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Episode 278
:
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. 

‍

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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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
:
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
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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.

‍

Episode 267
:
Aaron Nosbisch - Brez / Lucyd

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

In the DTC space, there are always headwinds.

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

And new headwinds pop up daily.

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

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

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

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

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

‍

‍

Show Notes:

Transcript:

Brett:

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

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

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

Aaron:

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

Brett:

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

Aaron:

That's a great question.

Brett:

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

Aaron:

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

Brett:

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

Aaron:

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

Brett:

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

Aaron:

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

Brett:

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

Aaron:

Went in the Midwest.

Brett:

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

Aaron:

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

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

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

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

Brett:

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

Aaron:

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

Brett:

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

Aaron:

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

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

Brett:

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

Aaron:

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

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

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

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

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

Brett:

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

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

Aaron:

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

Brett:

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

Aaron:

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

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

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

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

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

Brett:

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

Aaron:

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

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

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

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

Brett:

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

Aaron:

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

Brett:

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

Aaron:

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

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

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

Brett:

No, it helps me.

Aaron:

It

Brett:

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

Aaron:

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

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

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

Brett:

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

Aaron:

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

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

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

Brett:

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

Aaron:

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

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

Brett:

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

Aaron:

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

Brett:

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

Aaron:

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

Brett:

Protecting, darting.

Aaron:

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

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

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

Brett:

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

Aaron:

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

Brett:

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

Aaron:

Right. We are Lucyd.com.

Brett:

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

Aaron:

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

Brett:

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

Aaron:

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

Brett:

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

Episode 266
:
Cody Wittick - Kynship

Influencer Marketing and How to Create a Creative Flywheel in 2024

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


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


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


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


How to use influencers to build a creative flywheel.


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


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

Show Notes:

Transcript:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Episode 265
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Brett Curry - OMG Commerce

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

This year was an AMAZING year of podcast guests.

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

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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. 

‍

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

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

‍

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

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

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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. 

‍

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

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

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

‍

‍

Transcript:

Brett:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Episode 264
:
Bill D'Alessandro - Element Brands

Optimize Your Finance Stack or Risk Going Broke

How is your finance stack?

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

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

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

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

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

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

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

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

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

Show Notes:

Transcript:

Brett:

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

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

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

Bill:

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

Brett:

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

Bill:

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

Brett:

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

Bill:

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

Brett:

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

Bill:

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

Brett:

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

Bill:

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

Brett:

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

Bill:

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

Brett:

Yeah,

Bill:

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

Brett:

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

Bill:

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

Brett:

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

Bill:

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

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

Brett:

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

Bill:

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

Brett:

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

Bill:

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

Brett:

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

Bill:

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

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

Brett:

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

Bill:

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

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

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

Brett:

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

Bill:

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

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

Brett:

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

Bill:

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

Brett:

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

Bill:

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

Brett:

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

Bill:

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

Brett:

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

Bill:

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

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

Brett:

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

Bill:

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

Brett:

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

Bill:

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

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

Brett:

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

Bill:

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

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

Brett:

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

Bill:

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

Brett:

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

Bill:

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

Brett:

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

Bill:

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

Brett:

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

Bill:

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

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

Brett:

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

Bill:

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

Brett:

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

Bill:

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

Brett:

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

Bill:

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

Brett:

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

Bill:

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

Brett:

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

Bill:

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

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

Brett:

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

Bill:

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

Brett:

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

Bill:

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

Brett:

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

Bill:

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

Brett:

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

Bill:

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

Brett:

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

Bill:

Thanks for having me, Brett. Good seeing you.

Brett:

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

Episode 263
:
Anthony Mink - Live Bearded

Cut Your CPA in Half by Asking Better Questions

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

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

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

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

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

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

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

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

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

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

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

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

‍

Mentioned In This Episode:

Transcript:

Anthony:

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

Brett:

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

Anthony:

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

Brett:

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

Anthony:

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

Brett:

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

Anthony:

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

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

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

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

Brett:

In the wave

Anthony:

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

Brett:

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

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

Anthony:

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

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

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

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

Brett:

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

Anthony:

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

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

Brett:

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

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

Anthony:

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

Brett:

Hughes, yeah, liquid Mind, really good stuff.

Anthony:

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

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

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

Brett:

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

Anthony:

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

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

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

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

Brett:

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

Anthony:

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

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

Brett:

Most authentic.

Anthony:

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

Brett:

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

Anthony:

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

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

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

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

Brett:

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

Anthony:

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

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

Brett:

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

Anthony:

Bearded truckers

Brett:

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

Anthony:

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

Brett:

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

Anthony:

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

Brett:

Totally.

Anthony:

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

Brett:

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

Anthony:

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

Brett:

Get a picture in your mind when you think

Anthony:

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

Brett:

All good investing in yourself.

Anthony:

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

Brett:

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

Anthony:

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

Brett:

No entrepreneurs

Anthony:

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

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

Brett:

Painful when you do that, but sometimes

Anthony:

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

Brett:

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

Anthony:

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

Brett:

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

Anthony:

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

Brett:

That's what really moved the

Anthony:

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

Brett:

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

Anthony:

January 1st is the goal. Awesome.

Brett:

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

Anthony:

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

Brett:

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

Anthony:

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

Brett:

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

Anthony:

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

Brett:

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

Anthony:

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

Brett:

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

Episode 262
:
Jeremiah Prummer - KnoCommerce

The Missing Piece to Your Attribution & CRO

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

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

But we can’t see our customers. 

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

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

That’s where KnoCommerce comes in. 

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

And they have biases. 

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

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

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

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

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

Transcript:

Jeremiah:

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

Brett:

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

Jeremiah:

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

Brett:

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

Jeremiah:

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

Brett:

Nice. Yeah,

Jeremiah:

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

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

Brett:

Is wild.

Jeremiah:

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

Brett:

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

Jeremiah:

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

Brett:

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

Jeremiah:

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

Brett:

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

Jeremiah:

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

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

Brett:

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

Jeremiah:

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

Brett:

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

Jeremiah:

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

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

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

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

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

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

Brett:

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

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

Jeremiah:

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

Brett:

Window, right? Yes.

Jeremiah:

Some of that's

Brett:

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

Jeremiah:

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

Brett:

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

Jeremiah:

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

Brett:

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

Jeremiah:

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

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

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

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

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

Brett:

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

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

Jeremiah:

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

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

Brett:

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

Jeremiah:

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

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

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

Brett:

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

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

Jeremiah:

Can make that look really good too. You

Brett:

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

Jeremiah:

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

Brett:

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

Jeremiah:

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

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

Brett:

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

Jeremiah:

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

Brett:

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

Jeremiah:

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

Brett:

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

Jeremiah:

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

Brett:

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

Jeremiah:

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

Brett:

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

Jeremiah:

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

Brett:

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

Jeremiah:

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

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

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

Brett:

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

Jeremiah:

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

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

Brett:

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

Jeremiah:

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

Brett:

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

Jeremiah:

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

Brett:

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

Jeremiah:

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

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

Brett:

Yep, totally

Jeremiah:

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

Brett:

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

Jeremiah:

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

Brett:

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

Jeremiah:

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

Brett:

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

Jeremiah:

Man, really appreciate you. Thanks.

Brett:

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

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Episode 261
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Brett Curry - OMG Commerce

11 YouTube Success Factors

Download The YouTube Ads Checklist HERE!

‍

11 Reasons YouTube isn’t Working for You

YouTube offers TREMENDOUS scale opportunities.

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

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

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

Here’s a sneak peak:

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

- When to launch a YouTube ad campaign

- How to approach YouTube ad performance measurement

- What creative elements need to be in place

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

- How to think about remarketing and YouTube

Plus, much, much more.

Transcript:

Brett:

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

So as we look at YouTube ads, I think we need to first step back and say, is it really true that hey, YouTube just doesn't work for some brands. YouTube doesn't work for my brand. I think that can be true if you sell a commodity item, if you sell a lower ticket item, if you can't absorb CACs or CPAs and the $50 plus range, then YouTube may not be your number one vehicle, but likely if you're a DTC brand and you're driving new customer acquisition on Facebook through Facebook video, then YouTube should work as well. And what we found is for those that are spending 10,000, 20,000, $50,000 a day on Facebook, you should be able to spend about the same or at least half as much on YouTube as you're spending on Facebook. And let's take a look at some of the brands that have really succeeded on YouTube.

Purple Mattress primarily grew initially from YouTube. Dr. Squash grew on other channels, but YouTube was a huge part of their success. Organify, we worked with that brand for a while, and during some of their rapid growth years, they weren't on Facebook, they were advertising on YouTube, and the list goes on and on. And so YouTube is very powerful. Scale is very possible. In fact, there's maybe more scale opportunities available on YouTube than any other platform. It's the second most visited site on the web. It has more scale than even Facebook or any other social platform, but it's not the easiest. And I'll even say, and I'm a YouTube guy, a Google guy, it's not the best place to start to launch a brand unless maybe you're running YouTube organic, then that's a great place to start. YouTube ads, though they're a great accelerator of growth, so you have traction.

YouTube is a great way to accelerate that growth. So let me break down really quickly these 11 success factors, and then we're going to go into detail on each one. This is going to be fast paced, it's going to be inspirational, and at the end you're going to be hopefully motivated to crush it on YouTube. So here we go. What are the 11 success factors? Number one, product market fit. Number two, a site that converts and landing pages designed for cold traffic. Number three, the right creative. You have to be running ads that are designed or optimized for YouTube. Number four, email follow-ups. Do you have email marketing in place? Number five, solid Google search shopping and or performance max campaigns. Number six, remarketing campaigns. Number seven, a full funnel mindset. Number eight, useful reporting. So are we reporting in a way that's accurate enough and is it useful?

Number nine, proper budget. Number 10, adequate patience. And number 11, a marketplace. Read Amazon, but a marketplace strategy that works. Okay, let's dive in. This is not rocket science, it's not incredibly complex, but there's a lot. And you do need to have these in place before you can get really full leverage out of YouTube. So number one, there has to be product market fit. What I mean here is if you're still testing a product, you still dunno exactly who you're trying to reach. You still don't know exactly the best offers, the best angles, the things, the reasons why someone buys. Then YouTube is probably not your first bet, right? YouTube is an accelerant. YouTube is a place to really hit the gas pedal and take something that's good and make it great in terms of scale. So how do we know we've got good product market fit?

Well, I think one of the surest signs is do we have repeat purchases for a specific product? So are we getting repeat purchases? Are people buying again and again? And are they telling their friends? Do we have good reviews on this product? Are people reviewing it and showing that they love it? And then is branded search growing? And this is one of those surefire ways to tell that, Hey, my brand is growing in popularity that more people search for my brand by name month in and month out than that means I'm getting traction. So we do need to know I do have traction. I do know who my ideal customer profile is. I do know why they buy the product. Okay, now we're ready to go. So that's step one. That is the first success factor. Number two, a site that converts and a landing page or landing page is designed for cold traffic.

So we don't have to be perfect here, and there's always improvement. There's always ways we can get our conversion rate up, but we need to at least be adequate. You need to at least not be below average. The average conversion rate for e-commerce sites for cold traffic is one to 3%. If you're way below that, you're going to struggle. If you're over that, you're likely going to do better on YouTube. And so this comes down to do I have good pride detail pages? Is my cart at least not slower than average? And do I have some optimizations on my cart? And then we want to think about, okay, specific landing pages. And a great way to test this is do you have landing pages that are converting cold traffic from Facebook or Instagram or other channels? If you do, likely those same pages will work on YouTube converting cold traffic.

So what are some of the things we need to have on these pages? Well, these pages need to show why your product is unique. So remember, all the video is really doing is it's getting someone to say, maybe it's getting someone to say, this sounds interesting. I want to check it out. They're not fully convinced to buy just yet. So the page has to show why your product is unique, why it's different, why it's better. What is your unique selling proposition? Page has to show that it has to overcome objections. We're all skeptical. We show up on these pages and we're like, yeah, probably not. I'm going to not believe your claims. I'm not going to believe your promises until you prove them. So how do you overcome objections? Are there concerns about will this fit my car or my body if it's closed or will this break after use or will this actually solve my problem?

There are objections people come to the page with. Overcome those, overcome those visually, overcome those with text, overcome those with video images, graphs, anything that will work to overcome those objections. It needs to demonstrate the product, right? And one of the great examples is Purple Mattress where hey, historically we've always bought mattresses by going into the mattress store and laying on mattresses and trying them and seeing what they liked. But purple was like, Hey, we're selling these direct to consumer. You're not going to get to sleep on it until you come in. They overcame the objection by saying, Hey, test this for 50 days or a hundred days, or whatever the case was to provide confidence and hey, here's a guarantee. But they also showed the product, they showed the raw egg test, the big pane of glass dropping on top of raw eggs on the bed, and the purple mattress held those eggs.

They did not break wherever the mattress broke, right? So show the product in action. Flex Seal, right? It's showing, Hey, it'll seal the pots around your house or your gutters or whatever. And it's such a strong sealer. We can spray it on the underneath of our truck and then drive the truck into water and it will hold water. It'll float because of Flex Seal. Show the product in action. We need to give customers confidence. It will work for them in their situation, for their needs. Is this product for you? Your page needs to underscore that. Take away risk, just like we talked about with the guarantee. Try it in your home for X number of days. Money back today, easy returns, no question asked. Exchanges, things like that. How do we take away risks and then make purchase easy? So is it easy to add to cart?

Is it easy to take that next step? All sounds like table stakes. All sounds easy, but we do need to make it easy. Are people having to hunt? Do they have to scroll to be able to find add to cart? You need to make that easy. And then also, are we capturing shopper's info? If they're not ready to say yes yet, because it's not that common that someone sees a YouTube ad for the first time or Facebook ad or anything, and then they click and they buy, right? Then that happens very, very rarely. So if someone does that, do we have a way to capture their information? Do we have abandoned cart flows set up? And I'll talk a bit more about that in a minute. But do we have opt-ins where if they're on the page, they do not buy yet, are we enticing them to leave their email address so we can start following up with them and getting them to purchase?

That is going to add a couple of percentage points potentially in your conversion rate and potentially change the total math of your campaign. So do we have a site that converts and do we have landing pages built for cold traffic? Next, the right creative. So YouTube creative is different. YouTube ads are not TikTok ads. They're not Instagram ads, they're not any other ad, they're not Google Shopping ads. They are unique. The ad, the video ad stands alone, right? There's not really much of anything around it. There's not the block of copy like there is on a Facebook ad. So the video has to stand alone. It has to interrupt the prospect, it has to demonstrate the product, it has to overcome objections, it has to keep attention, and really it works better if YouTube ads are a little bit longer than ads on other platforms.

So what are some of the elements? And we have resources to really dive into this deeply. I'm just going to cover this in a few seconds. One, it has to hook your ideal prospects. And this is important. We're not just trying to hook anybody. If we're selling to middle-aged women, we don't care if teenagers hit the skip button and don't watch, right? We want to hook our ideal prospects. So what are we doing to capture attention? We could do some kind of pattern interrupt or shock and all. We'd have somebody in a gorilla suit, Dr. Squat style or whatever, or we could just be very straightforward and say, Hey, do you have this problem? Are you not sleeping well at night? Is this issue happening in your life? But we have to hook the ideal prospect. If we don't get attention, nothing else matters. If YouTube ads are not working most of the time it's because the hook is not quite right.

