actually helped them launch on Amazon and took off, went from zero to 6 million in one year because they had that brand built off Amazon. But you guys have done something unique in that I can really only think of, I want to have a couple, you guys anchor where you started on Amazon, but you have a real brand. People look for you, they want to buy your product, people are creating tiktoks about your product, you've got a real following. It's a real thing. It's not just some white label product that somebody buys a lot of reviews and it's a cheap price. It's a brand. And so how have you guys done that? How have you built a brand on Amazon?

Bryan :

So this is something that's taken eight years to get to this point, which I think is definitely worth saying. It's been a lot of work to get this point and a lot of trying things that did not work to get to this point. I think that it has helped us D two C that we've been omnichannel. So we started in 2015 on Amazon. We've been selling in Target for, gosh, probably last five or six years and in Walmart and Sam's Club. So I think developing more of a exposure to customers where they see you on Amazon, they see you kind of browsing the aisles at a different retailer. I think that helps to have impressions in different places. But in terms of D two C, we tried for a long time to compete with our Amazon offering and tried to give customers the as good or better of pricing with shipping on our website. It just didn't work. There's no reason to do that.

Brett:

The math doesn't check out, right?

Bryan :

Just let 'em buy on Amazon or if you're

Brett:

Going to do that, yeah, they're going to buy on Amazon anyway. It's easier. All their information is there. It's one click to check out. Why compete with that.

Bryan :

That's right. And Amazon's built the best logistics distribution network for e-commerce and by far we cannot be as profitable.

Brett:

We'll touch that anytime soon.

Bryan :

Yeah, we're less profitable selling the same single item on our website with free shipping is on Amazon, so there's no reason to do that. So what we did was really try to understand the strengths of D two C and try to use those unique characteristics. And what we learned was that on D two C, you can have better economics than Amazon with higher A OV, you have to have a higher average order value putting things in the same box if you have one three PL or one warehouse and you gain a ton of efficiency from multiple unit orders. For us, I guess an example is it would cost us say $10 to ship one Tumblr to a customer, but it would cost us $12 to ship three tumblers to a customer. So your cost per unit just goes down a ton with every additional item. So you want to incentivize bigger carts. And we started off with bundling where we merchandise different things together that customers could add and get a discount better for both of us. Our catalog is thousands of SKUs now, and so what we've pivoted to is more of a in cart cart dollar size discount. You get $10 off at a hundred dollars cart size and so on. There's different tiers as you get bigger. And then we use upselling to try and do the merchandising component of bundling. So there's that component.

Brett:

So it's not so much just offering a bundle outright, but it's more upselling as someone is going through the checkout process,

Bryan :

Right? Yeah. We do it that way just to try and give more flexibility instead of buying these exact three skews together, it's like here are things that you'll probably add them with what you have in your carts and you'll get a better deal. So that's one component. Another is the email and SMS lists that you can grow on D two C are incredibly valuable and it's one of those that you just have to, it takes time, you have to grow it over time, but you're never going to have

Brett:

That usually, especially for a brand like yours where you're primarily on Amazon, the people that are on that email on SMS list, they're your super fans.

Bryan :

Yeah, exactly. And you cannot do that on Amazon. So now since we've diligently tried to grow these lists, whenever we try to drop things weekly is kind of our long-term goal of limited edition drops, but you can tell all of your best fans about it and as long as you're coming out with things that they probably want, we've seen that it goes very well at driving traffic for free to your website. And then the third thing is personalization. Obviously you can't build things like that onto Amazon or have that in Target, but you can give a really awesome unique experience with customers on your website to make it more of their own. So those are really the three levers that we've really doubled down on.

Brett:

It's really great and it makes so much sense why try to compete versus Amazon and competing with yourself on Amazon doesn't make sense, but what are the strengths of D two C? What might people want there? What might be the reason they would do that? And I think you nailed it. And so that's really, really great. And I love the personalization piece too because there's something about that one, people are willing to pay premium so you can build in nicer margins. Also people share it. I saw a TikTok with 800,000 likes or something. There's one you shared, I'm not on TikTok a whole lot, but of just the lady showing her a Tumblr that had her name on it and it blew up on TikTok. And so that's more likely stuff like that is more likely to happen with a personalized product or you get a little different variety there. So really, really smart. That's awesome. And

Bryan :

There's one other thing that I'd like to add in that I think is really interesting and it's kind of what we're doing this year to grow our D two C. If you shop in other product categories for printers, you'll see there's different price ranges of printers and as you go up, it's the same printer but it has better features. The same thing with cars. There's different tiers of cars and

Brett:

Chevy Cadillac or Toyota and Lexus. Is it kind of the same but a little bit nicer

Bryan :

Or even you could buy the standard option or the premier or whatever that just has different stuff inside or sunroof or no sunroof. And so as I mentioned, we've been very sharp on our value prop because we're an Amazon first brand or we started on Amazon, but that's hard on D two C where the best brands typically have high margins, maybe even like 80% plus margins where they can spend a ton on advertising. So we are bringing out offerings that we're calling our signature line for our website only. We're not going to offer it on Amazon. And it comes with really awesome features like ceramic lining on the inside that people like that. It doesn't taste like retain flavor, any of that unique lids that have better features. Silicone rings on the bottom, just kind of like add-ons where it allows us to make really awesome drinkware that's not going to necessarily do great on Amazon because it's not as sharp of a low price point, but for our fans, they are going to love it and we can also advertise it and use it as customer acquisition on Facebook. So we're trying to develop both a mass retail and a specialty retail type strategy within our website and maybe push our website more towards the specialty retail type product offering.

Brett:

Love that. It's really great. And we see this with shoes too. I'm a Nike fan and you can buy the basic Nike shoe at various retail outlets, but to buy the real specialty or special colors, you're paying two or three x, but you got to order online. So yeah, I think there's a real place for that, again, to cater to that customer that really wants that. And so super smart. Let's talk about building a brand on Amazon. And this is not a new thing per se, it's existed. If you walk into Walmart, you can buy Coca-Cola can buy lace potato chips, or you could buy great value stuff. So kind of the white label or the private label, whatever, the own brands. But you guys have done a really good job where people go to Amazon looking for simple, modern or they go to Google looking for simple modern. You've built a real brand there and I think that's possible to do that on Amazon, but it's difficult. So any keys to building a brand on Amazon?

Bryan :

I've got a few thoughts. I know that simple modern is in drinkware and it's contextual to this category and this moment in time. It's hard to say there's a one size fit all approach, but the way that we think about it is the way that we win at Amazon is we take a customer who's searching for a water bottle or a kid's water bottle or a Tumblr, we convert them and the next time they're looking for something drinkware, they're searching for us and not the generic search term. That is our goal. And if we're able to accomplish that goal, even if they're not going to our website, it's searching for our brand on Amazon, we don't have to engage in the knife fight that is like Amazon PPC, we've won the battle at that point. So that's a high level objective of ours and there's all sorts of different tactics to try and achieve that objective. There are some obvious things like whenever we first started, I viewed imagery on Amazon listings as a sales pitch, why the customer should buy your product, all the features and things like that, which isn't wrong, you should do that, but I missed at first that the quality of your images imputes quality onto your product.

Brett:

Totally.

Bryan :

So if you have just this amazing photography, a lot of times customers will make up their mind before they even get the product that this thing's awesome. And it kind of develops that narrative in their mind that I just bought an awesome product and when they open it, it's like what they saw, then there's a good

Brett:

Chance, as long as you don't do anything to diminish that, they're going to have those same feelings once they open it. Yeah, really, really great insight.

Bryan :

So you want to create an experience with your customers that kind of maybe prepares them to use the products in a favorable way. Another one's packaging like unboxing experience. It kind of sets the expectations. If it's very high quality packaging, it signals to the customer that the product in it is also really high quality.

Brett:

It's kind of that second moment of truth. I think Proctor and Gamble may have said this first, I got the first moment of truth, which is kind of the experience on the shelf or in this case the digital shelf. How are you interacting and seeing it? The things you just described. But then when you open it and unbox it, that's kind of the second moment of truth. You can either really establish the brand or you could diminish it a little bit. And you guys do a great job with the product packaging, by the

Bryan :

Way. I appreciate that. We've tried, we've tried our best to create that type of an experience. And almost everyone has unboxed like an Apple product and they do the same thing. It's like next level, you don't want to throw their boxes away, so on.

Brett:

Yep, yep. So

Bryan :

True. So that's a big component. Ultimately we are our products, brands are their products. So being obsessive about rooting out any negative feedback that you see about your product and reviews is vital to creating a high net promoter score and getting repeat customers. Now, I would say one other thing that's a little bit more tricky on that front is that you could have products that aren't a great experience, but you wouldn't necessarily see that in the reviews. You could see it maybe in the return rate. An example is we used to sell, we have the bestselling taller backpack on Amazon and we had a 12 liter size and a seven liter size. The 12 liter size is the most common. It fits like three and four year olds, seven liters, really small. It fits like two year olds. So there is a purpose for it and it was a good product.

But the problem was whenever we sold out of the 12 liter, customers would just buy the seven liter because it was in stock and they wanted that pattern that was on it and they would get it and it'd just be like, this is way too small and I'm going to return it. It creates a negative experience, probably a customer that's not coming back and it's really expensive for us. Totally. They're not going to leave a review because it's not a bad product. But we actually discontinued that seven liter size even though it was a pretty good seller, but the return rate was just too high and it wasn't creating that customer

Brett:

Experience and nothing kills margin faster than a high return rate. So yeah, super smart.

Bryan :

Yeah, absolutely.

Brett:

So let's talk about one thing that I thought was super interesting as an agency and we're working with smaller brands typically, or those that are so rapidly growing, much more likely that they're three p selling through the third party marketplace. But you guys transition to being a one P seller on Amazon. Any insights as to why you did that and then from your perspective, when could or should someone consider making that switch?

Bryan :

So yeah, this is a great

Brett:

Question. I know this could be like we could probably talk an hour about this topic and we had a few minutes.

Bryan :

Yeah, yeah. No, it's a great question. I have talked to vendors who are sick of being one P and just want to get back to the marketplace. And I've talked to people in the marketplace who are like, should we make the jump? Should we not? Grass

Brett:

Is always greener,

Bryan :

The grass is greener, haven't loved the marketplace, is one P better? So my advice for my generic advice would be that if you can have leverage with Amazon, then being a vendor is great because you have Amazon's attention being a vendor, you need Amazon to help you do things that you could just do yourself in the marketplace. Variating different SKUs together into one listing or whatever. Changing content. If you're a vendor and you don't have Amazon's attention, sometimes you just get stuck and it's just terrible. No one's helping you and you have things broken. But we're fortunate to last year we grew, gosh, about 50% on Amazon. It's

Brett:

Amazing. It's amazing your volume to grow that percentage rate. That's unreal.

Bryan :

So we have their attention and they care about us. And so it's good. It's good right now. And my goal is to continue that growth rate and to be worth their time.

Brett:

So it's got to be a volume component and then also probably a growth rate component. Otherwise you may just be better controlling your own destiny as a seller as opposed to a vendor

Bryan :

For sure. And we ended up making the jump to being a vendor, sadly, the week the pandemic started, which was a whole story in itself. Oh my

Brett:

Goodness,

Bryan :

Not a great time to totally transition the most important part of your business. But the reason why we did it is we were getting to a size, we did I think maybe 70 million in retail in the marketplace whenever we decided to make the jump. And we were looking at what are the kill shots to our business? And one of them is like, what if Amazon turns your account off and you can't get it back? It's unlikely, but that is kind of a kill shot. That was a factor. We craved really deeply a partnership with Amazon. We felt like we were doing enough business with Amazon that

Brett:

You would warrant

Bryan :

That we shouldn't be left up to whatever rep we pay for and then just people overseas to run our business. We want to be partnered with them. And you are as a vendor. It's more like a relationship with Target or Walmart where you have a buyer who's helping to facilitate your account, and then you also have a rep that works with you and your buyer and there's more access to teams within Amazon, whether it's the in stock team or compliance team or whatever it may be. So the other component to our transition is that we were really starting to scale up in Target as well, which is retail. And Amazon retail wanted us to be a retail partner because they were noticing there's data that is published whenever you're in places like Target where everyone can see they can pay for your sales data. And so Amazon was aware of our growing business within Target and Walmart and wanted us to be a vendor with them as well. And on that note, I think it actually has been a really helpful thing for us to become a vendor. And once you're an Amazon vendor, your data starts showing up in the mass retail data that everyone sees from Walmart to Target, and it just helps those other retailers understand how big of a business you are. They don't see that your sales when you're in the marketplace.

Brett:

Right, right. Interesting. Yeah, so once you get to a certain size and you want to get into more brick and mortar retail, then being vendor on Amazon that can help make that

Bryan :

Case for those retailers. And I think the year that we jumped from the marketplace to being a vendor, we were already kind of on the radar with our target sales, but it looked like our growth just exploded in 2020 just because they could now see our Amazon sales from being a vendor. So all of a sudden Costco starts calling and Whole Foods and places like that.

Brett:

That is awesome. Well, Bryan, we have just about run out of time and I'm a little bit bummed because I've got five other questions I want to ask you, but we covered a lot of ground. This is super helpful, really insightful, keep doing what you guys are doing. I'm going to keep paying attention. You're one of the brands that I watch closely. But as we wrap up, anything new that people should check out, anything you want to plug or mention a passion project or a new product release or anything that you want people to do? Obviously they can go shop on Amazon or at your D two C, a lot of retail stores, but any asks or passion projects?

Bryan :

Well, for better or worse, I think my passion project intersects directly with what I do, 40 hours, 40 plus hours a week. So yeah, I would say for anyone listening, we simple modern has gotten to a point where we're about the fourth biggest drinkware brand in the us It's crazy. And we're privately owned, we aren't focused on profits. We want to scale this up to be as big as we can make it. So yeah, I would say just follow, keep up with what we're doing. We're going to, for better or worse, do things that are interesting and continue to try and scale this thing as big as we can make it. So our plan is to try and get to the top of the category if at all possible. So I would say stay tuned.

Brett:

Love it, man. Love it. And yeah, I'm enjoying Tasty Beverage out of the, this is the Kona, I believe. That's right. And I realized that I always like black. Oh, there you go. I just like simple colors for my drinkware. I probably should have got one of the wild and crazy colors just because you guys do that. Also, I probably need to get Kansas City Chiefs mugs since I just won the Super Bowl and I'm a longtime cheese fan, but keep creating great products. Super, super fun. So Bryan Porter, ladies and gentlemen, Bryan, thanks for the time, man. Super, super fun.

Bryan :

Yep, I enjoyed it. Thanks for having me on.

Brett:

Absolutely. And 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've not done it, please leave that review on iTunes. Go buy a simple, modern mug as well. And with that, until next time, thank you for listening.

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Episode 273
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Brett Curry - OMG Commerce

6 Candid Lessons from Parenting 8 Kids + Running an Agency

I have 8 kids. Yep, 8.

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Being a dad is like being a founder/entrepreneur (only harder).

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Here are 6 parallels between the two. 

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I posted this on LinkedIn several weeks ago, and it was my most shared, liked, and commented post on LinkedIn ever by a long shot. 

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So, I decided to do a deep dive into these parallels for this week's podcast episode. 

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Hopefully, these will be especially helpful if you find yourself in a stressful season. 

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#1. We're all making it up as we go. 

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Every week as a parent or business owner, you do at least 1-2 things you've never done before. 

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Follow a system. Sure. 

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Follow principles. 100%.

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But don't shy away from the moments you feel like you're making it up. 

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You are. We all are. 

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#2. You're never really ready.

 

Waiting until you're fully ready to become a parent, a business owner, or a leader means you'll never start. 

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Waiting until you're fully ready means you'll never launch that new service or new offering. 

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You'll never feel fully ready. 

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Step up. Do it anyway. Try. Fail. Learn. Improve. Try again.

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#3. Listen and communicate clearly in multiple ways.

 

I haven't always been the best listener. 

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I sometimes jump to conclusions. 

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I've had the tendency to be dismissive. 

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I'm getting better. 

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I'm pretty good at communicating from the stage. 

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Sometimes, I'm less effective one-on-one. 

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Sometimes, you have to say the same thing five different ways before it really lands. 

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#4. Admit when you're wrong.

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Brittany (my superhuman wife) and I became parents when we were young. 

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The "making it up as you go" stuff really applies when you're 22 and mostly clueless. 

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We've had to apologize to our oldest a bunch (love you, Nate). But to all of our kids, a lot. 

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Same with our team members at OMG. Especially those who've been with us the longest. 

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Don't be the parent or leader who won't apologize. 

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Own your stuff. 

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#5. You might want a coach.

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Our marriage got better when we saw a counselor. 

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My parenting improved, too. 

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We didn't wait until we were in big trouble. 

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We sought help when we had a few things we couldn't solve well on our own. 

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We're now BIG believers in counseling. 

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Even when (and maybe especially) you feel you don't need one. 

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My leadership skills improved when I got a business coach. 

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My parenting improved more. 

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If the top performers need coaches, it's silly to think that we don't. 

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If Jordan needed multiple coaches, you and I probably do too. 

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#6. Be all-in.

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Parenting or leading in business well takes everything you've got. 

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Not just focus and effort. Everything. 

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Your emotions. 

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Your brain. 

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Your creativity. 

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Your problem-solving. 

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Your area(s) of genius. 

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Your courage. 

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Your tenacity.