We're either not hooking anybody or we're hooking the wrong person, or we're hooking someone in the wrong frame of mind. You want the hook to be relevant to the problem you're solving, right? And so again, going back to Purple Mattress, it would say, what are the signs that your mattress is truly awful? And that's kind of a bit of a, I didn't expect you to say that and now I'm kind of intrigued. Or if you look at it, William Painter, shout out to the guys at Raindrop. It opens with him saying, your face is your moneymaker, and why are you putting cheap pieces of plastic on your face? And it gets right into the message. A bit of a pattern interrupt. Super interesting, my buddy Ryan, at True Earth, there's a witch that opens in one of the scenes, one of the videos about the laundry detergent strips, and it says, Hey, what do you not mix with water?

Well, witches and computers and whatever, and also laundry detergent. And then it gets into the whole pitch. So we got to hook prospect's attention. We need to demonstrate the product. This is video. We need to see the product in action. We need to see kind of daily use demonstrations and maybe a dramatic magic demonstration, kind of like the Flex Seal, where Flex Seal, you can spray it on a pot and it'll hold together, or you can spray it on your truck and make it waterproof. Although not many people do that. We need to overcome objections. Our page is going to do this, but if those objections aren't solved in the video, then someone is not going to click, right? And so they may think it's too expensive or it'll never work, or this isn't really proven or whatever. So overcome those objections in the video show social proof, show people like your ideal prospect, loving, enjoying your product.

This can be reviews, it can be UGC, but show social proof, remove the risk, some kind of guarantee. And then a clear call to action. Click here to learn more. Click here to check it out. It's super easy. You click here, you choose your size, you choose your color, whatever, and check out sounds simple, sounds obvious, sounds like you maybe don't need to do it, but asking someone to take that specific action will increase the percentage of people that actually do it. So way more that could be said. I encourage you to go to omg commerce.com. We got the top YouTube ads, guides, plus lots of examples of ads. Also, this episode has been made into APDF if you want to check that out. And there's also examples of great ads there. Okay, so that's number three, getting them right, creative. So what do we have here?

Number one, product market fit. Two, a site that converts on landing pages that convert cold traffic. Three, the right creative four email, we kind of talked about this, but we need abandoned cart flows at a minimum. That's going to happen a lot where someone comes, they're not really planning on buying, but they'll add to cart and just see what does shipping look like? What are the details, anything hidden here that I need to know about? So have those abandoned cart flows really dialed in? Go back and listen to some of the episodes I did with Nick Flint, OMG email expert on email and SMS campaigns for abandoned cart flows. And then what about new customer offers? So if someone just opts in on the landing page, hey, let's send them that indoctrination sequence telling them why our practice is great, why they should buy it for the first time, and maybe if they delay, delay, delay, you give them some kind of incentive to buy.

So number four is proper email follow up flows. At OMG commerce, we accelerate growth for some of the most loved brands in e-commerce like boom, native, true earth overtone, and dozens more. If your Google and YouTube ad performance isn't where it should be. If you're struggling with Performance Max or if you're not scaling like you'd like on Amazon that we have two ways to help. One, we have amazing resources that are free for the taking like our top YouTube ads guide with lots of examples, our P max checklist or our Amazon DSP roadmap plus many more or hit us up for a free strategy session. So go on over to omg commerce.com and click on Let's talk to request that free strategy session or click on resources and guides and pick the guide that's right for you. And now back to the show. Number five, solid Google search, shopping and or Performance Max.

Now let's talk about search. So what do people do? Someone watches a Facebook video. They don't buy, but they're intrigued. They watch a YouTube video, which is obviously the topic of this show, and then they don't purchase. What do they do next? Well, the next logical thing is they're going to search. They're going to search for you likely on Google. So, hey, I saw that video. Now want to know more? What's interesting is that we saw once we started to ramp up for Boom by Cindy Joseph on YouTube, and this was years ago with YouTube ads, we noticed people kind of searching for stuff they heard in the video, but they couldn't quite remember the name. So it was like pro age makeup or makeup for older women, or boom, by, they would get it all wrong, but because they couldn't quite remember, but they saw the video, they were intrigued, and now they're searching.

And so we need to have good search ads in place. I like to set up branded search where it's separated by branded search for loyalty, branded search for new customers. We want to be set up and we want to even bid on keywords that, Hey, what keywords might be triggered by this ad? If it's purple mattress, say, what if someone types in raw egg mattress because they can't remember the name of it or raw egg test or something like that. So what are some of the searches that someone could be conducting based on watching this video? The other piece is Google Shopping, or most likely you're going to be running Performance Max or maybe all Performance Max. But again, if I'm searching for a product, I'm likely going to do that on Google. And you need to control what that looks like for your own branded keywords, but also related keywords.

We see this a lot. We've helped other cosmetic brands and some that are high priced where someone will see a video and then that leads to a search. But if you're not careful, if you've got lots of other competitors, low competitors, things like that that are showing up, maybe all you're doing is generating awareness for someone just to buy another product. So you need to have good search shopping and for short performance Max in place to feel confident that, Hey, we're going to get full benefit from YouTube because the direct click from YouTube to purchase, that's a small percentage of the impact you'll get, get much more of an impact from branded search lift and people that convert off of search later. That's number five. Number six, remarketing campaigns goes without saying, but we audit hundreds of accounts every year, and we knows a lot of people are not running remarketing campaigns or they're not running remarketing campaigns in a way that's smart.

And so we want remarketing campaigns on Facebook and on YouTube and on discovery and with display. And essentially anywhere you can run remarketing campaigns. And we do want to focus more on recency. So that one to three day audiences, those are the ones we really want to key in on, but you can certainly go longer. So you're not going to get full impact from YouTube if you don't have remarketing in place. That's number six. Number seven, a full funnel mindset. I liked to use the analogy of team sports. I'm a sports guy. I coach basketball, I love football. I like to think about marketing in terms of team sports. Every member of a team has a role. If we look at the bulls of the nineties, everybody had a role. Michael Jordan was obviously the superstar of the goat. He scored a ton of points. Scotty Pipman did everything.

Lockdown defender scored a lot of points. Dennis Rodman, bit of a crazy dude. He was on the glass getting rebounds and just harassing his best players. So we would never look at that team and say, you know what? Dennis Rodman is not doing the work of Michael Jordan. We need to bench Rodman. I love football. I would never look at a football team and say, man, those are offensive linemen. They never get in the end zone. They never score points. You get points by getting in the end zone linemen never get in the end zone, cut the lineman. Anybody that knows the game knows that linemen are the key to an offensive unit success or defensive unit success. So the key there is just knowing what role should a player play and what role should a campaign play knowing that YouTube YouTube's greatest strength is at the very top of the funnel.

It's creating awareness, it's creating interest, it's getting someone into your funnel to convert. And so we got to have that mindset that, hey, we're building a team of campaigns. I don't need every campaign to generate a three row as I need my campaigns to collectively get a three row As. And so we need to look at that from a full funnel mindset, understand the shopping journey and understand how you need to influence that. I like to think about being an offensive coordinator. So how do I dial up the right plays? How do I get the right players on the field to achieve what I want them to achieve? But here's the cool thing. Your competitors don't know how to use YouTube. If you learn how to use YouTube, it's going to give you an edge. It's going to allow you to scale more quickly. But YouTube is a unique player on your team.

Don't measure it the way you measure search or shopping or even Facebook. Number eight, useful reporting. Now, what's so interesting to me, and this is one of those debates, there's attribution debates. Do I use third party tools? Do I just use Google analytics? Do I look at the metrics in my platforms? What numbers do I use? And I think the quick answer is you need to probably use a little bit of all of those things. And I think you need to obsess over being directionally correct and don't obsess over being 100% correct because you'll never be 100% correct. Even shoppers don't know why they buy what they buy. I just got to speak to some high school students and I talked to them about, Hey, what's something you bought online recently? And they would give examples. I'd be, well, why did you buy that? Well, because the most comfortable pair of shoes or whatever, well, yeah, but what triggered it?

Well, and sometimes we can't even remember, right? We don't even remember what we clicked on or what we did. And so attribution is never going to be 100% accurate, but we need reporting that shows impact. And so really all we should care about as a marketer from a top level perspective is am I driving financial outcomes? Am I building my brand, building sales, building profits, building my EBITDA through my marketing campaigns? Because now what can happen is if you're a multichannel, which I hope you are, someone can see a YouTube campaign and then go buy your product in store. Or someone will see a YouTube campaign and just go buy your product on Amazon. We'll talk more about that later. And so really want to be able to see holistically, how are sales growing? We want to see directly attributable conversions to campaigns, but we also want to begin to isolate and see, okay, when I spend more money on YouTube, when I spend more money on Facebook, is that causing Lyft and other channels way more?

We can unpack there, but do we at least have clear reporting where we can start to see Lyft? And then I would recommend running a brand lift study through Google, but more importantly a search Lyft study as we spend more on YouTube, how is that driving more branded search? Because I think branded search is one of the clearest indicators that your marketing efforts are working. Nobody just wakes up with an epiphany of your brand name in their mind. The only way they search for you by name is if they see an ad and if they're compelled by it. Number nine, proper budget. So the good news is you don't need to spend a fortune. And this has shifted some in recent years used to we'd talk about, Hey, you probably need to spend like 15 grand a month to really give campaigns enough volume to begin to see what's going to work.

Now, I would still say that the YouTube takes a lot of experimentation. You're not going to nail it the first go round. You're probably not going to be profitable month one, month two, or maybe even into month three, but you should be gaining learnings as you go and getting a clear picture of, Hey, here's a pocket of an audience and a creative that actually work. And so ideally, we're going to be able to spend at least a hundred dollars a day to begin with on YouTube so that we can at least measure engagement, interaction view rate, click-through rate, things like that, and then begin to see, okay, is this driving a lift in branded search? And are we seeing conversions? And really though, you're probably not depending on what you're spending on other channels. If you're spending 500,000 a month on Facebook and then you do a $10,000 a month test on YouTube, what are you really expecting to see?

Right? That's not going to be enough to create any kind of meaningful lift. But if you need to test small to see what content are people engaging with, what are people clicking on, then you can definitely do that. But then to be able to see lift, I want to see things like, Hey, am I causing a 10 to 15% lift in overall traffic from YouTube? If so, I should be able to see a lift in branded search and a total search and shopping volume. One thing we've seen a lot is once a brand gets to like 50,000 a month in YouTube spend, we start to see a 30% plus lift in branded search. And often a 30 to 80% lift in overall search and shopping performance depends on the brand of course, but getting that meaningful spin level is great. You can start small though to test.

That's number nine, proper budget. Number 10, adequate patience. If I'm turning on branded search where I'm turning on Google shopping, or if I'm running sponsored product ads on Amazon, I should be a little bit impatient, right? This should work almost right away. It won't be optimal right away, but I'll make sales right away. It's going to work right away. YouTube takes some trial and error, right? We're going to potentially find more audiences and more ads that don't work than those that do in the early stages. But once we find stuff that works, we can scale and we can like to scale for a long time. One of the things I love about YouTube is if we find an ad that works, you can probably ride that horse for a year, maybe two years. We've seen that with several large brands on YouTube where once we find a creative that works, we can run that for a year to 18 months to sometimes more.

So 10, we got to have adequate patience. Number 11, a marketplace strategy, AKA and Amazon strategy. Now, I don't believe you have to be on Amazon to be successful, but I believe you've got to be strategic about this decision. Over 50% of all purchases in the US online are done on Amazon. All of your customers are buying on Amazon in some form or fashion. Doesn't mean though, for sure have to buy your product on Amazon, but a lot of people only want to buy on Amazon. One interesting statistic, and I'll go back to an episode I did with Jordan Pine on infomercials. This guy was in the infomercial business, still is helped a lot of the greats, a lot of the recognizable brands that then products that have sold through infomercials. Here's what infomercial producers know right now. If they launch a new infomercial product, they know that 20% of those sales are going to come by phone, especially if they're targeting an older demographic.

Still, people pick up the phone and order these products, not younger people, but people. 50 plus for sure. 30% of sales are going to come from the website. So people looking at the product, googling it, finding the URL, finding the whizzbang potato peeler.com, clicking on that buying, 50% of the sales of an infomercial are going to come on Amazon. That's if they don't even mention Amazon, right? People see a product on an infomercial, they become intrigued. They say, nah, just lemme buy it on Amazon, right? Amazon's got my payment information, my address I can get in a couple days likely. Lemme just go to Amazon. So a full 50% of infomercial purchases take place on Amazon. Why should we expect anything different if we are running ads on YouTube especially, but also Facebook, you're driving searches to Amazon, people are going to Amazon to look for it.

And here's what I believe. If someone sees your ad and they're convinced that that's kind of a cool product and maybe my needs and maybe just for me, but then they go to Amazon and they see other competitors that maybe have more reviews or maybe a different price point, then they're likely to potentially buy someone else. So especially if you're not there. However, if you do a good enough job telling why you're different, why you're better overcoming rejections, maybe making it seem like there's nobody else that does exactly what you do, then even if you have competitors that looks somewhat similar on Amazon, you'll still be able to capture enough of those customers to make it work. So we got to think through our Amazon strategy, and when we look at Amazon, we built a course, smart Amazon e-Commerce with Ezra Firestone, smart Marketer. Our agency helps with basically full channel management on Amazon. But we got to think about this. How are we merchandising our products on Amazon? Are we optimizing all of our listings on Amazon? Do we have search ads built on Amazon sponsored products and sponsored brands and sponsored brand video? Do we have a smart approach to Amazon? Because any top of funnel campaign is going to also drive traffic to Amazon.

So let's do a quick review here. What are the 11 things we need to have in place on YouTube? Well, it's not just a good video. It's a lot of other things. It's one product market fit. It's two a site that converts and a landing page built for cold traffic. It's three the right creative, creative built for and or modified and or optimized for YouTube. It's for email follow-ups. It's five solid Google search shopping and performance max. It's six remarketing campaigns. It's seven full funnel mindset and approach. It's eight useful, directionally accurate reporting. It's nine proper budgets so that we can actually see what's working and what's not. It's 10 adequate patients. We can't give up month one or even month two. We got to be willing to test to find something that works. And then 11, it's a marketplace strategy that works. So my advice to you, if you want to learn YouTube more, again, we built a course with smart marketer, Ezra and the Gang on smart Google Ads, and there is a whole section that talks about YouTube ads success.

If you want to do this on your own, you have an in-house team, get that course, go to omg commerce.com, click on courses. There's links to all of that there. Or you check it out at the Smart Marketer site. Of course, at OMG Commerce, this is what we do. If you are a growing D two C brand, if you've got traction, if you're spending over a hundred thousand a month on paid media, then we should talk and we can talk about potentially how we can help you scale on YouTube. So with that, hey, let's make it a priority in the coming year to make YouTube a viable customer acquisition source for your brand. And to do that, you need these 11 things in place. With that, this has been so much fun. Thank you for tuning in. If you like this show, please share it. Please rate it. Please leave us that review. We really, really appreciate that. Thank you for all the love that I experience when I go to events and hear from loyal listeners. And with that, until next time, thank you for listening.

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Episode 260
:
Preston Rutherford - Co-Founder of Chubbies

Lessons From Chubbies with Co-Founder Preston Rutherford

Few DTC brands have been as polarizing or as successful as Chubbies.