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Chapters

(00:00) Introduction 

(03:12) Lesson 1 - Where All Making It Up As We Go

(06:58) Lesson 2 - You’re Never Really Ready

(09:19) Lesson 3 - Listen and Communicate Clearly In Multiple Ways

(12:17) Lesson 4 - Admit When You’re Wrong

(14:39) Lesson 5 - You Might Want A Coach

(19:39) Lesson 6 - Be All In

(22:52) Outro

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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:

Brett:

Hey, we are all of us making it up as we go, right? And we want to pretend like we've got this master plan and everything is well thought out. And the only reason I'm successful here is because my planning and execution is so brilliant and I think the truth is

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 unique episode because one, I'm flying solo, so you just get to hear from me today. Two, I'm going to get a little bit personal on this podcast. Now, this is still going to directly apply to your business, to your D2C business, your service-based business, whatever the case may be. But I'm going to talk more about myself and my family and my background than I ever have before on this podcast. So recently I posted on LinkedIn six parallels or six lessons from being a father that also apply to running a business, and specifically in my case, a seven figure agency. And so I've mentioned on the podcast before, if you're a long time listener, you certainly know it, but I have eight kids, the OCHO eight count, 'em eight kids.

Now, it's not a blended family. This is just go to old fashioned growth. Now, a lot of people ask one, do you know how this happens? Did you mean to do this? All kinds of quite personal questions honestly, but I don't mind it. And the truth is, my wife, Brittany and I, we always planned to have a big family. We wanted to have four, or maybe the stretch goal was five, and then we just completely overachieved and ended up with the crazy number eight. So it is not what we expected or planned for, but would not have it any other way. It is pure chaos. It's noise, but it's a ton of fun. We were talking in a, we actually host a small group at our house too from our church, but talking about how there's a lot of loneliness actually going on right now fueled by the virtual world we live in and things like that, and that it's a real issue.

That's not something we deal with. I do not have alone time because when would I do that? I'm either running a company and around people or at home, which is full, which again, absolutely love it. So what are the lessons here? Because I think there's a lot of parallels between being a parent, being a mother or a father, leading a family, helping a family grow, and also leading an enterprise. And I would argue that being a parent probably harder, it's probably more of a challenge to be a parent than it is to be a business owner. But let's talk through six parallels, and I'm going to get a little bit transparent and a little bit vulnerable along the way, but hopefully this will be fun and inspiring because my guess is you probably find yourself in a time of stress. We're all stressed, you're probably in a time of growth.

I think this year is going to be a year of growth for most of us in our industry. And so hopefully these six parallels or these six lessons will help you in your journey. So parallel number one between being a parent and owning a business is, hey, we are all of us making it as we go, and we want to pretend like we've got this master plan and everything is well thought out. And the only reason I'm successful here is because my planning and execution is so brilliant. And I think the truth is yes, we should plan. And so we've got over $10 million total revenue agency. It's growing. I got a team of 63. We're certainly quarterly, annually planning. We've got targets, we've got OKRs, things like that that we're trying to hit. But hey, every day, or at least every week and for sure every month, you're going to deal with stuff you've never dealt with before.

And the same is true as a parent. I remember when all of our kids were little and we had several in diapers and several in car seats, which by the way, the amount of diapers I have purchased and changed, and my wife obviously changed more diapers than me because I was working a lot, but it's an astronomical number. You could Google that sometime and do the math, but I dunno, it's like 50,000, I'm not sure. But it's an insane number. And so there was a time though when all the kids were little, and I remember hearing people say, yeah, enjoy it when they're little, because when they get bigger, the problems just get bigger. When they become a teen, those problems just get bigger. When they start dating people, the problems just get bigger. And I'm like, really? But this is difficult right here. I've got a kid who has declared war on bedtime and Maggie, who's now a teenager, but she declared war on bedtime for about five years.

About five years. She said, no, I'm not going to bed. So there are times when you're like, dude, anything could be easier than this. But then as is often the case, some of that sage advice of, Hey, enjoy them while they're young. The problems do get more difficult. I would just say they become different. And as your kids start to date and especially have daughters and they start dating, it's tricky. And so then you're dealing with, Hey, my daughter is initiating a breakup, or she's initiating a break with her boyfriend and I'm coaching her through that. We're talking through that and trying to help her be strong and advocate for herself and be independent. But then every day there's, there's something new. And the same is true in your business, slightly different dynamics. Maybe you've handled a situation similar before but not exactly the same.

And so we all have things we're doing that are new. And so I'm a big believer in systems, although I'm not a super detailed guy, I'm a little more of an improv guy, but I do like to follow plans. I love following principles, right? We are a principle based company, a culture first company. And so if you focus on culture, and for us at OMG, we think like owners. So we behave and operate like owners, not employees. We have fun solving problems. We don't shy away from problems. We have fun solving problems. That's part of what we're paid for. The biggest thing we're paid for, honestly. And then we constantly improve, meaning we help each other level up and we take the initiative to level up ourselves. So we are principle first, but the reality is a lot of us are making it up. I remember hearing this interview, this quote with Paul McCartney of the Beatles, and somebody was like, Hey, how'd you guys do it?

What was the plan? How did you become the Beatles? And he's like, and nobody knows when they're starting a band, we didn't sit down and say, Hey, what if we became, I don't know, the biggest band ever to ever walk the earth? They didn't do that. They just started making great music and then things started to make sense and unfold and still succeeded beyond their wildest dreams. So number one, we are all making it up as we go. Number two, you're never really ready and you're never ready to be a parent, never fully, never fully ready to start a business. You're never fully ready to start the new service or to launch the new product or to do the new thing. You're never fully ready. Why? Because you're always going to learn as you go. And if you wait until you're fully ready, then you will never do anything new.

You'll never start the family. You'll never start the business. You'll never launch the new service. Here's the deal. It does depend a little bit on what type of business you're in. If you're selling a physical product, obviously you can't launch before it's safe or tested or at least a minimum viable product. But there's something to be said about launching and iterating. This is kind of the way Google has always operated. Hey, let's launch a beta. Let's test. Let's learn, let's fail, and then let's improve. And then let's keep iterating and iterating and iterating until eventually we've got Google search. We've got Google AdWords, which is now just Google Ads, but we've got a product that is absolutely amazing, but it wasn't perfect in the beginning, but we launched a minimum viable product and kept improving. Now, apple is a little bit different. That's more of a measure, twice cut once type of company.

We can't just launch the new iPhone and say, Hey, this iPhone's going to be, it'll just be okay, but we'll be better on the next one. And so that doesn't really work in that model. But for the most part, you can't wait until you're fully ready. You need to launch, just do the thing and then get better as you go. I love the explanation or the picture of being an entrepreneur is jumping off a cliff and assembling the airplane on the way down and hoping that you complete that thing before you crash and come down to earth. And there's certainly some elements of that, right? There are some things you can figure out ahead of time, but a lot of it you have to figure out as you go. And Jeff Bezos talks about a lot that, Hey, when you're 70% sure about something, do it.

Because if you wait until you are 90 or a hundred percent sure it's going to be too late, you're going to be too slow. And what you learn in that extra 10 or 20% or whatever, probably won't make a difference. Launch the thing, learn, get better as you go. So number two, you're never fully ready. Number three, listen and communicate in multiple ways. Now, I can be a pretty good listener. I love people. I genuinely love people. I love hearing stories. I love meeting people. I go into trade shows. As long as you're meeting authentic people, and it's not just an endless line of people that want to sell you stuff or whatever. I like meeting new people. I like engaging in conversations. When I go to an event and I speak from stage and then I share in a group or whatever, it's more of an energy gain for me than it is an energy drain.

Of course, it's tiring too, but I love it. I thrive on it so I can be a good listener. But let's face it, man, I can tune out as well and I can jump to conclusions. And I'm not always the most patient person. I do like growth. And so sometimes I'm not the best listener. I think I'm a pretty good communicator, and I can communicate on stage and be pretty clear on a podcast and be pretty clear. One-to-one can be really good, but sometimes I don't do so well. And I'm going to share a quick story, quick story from when my daughter Sophia was a kid, and Sophia is spunky and ornery and smart, and just, she's so much fun. But when she was little, I was tucking her into bed and I wanted end the day on a positive note. I just wanted to be an encourager.

I totally believe in words of affirmation and building your kids up, and they're going to rise to that level if you keep putting positive thoughts and positive words into their minds. And so I said, Sophia, there's no one like you, right? And I'm just kind of smiling looking at her, and she pauses and she thinks for a minute she says, well, Nana likes me and my friends like me. And then it dawned on me, I was like, oh no, you misunderstood. I was like, no, no, no, no, no. Of course, of course Nana, that's her grandma. Of course Nana likes you. And of course your friend's like, I like you too. I think you're amazing. I said, but lemme think of this another way, no other. And I kind of point at her and I touched her. There's no other Sophia. And she says, dad, I know three other, there's two at church, there's one at school.

And I'm like, okay, all right. This is not working well. And so I said, Sophia, I love you. You're awesome. And that was it, right? And so what's interesting though, I thought I was being clear. I was like, there's no one like you, Sophia heard. No one likes you. And so it was just a reminder though, like, Hey, your market or your team, they may not be as transparent or as quick with their feedback as Sophia was. You may have said something you thought was brilliant and super clear, but your team's walking around thinking he doesn't like me, or He doesn't like this, or this isn't going well. So we have to be ultra clear. And usually the way you become ultra clear is by saying the same thing in multiple ways. Listening, listening for feedback, listening and watching body language and the way people are responding and reacting, but communicating in multiple ways.

I believe everything hinges on communication. You want to be a better leader. You want to be a better CEO, you want to be a better founder, you want to be a better marketer. You got to be better communicators. That's point number three. Point number four, this is a difficult one. You got to admit when you are wrong, and this is hard. If we are confident and we have big egos with which most of us do if we're leading a company, it's hard to admit when you're wrong. Nobody wants to do this. But this is something my wife and I had to do. So we got married very young. I was 20 when we got married. We had our first son, Nate when I was 22. And so this whole thing about, we're all making it up as we go, let me assure you, as a 22-year-old, first time father, I was absolutely making stuff up.

And so was my wife, Brittany, although she's better relationally and she was just made to be a mom. She's amazing. But we were making stuff up as we go. We've had to apologize to Nate on multiple occasions. And even recently, he's 22 now, but we're like, Nate, hey, we didn't know what we were doing. We were young, we were figuring it out. And unfortunately you caught the brunt of us not knowing what the heck we're doing as parents. Fortunately, he's doing awesome. He's got a sales job, he's a great kid. But we had to apologize a lot on the work side. At OMG, we have two longtime employees, two employees that were here almost from the very beginning. So they've been with us now for over 13 years. They've seen the good, the bad, and the ugly in every season. They were with us when we were just doing cool stuff, but making lots of mistakes.

And so they could have quit or they could have harbored resentment or they could have not gotten over things or the whole thing could have not worked. But we have had to apologize in numerous ways at numerous times being like, Hey, thank you for sticking with us. We didn't know and we didn't show enough appreciation on this, or I didn't understand you fully in this, or We didn't handle this situation the right way. And so don't be the leader, don't be the parent who won't apologize. It is not a sign of weakness. One of my mentors and actually the pastor of the church, we attend Craig Gross show. Shout out to the Craig Row show leadership podcast. He says, people would always rather follow a leader who's real than one who's always right. You should always be real. Don't try to always be right because you're not going to be always right.

So be quick to apologize when necessary. Number five, you may want a coach. Now, lemme just talk about my marriage for a minute. I'm super, super grateful for Brittany. She is a supermom. Anybody that can give birth to eight kids and still be functioning and be a sane member of society. And she's awesome. She maintains relationships. She's a cheer coach. She keeps me in check. She's amazing. So we've actually had a pretty solid marriage. We genuinely like each other. We like to spend time with each other. We like to travel together. We like to have occasional date nights, which by the way, we are prioritizing this year. Over the last six months, we've prioritized date nights, as you can imagine with eight kids. That has not always been possible. There for a while I was like, Hey, we're on our semi-annual date here. We get two of them a year is basically it.

But now we're doing it on, we're having dates on a weekly basis. And so we've had a pretty solid marriage. But we went through this period of time about four years ago where we were just disagreeing a lot. It was kind of when a couple of our kids at the teenage years, we started disagreeing more than we ever had and still committed. Relationships still solve, but it was kind of rocky. And my wife suggested, she said, Hey, what if we saw a counselor? What if we met with a counselor? She'd actually been meeting with a counselor to kind of help her work through stuff. And she said, Hey, Nicole, who's her counselor? Nicole can do couples therapy. Would you be willing to do that? And I said, yes. So here's what we found going through that process. One, it allowed me to see myself a little bit better.

How am I showing up in ways that are unfair? How is Brittany perceiving me in the way I'm behaving at home? Or the way I'm a little too relaxed with teenagers or whatever, and not, she's more structured. I'm a little more loosey goosey on certain things, especially at home. And so it allowed me to see how she was perceiving me, showing up. It also allowed me to dig into and say, what are some false beliefs that I'm holding onto? What are some half-truths or no truths that I've got playing in my head that I need to rewrite or get rid of so that I can be a better parent? And it was not always easy. Being vulnerable and being transparent is not always easy. Again, this was another time we had to admit to each other when we were wrong. We also had to fight for like, Hey, this is why I'm doing this, and I don't think this is actually wrong, but let's talk about it.

And so it was hard work, but it was so worth it. And similar things on business. And myself and my business partner, Chris, had a great partnership over the years, but had a few times we're like, Hey, we're not agreeing on this. Let's bring in a coach. Let's bring in someone to kind of help us. And so we went through a period of time, met with a coach. He coached us through the process of nonviolent communication. Really recommend that book Marshall Rosenberg, I believe it is. We'll link to it in the show notes. I may have said the name wrong, but nonviolent communication, this coach Matt walked us through, helped us with that. It was so transformational. It improved my communication and my listening and me understanding. When am I communicating a way that's really feels and sounds and kind of is judgmental rather than communicating, fact communicating, emotion, communicating when I'm frustrated or when I'm disappointed, or when I'm fearful about something.

So communicating with emotion, but communicating in a way that is non-judgmental towards the other person, transformed the way my business partner and I communicate. But at the same time, it may be better communicated to the whole team, and it made me a better communicator at home, made me a better dad, better husband. And so you probably need a coach. And hey, I'm a huge sports fan. I am 100% in Camp Jordan, team Jordan, for the goat, for basketball. And here's a way to look at it, right? If Jordan had multiple coaches, if the greatest basketball player to ever lace up a pair of Nikes, which by the way, he was such a good basketball player that Nike is what it is today. Without Jordan, there is no Nike as we know it. If he needed multiple coaches, if he needed a strength coach, if he wanted a shooting coach, if he wanted a mindset coach, which already his mindset, his mentality was insane.

He wanted and needed coaches. If he did, then you do too. And I know, depending on where you are in your journey, you may be able to invest in a counselor, invest in a coach, or you may not. But hey, podcasts, books, those can make great coaches too. Somebody that I consider to be a coach of mine is Jim Collins. I never met Jim Collins, but read a lot of his books. And I pour over those books and he becomes like a mentor to me. I mentioned Craig Rochelle, I've actually got to meet Craig RHEL and hang out with him just a little bit. But it's not like we talk a lot or ever really, other than just one time. But he's still a mentor to me. And so you can find coaches, you can find mentors even if you can't afford one. So number five, you may need a coach.

Alright, number six. And to wrap it up, hey, you got to be all in, right? There's no halfway in this thing. There's no halfway as a parent, there's no halfway. As an entrepreneur, there's no time for you just to coast. You can't mail it in. You've got to be on your game. So to use another sports analogy, I like to coach. I coach basketball. When you are on the floor, this is what I talk to my kids about a lot. When you're on the floor, your head is in the game. You're not anywhere else. When you're on the floor, that's all that exists. What's going on in the stands doesn't exist. What's going on at home doesn't exist. That's all that matters. And all there is because you start to lose focus for a minute, you're going to catch a ball to the face, you're going to dribble it out of bounds.

You're going to make a mistake. You're going to let your team down if you're not all in. So what does it require as a business owner? Well, it requires your creativity. It requires all of your brainpower. It requires all of your tenacity. Not giving up, not giving in. It requires all of your wisdom, right? Because we don't want to quit on things. But also, we do need to learn where's there a time to be wise and to pivot because this isn't working as we're doing it. So we got to pivot and do something else. So it's going to take really all that you've got. And another parallel. I trained in Juujitsu for just a short period of time, didn't work out in my schedule. I actually loved it. I'd love to get back into it one of these days. But when you're on the mat and you're rolling with someone, especially for me, man, I was a white belt, obviously, very much a beginner.

You are not thinking about anything else, right? The dude across from you is trying to choke you out, right? You are fully focused on what you're doing. You can't panic, right? You got to stay calm and monitor your breathing and learn to try to make moves and counter moves and things like that. And that's really the way it is in business, right? Yes, we need times to rest, but you rest after the bell sounds right. You rest when it's time to sit and rest. You rest when you're on the bench catching a breather. You don't rest when you're in the game. And the same is true as a parent. We rest when the kids are asleep, which when you're in my world where you got little kids and you got teenagers, nobody's ever, there's never a time when all of them are asleep, it feels like.

But it's going to take all that you've got and then more. And I love a quote from Alex Hormo that I heard not long ago where he said, I'm not going to just say I'm going to give my best, right? Because what if my best isn't enough? I'm going to tell myself I'm going to do what's required. And I think that is very much true as a business owner or as a parent, because listen, there may be times when your best isn't good enough. Now, I fully believe you are capable. You're capable of being an amazing parent. You're capable of being an amazing business person. But you may need some tools. You may need some skills. You may need that coach we were talking about. But you may need some training and you may need to level up. So have the mentality that I'm going to do whatever it takes to be successful in this endeavor, or to be successful training these kids, giving 'em what they need and helping them become amazing humans.