The Chubbies story is a wild one. It started with humble beginnings, selling shorts one by one in parks around the Stanford campus, leading to an IPO.

Four Stanford college students had 3 things in common: 

1. They were tired of working for the man. 

2. They didn't fit the "Abercrombie" fashion mold of the late 2000s and 

3. They loved shorter shorts - BEFORE the short shorts trend. 

And so, Chubbies was born.  

This is a deep dive with Co-founder Preston Rutherford on what Chubbies got right, what they got wrong, and how to think about building a brand.

Here's a look at what we cover:

  • Feedback loops. This started when the co-founders were selling their shorts in person. They could immediately read customers' reactions and hear what they liked, what they didn't like and what needed to be tweaked. As the company grew, this shifted to digital and online feedback loops tied to ad creatives, social posts, and user experience.
  • Downplaying vanity metrics. We all want to brag about ROAS and revenue. But, these metrics can be misleading. If you maximize ROAS, you sacrifice long-term growth for a sale today. And you get into a trap that squeezes profits and becomes hard to break. 
  • Obsessing over core metrics. We should focus on metrics like contribution margin, total profits and branded search growth (as a sign of a growing, healthy brand).
  • Building a brand. Want to have a big exit? Want to charge a premium? Want to drive consistent demand? It's all about brand. 

Transcript

Preston:

Why do you build a brand in the first place? Well, it's so that people seek you out without having to prompt them with a conversion ad basically. Or when people are in market, they think of Che's and they come and they go to Nordstrom, where they go to Dick's Sporting Goods or they go to Amazon or they go to chubby.com, but ideally unprompted, and that becomes a conscious or subconscious learned behavior. Those are the dynamics that we're trying to create, not this Pavlovian. And I see a product offer urgency ad in my feed, and I click and I buy because it's 15% off. And I had to get that because the discount expires in two hours. That's not what we're trying to build.

Brett:

Well, hello and welcome to another edition of the e-commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce. And today we are talking about really just an iconic DTC story, an amazing success story, an amazing brand. Talk to one of the co-founders of Chubbies, and we're going to talk about brand building and how to think about growth and how to think about brand. And I just can't wait to dive in. And so my guest today is Preston Rutherford. He is the co-founder of both Chubbies and Loop Returns. And so Preston, welcome to the show. Thanks for taking the time and how's it going?

Preston:

Awesome. Yeah, Brett, thank you. Great to meet you. Great to chat with you and really look forward to this conversation today.

Brett:

It's going to be good, man. And so I was telling you before we hit record, well two things. One, you and I met on LinkedIn, so I've been following your posts. I don't know, some friends of mine commented or shared or whatever, and I'm like, dude, this guy's smart. He's got some fresh takes on brand building and how to think about stuff like ROAS and who you are as a brand and growth and things like that. And then I also met Kyle, one of the other co-founders of Chubbies, about a year ago. We spoke at the same event in Los Angeles. And what a cool guy. And so when I saw you posting, I'm like, dude, got to get you on the show and we got to talk about this. So let's do this first. I think a lot of people are interested. First of all, what is chubby for those that don't know? And then what's the origin story? How did you and your co-founders start this brand?

Preston:

Totally. Chubby's is a lifestyle apparel brand. Basically if you think about what you want to wear on the weekend, it's our job to provide that apparel net lifestyle. And in terms of how we got it started, it was, gosh, it was over a decade ago now. We were friends from college. We had been working for the man for a while, four or five years and just thought we would love

Brett:

Working for the man. Nobody wants to do

Preston:

That long term. Exactly. And we just weren't a fit for it. And at that time, Shopify was just becoming a thing, a platform that existed. And we realized, oh my gosh, it used to be so much harder, more expensive and slower to just be able to sell something online. And some of these tailwinds were making it ridiculously easy. And we also thought there was a product gap in the market for some reason or another. All of us really liked shorter shorts. Two of us played soccer, one of us played rugby. Another one of us just spent a lot of time growing up in the southeast where shorter shorts were more than normal.

Brett:

And you were the rugby guy, right?

Preston:

I was the rugby guy, yeah.

Brett:

Nice man. Rugby from the time you were a kid, this is a sport that fascinates me. I think you can make the case that there may not be a tougher athlete out there than the rugby player, but how did you pick up rugby?

Preston:

A good friend of mine freshman year in college, he played it in high school. He just asked me to go out for tryouts, and I really loved it. I grew up playing soccer myself. Wasn't good enough to play at Stanford, like some of my co-founders, but I liked running around. I liked the team environment and the culture just seemed awesome, really fun thing to be a part of. And again, with rugby as with chubby, fun and community were at the core. So it drew me to it.

Brett:

Yeah. Now wait a minute. So now you started playing rugby with a guy who was on the college rugby team, or you just decided, I'm going to go out for the college rugby team, and you made it

Preston:

A guy who was already on the team. He knew what he was doing. I had no idea, but he knew that I liked playing sports. I like running around. Maybe I'm fast, who knows. And he asked me to come out and try out, and I was blessed enough that got on the team.

Brett:

That's insane. And was this at Stanford?

Preston:

Yep. Yep, it was at Stanford. So it's a club team. It's not D one, it's not varsity, it's club team, but lot of amazing athletes on the team.

Brett:

Yeah, I've been around club lacrosse teams at the collegiate level. I mean, it's still collegiate sports, man. Most people don't just decide, yeah, I'll learn the sport as I go. I'll learn at the college level and then I'll go. So anyway, that's super impressive. Hats off to you. Your first experience was at the college level of rugby. Holy cow. I appreciate,

Preston:

I appreciate that, I appreciate that. So yeah, that was a little bit about who we were. And at the time, if you remember back late 2011, the Abercrombie and Fitch vibe different from today, but back then it was very guys with six packs standing at the door spraining with cologne, like the NCE music playing. And if you weren't that vibe, you didn't even feel like you could walk in the place.

Brett:

Dude, I was so not that vibe ever in my life, and I resonated with that. I'm like, I can't even buy this stuff.

Preston:

Yeah, exactly. And then just at the time, it was very much serious and exclusionary and there wasn't a lot of humor and we just thought, well, let's just flip it on its head. Let's have some fun here. Let's create a vibe that is the vibe that we wish existed. That hearkens back to the retro days of shorter shorts, barbecues, fun, welcoming humor, creativity, and let's just have a go. And so nights and weekends while we were doing our normal jobs, we just started trying to make some product first made it for ourselves and then just started making it for our friends. And then this was also at the time when the square card reader came out where you could actually transact with the credit card in person. So we just put product in our backpacks and went out and would do the weekend thing at the park or at brunch or whatever, and there'd be just a group of us wearing these bright tiny shorts and people would either love it or hate it. And we loved that polarity existed. There wasn't apathy. It was either you love it and you want to be a part of it, or you're just like, this is clearly not for me. And I think these guys are idiots. But that's kind of what you need with a brand that is what you need. Because

Brett:

The worst thing is apathy. The worst thing is that I don't really care that polarity means that there's a group out there that they fall in love with it and they want to be associated with it. And so that's perfect.

Preston:

Exactly. It was clear what we were and clear what we weren't, and that was just authentic to us. That was our story. That was who we were. And people would come up to us, people who liked it, they said, where can I get this? And we said, well, oddly enough, we've got some in our backpacks you want to try 'em on. And then people would just be buying. And so in-person sales was huge for us. There was such a tight feedback loop. Now it's tougher. You've got this meta and Google middleman in there, but it was awesome to just have that hands-on direct connection with folks at the beginning.

Brett:

Now I know the trend, and we're actually just talking about this with some of the guys that work here at OMG. We're talking about how shorter shorts are the thing. And a couple of guys that work for me are runners and they love the short shorts. And I am more of a child in the nineties. I played basketball in high school in the late nineties, and that was the era of the giant shorts. I have no idea why this was a thing. But the Fab five in Michigan, I mean you look at now and you're like, how did we move? How did we do a crossover between, I was a post player, so I didn't do any crossover between the leagues, but how do you do that with the long shorts? I don't know. But were you guys very early on in the short trend? Do you feel like you helped helped that trend, or were you kind of riding the wave?

Preston:

Oh my gosh, we were early, super early. We looked like idiots for the first number of years in terms of what we were doing because the vibe was the longer the cargo shorts with 20 pockets

Brett:

Cargo shorts,

Preston:

The tight ed hardy shirts, that was the vibe. So yeah, we were not riding tailwinds at that time. Now, I would hope that we were a part of creating these tailwinds and this change, but that's something out of our control. We were just focused on the inputs and what we felt was a missing piece of the market. But at the beginning it was just very polarizing and very different. But we knew we were a customer and we knew there got to be people like us out there. And it wasn't a top down sort of men's fashion tam and then men's bottoms, if you did that analysis, you wouldn't have started chubs because the tam totally addressable market gets really small real fast. That's why a post I did was basically no MBA in the right mind would've started chubby because it's a tiny tam and people generally want to attack massive tams. But we didn't care. It was just let's make a product for ourselves and let's just see

Brett:

What happens, make a product for us and then see where it goes. Yeah, it's so great. And so I want to skip ahead to kind of the ending because I think a lot of people don't know this. And then we're going to get into lessons learned that I've got some great topics, again kind of inspired by your writings, but you guys were acquired by this what became the solo stove kind of platform, which iPod, and there's a lot to that. But what was that exit and was that process, were you involved in that process? Did you leave the company prior to that or what was that like?

Preston:

It was a whirlwind. I mean, first of all, a huge blessing that anything like that even happened. And

Brett:

You had to go from selling in parks in around your college campus or whatever to company that had an IPO. That's just wild. It's just crazy.

Preston:

It's totally wild. It's mind boggling, and it is crazy to think about it in that way. But yeah, I mean, it was wild and a crazy, crazy process. And yeah, you're exactly right. It was a bit of a rollup. So it was the solo stove brand and then two other brands. And then very quickly after the acquisition went public, which was its own crazy whirlwind, so many learnings and things like that. But yes, so that was gosh, about a decade after starting the business. So my takeaway is these things take time. Consumer brand building takes time. And our hope is that this is just the beginning, right? That this is a multi-generational thing, like a brand that transcends and that's the hope. So we view it as sort of the Jeff Bezos quote of day one, and it's amazing to see that the brand continues to grow, the resonance continues to strengthen. And I was just in Dick's Sporting Goods last week looking for a golf club, and I saw this massive chubby set up there. I almost started crying because it was just amazing to see that something like that could happen after, again, just walking around San Francisco selling one short at a time to people who would just walk up to us. So

Brett:

Were you tempted people walking through the aisles of Dick's Sporting Goods? Hey, hey, I'm one of the founders of that.

Preston:

My wife does that. I'm so embarrassed to do that kind of stuff, but my wife does that sometimes. Then I get really red and blushing and kind of look down. But no, it's such an amazing thing to just see all the UGC, for instance, thousands and thousands of things that have been created by just people living their life, having fun, kind of reflecting back at us, what we hoped to put out into the world. And it's things like that that gosh, just kind of floor you and fill you with humility. It really just kind of shows you, gosh, left a little bit of a positive mark on this and what a joy to be a part of that.

Brett:

Yep. It's so cool. And yeah, I think most overnight success stories, unquote, this was about 10 years in the making and lots of blood, sweat and tears along the way that eventually led to roll up in that IPO, which is amazing. Let's dive into a few things. I want to unpack several lessons you guys learned along the way, and one of those is I think we learned a lot from failures or missteps. So what are some of your favorite lessons learned at Chubby's from what you guys got wrong?

Preston:

Geez, so maybe to start, we made all of the mistakes in the book, I would say. So anything that I say or anything that I write about, if you read any of my stuff, is all coming from a perspective of starting with humility and having made all the mistakes, not I know this is right sort of thing. So just a couple of things that pop into my mind. One is around changing the view, having more learning, humility around channel expansion. So for the longest time it was the trend of I got to sell everything through my site. I'm going to own this customer, own this transaction, get this email address, and I'm just going to, it's mine. You get all the data, blah, blah, blah. What we realized is a e-comm is a very small sliver of overall retail or commerce, what, 20%, maybe a little bit more growing fast, but still very small.

Amazon owns half of that. So we're fighting for 10% of this broad sort of pie, yet spending a hundred percent of our dollars on that pie. So that to us started to make less sense over time. So I think one thing we got wrong was holding onto that digital D two C for way too long, have a little bit of humility that even if someone really loves your brand, they're busy and you want to be where they're buying and you don't want them to necessarily have to just type in ch.com, be where they are. So big thing there, maybe start going multi-channel, exploring multi-channel earlier. Now it's hard to do that before you actually build an association in people's minds. So you've got to do those things, those basics, but be where the customer is.

Brett:

And a couple things to piggyback on that, because I 100% agree with you, people are strapped for time. It's not easy to just buy in one place. And I think a lot of people mistakenly believe that, Hey, if I don't have someone's email address and phone number so that I can follow up with them, or I don't have their address where I can mail to them or whatever, then they're not my customer. And while in an ideal world, yes, we would want all of those data points, that's not necessarily true. We can all think about our favorite brands, whether that's Nike or particular kind of jeans, or my favorite hot sauce. I'm a hot sauce guy, I am a customer of certain brands, and I may buy those brands in a variety of places. Maybe it's on Amazon, maybe it's D two C, maybe it's through their app, but yeah, maybe it's just at a retail outlet. And so I think we over romanticize having full control of the customer experience when it'd be a lot better if we just put our products where people are, because another reason, a lot of people may find you in a retail store and then become your customer online. So it can work both ways, and I think we forget that or are just a little bit too shortsighted about that.

Preston:

Totally. And there's fear. I mean, on Amazon, is Amazon going to duplicate my product and put me out of business or will the same thing happen

Brett:

When it comes to brand? They can't do that, right? Amazon's not, I mean, okay, maybe they could at some point, but you guys had this brand going for which I think that's the key. And Amazon's not just going to recreate that brand overnight

Preston:

A hundred percent, but we have these, now I can call them irrational fears, but at the time, very real. You're trying to do the right thing and I get it, but that was a big lesson for us and big growth drivers now that we're able to be in more of the places where a consumer already is. Another one is how to spend our marketing dollars to better drive the outcomes that we actually want. And so what do I mean by that? For the longest time, it was very much, and this starts to get into the roas, short-term ROAS conversation, but it was very much, I feel like I'm doing a good job if my ROAS is a high number and not really thinking about what that means in terms of business fundamentals. And so starting to think a little bit longer term, my primary goal is not to buy short-term revenue pops. My primary goal in building a brand and building a business is to generate a machine that generates sustainable sequential increases in profit dollars over time,

Brett:

Which

Preston:

Allows me to create jobs, which allows me to make more great product, invest in great product and build great content, create great content that brightens people today. So let's create a machine that actually does that rather than give me whatever, 8.3 x roas that I can then screenshot and tweak. And so that was a big shift because we thought we were amazing media buyers. We thought we had cracked the code. We would constantly look for these little pockets of arbitrage, short-term arbitrage, but we thought we were killing it, but we weren't really generating any profits at the end of the day. And so shifting a little bit to, okay, what are we trying to do and then how do we think about getting there? And so a little bit about what does it mean to be strengthening a brand? Why do you build a brand in the first place?

Well, so that people seek you out without having to prompt them with a conversion ad basically. Or when people are in market, they think of Chubbies and they come and they go to Nordstrom or they go to Dick's Sporting Goods, or they go to Amazon or they go to chubbies.com, but ideally unprompted, and that becomes a conscious or subconscious learned behavior. Those are the dynamics that we're trying to create, not this Pavlovian. And I see a product offer urgency ad in my feed, and I click and I buy because it's 15% off, and I had to get that because the discount expires in two hours. That's not what we're trying to build. Not that we shouldn't do any of that. Of course there's a balance. But shifting the way that we thought about, okay, what am I buying when I spend a dollar? And getting a little bit more of an understanding of that was huge, was huge for us. Let's build these.

Brett:

Yeah, I love this so much.

Preston:

Yeah, let's build these resilient bases of revenue and then let's build a layer cake rather than just a pop. And then you have to do it again. And then because you're reaching an ever increasing pool of people, the LTV to CAC ratios just get funkier and funkier over time, and CPMs go up, CACs go up, and you kind of get in this upside down position where they're just insurmountable headwinds or you're starting to sell multi-channel and the old playbook didn't work for us. So you just have to make these shifts and I think start to think a little bit more long-term, like how is my percentage of new customer revenue coming through owned and organic channels? How is that changing? What am I doing there? Fundamentals.

Brett:

Yeah. And I think what's really interesting here is that of course, we want all of our marketing dollars to be productive. Of course, we want everything to work in our favor, but on what time horizon and what does that really mean? Because we can all become ROAS obsessed. And if you think about it, the only way that you truly maximize ROAS is by making mistakes or doing things the wrong way. If I want to maximize roas, I'm just going to go for search and branded search. But where does branded search come from? You got to generate that in the first place. Or going to, if I only want to maximize ROAS today, then I'm going to stop organic content and I'm going to stop prospecting on Facebook and I'm going to stop prospecting on YouTube and I'm going to stop doing some of those things.

But that kills your brand in very short order. And so I love that being able to spread out the time horizon and think, yes, I want this to be a maximum return, but over the long haul, right? Because I want to be able to charge a premium forever, and I want people to associate with my brand and share my brand and talk about it and to seek me out and all those things. And you don't get that. You don't build that by just running discount ads and by just creating that discount death loop. And so I'm so glad, so glad you brought that up, but sometimes you have to learn that, right? We all get addicted and even as an agency, and we run a lot of Google ads and YouTube ads and stuff, and I get it, we want to be able to show those impressive ROAS numbers and put 'em on case studies on your website or brag about it on social media. But it's pretty much a vanity metric, and it really only tells a sliver of the story, not the whole story

Preston:

Vanity metric. Yeah, I mean, I think for us realized vanity metric revenue we found for us was a vanity metric. I mean, optimizing around revenue, you're missing a whole bunch of stuff. Start thinking about contribution, contribution margin, things like that. Letting that drive everything we do, at least on the demand driving side of the business was also huge. So yeah, just learning about these vanity metrics took time. You get there, but then can we start to spread that message a little bit more broadly so that people get there a little bit faster without having to struggle through it for 5, 7, 9 years?

Brett:

And one thing, sometimes we kind of push aside lessons from bigger brands because we think I'm not that big. I can't do that, right? I'm not Apple, I'm not Nike, I'm not Procter and Gamble, but one of my favorite lessons I actually heard from Procter Gamble, and we'd already thought about it this way, but hearing it from them was validation. Then one of the key success drivers they look for in ad campaigns, what they're doing is, does this lead to branded search? Does this lead to branded search? If it does, then it's probably working. So if we're running a TV campaign, it's maybe hard to measure exactly, but is it driving branded search? Are these other campaigns driving branded search? That is a huge component of brand building, and that's kind of a shift in mindset that gets you to think, and that's where the big profits are is I do want to double click on something since you brought it up, and we'll kind of talk about this for a minute, and then I want to hear some lessons from some of the wins and some of the stuff you guys got. But you mentioned contribution margins when we talked about vanity metrics. So what metrics did you start leaning into? And let's start with contribution margin and the way you guys viewed contribution margin.

Preston:

Yeah, yeah. I mean, an example, maybe it's helpful to think about an example. So you could, as you know, get a really nice roas, but what's happening is you're selling shorts that are 15% off, and so you're still spending the same amount as you were when your shorts were full price. It looks like ROAS is going up, or you're just driving a bunch of conversions. And ultimately the dollars that are flowing through your p and l are dramatically reduced. And so then at the end of the month or at the end of the quarter, you look back and you're like, I thought I was killing it. And then you realize, wow, I generated no cash from this. So then we started to think, okay, gosh, what really matters here? And then how do we look at things on an apple to apple basis? Then it allows you to compare to things like wholesale and things like that, and it starts to incorporate things like the amount of dollars you're spending and the discounts that you're running.

And so for us, just that change and then ideally trying to, and I know Bennett True classic talks a lot about this of daily contribution. It's one thing to get a number from finance at the end of the month once you've chewed everything up, but that's far less actionable on a day-to-day, we're making these decisions on a daily basis like budget allocation, channel tactic, creative decisions. We need this daily feedback loop. So yeah, very much getting away from revenue because revenue can be tricky and can, I mean you can gain short-term contribution, but looking at long-term sustainable sequential increases in contribution dollars that your business machine is generating for us was huge. I mean, it just totally shifted how we thought about things and how we gold our team and things like that.

Brett:

And just for those, I think a lot of people listening are very familiar with contribution margin, but for those that aren't, can you define it really quickly?

Preston:

Sure. And I think people have differing definitions, but fundamentally it's just taking into account sales less all of the things like your cost of sales, which incorporates your marketing costs, which incorporates your product, gross margins, but then also all of these other costs like diminishing returns maybe in terms of where you are in your business. But once you become relatively sophisticated, you start to incorporate things like per skew, returns per skew, CX tickets, and all of these other sort of associated costs. Getting down to incorporating shipping one little aside here, we started doing, one of the things you want to do is drive basket size, drive your ALV, and we didn't have $200 shorts, but we could do bundles, and I think a lot of us have tried bundles. The thing about bundles is that you hit a shipping size threshold where you might go from an average of five bucks to ship a package to 10, and you didn't take that into account.

You didn't know you hit that threshold. Maybe you scaled shipping costs linearly and you're like, wow, this is way off. So having that sort of sophistication where you're incorporating both shipping costs as well, especially as you run these different promos becomes very important. So then you get this sort of nut of cost associated with selling your goods. And I mean, you're not incorporating fixed costs. This is all your variable costs, so you get to effectively your variable profit. So it's not incorporating things like your rent or your headcount, things like that, but nearly everything else. So then it helps from the perspective of, okay, I'm the marketing team. I'm the demand driving side of the business. What can I truly control? I can't control the whole p and l, I can control revenue, but that's not really driving the fundamentals of my business. I can control effectively down to, and obviously there are other teams that are taking into account product gross margin and CX ticket costs and things like that. But from the demand side, driving demand side of the business, what are we able to really affect here and help drive the business and get just closer to the bottom line effectively? It's just more of a tie to what the business is actually producing at the end of the day.

Brett:

It's so good. It's so good. And yeah, when you realize that rose is a vanity metric and revenues a vanity metric, and even percentages, margin percentages can be a vanity metric, it's more about what is the contribution margin? How am I getting closer to the bottom line with each sale and getting those daily feedback loops so I can adjust marketing efforts and adjust merchandising to really get there. And so it's so smart. It's great. I love it. Let's talk then about what did you get, and I think sometimes people confess we're definitely this way in the building and scaling of our agency. Sometimes you get stuff right on accident, you did this and you're like, oh, holy cow, we were spot on here and that was an accident. And then sometimes you're very intentional about it and you end up being right. But what are some of the things you just got right early on?

Preston:

Man, I think a lot of this was wasn't an accident or things we stumbled into, but we did try to be very thoughtful around the things that we did. So I think first and foremost, no ad spend can compensate for substandard product. So I mean, you got to start there. Your product has to deliver, has to be unique, it has to meet a need that's currently unmet, and that's relatively obvious, but with how easy it is to create a product and then just start running met ads against it and being able to sell some stuff, there's somewhat of an issue there in my opinion. And obviously you'll get feedback and you can iterate over time, but fundamentally, that's why I'm such an advocate of in-person sales at the beginning because you see that look on people's face, you see if they'll just walk up to your thing and be like, eh. You get so much feedback that

Brett:

You can read the emotion and you hear the language and they're like, there's so much rich feedback there. Yeah, I love that too.

Preston:

It doesn't show up in clicks or sessions. I mean some of it does, but that's one of the things I think that we really focused on. And I think it started because we made the product for us. We were the first customers. The second I think is the fundamental approach that we had to the relationship with our customers. So because we were making product for ourselves and our friends, this was sort of easy, but generally what we were seeing out there that we thought was fundamentally problematic was companies, this corporate entity communicating with faceless customers. And that drove the communication, the communication style, the content that was put out, and we just kind of fundamentally decided to take the opposite approach. We are not a company first, we're just group of people first, and we're developing friendships with other people, and that's it. So then how does that govern what we do and how we behave and how we communicate?

We're trying to build a relationship. So then when you internalize it and you think about, okay, how do I behave in my friendships? What are the things that I do that drive deepening of friendships? What do my best relationships look like? I'm giving, I'm investing. I'm there, I'm dependable. I'm building trust. I'm honest, I'm transparent, all these sorts of things. Whereas if you're a company talking to customers, you don't care about investing in the relationship, you don't care about giving a hundred x more than you ask for, so you can just feel good just throwing an ad in someone's feed that's like, yeah, buy this right now. I don't care who you are. And not that we never put ads in front of people that we're telling them about our product, but it was just fundamentally different approach and it just guided everything that we did, and it really kind of permeated the culture of the org. So I think that was something that really helped because it really helped in building a community. People felt like they were in it with us, they were building it with us, and they felt like they knew us. They did. They really did. And that I think led to a level of closeness and loyalty and trust that you just can't really manufacture if you're doing it another way.

Brett:

Yeah, it's the stuff you can't hack, you can't shortcut, you can't get there in sneaky ways. It just takes time and you just got to do it the right way. Yeah, absolutely.

I want to talk a little bit now about content creation and we will talk ads and inorganic. We can talk about both, of course. I'm going to quote a post you made on LinkedIn recently because I thought this was great. You said that, Hey, there's three parts. There's a three part playbook for infinite video success, part one roller blades, part two, Nerf footballs and part three my favorite mullets. And so this tied into a specific piece of content you guys created, but it was so great. It was so fun. It was so funny. But my question is how do you create content that is on brand but still impactful, where people want to watch it and want to share it, want to comment on it? You guys did that so well, you do that so well at Chubby. So what's your approach? Talk about your approach there.

Preston:

Yeah, I mean, appreciate it. So yeah, obviously that was me being somewhat facetious, but

Brett:

For

Preston:

Us, what we learned is, and it'll be different for everyone's brand, but it's about an approach. So the only formula we really have is making sure we have a tight feedback loop where the learning can take place, and that's all that matters. And I think that's the thing that's universally applicable. And so that's relatively obvious. So then what does that mean? It's having that deep process in place. So what is the quantifiable goal you're trying to achieve? You mentioned one metric that is branded search, or you could even take it a step further and talk about engaged sessions from branded search, right? Because a lot of totally and bounces. So what is getting to two page views or collection view or whatever it might be, however you want to define that, but there's a quality there that we found matters, but what is that quantifiable?

What are you driving for as it relates to brand video content? And it's not that it necessarily cannot have any kind of ACTA or anything like that, but for us, we found that it wasn't necessarily short-term revenue. That was the way that we would measure the success of this stuff, but have that quantifiable metric and then use your gut to come up with two or three different ideas and then just start the learning process. But you have to know what you're going for. And once you have that, you can start the beautiful process of looking at the data, coupling it with your intuition and doubling down on what's working, doing less of what's not working, and just build that machine. And it doesn't cost a lot of money. I mean, you probably saw some of our videos. Production value was effectively one of the things we found was that production value was inversely related to success of the video.

So it was just very much like let's make something that's authentic and that resonates, and that allowed us to have the fast feedback loop where you didn't have to pay up front 50 K to just get one idea to explore you, to explore a lot of ideas very quickly so that the feedback loop could happen. So I think that was the key for us is just having a feedback loop and you got to have that dependent variable that you're optimizing for, and it has to be very clear. Everyone has to know what it is. And then you got to have a method for to the best you can connecting what you did to that metric. And that's it For us, it was rollerblades and nerve footballs and mullets for you, it's going to be something else

Brett:

That's not going to be universally applicable. I mean, maybe

Preston:

That formula,

Brett:

Who knows mullets could work anywhere probably. So let's talk a little bit about, you were saying that, or maybe we talked about this before we hit record, but your brand statement, what you focused on, what drove and inspired everything you did was chubby equals weakened. Now was that something that was just kind of baked in and part of who you were when you started or did you have that crystalline focus in the beginning or did that kind of evolve over time? Talk about how you got to that chubby's equals weekend, and then how did that impact everything you did?

Preston:

Sure. The way we thought about it was that the core is fixed and then around the edges or the narrative evolves over time. And we didn't necessarily know that at the beginning, but the notion of weekend, the way we kind of summed it up was that Friday at five feeling was there from the beginning. We graduated college in 2008, global recession, very stressful. It was hard to get a job

Brett:

The worst time, the worst time possible to graduate college.

Preston:

Yeah, I mean, it was a time. And so there was all this stress around work and getting a job and holding onto your job and feeling nervous about whatever, that whole thing. And so for us, it was just kind of like, man, that's rough. And what can we do there? How can we contribute on that front? And it's, gosh, it's that moment where you leave the cubicle, you change into your weekend where you relax. It's Friday at five, that's the trigger, that's the switch, that's when things turn on. And we just wanted to capture that feeling and that was the kickoff for the weekend. That was the time when you were making memories with your friends, when you felt in control of your time and where you just kind of felt free. And so it was that feeling of freedom that was associated with Friday at five with the weekend and all of these things that were the story that we wanted to tell. And then that just very nicely tied into a lot of the charitable things or the cause things that we decided to associate with around mental health because this stuff matters. It's all a consistent story because ultimately that's what we were trying to is help us have a different approach to life and stress and our work and what's important. So yeah, that was there from the beginning. And with that comes an irreverence, comes a humor, comes a levity that we can

Brett:

Not taking seriously.

Preston:

Yeah, it's the weight that we add to our lives that in a lot of ways can be changed if we just bring a little bit of levity and take ourselves a little bit less seriously. And that's what we were trying to do, the story we were trying to tell, and we knew it had to be a tight story because people are busy. Again, back to that note, humility around the fact that you are not the only thing people are thinking about. You get a quarter second and then they're moving on. So are you going to tell the same story over and over? Are you just going to continue to build that mental availability, that mental association around one very simple thing? You're going to monopolize that niche in someone's mind. It's got to be tight, but it can't be boring. So it's finding that balance. That's the infinite balance.

Brett:

And I think it's one of the fundamental marketing mistakes that so many people make is assuming people are paying attention to you or assuming that people are more interested in you than they really are, and in the beginning they're not interested in you, right? In the beginning, they're not thinking about you. You really got to work and you got to be both succinct and interesting and funny if that fits your brand and all of those things. Now, I saw some videos, and I think this was you guys, but it may not been the videos of the guy on the Zoom call and he's got the green screen behind him, so it looks like he's in his office, but he's really on the golf course where he is riding his bike down a busy street. Was that you guys?