And so, hey, I hope that was fun. We'll get back to the pure moneymaking content and talking about ads and e-comm growth here with just the next episode. But that was fun for me to record. Like I said, it really landed, it resonated in the LinkedIn, and so I wanted to dig a little bit deeper and share those insights with you. But as always, we would love your feedback. And so if you've not left that review on iTunes, please do that. If you listen to this podcast and someone else would be encouraged by it or someone else would enjoy it, please share it. That would make my day. If you've not left a review on iTunes, I would love that as well. That helps other people discover the show. And with that, until next time, thank you.

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Episode 272
:
Kyle Fraughton - Get Roster

Ambassador Programs that Fuel Growth

Kyle Fraugton is a passionate dude. Get him talking about good trail running gear or well-built software and look out. He’s an instant ambassador.

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The interesting thing is that you have Kyle’s in your customer list right now. People who are passionate about what you sell and who you are as a brand. And the cool thing is that with a little encouragement, structure and incentive from you - they can become super ambassadors.

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The right Ambassador Programs have a few great benefits:

  1. Increased word of mouth. We all know this is the most effective form of advertising. It’s just slow. But yo can speed it up.
  2. Better ad content. With the right Ambassador program you’ll have an endless content flywheel.
  3. More purchases from Ambassadors. While the point of an ambassador program is to get them to advocate for your brand. You’ll also get them to buy more in the process.

Here’s a look at some other key points Kyle and I discuss:

  • How to identify the ideal customers for your Ambassador program.
  • Why you want to be picky, but not too picky
  • How Ambassador programs lose momentum and how to avoid it
  • How to track programs and make them work
  • Why Authenticity was the word of the year last year by Merriam Webster and how that applies here
  • Is UGC really dead? 

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Chapters

(00:00) Introduction 

(02:40) Kyle’s Background 

(03:53) Authentic - The Word of the Year

(05:55) Is UGC Dead? 

(10:51) The Digital Age Version of Word of Mouth

(13:32) Strategies To Facilitate Word of Mouth

(15:26) What Does A Good Ambassador Program Do?

(16:16) Influencer Program vs. Ambassador Program

(26:08) How To Set Up An Ambassador Program

(34:50) Ambassadors and Ads

(38:41) More About Get Roster

(43:06) 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:

Brett :

It's time for another Spicy Curry Hot Take the part of the show when I get just a little bit spicy, I've heard several people say recently, UGC user generated content is dead finished, done over. And I would say to that, not a chance bad UGC in authentic UGC was always dead. And so maybe the days when just UGC all by itself was a hack and you could just do it and it would work. I would agree those days are over, but authentic stories from real customers will always work. I've been in this marketing game a long time. I used to do TV and radio back in the early two thousands, and I remember running into people, I had clients that were doing direct response type advertising and I'd hear people say, ah, testimonials, get rid of it. People don't believe them anymore. Don't do testimonials. And I'm like, really? The best infomercials use testimonials. They always have. They always will. And so the key here is be authentic. There's no shortcuts. Getting good UGC from real customers saying real powerful things will always work. So you got to put in the work. You got to be picky then about what UGC you use, but my friends UGC is not dead.

Well, hello and welcome to another edition of the eCommerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce. And today we're talking about ambassador programs. UGC, is it dead? Is it not dead? Is it still effective? We're talking word of mouth and we're talking about how to leverage all of that for continued growth for your brand. My guest today is the CEO of Get Roster. Kyle, he was introduced to me by Desiree, used to be at Shopify. She's one of the most connected people in e-commerce that I know. And so she connected us and I'm like, Hey, this is going to be a great topic. And so wanted to have Kyle on the show. So with that, Kyle, welcome and how's it going, man?

Kyle:

Thank you. It's going great. Thanks for having me. Super excited to be here.

Brett :

Really excited to talk about this. I love this topic. And it's so interesting. It's been all the rave to look at UGC and influencer and ambassador programs. Oddly enough, it's getting a little bit of backlash right now. It's getting the opposite of love from a few people. We'll talk about that in a minute, but lots of good things to unpack here and really excited to get your perspective on a number of key areas. Before we do that though, Kyle, what's your 32nd background and how did you get into starting and developing get roster?

Kyle:

Yeah, yeah, for sure. So I've been in software startups for most of my career and help grow them, sell them off as they've gotten bigger. And I've always been super passionate about sharing things that I love with other people. In fact, my wife would always get mad at me after we'd be at a party or something and I'd be there super long talking about a certain product. She's like, why do you have to push this so hard? I'm like, I love it and I want other people to enjoy it. And so

Brett :

You're a natural ambassador.

Kyle:

I'm I'm a 100% natural ambassador and I think a lot of people are actually, a ton of people are. And yeah, a few years ago we started roster and we kind started in more of the influencer space, but it evolved into something a little bit more authentic with ambassadors, actual users of the product. And we developed software to help brands engage with their customers and turn them into ambassadors.

Brett :

Love that approach. And you mentioned a word a second ago, you even said this could be the word of the year, and so we're going to talk about this a little bit, but authentic. Why would you say that could potentially be the word of the year, especially related to this topic? Why is that so important?

Kyle:

I mean, I think it's incredibly important, and not only could it potentially be the word of the year, but it actually was the 2023 word of the year from Merriam Webster. Was it really? Yeah, hundred percent.

Brett :

When you sent that note over, I just assumed it meant it was your word of the year, Miriam Webster's word of the year. Yeah,

Kyle:

This is legit. I'm just not making stuff up. It's 100% accurate, but I think it's huge. We live in this world where artificial intelligence and deep fakes blur the lines of reality. And it's just people want authenticity these days. We don't even know what's real, but we recognize it when we see it, when we see something authentic that you always know if something's not real, it's like, well, maybe it could be. You try to figure it out. You just instantly know when something is real and authentic. And I think it's important, especially when it comes to building a brand, when it comes to advertising, when it comes to any type of way that you're trying to interact with a consumer, authenticity is absolutely critical.

Brett :

And I just finished a book by Malcolm Gladwell, one of my favorite authors called Blink, and it's called Thinking Without Thinking, the ways we can make snap judgements and often be very right. And you got to read the whole book obviously some ways that our initial impressions can be very, very wrong. And so it's not just to say I instantly know everything when I see it, but we think we know what's authentic or not. And sometimes we can't explain it, but we can feel it. I can feel it when I see a testimonial. Is that a real user? Is that not a real user? Usually we can just tell, and I kind of tease this as doing the intro of the show, but I've had even some close friends of mine who've been in the game for a while saying, I think UGC is dead.

I think it's dead. I'm like, come on bro. U C's not dead. But I've been in this game a long time and I did some TV back in the day, had several clients that ran infomercials, and every now and then you'd hear people say, yeah, don't do testimonials. Don't get real customers on camera because nobody believes those anymore. And this was in 2002 or something. And I'm like, yeah, no, that's actually not true. That's almost like saying, yeah, don't give personal recommendations to anyone anymore because no one trusts them anymore. But it comes down to authenticity. Is it a real story? Does it ring true? Is it a powerful UGC and a powerful testimony? If it is, then people are all ears.

Kyle:

I think that's absolutely true, and we can see it anytime that someone's, if you see any kind of an advertisement, and UGC is a form of advertising for sure, but it's like if people are actual users of the product or not pick anything. If you're an outdoor sports person, maybe you run outdoors, you do trail running and stuff like that, you can recognize people who are authentic trail runners who actually use the products that they're talking about. And so I think it's dead in the fact that I think people who say it's dead have never experienced true authentic UGC. It's like they found or paid influencers to create what they're calling UGC. But I think there's a difference between a macro big influencer who you're paying tons of money to create content to versus someone who is offering their content to you almost for free.

Maybe it's completely free because of a love of the product. You see people post about this stuff all the time and their environment and the areas that they love, and they'll mention the brands that they're using. I'm super into the outdoors and into trail running, so I'm using that as an example. But when I see people post or my friends or peers post about that kind of stuff, they're in their element and they'll talk about the gear they use to get them there because they love it. And that is very authentic. And I can tell, in fact, I'll even see that. I'm like, oh my gosh, I've got to try that. I've had my own for a long time and now all of a sudden that's what puts me over the

Brett :

Edge. And you can tell when someone's not in their element. I was working with this brand and doing some consulting and we're helping with Google ads and stuff, and I won't mention the celebrity or the brand because I don't want to embarrass anybody, but they were showing me this video of a pretty well-known celebrity that was in the kitchen cutting fruit and doing stuff to tee up this product. And you could tell this celebrity did not spend much time in the kitchen. It was almost like they were holding the knife backwards. I'm like, this feels so staged and inauthentic. Now someone may pay attention a celebrity, but it's like, nah, this is not their element. This was probably not the right pick.