Preston:

Yeah, yeah. In partnership with one of the most awesome TikTok creators. But yeah,

Brett:

So where did that idea come from, and can you talk a little bit about the success of that? Because one that I was just remembering and I watched the other day, which was so great, was a guy's on a Zoom call and he's got a headset on. He's like, yeah, yeah, yeah, but he's actually lining up a putt. He's on a green, and then he sinks the putt and he's like, yeah, exactly. Everybody else on the zoom call is whatcha excited about, but that really captures that weekend vibe. Where did that come from? Was that you guys? Was that this TikTok creator? Was it a collaboration? I'd love to hear the story.

Preston:

I mean, we've been doing videos, making fun of work from the beginning. We would make videos where we would just get dummy laptops and do flipping the tables or throwing our laptops out the window. But again, it all kind of speaks to what is the video, what is the content that you want to see when you just got out of that performance review and you're just feeling like, what am I doing? I just want to flip the table, throw my laptop out the window and just go fishing. And so that was a lot of the stuff that it is such a blessing to be able to even spend time making content like this. I mean, we were the luckiest people in the world to be able to do this stuff. But yeah, just bringing fun and levity to work. I mean, we talked a ton about just the shackles of the cubicle and all these sorts of things.

And so what's the opposite of that and how do you think about, gosh, this is exactly what I want to be doing when I'm looking at this content. And again, that was one of the consistent themes that ran throughout and it's just fun. It's just fun to think about because so many of us spend so much time sitting looking at a Zoom screen, and so then to be able to just sort of say, okay, what is the most creative approach you could take there? Because it's just something we all resonate with and generally sucks. And so how do you turn it into something that is like, oh, this is awesome. This is super fun. I wish I was doing this.

Brett:

Yeah, we've all been on a Zoom call where we desperately wished we were on the golf course or riding a bike or doing anything other than being on the Zoom call. Totally on brand and totally worked for you guys for sure. So other just, and I know there's a million, I know we could talk for hours and hours. I want to also talk about Loop, which is kind of your newer venture, just a second. But any other lessons or takeaways, some of your favorites from the building of Chubby that you want to share with entrepreneurs that are listening?

Preston:

I think one of the realizations that was really helpful for us was just an understanding that 95% of your audience is not in the market for your product at that given moment. So then what does that mean? What are you going to do with that information? And that kind of blew our minds. We were just sort of thinking, man, as long as my CT A is good and I can tweak this language a little bit and I can run all of these variants, and it was kind of like missing the forest through the tree sort of thing, or playing just fundamentally the wrong game. And once we realized that stuff and we're able to start thinking a little bit longer term like, Hey, this is a marathon, not a sprint. We're trying to drive this machine that is this ever increasing percentage of new customer revenue coming through, owned in organic channels and just create this layer cake of resilient based revenue.

I think that's the mindset shift. And I'm not being prescriptive in terms of what you actually do to do that, but just how can we think about our businesses like that? That might be the one thing I want to leave people with because when we were changing our mindset and changing our approach to these sorts of things, and there were a set of tactics that worked for us as we kind of waded through, stumbled through most of the stuff that didn't work, but that really was one of the big things that drove this unlock in not only growing top line, but bottom line profit generation as well. And having gone from a business that wasn't really doing that to doing that, that's all I want to contribute to the ecosystem is how do you do more of that and what are these fundamental approaches and mindset shifts that we think we learned are more aligned with better way to run our business?

And just because it's not as popular or talked about on Twitter or whatever, doesn't mean it's not right. It's harder. It takes longer period of time. The feedback loop is less well measured in platform, but it's the stuff that lays these foundations that helps us build the business we're all trying to build. So I think that's maybe the main thing is just that mindset shift and I'm exploring it myself because it's something that to be silently articulated so that people can understand it, internalize it, and then operationalize in their business. So that's the fun of writing and having a conversation, Brett with you, is just figuring out how to talk about this stuff in a way that actually makes sense to people.

Brett:

And I think we just, a lot of people are trying to solve the wrong problem. They're trying to solve a short-term revenue problem rather than obsessing over long-term sustainable revenue, or they're trying to optimize towards the wrong metrics, roas in revenue versus contribution margin and some of these more sustainable healthy things and trying to drive sales instead of trying to build a brand and building long-term demand. Then of course we got to meet cashflow needs for today and things like that. But shifting the mindset there, it's so good, and if you can successfully do it, you'll be happier. You'll have more fun in business. If you want that exit one, an additional and eventual IPO like you guys, then that's really about the only way to do it. And so really enjoy that. That's awesome. Love it. Let's talk a little bit about loop returns. That's a newer venture. So what's the idea behind that and what is Loop returns?

Preston:

Yeah, I mean this was something that we built for ourselves while at Chub's, oddly enough, and we had no idea

Brett:

Noticing a theme here, right? Building for ourselves first, which is a brilliant way to start a business.

Preston:

Well, thanks can really, I mean, what it has turned into is absolutely fantastic. Jonathan Palmer and the team amazing in building this thing into a great, great company, growing very quickly and really helping the Shopify ecosystem. And then more broadly, non Shopify ecosystems really provide much better customer experiences around this truly bottom of funnel, these experiences that used to be really bad. So I mean, we had a habit of just building software tools, software experiences that solved their problems internally. I mean, if you remember, I don't remember exactly when it was 20 15, 20 16, the returns and exchanges process was rough. I mean, you just think about the back and forth.

Brett:

It was so rough that that's why a lot of people didn't buy online. And apparel being the most challenging, really good shot, this isn't going to fit. And that would just deter. It was so painful to deter people from purchasing,

Preston:

Totally emailing in, say, I want to do a return email back. They send me a photo so I understand you didn't violate the return policy. They send the photo, then you check the policy, then you send back a manual PDF of a shipping label, just so broken. And then the realization, so many returns could have been exchanges and just that the material difference that that can have on your p and l if you're converting a return into an exchange. It just sort of seemed obvious to us that there had to be a better solution. So we built it for ourselves. And then other brands came to us saying, we want this experience. This is so much better than what we have. And we were just like, I don't even know how to think about this. This was for us. Are we a software business? Are we not?

So we stumbled into it and it seemed like it was solving a need that wasn't unaddressed elsewhere, just kind of like what happened with Chubby's just in a different context. So yeah, I mean, put together, spun up a new entity, put a team in place, and they have gone and built an amazing business. It is awesome to see, so proud of the team, and I think a lot of customers are having much better experiences with a ton of brands, thousands of brands because of this. And that's humbling and awe inspiring to be a part of in some small way.

Brett:

So making returns less painful for both shopper and merchant. Such a needed, needed thing. Where can people learn more about Loop returns?

Preston:

Loop returns.com.

Brett:

Easy enough, man. So we'll link to that in the show notes as well. And I do want to underscore, if you've enjoyed this podcast, which I'm confident you have, you need to follow Preston on the socials. That's how he and I connected. I was reading his stuff on LinkedIn. The post about ROAS just got me teary eyed and I was crying tears of joy as a marketer, but your content is really, really good, man. So where all can people follow you? I know I saw you on LinkedIn, but where else are you posting regularly? If anywhere else?

Preston:

LinkedIn's the place, man, that's where I'm trying to do it and spend time and invest and try to get better at it. So just search Preston Rutherford on LinkedIn. There's a little shorts emoji in between Preston and Rutherford, so you know that this is the one you're going to select and follow. But yeah, LinkedIn would be awesome to interact with you, comment on my stuff, give me feedback. I mean, this is a learning process. I'm not here to just dictate stuff. It's searching for truth and trying to learn together. So would love to follow, would love the comments. I mean, let's learn together.

Brett:

And your teaching style, the style of your posts, the style of your education is very chubby esque, right? It fits the mode and the ethos of Chubby, which is fantastic. I really like to hear that what you said, you're focused on LinkedIn. That's what I'm doing as well. I kind of, for a little while I was like, I'm going to try posting on Twitter and I'm going to on Instagram and all these things, and TikTok, which I'm never on TikTok as a user, but I was like, this is ridiculous. I like LinkedIn. That's where I'm going to connect with other brand owners and stuff. So I'm just going to go kind of all in on that and then I may add stuff later. But I think there's a lot of wisdom in that. Preston, this has been an absolute joy, an absolute blast. I have to do it again sometime. Thank you so much.

Preston:

Would love it, Brett, thank you. So grateful to do this with you. It was really fun, super fun conversation. And yeah, I'd love to do this again sometime.

Brett:

Awesome. Keep up the good work on that content and I will keep reading and sharing, and I know other people will as well.

Preston:

Appreciate it, man. Thank you.

Brett:

And as always, thank you for tuning into the show and we'd love to hear from you. What would you like to hear more of on the show? If you'd like this episode, share it with somebody that will enjoy it. And if anyone is thinking about being an entrepreneur or they run AD two C brand or they're a marketer, they're going to love this show, Preston Rutherford. So please share that. Until next time, thank you.

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Episode 259
:
Brett Curry - OMG Commerce

5 Untapped Growth Opportunites

“If you do what you’ve always done, you’ll get what you’ve always gotten.”

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“The definition of insanity is doing the same things over and over again and expecting different results.”

‍

Not sure where I first heard these quotes, but they definitely apply to this week’s episode.

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I firmly believe that to grow like no one else is growing, you must do what no one else is doing.

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In this episode, I walk through 5 growth opportunities that you’re likely under-leveraging or completely missing.

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This is the recording from a recent talk I gave in Austin, Texas, to a group of 1,200 eager Amazon Sellers and DTC brand owners, where I unpacked these 5 growth opportunities.  

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While there are a few cases where seeing the video might be more helpful (watch it here), the audio should still be helpful! 

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I hope you enjoy it.

Transcript

Brett:

At OMG Commerce, we accelerate growth for some of the most loved brands in e-commerce, like boom, native, true earth overtone, and dozens more. If your Google and YouTube ad performance isn't where it should be, if you're struggling with Performance Max, or if you're not scaling like you'd like on Amazon, then we have two ways to help. One, we have amazing resources that are free for the taking, like our top YouTube ads guide with lots of examples, our P max checklist or our Amazon DSP roadmap plus many more, or hit us up for a free strategy session. So go on over to omg commerce.com and click on Let's talk to request that free strategy session or click on resources and guides and pick the guide that's right for you. And now back to the show.

For two hours they ran out of lemonade, they made 200 bucks. Now I was impressed, but also like, man, does this set these kids up to fail? Are they going to think everything is this easy? And so anyway, now my entrepreneurial juices are flowing. I'm like, Hey, we should make cookies and muffins and let's double production. And so all this stuff, and I overheard Sophia, the success had gotten to Sophia's head a little bit, and so she's talking to her siblings and she said, guys, dad is trying to give us business advice. We make more money than he does. And so love Sophia, but her siblings were like, Hey, maybe dad knows a thing or two. So anyway, they kept it going and the success was quite impressive and quite fun.

Well, hello and welcome to another edition of the e-Commerce Evolution podcast. I'm your host, Brett Curry, CEO of OMG Commerce. And today's episode is different because this is a live recording from an event I did in Austin, Texas in front of about 1200 DTC brands and Amazon sellers on five untapped growth opportunities that you are likely missing. This presentation was a lot of fun. I got rave reviews. I hope you enjoy it. I'll talk about three big marketing mistakes that are holding you back. We have the privilege of auditing hundreds of DTC brands, Google and Amazon and YouTube accounts every year. And so it gives us really clear insight into what separates the best from the rest. I'm going to talk about that also. Sure. Kind of a fun and humorous and insightful story about my kids' lemonade stand. As many of you know, I do have eight kids.

I dive into that a little bit. But we get into Performance Max. We talk about a way to look at branded search campaigns that you're probably not doing now. We talk about how to tap into Amazon's number one traffic source and their number one source of new customers and lots of other good stuff. So please enjoy my presentation on five Untapped Growth Opportunities Seller Con, what is up? Hey, I think we should do something really quickly. How many of you guys are enjoying Mimi? Isn't that guy full of energy? Give it up for justice. Mimi. Love that guy. Love that guy. I want him to do all of my intros forever. That guy is fantastic. So I love what Matt Clark said yesterday that just one idea, one strategy, one connection, and I really encourage you to focus on that can add millions of dollars in sales to your business and can change their trajectory of your business.

So my goal is I hope to give you at least a few of those ideas right now. My guess is of these five strategies, these five untapped strategies, you are likely missing possibly all five. Or if you're using them, I bet you're only using a few and I bet you're not fully leveraging them. So I believe to grow like nobody else is growing, you got to do what nobody else is doing. And so that's what I'm going to help you do today. As Justice said, I do run an agency team of 73, 1 of the top spenders on YouTube ads. We manage about a hundred million a year in ad spend. So I got a lot of data, got a lot of data to pull from as I share these ideas and these strategies. Got a full Amazon department, so I'll talk mostly about D two C growth, but I'm also going to mix in some Amazon growth as we go.

We do Amazon DSP, one of the fastest growing agencies there, and so we're going to get after it. I also work with some great brands like Native deodorant and Overtone Boom, my city, Joseph Organify, a bunch of others. And so I had the privilege of working with some pretty great folks. But in addition to running a large agency, what I'm also known for is just having a whole bunch of kids. So this is my wife and I. If you don't have the time to count, thank you. Yes, thank you. Yes. Do you have a lot of kids? Okay, kids are great. Kids are great. So we have eight and not a blended family, no adoptions, just old fashioned growth. And so if you want to learn how to scale a family or scale a business, I'm potentially your guy, so I'll talk to you. But people always look at this picture and like, oh man, your kids are adorable.

And I'm like, yeah, that's because you don't know. But in all seriousness, we love it. We wanted a big family, then we just overachieved. And so this is what we ended up with would not change. It would not change it for anything. It is chaos, but it's beautiful chaos. And I think that's what it's like being an entrepreneur, running a brand, managing all these things, inventory and ads and all this crazy stuff. Employees and emotions and stuff. It's beautiful chaos. And so that's where I live. I want to tell a quick story to get us started, sets the stage for where we're going to go, and it's kind of cute and entertaining. So that's my daughter, Sophia. If you're thinking she's a little sassy, you are correct, you have a good keen eye. She gets it from her grandmother. That's my mother-in-law, Tammy. And so a few years ago, the kids came to me and they said, Hey dad, we're going to open a lemonade stand.

Now we don't have the worst spot for a lemonade stand, but it's not the best. We live on five acres. We do have neighbors. The road in front of our house is relatively busy. People don't slow down for our driveway unless they're coming over to visit. But I'm an entrepreneur. I love the life lesson. So I'm like, yes, let's do a lemonade stand. Now, this is not a picture of the lemonade stand. I was so uninspired by the lemonade stand that they did produce that I did not take a picture. Apparently it's like table and an umbrella and handmade signs, cute lemonade stand stuff. So I remember doing stuff like this in my neighborhood and I don't know if I just had all the realists in my neighborhood, but they're like, Hey, we can't give these kids expectations too high. Here's a nickel for your lemonade.