Kyle:

Yeah, I think that's what it is, is you have to find people who are in their element. So I think it's super important for brands these days to find their actual users, like their customers, the people who utilize the product on a regular basis and engage with them. They will give you the most authentic content you could ever possibly have. And our eyes are trained for that sort of stuff. I mean, we know that more and more eyeballs are on social media than ever. We're not typically out reading blogs anymore about the top bikes of 2024, finding this stuff on social. And if you're anything like me, if I'm scrolling social media, my eyes have now been trained to skip over inauthentic content. If I'm just scrolling really fast and all of a sudden I see a post from a friend and it might not be talking about any kind of product at all, it's just a post about their family.

I'm able to stop because the picture looks different. I'm not reading the names, I'm not seeing that stuff. It just looks real. And so I stop and I pause and I'll go back. And so when you get that kind of stuff happening and people are talking about your brands become super, super powerful for a brand. And so I firmly believe that every brands need to be adding this to their arsenal. It needs to become a pillar in your go-to-market tools. And that is utilizing nano or micro influencers, the small people, the ones with hardly any followers in comparison to the millions of followers that you have to be able to utilize those people in order to help spread word of mouth marketing and get that authentic content.

Brett :

Love it. And so let's actually talk about word of mouth for a minute because if you go and talk to local business owner, local retail shop, local service provider, and you ask, Hey, what's your most effective form of advertising? My guess is they'll say word of mouth. Word of mouth is like that. That's tried and true. That's how great businesses grow. That's also kind of enough. You got a good product, you got a good thing going as if there's word of mouth. But how do we create that same effect? How do we stimulate word of mouth through ambassador programs and things like that because word of mouth is powerful, but word of mouth can also be kind of slow. And so how do we stimulate that?

Kyle:

Yeah, that's a great question. And I think if you look at word of mouth, the example you gave is fantastic, and it's always been something that I think a lot of businesses have said is super powerful form like, oh, that's my best form of advertising, or they at least say I want it to be my top four of advertising. Everyone aspires to have that be their number one, but there's no way to track it. There's no way to really understand how powerful it is. As we've evolved as a society, and this is actually kind of sad I guess, but people communicate now any kind of word of mouth on social, right? Totally. I think my kids, my teenage kids and the majority of their interactions are all on Snapchat

Brett :

Digital or on

Kyle:

Some kind of social media. They don't just talk face to face all that often unless they're at school. They find ways to do it through technology, and we have to be able to adapt to that as brands, we have to be able to do the exact same thing. And so there are people out there right now talking about your brand, any brand that has already established some product market fit and you've got a handful of customers, you will have customers that are absolutely passionate about your product. And even if there's lots of competitors in the space, I think of how many different athletic shorts are out there right now, different brands. They have very passionate customers, every single one of 'em. All thousand different companies have these passionate customers, and you've got to be able to find those people and you want them to start spreading the word of mouth, especially on social because that's where people are. That's where the eyeballs are now. That's where people are connecting and learning more about their friends and what their friends do and what their friends use and then what they want to start using. And so I think you have to be able to utilize social media to spread word of mouth in today's economy. I think it's absolutely critical.

Brett :

What are some strategies or some approaches to help facilitate that? Yeah,

Kyle:

I think the biggest thing is as a brand, you've got to be able to find out who are your most loyal and passionate customers, and that's super simple. You can pull reports from your e-commerce site and you can see who's buying the most frequently, who's buying the most often or the most product. Yeah,

Brett :

Kind of your RFM reports, right? Your recency frequency and monetary value. So who's bought most recently, who buys the most and who buys the most often or who buys the most quantity.

Kyle:

Both of those things are super important and engage with those people, and oftentimes you'll reach out to them and one, they're honored that they'd reach out to you because they're clearly a fan of your product. And just like anyone else, these people want connection and they want to feel like they're a part of your brand. I mean, put yourself in their shoes. If you have a brand that you love and they reach out and you're not some big mega influencer and they're like, I would love to be able to get your help in spreading the gospel of insert your brand here, right?

Brett :

Yeah, it's a big deal, man.

Kyle:

It's huge.

Brett :

That feels like I'm a real VIP, not just like you're sending me a VIP email, you want me to buy more. I feel like pretty important.

Kyle:

That's exactly right. In fact, so much so that if you look, and I'm not knocking on influencers because I think that's an important strategy for people to have. They should have a complete influencer strategy, but when you look at ambassadors, they're very, very different in that they're super proud to be an ambassador of your brand. They'll even post in their social bio that they are an ambassador for your brand. They're so excited about it, and they'll look for opportunities to post and mention and tag your brand and use whatever hashtags you have. But what you do is there's these people, like I said, they're out talking about your brand anyways, what an ambassador program is going to help your brand do is take control of the narrative of what they're saying. It's like I have lots of brands that I love and I'm talking about them constantly and I'm doing it in my own way, which is totally fine, but if someone gave me a little guidance, you're like, Hey, focus on some of these areas over here. We've got this new line out and you've been using the other one, we would love for you to talk about the new line that we have. I'm more than happy to talk about it, especially if I'm a user of it. But I think that's the key is as a brand, you have to be able take control of the narrative in today's conversations that are happening across social, and it's really easy to do and it's really easy to keep track of as well and to see what kind of impacts it's having on your sales.

Brett :

And so talk about that just a little bit. Influencer program versus the ambassador program. I'm assuming the difference, the way you guys define it is influencers could be people that are outside your brand and you're reaching out to them hoping that they'll want to talk about it. Ambassadors, those are your best customers that you're turning into micro or nano influencers.

Kyle:

Yeah, that's really what it is. And the lines can be kind of blurred, right? Sure. When you think about, we've got affiliates and we've got ambassadors and we've got professional athletes or just professionals in general, and then we've got influencers. This is what creates your community. These are all ambassadors to a certain extent, but each one of these areas is starting to become more and more defined. And the way that I've always defined an ambassador is just that it's someone who is already a customer of yours. You're not reaching out to them and product seeding, sending 'em some free product in hopes that they'll make a post or you're not signing a contract with them upfront saying, I'm going to pay you $10,000. I want you to post about this. You're going to send me your content and then I'm going to approve it. Once I approve it, then you can go ahead and post it.

That to me, that's more of the traditional influencer. An ambassador is someone who you say, great. I think that you have a great deal of influence amongst your sphere of friends, and if you look at it a nano or a micro influencer, their engagement rates are significantly higher than what an influencer would be. And that makes a lot of sense. You can't have someone who has millions of followers get millions of likes and millions of comments and millions of says all that sort of stuff. But if I have, I'll just use myself as an example of this. I have like 500 followers on Instagram. If I saw any one of my followers at the grocery store, I would go up and say hi to 'em and we'd have a conversation because we actually all know each other for the most part. And there's a huge difference there because I have a ton of pool and influence with them.

Most of the people for a person like me, and there are millions of us out there, my friends are in the same demographic as me, we have the same types of interests. And so with those things, I have a lot of pull and say and influence on what my friends will actually buy, especially if they're in the market. We share things all of the time with each other and it leads to purchases. Absolutely. So that's the type of thing that you need for your brand, I think, in order to grow, especially in today's current marketplace. And it's nice because rather than trying, when I talk to brands who are trying to find an influencer, there's a lot of angst over am I choosing the right one because this is a really big investment and if we get it wrong, it's going to cost us a ton of money and it can be off brand, and then we got to find someone else and we're going to commit for a certain amount of time.

Ambassadors is different in that you're trying to get as many of them as you can. If you have hundreds, wonderful. If you have thousands, that's great. And then it becomes kind of that VIP club, as you'd mentioned before for your brand where we have, or I know of brands that have tens of thousands of people lining up trying to become an official ambassador because it does make them part of a very exclusive club and they don't care how many followers they have. They just care about, are you going to make the social posts that we're asking of you? Are you going to do all of the other asks that we have a lot of things that are valuable to a brand beyond just a social post. Maybe there's some social swarming that you want to have happen. Maybe there's some support for the stuff that your brand is.

Brett :

Talk about social swarming. What do you mean?

Kyle:

So maybe there's a post that, let's say there's an ambassador that makes a post and you as a brand think it's awesome, you love it, and you can see that it's getting a lot of traction. You could reach out to your ambassadors at that point and say, Hey, we would love for you to go and comment on this post. Yeah, totally makes sense. And because your ambassadors love you, they love your brand, they want to feel connected to you, and maybe you're going to give them as an ambassador, you're going to give 'em a certain discount or they can earn some rewards. They're very, very happy to go out and do that sort of stuff. And so now you can kind of impact that algorithm where all of a sudden it goes from, Hey, this is getting a few thousand likes to now this is getting tens of thousands or even hundreds of thousands of likes because all of your ambassadors are liking or commenting or sharing

Brett :

That helps fuel the fire

Kyle:

Stories, whatever it may be. It just starts taking off and then all of their friends start to see it. And so it's really just the whole strength and numbers concept. You can have one person, but you're putting a lot on that one person or maybe the very few macro influencers that you're engaging with. Or you can say, I'm going to spread this across everything. I'm going to diversify my investment, which we all know is a good thing to do and say, I'm going to have hundreds or thousands of people doing this stuff for me. And then you get the same results. You get the same kind of reach as a single macro influencer would have, but it's across all sorts of different people and you've got a completely different demographic and a much higher engagement. And what I would argue is a much deeper pool from an influence standpoint.