We made like 50 cents or something. So my kids get started on the lemonade stand and two minutes in they set up a shot for two minutes. Sophia comes running in and said, dad, someone gave me a $5 bill and didn't ask for change. I'm like, cool, alright, well that's probably your day, so that's good. Get after it. She comes back a little later, dad, I got a 20. And then in one change I'm like, this is interesting. What are you guys, what does the sign say? What are you advertising here? And then later it's like 40 bucks. And this just kept going for two hours. They ran out of lemonade, they made 200 bucks. Now I was impressed, but also like, man, is this setting these kids up to fail? Are they going to think everything is this easy? So anyway, now my entrepreneurial juices are flowing.

I'm like, Hey, we should make cookies and muffins and let's double production. And so all this stuff, and I overheard Sophia, the success had gotten to Sophia's head a little bit. And so she's talking to her siblings and she said, guys, dad is trying to give us business advice. We make more money than he does. And so love Sophia, but her siblings were like, Hey, maybe dad knows a thing or two. So anyway, they kept it going and the success was quite impressive and quite fun. So the reason I share that story is I believe as we unpack these five strategies, you could take Sophia's approach and be like, eh, I'll just kind of do what I'm going to do and you'll achieve some success. Or you could go all in on these things, really absorb the advice. And I think you can take it to some pretty impressive levels.

So we're talking mostly about YouTube and Google and some other related stuff, but want to take just a minute, set the stage. Talk about how we've never seen anything like Google in the history of marketing. So every day, a billion shopping experiences across Google. So that includes YouTube display, Gmail, search shopping, all of that, a billion shopping experiences every day. 86% of people touch Google in their shopping journey. Even if they're going to buy on Amazon, they still often touch Google on the way. And let's talk YouTube for a minute. 90% of the US population watching YouTube talk to your kids, talk to your parents. They're all using YouTube. And what's really crazy is that the average session duration is about 42 minutes. So people are spending time on YouTube. It's a great place to interrupt and share your message and drive new customers. And primetime is becoming really personalized.

How many of you guys watch YouTube on tv? Not YouTube tv, but the YouTube app on the television set? Yep. Yep. So that is the fastest growing platform. So I bet if you observe your kids, like my teenagers, if they're watching TV in the evenings, they're usually watching one of their YouTube favorite YouTube creators. So that's the fastest growing platform. And more people watch YouTube during prime time than any cable network. About 70% of people say they bought something that they first learned about on YouTube, and about half of people that are on YouTube are bouncing back and forth between YouTube and search. So they see something interesting on YouTube now they've got their phone and they're searching for that and exploring a little bit more. So the two paired together really nicely. Now, quick case study, I'll share more as we go, but Boom was largely a Facebook driven business.

So mostly acquiring new customers from Facebook. We launched YouTube top of funnel, really beefed up what they were doing on Google and grew top line 30% and achieved about 200% growth on Google. Now the combination of Google and YouTube is their number two source of new customers and it continues to grow the brand. So before we get into the five tips, I want to talk about three mistakes that could absolutely trip you up, hold you back, squash all of these five strategies from working. So three mistakes, let's dive in. First one, forcing campaigns or channels to work outside their strengths or expecting channels to work outside their strengths. So every channel is different. YouTube is not search, display is not shopping. They're all different and they have different strengths, but on occasion even as well-meaning marketers, we can end up like this guy. Now, I don't know what this guy was thinking.

I don't know if he just convinced himself this is okay to do with a Lamborghini. I don't own a Lambo. I don't pretend to own one on Instagram either, but I know there's some Italian sports car lovers that weep when they see this picture. This is not okay. And so I don't know if he just overextended himself and he is like, I got to make this Lambo pay for itself. But that doesn't work, right? That's not cool. Let's talk about YouTube and Google shopping for a minute. How many people are running ads on Google shopping? That's actually not very many, so that's good opportunity for you. So Google Shopping is to Google what sponsored products are to Amazon. They just work, right? This is like the Toyota truck of advertising. You mistreat it, you don't change the oil, you don't care for it. It's just going to work, right?

You can optimize and make it better, but it's just going to work. Now, YouTube on the other hand, is a little trickier. It's like the Italian sports car. You got to really take care of it. It's going to need some maintenance. You got to love it a little bit. You can't treat it like a Chevy Silverado like the guy in the previous image, but it can unlock scale and speed and growth. Give you a couple examples. Some buddies of mine ran all the media for Purple Mattress and they grew to over 150 million in sales top line largely from YouTube. And they were not VC backed. They did this all on their own. Dr. Squatch love this brand. They grew from 3 million to 150 million a year run rate, largely driven by ads. I know the agency that does their Creative Raindrop agency, shout out to the guys there, but huge growth there.

We helped with YouTube there, but they grew over a hundred million in sales largely from top of funnel ads. Okay, mistake number two, not understanding that campaigns work together. This is a team sport. I love sports, I coach basketball. We want to look at individual statistics. How are individual players? How are individual campaigns performing? But the collective performance is what matters. It's a team sport. So if we look at the shopping journey, someone goes from trigger to now they're shopping and evaluating, trying to decide what to buy, whether they're exploring, looking at all their options or evaluating going deep on something, we've got a chance to interrupt with the right message at the right time. But all of these things work together, so know that it's a team sport and measure accordingly. And then number three, not getting the proper mix of AI plus smart humans.

So we're not going fully auto, not fully black box where it's like we're just trusting the machine to do whatever it wants. But we're also not saying fully manual as well, because when you've got the combination, you've got smart humans driving good strategy, you got more leverage, more speed, it just works. And the cool thing is Google has had the best AI scientists since 2015. So the backend of their smart bidding and their targeting and their in-market audiences and cool stuff like that, AI is powering that and it's really, really good. So let's dive in five untapped growth opportunities. We'll go quickly, but we'll still spend enough time. First one is performance Max. Show of hands, how many of you guys are running performance Max ads? I see Seven hands or something like that. Okay, great. This is a pretty divisive topic. I'm in a lot of e-commerce forums and I hear people call this performance meh instead of Performance Max.

And so up to date, we've spent about five to 6 million on this platform and with almost overwhelmingly positive results. Now, when I first learned about this platform, I actually, I hated the idea. I'm a Google fan, we're a Google partner agency. I go to the Google offices frequently. I talk to people there a lot. I'm very transparent with my feelings. I said, I hate this I idea. So basically what it is, all seven of these channels, search shopping, Gmail, display discovery and maps. If you're local all in one campaign. So usually you'd have to set up seven different campaigns to reach these channels. But with this, you give Google your assets, your ads and your headlines and things like, and they'll run ads in all these channels. So when I first heard about, I thought this is terrible. I thought this is going to be no control, no room to be creative.

It's just not going to work. But to my surprise and delight, there actually is a lot you can do with these campaigns. A lot. You can manipulate in a lot of ways, you can be creative. And so we'll break that down. So why did Google create this? I believe it's primarily for these two reasons. One, this is the perfect environment for AI and machine learning to go wild because now the machine can do all that it wants to do across all these channels and across all these shoppers, and they'll find you new customers. Also, Google has a lot of unsold inventory. I know these are pictures of boxes. I'm actually talking about unsold ad inventory. So the Google Display network covers like 90% of the web. YouTube has basically unlimited inventory. And Google is saying, Hey, you don't really know how to utilize YouTube and you don't really know how to utilize the display network, but we do.

So give us your assets and we'll take care of the rest. However, you can't just say, oh, here's like a sloppy headline, or here's kind of a lean video and machine. You're magic. You can find people, people will buy. No matter what I say, that is not true. So it requires your best assets. So on the left there, that's true Earth Laundry detergent strips, we helped them launch on Google and on YouTube, that video scaled to over a hundred million profitable paid views and just continues to drive new customers. But in the middle, even the og even search search ads that a lot of people forget about because they're not sexy and they're not new. Those work. But you got to have a good headline, a headline that grabs people and a description that makes people want to click. And so you've got to still have good assets and if you want to succeed on the display network, you got to have good images.

But most of Performance Max is actually this Google shopping. So 60 to 80% of your spend will be in Google shopping. And so you want to optimize your images and kind of the way they look. That's pretty appealing, right? That's overtone, coloring, conditioner makes you want to click. Alright, couple of results. So this is a subscription product, large LTV, great stick rate. So they were getting just right about a two x return on ad spend that may sound low to you. That was great for them. We quickly scaled performance Max from zero to about $10,000 a day and they were thrilled finding new customers, automotive client, automotive accessories, big shopping client spent a lot of money on Google shopping. So when we switched to Performance Max from their old shopping campaigns, we improved impressions and clicks and volume and improved roas. So more sales at a more efficient return.

Now this part's a little bit nerdy. I'll go kind of quickly through this. If you're primarily growing on Amazon, you can't run feed traffic or Google Shopping traffic to Amazon. You can search, we'll talk about that in a minute. But you can actually remove the feed from your performance Max and then you can use Performance Max to grow directly on Amazon. That's more advanced. I wouldn't suggest you start there. A couple of bottom line things, if you're running Performance Max and it's not a top campaign for you, then something's wrong. If it's not driving the most conversions and likely the best row as then something is wrong. And so it ultimately comes down to these three things. Success on performance max, right Audiences. So Google knows who to target, who your ideal shopper is, the right assets, the right creatives like we talked about, and then the right campaign structure.

Now we could spend all day, we could do an entire course on Performance Max, but here's the good news. I actually did make a course and you get it for free. And so that's something that we are giving to everybody. So if you're like, I don't even still understand Performance Max. So we do like a three hour training, we sell it for 400 bucks, that's not like a made up price, that's what we actually sell it for and you get it for free. So it's going to be emailed to you afterwards. There you go. So Performance Max, I'm telling you it's the future of Google Ads. You got to dig in. So enjoy the course at OMG E-Commerce, we accelerate growth for some of the most loved brands in e-commerce like boom, native, true earth overtone, and dozens more. If your Google and YouTube ad performance isn't where it should be.

If you're struggling with Performance Max or if you're not scaling like you'd like on Amazon, then we have two ways to help. One, we have amazing resources that are free for the taking like our top YouTube ads guide with lots of examples, our P max checklist or our Amazon DSP roadmap plus many more or hit us up for a free strategy session. So go on over to omg commerce.com and click on Let's talk to request that free strategy session or click on resources and guides and pick the guide that's right for you. And now back to the show. Next one, Google to Amazon. A lot of people don't know this, but Amazon's number one source of traffic is Google and Google's largest advertiser, the company that spends the most money on Google ads is Amazon. And so if Amazon is spending money on Google ads and you are not, then that means they know something that you don't, right?

Which is this their millions of people every day that search for products on Amazon, but they do it on Google. It doesn't make any sense really, but that's the way it works. A lot of people think the internet begins with Google. That's just where they start. That's where they go to make a search. And so this is just a snapshot of people searching for mattresses. Mattresses, Amazon, over a million searches there. Now, a couple of benefits. If you send Google search traffic to Amazon, we know that Amazon loves external traffic. Amazon loves it when you send traffic that wasn't already on Amazon to Amazon, especially if it converts. Now if you're like us where we're running sponsored products and sponsored brand and sponsored brand ads, we're running DSP for remarketing, then you put Google to Amazon in there, it just makes everything better. So Google to Amazon is a very effective little addition to what you're doing.

Now I want to show an example. So this is the Google search suggest. So I type in protein powder and then I stopped. And you see the number one suggestion is protein powder. Amazon. That's what Google thinks. I'm probably going to type next protein powder on Amazon. Now, if you were to click on the ad, if Amazon was running an ad for that keyword, which they usually are, and you click on that ad from Amazon to an Amazon page, where would you land? What page would you land on? Well, you would land on a page kind of like this, a page that's littered with ads, right? All these sponsored projects. So Amazon's playing a brilliant game, guys. They're paying for clicks on Google, then they're sending people to a category page where they're running their ads and they know people are likely to click one or two or maybe multiple ads are getting a lot of their money back.

But the issue there is your traffic's going to a page where all your competitors hang out. So if you control the ad, if you run the ad, which you can do, and then you can send people directly to your storefront or directly to your product listing, now you've got the chance to really sell that shopper. Now, this may not be a complete game changer for your business. We have some brands that spend a couple thousand a month on Google to Amazon and it's like a nice little incremental bump. We have other brands that spend a hundred, 150 a month on Google to Amazon, and it works, right? It grows ranking, it grow sales, it just works. So Google, Amazon, a great strategy. Strategy number three. This is one that's gotten a lot of bad press lately. Again, I hear a lot of people getting angry, getting upset, getting visceral about this one.

But branded search, some people saying, I will never pay for my own brand name. I've already earned that. So I'm not paying Google, I'm not paying Amazon for my branded keyword. But I think there's maybe an alternative perspective. Love this quote. This is from Mark Pritchard. He's a guy from p and g and he said, Hey, one of the best ways to measure our success is by the number of people searching for our brand. And when that happens for you, when you're no longer just converting sales off of sponsored product ads, but people are looking for your brand name, they're keying in your brand to Google or to Amazon, that's a really special time. You're no longer just selling stuff. Now you're a real brand. And that's where real value comes in later, bigger exits, bigger momentum, lots of good stuff happened, but I don't think you should just go nuts on branded search.

So how many of you guys think branded search is a waste? Like, well, I'm not going to say that now. How many think branded search is maybe just the necessary evil? Okay, how many? You don't want to raise your hand. Sweet. Okay, awesome. So this is the way we do it. I don't know any other agency that does it this way. This applies to Google. We like to separate brand. So we like to think about, hey, if someone's never done business with us, if they've never bought from us, never shopped from us, we're treating that like a new customer. So even if they're searching us for by name, searching for us by name, they saw a YouTube ad, they saw a Facebook ad, they're searching for us by name, but they've never bought before. I want to make sure I'm showing up for that person because there's no chant, there's no guarantee they're going to buy from you.

You're not Nike, right? There's no guarantee you're going to close that sale. So for new customers searching for you by brand, we want to target them. If it's someone who's shopped with you before or they've bought from you before, maybe we don't bid at all or maybe we just bid for efficiency, but we do want to show up for branded search. It is a bit of a necessary evil. You also want to watch that branded search grow as you do cool organic things. You run YouTube ads or Facebook ads, you can see that branded search grow, which is really important data. So we like to separate the two. Alright, growth strategy number four, remarketing and loyalty campaigns. Remarketing. This is something that everybody is doing, but everybody is pretty bad at. We audit hundreds of accounts every year and remarketing is usually there. It just usually sucks.

And so what we recommend here, and I'm going to quote Dan Kennedy again, Devin mentioned this yesterday, but it's a really good quote. The company that can afford to spend the most, not the least, but the most on ads wins. Now the reason for that, this is not advice to just start blowing money or spending recklessly or just spend baby spend, that'll all come in. But the idea is, are ad costs going up or down? They're going up. Is competition going up or down? It's going up. The strategy of let's spend less overtime on ads probably isn't a good strategy. Probably isn't a good long-term way to build a company. But if you're better at remarketing, better at closing people that visit your store or visit your detailed pages on Amazon, then you can be more aggressive at the top of the funnel. And if you're better at getting people to buy more and more often, you can spend more at the top of the funnel.

So a few things we like to do, reorder campaigns, that's where we look at, hey, if someone should buy every 30 to 60 days and they haven't, let's remind them. And so here's an example, live bearded, awesome brand. So if they haven't bought their beer product in 30, 60 days, we're going to run an ad across Google encouraging them to buy. I also love this bought X, not Y. So if someone has bought our moisturizer but they haven't bought our mascara, maybe they don't know what we offer, maybe we emailed, maybe they didn't see it. So we're going to run an ad for them promoting our mascara. If they've purchased moisturizer, this is usually one of the most cost-effective campaigns out there. Highly recommend it if you bought beard products, but not a beard trimmer. We'll say the beard trimmer. Alright, number five, we're going to wrap up right here.

So YouTube, top of funnel. I love YouTube ads. I've been talking about YouTube since 2017. Quick show of hands, how many you guys are running YouTube ads? Not YouTube organic, but YouTube ads. Okay, yeah, that's like the fewest hands of anything yet, which makes sense. YouTube is a little bit different. It's not the easiest nut to crack. YouTube ads are just slightly different. A couple things. One, you have to say enough in your ad. So it's not like Facebook where maybe the video can just be the scroll stopper. And then you've got text above the video to really do the selling and convincing. With YouTube, the ad has to do everything right, the ad has to carry the day. We found as the sweet spot, like the ideal link of a YouTube video if you're trying to get conversions is a minute and a half to three minutes.

Now we've seen as low as 45 seconds work. We've seen as high as seven or eight minutes for an ad work, believe it or not. One exception is YouTube shorts and we're seeing a lot of success on YouTube shorts. Those have to be under 60 seconds. But in general, that's the sweet spot. Important thing to keep in mind is that the story, what you say, how you say it, how compelling are you, how interesting are you? What's the pace of your ad that's more important than the production value. So you don't need to go out and spend 20, 30, 50, a hundred grand on an ad. We like to tell people, dial in the message first. Make sure that you've got the right hook, the right offer, you're targeting the right audience with a simple ad and then you can begin to iterate. But what's really, really cool, so YouTube is maybe hard to dial in, but once you find it, once you find the combination of ad audience campaign structure, we've had the same ad, we've seen this for native, for boom bunch of others.

A winning ad can run for a year or more, same ad. And a lot of that's because Google's audiences or YouTube's audiences refresh all the time. But this isn't like TikTok and I'm a fan of TikTok, but it's not. YouTube isn't that creative hungry once you find things that are working. So I'm going to show you a couple of ads, won't play all of them, but I want to show you a couple ads that have done really well on YouTube to illustrate the point. So this is overtone color depositing conditioner. Let's give this a watch.

Brett:

Here we go. This is insane. This is so bright. It doesn't really matter what your hair type is. A product like this is going to work for you no matter what. Today I am dyeing my hair for the first time with overtone. It's a semi permitted color depositing conditioner. It's a vegan, it's moisturizing. It's really, really easy to use. I'm going to put my hair in like six sections. I applied it on my dry hair. You want to make sure that you are fully saturated.

Brett:

Okay, so that's good. So let's talk about that for a minute. One, I love the energy. It starts with the girls saying, I'm going to color my hair today. It shows pictures of guys and girls with the product in their hair, pink, green, blue, whatever you're looking for, you can go gray or brown too. And so if you're thinking I'd kind of like to do that, now you're seeing people excited and you're seeing people doing it. It shows that it's easy. It shows that it's healthy for your hair. It shows it's vegan and cruelty free. It just makes it seem like I could do that. And then it shows a quick walkthrough of how to do it. Now that did have some production value, but those were mostly real customers and those were mostly influencers. And they were able to get those videos, chopped them up, add some fast-paced music, add some fast-paced cuts. And that ad is cranking. Now this one's a little simpler. This is for live bearded. Live bearded has some higher production quality videos that we run to, but this one is super simple. So I'm going to show a little bit of it. You could recreate something similar to this. So here we go.

Brett:

Without products, with

Brett:

Products before, products after products,

Brett:

My beard without products, my beard with products

Brett:

Without products, with products,

Brett:

Without products with product. If you're considering trying look beard at products, I want to take just a couple of minutes to walk you through these products. Demonstrate first.

Brett:

So super simple in that basically you you're just seeing before and after. So without product, with product, how simple is that? But it illustrates the point. They look better, they look put together with the product in their beard. And then Spencer, he is one of the owners, he just shot that in his bathroom with an iPhone. Here are three ways to adjust your beard care, your beard grooming sequence, simple ad and it works. And we've been running that ad forever. Now, a couple case studies, they got a free bonus and then we'll wrap up. So a large haircare brand, we worked with them. They were a large six figure spinner on Facebook, did TV ads, could never get YouTube to work. And so we worked with them, we helped them modify the creative, we revamped the campaigns and then grew that into their number two source of new customers.

So outpacing everything except Facebook. Now we had another brand, and this is where I want to tie in a couple things related to Amazon really quickly. So we had another brand and they were a large spender on YouTube, but when iOS 14 hit, they paused YouTube because they had to figure out tracking and stuff. And we were also running all their Amazon. And so when they did that, when they paused YouTube over the coming weeks, we saw that branded searches, searches for their brand name on Amazon dropped in half. And we since have gotten them back. They're running things are great. But during that process, YouTube went down. Amazon went down because Amazon, Google, YouTube was driving Amazon business. Now I'm a big fan of infomercials. I don't know what it's about. I love 'em. I remember the Ginsu knife commercials from the early, I think they're actually from the eighties, but I actually did a great podcast with my buddy Jordan Pine and he's like a veteran of the direct response TV industry.

So we talk about this, but if you've ever wondered how do those products work, what's the math behind these products? Because these products, whether it's like a potato peeler, like the tack light, you run over with your Humvee or whatever it is, Ginsu knives that cut through bottles and stuff, how does that work? Because pushing the phone number, like, hey, call in and get this whizzbang offer, or they mention a website or whatever. This is actually the stat. So only about 20% of people call in. Makes sense, right? Need millennials out there. Of course I'm never going to call, but you're probably not going to buy from an infomercial either website. Only about 30% of people do that. But 50%, and this is not mentioning Amazon, this is just running an infomercial. 50% of the sales will come from Amazon. Quick stat, we noticed this with true Earth laundry detergent strip. Once we got to a little over 50 KA month in YouTube spend, we started to see everything else. Lift shopping went up 300%. Search and remarking went up 80%. And so the direct click and buy from YouTube was quite small, but it lifted everything else. And so if you're running YouTube, you are going to see Sales Boost on Amazon.

Last thing, I think the best way to learn is to watch other great ads. This is a guide I put together some of our favorite YouTube ads. I break down why they work and kind of the formula behind it. This does not require an opt-in. This will get you right to the PDF with links to the ads so you can watch those and learn from them and be inspired by them. And with that, that's my podcast, that's my email address. I'll be around. I would love to chat. You guys have been fantastic. Thank you so much.

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Episode 258
:
OMG Experts - OMG Commerce

Cyber 5: How The Best Brands Win

How can you make the most of the Cyber 5?

It all comes down to strategy, planning and execution.

Ideally, you’re planning all year and working on the perfect strategies to attract new customers and inspire existing customers to buy more. 

But planning is only part of the success equation. Making adjustments and tweaks based on what’s working and what’s not is also crucial.

On this episode, I’m bringing on a star-studded cast of OMG experts. We talk about Black Friday and Cyber Monday success from essentially every angle. 

We talk about successful email and SMS promotions. We cover do’s and don’ts for maximizing Amazon profits and share insights for getting the most from Google, YouTube and other channels. 

My guests:

  • Bill Cover, Google Strategist
  • Nick Flint, Email Strategist
  • Trenton Bodenbach, Amazon Growth Strategist

What we discuss:

  • Top BFCM mistakes merchants make.
  • What you need to plan ahead of time and lock in vs. what you can change on the fly during the Cyber 5.
  • Or favorite Cyber 5 growth strategies.
  • Protecting margin while still driving purchases from customers who expect deals. Can you make a 10% off deal irresistible?
Episode 257
:
Peter Awad - White Stone Coaching

Grow Your Leadership, Grow Your Business

I believe in the who, not the how, for more business problems and opportunities.

Want to grow faster?

Need to solve a nagging problem?

Rather than thinking about how to solve it, you might want to start with who.

But that only works well if you have strong leadership skills. As your business grows, you’ll be doing less and leading more. 

My buddy Peter Awad joins the show today. He’s an eCommerce vet. He launched his first online venture in 2000 and co-founded Mission Meats, an online snack company, in 2015.

Now, Peter’s passion is coaching and building great leaders. 

I’m a big believer that culture and leadership will trump strategy any day of the week.

Here are a few of the things we discussed:

  • What’s it like on the other side of me?
  • Knowing yourself first.
  • Radical candor or ruinous empathy.
  • The nothing to lose, nothing to prove, nothing to hide approach to discussions.
  • The fact that the life you want, the business you want, is on the other side of a few hard conversations.
  • How to lead vendors, freelancers, and agencies better.
  • How to have better meetings.

Transcript:

Peter:

If you walk into a meeting, whether it's going to be a tentious one or not, doesn't matter, or this conversation we're having right now, and you repeat that to yourself and you believe it, I've got nothing to prove, nothing to lose, nothing to hide. You show up completely differently. You show up authentically you. And one of those things for Johnny in this example would be like, I don't need people to like me. They don't have to like me. I would like them to like me, but I don't need to worry about losing my likability. What's more important is that I do what's best for the business and do what's best for this person across the desk. For me,

Brett:

Culture eats strategy for breakfast. What's up? It's Brett Curry here, CEO of OMG Commerce, host of eCommerce Evolution podcast. And I'm so excited about the show today because we're talking about improving your leadership. I do believe that culture is more important than strategy because even the best strategy, if poorly executed or if you've got a toxic culture, you won't be able to execute on what you want to do. And I believe culture is totally driven by leadership. So you want better growth, you want more profits, you want to have more fun doing what you do than you need better leadership. You want better vendor relationships, better agency relationships. You need to improve your leadership. So my guest today is Peter Awad. He's a friend of mine. He's the co-founder of Mission Meets an online snack company. He also started his e-commerce group back in the year 2000.

That's right, the dawn of the internet. He started his first e-commerce gig. Now he's the founder and head coach of Whitestone Coaching. And so we get into what does it mean to lead better? How do I lead myself better? How do I know myself to lead myself better? How do I lead better meetings? How do I lead vendors and others? We get into lots and lots of good stuff because here's what I believe. As your business grows, as my business grows and I've got a team of about 70, you're going to do less and lead more. And so there's going to be some effective cools, some tips, some strategies here that I think are really fun and really helpful. So please enjoy my interview with Peter Awad. I'm here with Peter Awad of White Stone Consulting Group. Peter, what's up my man? Thanks for coming on the show and I think this is round two for us on the podcast.

Peter:

It might be so you didn't learn enough the first time,

Brett:

A slow learner man, you had to come back and you keep trying to drill it into my thick skull.

Peter:

No, no, I meant more so you didn't learn the first time to not have me back. That's what I meant.

Brett:

I think either one of those could be true, right? So yeah, I like it, man. First of all, just a good friend, love chatting with you, love hanging with you. Any chance that I get Love your e-commerce background and then also what was you're doing now in terms of coaching. So we're going to talk today about being a better leader and to kind of set the stage for that. I think that's important. A lot of times we get tactical on this podcast. We'll get a little bit tactical today too, but I'm a believer, especially as my business grows, but I think this is true for anybody as their business grows, the answer to any problem, any question, any issue is often more about who than it is about how. So instead of solving how do we come to a decision here or solve this issue, it's more about who do we bring in, who do we consult with? Who is going to be the one to lead this or solve this? And so that really all pivots back to us as leaders. How do we grow and become better leaders? And that's what we're going to talk about today. But first off, we'd love to just talk a little bit about your e-commerce background. You'll be able to connect with people, they'll realize, Hey, Peter is my people. Talk a little bit about running an e-comm brand, the challenges and anything in that that led you to the current path now where you're so passionate about leadership.

Peter:

Yeah, I mean, just quick backstory, I started e-comm in 2000, the actual year 2000. So I'm like the old man in the room. Yeah, started in automotive parts, did a bunch of other,

Brett:

The dawn of the internet.

Peter:

The internet was around then. Yeah, it was around then. So I think that doing that and then starting Mission meets D two C snack food brand in 2015. So just had a lot of experience around e-comm and just the life of an e-commerce owner, which I think is unique in many different ways. But what led me to this is just realizing that I didn't know what it was like to be on the other side of me. I think a lot of times as founders, we find ourselves in a leadership position. We didn't plan to get there. You start typically you're one man band or one woman band, and then you add a couple of people and then before you know it, you kind of find yourself in this leadership position. Maybe you don't call it that, and you're severely outgunned. You don't have the tools or you don't have many of the tools that you need in order to figure out how to lead effectively and efficiently a team or a group of people.

And so I just got off the phone with a new client just right before this call, and he's 57 years old and realizing, man, I've been running a business for 20 years, an e-commerce owner running a business for 20 years, has a fairly large team, and is realizing I don't have the tools that I need in order to lead these people effectively. I've just been doing what I'm doing and it's kind of morphed into what it's turned into and I'm defaulting to certain behaviors and tactics that maybe aren't the most effective. And so that's kind of where I found myself at. And it's a really hard mirror to hold up. Like, wait a minute. I thought I was great. I thought I knew what I was doing. And then you realize like, oh man, I kind of don't look so great some of these days and it's not physically looking great. It's like I don't communicate that well or I'm not communicating effectively or efficiently. And so that's what led me down this path to learning more about leadership, learning more about myself as a leader, learning where I was missing the boat and then improving upon that.

Brett:

It's so good. And I love that perspective of seeing what it's like being on the other side of me. And that's one of those statements that can be a little bit scary, a little bit scary sounding, what is it like to be led by me? And a lot of us, and myself included, we've been leading companies or we've in the executive position, president, CEO, founder, whatever for so long, it's pretty hard for us even to put ourselves in the shoes of someone who's being led. And there's been a few situations recently where I've been talking to groups and I'm like, I wonder, do I ever show up like that? Or is this what it feels like to be led by me? And it's one of those things that it's kind of hard to have that real objective perspective on what it's like to be under your own leadership. And so really enjoy this process. And I'm a big fan of Craig Rochelle, Craig Rochelle leadership podcast, but he says, everyone improves, everything gets better when the leader gets better. 100% agree with that statement. So let's maybe start here. Let's talk about what's the difference between a really good leader and just a mediocre leader?

Peter:

I think that it goes back to not knowing what it's like to be on the other side of you. And big part of that is understanding what you're strong at and then particularly what you're weak at. What's the shadow of your strength? Because you're a hard charger and you have a huge bias for action and you can get things done if that's your personality. A lot of times you steamroll people in the process. I'm talking about myself. I'll steamroll people in the process or I won't slow down long enough to hear what they have to say and understand why the ideas maybe not so great. So we put people through an assessment through our program called Giant as part of Whitestone, and it's called Five Voices and everybody's got the five voices, but they can be in different orders. And so I'm a pioneer connector.

And some of the terminology we use to give you some context is we have triggers and weapon systems. And so a trigger is something that somebody will do or say are the types of people that will then cause you to deploy your weapon system. So my weapon system is a grenade launcher, meaning I will just blow up a situation, person, place, whatever, not physically, but you understand. And then triggers. My triggers are time wasters, people threatening my vision, people perceived as incompetent people threatening my competency. And so it was so revealing, Brett, for me to learn that like, wait a minute, if you're like, Hey, Peter, pump the brakes, I don't know about that idea. I would feel like you're wasting my time. You must be incompetent. You didn't understand the vision the first time. You're threatening my incompetence telling me that I need to slow down and then I'll just blow you up.