Brett :

And really I think that the approach you just outlined, I think that's the way to approach influencer marketing if you want to go down that route, which I think is very valid. And if you want to look at ambassadors, so I did an interview recently with my buddy Cody Whittick from Kinship. He and Taylor run that agency and they focus on micro influencers. We're not looking for one or two, we're looking for a whole bunch and we don't know which ones are going to take off and which ones aren't, but we're seeding and we're getting a lot of influencers. Kind of the same with ambassadors. And what's cool is the way you described it where you've got friends and people that look to you for recommendations, it's kind of fun. I think you and I are similar in that regard. I've got several close friends that know what I do for a living.

Obviously they know that I'm talking to brands and I'm trying products because we're going to do some advertising on YouTube or Google or Amazon or whatever. So they're always like, Hey, what have you tried that's new? What do you like? What do you like? And I'm always very honest, obviously because behind closed doors, but I'll be like, yeah, I tried this product. I didn't like it, but someone else on my team did. I tried this project. It was awesome. You got to give it a go. But you as a brand, you have people like that that are part of your customer list where if you just encourage them and help them and gave them tools and gave them the ability and incentivize it a little bit, they would become an ambassador. And it could be you do that enough times and it's a game changer

Kyle:

And it will absolutely take off. But I think that every brand has established brands have thousands of these people that are just like you and me who want to share. I view it as, I always talk to my kids about this, a big piece of chocolate cake. I can go into my room and eat a piece of chocolate cake by myself and not share it with anybody, but that's just not very fun. It's not nearly as enjoyable. That's

Brett :

Not what you do with cake, right? Cake you share. It's

Kyle:

Meant to be shared. So you sit down and you enjoy it with someone. You talk about how great it tastes, you get that little sugar dopamine hit and everyone feels really happy together. I think it's the same way about your products. You love to share the things that you truly enjoy with other people. It's just a matter of finding them and then asking them for help, and then they are going to feel so much more connected to you. The other thing that I think is super intriguing about this topic is that when someone becomes an ambassador of a brand, their purchases of your product increased for sure, because all of a sudden they're going, oh my gosh, yeah, I'm kind of part of the team here. I'm not an employee, but I'm part of this brand now I feel actually connected to this brand. And then if you look at all of the other things that go along with that, when a ambassador or anybody for that matter recommends your product, the person that they recommend your product to will purchase, and this is an actual statistic, will purchase 200 times or excuse me, 200% more than what they would otherwise just coming in through any other method.

And you think about it, it's because there's instant trust. If we're trying a brand for the very first time, I'm this way anyways, I'm a little hesitant to just go all in because I'm like, I don't know much about it other than it looks really cool and interesting, but if I have a friend that's told me about that brand, I'm like, it's good. It's totally good. I know I'm going to get it. That's a huge thing now too, right? I'm going to actually receive my product. It's going to be good quality, and so I'm willing to buy three or four items as opposed to just one on that initial purchase. And then the people that you recommend not only will buy more upfront, but their lifetime value increases significantly as well. They'll come back time after time.

Brett :

They'll be more likely to refer as well.

Kyle:

Yes, those people are more likely to become ambassadors for your brand as well. All of that stuff is amazing for you as a brand. That's the stuff that every brand dreams of having, and it's right there at your fingertips. It's just a matter of knowing and understanding how to engage with these people and knowing what to ask them to do so that it is beneficial.

Brett :

Cool. So let's talk about that. What are some of the things we should do? How do we ask someone to become an ambassador? Do we equip them and make it easy for them to be effective as an ambassador? What are some tips there?

Kyle:

And I think every brand's going to approach this stuff differently. And I'll just share with you examples that I've seen over my career. And some people try to make it a super exclusive program. I personally feel like if someone approaches your brand and says, I would like to work with you, you don't want to turn 'em away. You don't want to say no because all of a sudden they're going to sour on your brand just a little bit. Whereas like, God, I got rejected by them and maybe someone else will say yes to me. So I always recommend to brands to kind have what I would call a farm league type of a program where it's like, look, anyone can get into this. It's a tryout. You're going to come in, we're going to ask you to do certain things if you perform well and do all the asks, then you can get elevated.

If you're good enough, you can get into a more exclusive, I guess, ambassador program. But what we see brands do all the time is they'll obviously post about it on their website and on their socials. That's the easiest thing. And then as part of their post-purchase landing page, they'll announce, we've got an ambassador program, would you like to join it? And they'll talk about the different perks that come from it. And the other thing too that I'd like to just mention is the perks don't have to be crazy. You don't have to give away a ton of free product. You don't have to give stupid discounts. Some of the things that people like the very most speaking of authenticity is like, Hey, you're going to get an opportunity to product test some of the new things that we have coming out. You're going to have an opportunity to meet with some of our product managers so that you can give input into future things that we're coming out with and your say matters. That kind of stuff makes people feel incredibly important. And surprisingly, they'll do even more for that type of a reward, which costs you nothing as a brand. In fact, it's only beneficial

Brett :

In fact. Yeah, in fact, you're getting good feedback, but people want to be valued and people want to be heard. And so just giving them a voice and just saying, I want to hear from you, you're important. That says more than a little freebie.

Kyle:

Yeah, exactly. And so that's a post-purchase landing page, and then always have on the bottom of your website down on the footers, become an ambassador, have something about that where they can click and they can become, learn more about your ambassador program, that sort of stuff. You can put inserts into all of your packages. You can put stuff on the labels about joining your ambassador program, the little QR code that will take 'em right there. There's a lot of ways to engage with those people. And then the other ways is if you're targeting, we mentioned this stuff earlier, if you're looking through your reports and finding who's buying the most, who's buying the most frequently, then the outreach to them specifically. And if a brand is out doing outreach to their customers, their customers are usually super stoked. Response rates are really, really high for those things. So I think there's a lot of different ways. It's pretty simple, but I'd say the easiest thing that anyone can do is just figure out what you want your ambassador program to look like. What would, and that's really important, if I can just tangent on this for a second. Absolutely. One thing that I've seen too is that brands don't really put themselves in their customer's shoes. What would get you motivated to be an ambassador for a brand?

Brett :

Not what makes the ambassador program valuable for you as a brand, but what makes the shopper feel valued and what makes them likely to actually do something?

Kyle:

Yes. I mean, it's crazy to me. I see, and we all know this, you can go to just about any e-commerce site right now, and if I put my email address in, I'm going to get a 15% 20% discount. It's nothing, right? But some of those very same brands will say, there's no way I'm going to give my ambassadors a 20% discount. It's like, why would you not do that? Because it can be so just you have to be able to look at your program and say, I would be super excited if someone made this offer to me. And if that's the case, chances are that they're going to be very excited to join your program and you figure out what you want to do for your program. And from there, just put a footer in your website and say, join our program. Get people to start engaging with you because engagement is key in all of this. And you have to be able to continually give your customers your ambassadors things to do,

Brett :

And who does this really well? Who should we go pay attention to? Maybe get on their email list to see how they're running their ambassador program.

Kyle:

There are so many brands I think that do this well a lot, and they do it for different reasons and for different motivations. And so you'll find different things when you look at some of these different brands, meaning there are some brands that their sole purpose of an ambassador program is going to be to drive sales and revenue. Ultimately, that's always a goal of everyone, but they're meticulously tracking it. They're trying to find out, great, who's using referral codes? Who's using discount codes? What do the revenues actually look like? There's other brands that their number one goal is just, we want to be able to generate a lot of UGC. We need that user generated content for our own marketing purposes, and they're going to run a program in a very different manner than someone who's trying to drive revenue as their primary goal. And then there's others that are just trying to create general awareness like, look, we just need people posting.

We want to look at our reach on social. And so all three of those scenarios, they're all ambassador programs, but depending on what the goal is, they're going to have something different out of every single one of those. But there's, all of the big brands are doing this now, and they have teams that are dedicated to it as well. Because I will say this, an ambassador program is not, it requires work. It's not something that you can just say, cool, I started an ambassador program and now it's just going to take off. You have to put in a ton of effort on your end. I mean multiple hours every week where you're coming up with, okay, what do I want my ambassadors to do for the month? At least you have to have a plan in place just like you'd have a marketing calendar you need to have, and it's even better if it aligns with your marketing calendar, an ambassador calendar where it's like, here's all of the different types of actions I want people to do.

And it can be simple things too, where you take all the different technologies that are out there and you say, cool. I want my ambassadors to be leaving me reviews. I want them liking and commenting on my brand's social posts. I want them liking and commenting or sharing some of my ambassador's posts. I want them posting at least once a month. And you can give them ideas of things to post about, and they make it authentic because it's usually just throughout what they would normally doing in their regular life. So if you can take the time to create a good ambassador program, it will pay huge dividends for you, and it just supports everything else that you're doing.

Brett :

Totally makes sense. And what's interesting is even if you look at this like, Hey, even in the beginning, this may be more of a loyalty program. We're getting our ambassadors to buy more, and then everything else, it's all going to grow as you go. But I think there's a few things that work there. If I'm an ambassador and I'm not talking about your brand and I'm talking about why I like it and I'm posting and I'm liking stuff, the first person that I'm selling on that is me. I'm reaffirming to myself why I love this brand, which means I'm probably going to buy more. Also, there's this law of consistency. If we say we're into something, if we say this is important, we want our actions to line up with that. And so I think that leads more purchases also. Hey, Luke got a little justification, right? It's easy to say to our spouse like, Hey, I'm an ambassador now. I've got to fulfill my duty. I got to buy these yoga pants or whatever to make this work. And so really interesting.

Kyle:

Yeah, and it's funny that you said that about loyalty because I think that there are some similarities. I was just thinking about it the other day. When I say lines are blurred ambassadors, it's almost like a loyalty program, but rather than asking your ambassadors to just keep buying more and then they're going to get more credit, it's just we want you to talk about our brand more and we'll give you more credit. You don't even have to buy it more. Just start talking about it more, but naturally.

Brett :

Naturally. Yeah. Love it. Love it. Let's talk about ambassadors and ads. So how do those two work together to make your ads better? Well,

Kyle:

I think the biggest thing is you can't talk about those two things without recognizing the importance of user generated content and all of that stuff. And you'll see there's more and more brands. In fact, there was an article that came out not too long ago about Yeti specifically going away from their traditional stock images and photography and using solely user generated content. Awesome. And I think that is really cool for all the reasons we talked about before with just how authentic that stuff actually is. But you utilize your ambassadors, like I just said, to align with your marketing calendar and you say, okay, here are the different themes that we're focused on this month, or maybe it's this quarter and get as much UGC as you can possibly get. And then you as a brand, you either boost that UGC, you use it for your own post.

Because the other thing too is that if you have a legitimate ambassador program, you as a brand actually own. If someone signs the contract becomes an ambassador with you, you say, Hey, I'm going to give you this in exchange for it. Maybe it's a discount. For example, you own all of that UGC, whatever they posted, it's yours. You're able to utilize it however you want, and you just get much better engagement. To the point that I've seen many brands that have got so much more traction from utilizing their ambassador's content as a social post, again, because people are scrolling through and they recognize that, Hey, here's a real photo. This isn't some advertisement, I guess. And they'll stop and they'll look at it and they'll engage with it. And so the engagement rates are significantly higher. In fact, we see that on average they'll raise by 25 to 30% just by utilizing your ambassador's content,

Brett :

It really becomes a content flywheel, right? You'll just constantly have new content to test and use. And I know, especially the social platforms, meta and Instagram and certainly TikTok, they're content hungry and you got to feed the beast really hungry, more content, YouTube less, but we still need new stuff on YouTube and we look at UGC Mashups or UGC to help highlight a point within a broader video. And so all kinds of use cases there. Big believer in that. Let's talk about, go ahead J. No,

Kyle:

I was going to one last thing. The other thing is you think of your marketing team, and no matter the size of your brand, you might have a one person marketing team, you might have a 10 person marketing team, but if you have someone who's focused on this area, there's only one, let's call it one to 10 minds, thinking about all of the different ways that you could advertise or market your product and you engage with your ambassador team to do this sort of stuff, you now get hundreds of different ideas, thousands of different ideas, because they're going to think of it very differently if it's like, Hey, here's our theme. This is the overall arching topic that we're trying to discuss. You'll get so many different unique ideas that it's absolutely amazing. And we all know this too, that everyone's become a photographer. So even if you're talking about the nano or the micro influencer, the contents, the U GC is pretty good. I'm not can ever say it's influencer quality, but it's really good. And like I said before, there's brands out there that are opting for a less quality product in terms of the setup because it is authentic. And that gets people to stop in their tracks.

Brett :

Yeah, love that so much. So let's pivot a little bit here as we're kind of wrapping up. How does get roster work? How do you facilitate ambassador programs? How do you identify? How do you manage? How do you make the whole process easier?

Kyle:

Yeah, so we've got an awesome piece of software that makes life super, super simple. We're custom built for ambassador programs and we allow people to run everything. Your affiliates, your ambassadors, your professionals, influencers, everything through our platform. But at the heart of what we do is we really try to automate the engagement process as much as possible. One thing to start an ambassador program, it's another thing to keep those people continually doing something for you. The goal is to have your ambassadors doing something at least monthly for your brand. They need to be doing something of value for your brand, the very least monthly. And sometimes people get excited about it and they come out of the gates and they're gung ho and they're doing everything you want 'em to do. And after a month or two, you kind of stop coming up with ideas and you weren't reaching them as much because it's human nature, it's what we do.

Brett :

It takes work to keep that momentum, otherwise it's just going to lose

Kyle:

Steam. And so we have a lot of stuff in place that allows you to continually have, reach out to your ambassadors, continually giving them things to do. We have tons of different templates where you can almost put this in autopilot, not completely. I mean, you still have to do some things, but it's like there's all the different ideas of things that you can do from an actions perspective, from a post perspective in order to keep them going. And then we just keep track of everything on the backend so that you don't have to figure out who do I need to send product to and who do I need to send a discount to or a coupon code to or any of those things. And so we provide you with referral links or affiliate links. We provide you with the discount codes, we integrate with all of the different shopping carts out there and just automate it as much as we possibly can.

So it makes it super simple for brands to be able to run their ambassador programs. And what we'll find is that someone who's tried to do this manually in spreadsheets, a lot of people will come to us having done it in spreadsheets. We will save people 30, 40 hours a week. I mean, we can essentially give someone their life back and their job back so that they can focus on all of these other things because they can now automate it through software. It's just software that's custom built for this sort of stuff. Everything that we just talked about from an ambassador, stuff you can do through the platform. And we've seen so many hundreds and hundreds and hundreds of brands do this and have amazing success through running their ambassador programs. And so many of them even said, look, we were built on word of mouth and for the first time, we were able to take control of the narrative and measure it as a result of roster. So

Brett :

Talk a little bit about, before we talk about how people can check it out and stuff like that, how do you measure it? Because an important piece, how are we measuring the impact of this?

Kyle:

Yeah, so there's a couple of different ways that we do that. One is just from a brand awareness or from an earned media value perspective, what does the reach look like across the board? How many likes, comments, shares, that sort of stuff are you getting from a social perspective? And then we utilize the same thing that this is not new at all. It's discount codes, it's referral links or affiliate links to be able to see how often those are shared, how often they're clicked, how much revenue's coming through that particular link. So if I'm an ambassador and I say, Hey, yeah, you should check this brand out, I can share my link and I can get credit for anything that happens through there. So I would say those are the two primary ways that we're tracking all of that information is through that

Brett :

Makes sense for those who want to check it out and learn more, how can they do that?

Kyle:

Just check out our website, get roster.com, go there. Tons of really good content on there, give us a call. We're happy to give people a demo. And at the end of the day, it's not a high pressure situation. We love helping brands grow their businesses. It's what we're passionate about. And you'll find that we'll share information with you. Sometimes it's like, Hey, this might not be best for you. Maybe you're not ready for it. It's super low pressure. We're just, we're low pressure people overall and we just want to help brands

Brett :

Grow getting that vibe for sure. And so, hey, this is something I'm all fired up now, fired up for ambassador programs and I see it all working together, right? Ambassador program, influencer marketing, your standard social advertising and search advertising and all of it can work together. And man, that's really what it takes. Yeah, that's the key to D two c e-commerce, right? You're not going to just find one thing that you can do to grow to your e-commerce brand and to sustain growth. It's going to be the combination of a lot of little things executed well. And so get roster will help you do that. Kyle fr. And ladies and gentlemen, Kyle, thanks for the time, man. Super fun and best wishes to you guys, and excited to see you guys grow.

Kyle:

Okay. Sounds good, man. Thanks. We'll talk

Brett :

Soon. Absolutely. And 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? Give us some ideas. Also, if you've not left that review on iTunes or wherever you consume the podcast, please do that. It makes my day, but also helps other people find the show. And with that, until next time, thank you for listening.

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Episode 271
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Sean Frank - Ridge

How to Win in 2024 with Sean Frank of Ridge

Sean Frank is a true legend in the DTC space.

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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. 

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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).

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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.

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Here's a look at what we discuss:

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  • 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.

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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.

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Episode 269
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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.

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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

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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.

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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!

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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.

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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!

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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. 

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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. 

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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. 

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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) 

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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.

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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. 

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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.”

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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. 

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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! 

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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. 

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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

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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.

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