And so that's the difference between a good leader and a bad leader. A good leader will know, okay, I have a tendency to do that. And so when you tell me to pump the brakes and you're a guardian, which means you like to dot i's and cross t's, I'm prepared for you. I'm going to bring an idea to Brett and I'm going to be prepared with more data. I know he's going to ask me some really hard questions. And it's not because he's threatening my vision and it's not because he's incompetent. He has a different skillset and he's going to protect the business and protect the vision. And he's actually not an adversary. He's an ally. He wants this to succeed. And because of that, he's going to ask the necessary questions. Now that is an effective leader, I know what your personality type is, and I know mine and we can now work it together.

And this ties back to true ROI of learning this stuff. Most orgs are barely over 50% efficient. Why? Because I might spend an hour arguing with you and really treating you. You're an idiot, and I've done that when instead I'm prepared for you. And we can cut through all that and I can share the data that I need to share so that you can understand and so I can understand where you're coming from and maybe we won't do the idea. It turns out it's actually stupid idea, which is usually the case. And so that's a difference between a good leader and a bad leader. Just one example,

Brett:

This is so good, Peter, because to have a successful organization, you need people with different personality profiles, different ways of attacking the same issue, and finding ways to work together. Because let's face it, if everybody was like Peter, if everybody was like me, holy cow, it'd be a wreck, right? Organization would be a wreck because for me, and I'm more a visionary, high level, pretty fast in a lot of things, but not great with details. And so certain details would just get dropped, missed, it would be a mess. But if we don't understand ourselves, we don't understand the people on our team, then that's going to lead to issues for sure. A couple things that I'm curious, I haven't gone through your test, so I don't know some of the terminology, although it's totally resonating. Have you done Peter Lencioni's, five Working Geniuses?

Peter:

I have not, yes. Have you heard of that? Yeah. Pat Lencioni. Yeah, I have not. I've heard really, really good things. Have you?

Brett:

Yeah, it's really good. And so he's got these acronyms, I'm sure it lines up pretty closely to what you are talking about, but it's an acronym that spell widget, but it's Wonder Inventor, discerner, galvanizer, enabler, and then Tenacity. Anyway, as you look at those, and it's kind of the same thing where you got one or two strengths and you got some competencies and you got some things that you're kind of deficient at. Probably for me, I'm a wanderer and a galvanizer, so I do like to wonder. So it's more like if you're solving a problem, you're like, Hey, what if this might actually be really cool? Lemme think about this big picture thing. I enjoy doing that, but I also enjoy rallying the troops. And what's interesting is sometimes when you face a problem, you just go back to those strengths. If there's a problem, I want to reinvent things. I'm like, Hey, we wonder about this. Lemme wonder about that. And if someone's really just a tenacity person, let's just get stuff done. Problem shows up. There's one charge through it. So kind of understanding how you operate and how your team operates, man, it's a game changer. Game changer, because you go from communicating in a way you're wrong as how we might lean into that to be like, Hey, this is a different perspective and we need this perspective.

Peter:

That's right. You're exactly right, man. And I think that it's so incredibly powerful because just like you said, a whole group of Peters, a whole group of just Bretts, it's going to be disaster. You're going to be running through walls as fast as you can, but they might be the wrong ones. And then a whole group of guardians, the people that are maybe, I don't know the terminology in the six working geniuses, but someone who's going to dot i's and cross T's very, very safe, very, very safe organization going nowhere. And so you need both. And when you see everybody as an ally and understanding that you need all these different personalities at the table in order to do something really special, it just changed the organization, it changed the way you lead. And then also understanding that they've got some weaknesses that got to maybe pick up and you have some weaknesses that you got to pick up. And so together you're just making each other better. And so it's a totally different organization.

Brett:

Yeah, absolutely. And so let's talk about this in any practical tips or suggestions. So it'd be great to use a tool, some kind of personality tool to kind of see how your team operates. I think everybody's got their favorites. I love the way yours sounds. And so once you kind of do that, then how do you create this unity amongst your team? And how do you allow those different voices, different perspectives to be shared, but then also to get stuff done and to move forward?

Peter:

So one of the tools that, because I know that maybe most people are listening and not watching, and so just visualize an X in AY axis, and the top right corner is a liberator. And so the Y axis is support, and the x axis is challenge. So if you're high support, high challenge, you're a liberator, bottom right corner, low support, high challenge, that's a dominator. Top left corners all support, very little challenge. That's a protector. And bottom left, low support, low challenge, that's an abator. And so the reason I'm bringing that tool up is because when you calibrate, and that's a very specific word, and I'll tell you why in a minute, support and challenge to that person knowing their personality, you can bring them effective support and challenge so they can be liberated. Now, calibrated means when you know that person, each person's going to need different sorts of levels of support and different levels of challenge, different types of support, different types of challenge.

So you start to understand what it is this person needs in order to succeed in their position. So that's calibrated to that person. Now, what does it mean to liberate and what does support and challenge even mean? This is the sticking point. This is I've found really, really fascinating, Brett, is that most good leaders that are also kind, which is most of us, they actually lean more towards a protector. They're going to protect that person from maybe not so great in interaction. You're like, ah, John, Jenny, you didn't really perform that well. We're going to avoid that. It might make them feel bad, it might be awkward, it might be awkward for Brett, it might be awkward for those people. And so you're going to protect them. You're going to bring them support, a lot of support, but very little challenge meaning like, oh, I'm sorry you missed the Friday deadline.

How about Monday is Monday, but then that develops a lot of mistrust and why does it develop mistrust? Brett's going to come in over the weekend and just get it done. It really actually needed to be done on Friday. And then they're going to come in on Monday and be like, wait, why'd you do it? You told me Monday was okay. You're like, yeah, it wasn't actually okay, but I didn't know how to bring effective challenge. And we don't have that terminology now why is that? It's because most people have not been modeled what effective challenge looks like. A lot of times we hear that word or we think about a negative interaction where somebody didn't perform well, an interaction or a situation where somebody didn't perform well, we think about it as negative. We think like, oh, there's going to be yelling, crying, cursing. It's going to be stressful. Somebody's going to quit, somebody's going to get fired, they're going to feel bad. There's going to be all kinds of excuses. And so we just try to avoid those. We avoid those situations. And so another podcast that I was on, I was saying this story, and you probably know him, Brett, and he has almost a billion dollars of property under management, $1 billion.

Brett:

Dang,

Peter:

It's crazy. This guy is a real estate. Ty Khan, a real estate guru, and he just starts laughing, why are you laughing, dude? He's like, Peter, I am the deal in this industry. He goes, and even when I come in and there's been a remodel or something's happened and I see all the things that are wrong, I'll then look the contractor in the face or the general in the face and say cash or check. I don't like those situations. I don't like telling somebody, well, yeah, you did a great job. However, there's one thing you got to do a little bit better. So that's him protecting them, but it's also him protecting himself. He doesn't want to deal with that sort of situation. Now, what's the downside of this man? What's the downside of this? You're robbing yourself in many different ways. One is they didn't do the job and that sucks.

You're robbing them because they now don't get to do a better job and come back and be your a-player contractor, your a-player vendor because they didn't know to do better, and so they're going to keep delivering you mediocre work or you're going to have to go find another vendor because you didn't give them a chance to improve. And so you're robbing the business and all the relationship in all the situations in every way possible because you didn't spend the time and do the hard thing to bring effective support and challenge calibrate to that person so they can be liberated and be your A player that's your contractor for the next 20 years. So amazing and know exactly how Brett operates. And so that's just an example of bringing that support challenge, liberating a person so that they can become effective for you. Now, there's people listening right now, I guarantee it. They're like, well, I shouldn't have to do that. They're the specialists, they're the drywall, they're the Google ad specialist. They should be able to do that. I shouldn't have to tell them maybe, but you're the one that's dictating and you're the one that's the drumbeat of the organization. If you want it done a certain way, it is your responsibility to communicate that and give them a chance. Now you give 'em a chance and they don't perform fine, get rid of 'em. But you'll never know until you become that liberator leader.

Brett:

Yeah, it's so good. And I heard a quote recently that I really like. That's the life you want, the business you want. It's on the other side of a few hard conversations. And if you are stuck, it's because you're unwilling to have those hard conversations. And I really like the way you position that, that it's not just cheating you, it's cheating the other person if you're not sharing that feedback. One of my favorite books in this genre is called Radical Candor by Kim Scott. Do you know Radical Candor?

Peter:

Yeah,

Brett:

It's so good. And she talks about ruinous empathy versus radical candor. And I believe in a lot of ways, I'm a protector. I don't want to make people feel bad. I think I'm very conscious of the way people are feeling and their emotions. I think I'm pretty in tune with that, and I hate to ruin someone's day or make them feel bad. So I would have a tendency to not give radical candor. But the thing is, people want it. They may not want it in the moment, but ultimately they want it. They want that candid feedback. They want to be able to improve, and they certainly don't want to, not if you're upset, they don't want to be sitting in the dark. And I remember one great story about Steve Jobs, and I think we can obviously clearly a genius and one of the great business leaders.

I don't know that we want to adopt all his leadership styles, but obviously a genius and very effective. He had a conversation with Johnny, ive, and of course Johnny Ive is a famous designer that created all the products we love, iPhone, iPad, Mac and all that stuff. And so there was this time when Steve was like, Johnny, why don't you talk to your team about making these improvements? This is not good enough needs to be improved. And Johnny's like, well, there's stress. I don't want to upset them. I don't want to do this or that. And Steve said, no, Johnny, you're just being vain and you want people to like you. He realized, yeah, that's actually a big part of it. And so understanding that too, that part of why I don't want to challenge or give this feedback is because I want people to like me and I'm being vain, but I'm just hurting myself. I'm hurting someone else. And so I've got to give that feedback. So I think it'd be good to talk about how do we get better at leading ourselves? I think that's something we got to do, right? If you can't lead yourself, probably can't lead other people. Then I've got several specific questions I think will tie into our e-commerce owner friends, but also any business. But how do we get better at leading ourselves?

Peter:

So we have a phrase, know yourself to lead yourself. And a big part of it are these voices. A big part of it are like this, you just said this about Johnny, the understanding that you want to be liked and how that's impeding your growth as a leader. And so we've got a phrase, nothing to lose, nothing to prove, and nothing to hide. And it's so interesting, Brett, because if you walk into a meeting, whether it's going to be a contentious one or not, doesn't matter, or this conversation we're having right now, and you repeat that to yourself and you believe it, I've got nothing to prove and nothing to lose, nothing to hide. You show up completely differently. You show up authentically you. And one of those things for Johnny in this example would be like, I don't need people to like me. They don't have to like me.

I would like them to like me, but I don't need to worry about losing my likability. What's more important is that I do what's best for the business and do what's best for this person across the desk for me. And so those types of tools that we teach, they allow you to lead yourself in a way that is authentic and in alignment with who you are. If you think about those three questions and you say them to yourself, do I have anything to lose, prove or hide? And you walk into a meeting, it's pretty crazy because if you even use it on your next one, Brett, and you'll find yourself about to say something, you're like, wait a minute, why would I say that? Oh, I don't lose the argument. Or I need to prove that I know what I'm talking about. Or I need to hide the fact that I made a mistake. Then instead just being like, oh, I don't know. I guess I made a mistake or that was wrong. Yeah, yeah, you're right. It's a bad idea. It's so powerful to see. That to me is leading yourself right down the path that you're supposed to be on. I dunno if that's answering your question.

Brett:

Yeah, it's really helpful and insightful. I do have a couple of questions that to kind of follow up on that. So how do we do that? And it totally makes sense. If you go in with nothing to lose, nothing to prove, nothing to hide, it's just going to go better. It at least strips out the chargey side of emotions that could lead you to make a snap decision or to fly off the handle or do something you're going to regret. But what about situations where it's a pretty tense situation and you do have something to lose, client's going to cancel or customer's going to leave a bad review or somebody might quit. How do you frame that? I'm sure still saying those questions is going to help provide the right frame of mind, but what do you do in tense tough situations?

Peter:

What's so interesting about that question? I've been thinking about it a lot recently. You're walking into a meeting and you're like, man, I'm going to lose this client. You probably feel exactly what that feels like right now. You're like, yeah, I remember this was a month ago at this meeting with a big time client, huge retainer. And I'm like, man, I don't think they're happy. We call it making the implicit explicit. So I'll just walk in and be like, Hey, hey guys, I know we're definitely not making you happy. This has not been working out. We have not delivered on what we were supposed to deliver on or the way that we were supposed to deliver it. So what should we do? And speaking explicitly, everybody knows the elephant in the room, just call it out. And the other thing is on losing the client or the employee is I lean on the fact that maybe that's the right thing.

Maybe the client's not supposed to be your client. Maybe they're making your life hell, you're making their life hell or you're just the wrong fit. And so again, nothing to lose walking in with just being like, man, I don't want to lose this client, but maybe it's the right thing and let's just call out the elephant in the room. Let's make it explicit. Hey guys, we haven't delivered and I'm sorry, what should we do about it? Or with the employee, this situation hasn't been working out. I know it's been contentious for you, it's definitely been contentious for me. What should we do? And just calling it right out, and maybe they're not the right fit. It's crazy examples where you've held onto a client or an employee because you really didn't want to lose them. And you look back, you're like, dude, we should have just cut them loose.

That was so stupid. Why did I fight for that? That was just a bad fit for us. So that's my mentality. Maybe it feels a little bit naive, and maybe it is, but it's like that's how I'd walk into those situations without trying so desperately to hold onto it. And I think it's an andreesen quote, you have to Google it, but strong opinions loosely held comes to mind where it's like, yeah, I feel like this is the right idea or this is the right employee or this is the right client, but I'm okay being wrong. I'm open to being wrong. Maybe I get some more data. And it's just like it's not the right move for us.

Brett:

Yeah, strong opinions loosely held. It's so powerful. And it kind of ties into that the mindset of this is my position until I learn different data, this is what I believe about this topic, this ad campaign, this product launch, this person who's an employee, this is my belief. Until the data changes, then, so I've got a strong opinion, but I'm willing to change if the data changes. And I do think it's 100% the right mindset that you don't need any one deal or any one customer or any one team member to be successful. There are some of those changes that could be right. You lose a key team member, your partner bails, you lose the largest client you have. Some of those things are legitimately painful, but they're not usually life threatening, right? You're going to make it. And I do believe, like you said, most of the time you find out that, dang, it's actually good.

It's probably good that this happened then I should have made a change sooner. And one of my favorite quotes comes from Peter Drucker. He talks about, you look at a situation, so this team member, this vendor, this client, if I had to go back, would I do that again? Would I hire that person again? Would I hire that vendor? Would I take that client on? If the answer is no, then why do you persist, right? And so I love that. Why do you persist if you wouldn't, knowing what you know now, if you wouldn't have done it, why do you keep doing it now? Why do you persist? And a lot of times I think we're holding on because of fear or something when probably if you go in with kind of that mindset of nothing to lose and then you make the implicit exploits like you talked about, then you're probably going to be okay if that thing ends or that relationship ends, and you may find it's better anyway.

Peter:

You know what else, Brett too? You said it's painful. It's painful in the short term because you're letting go of a client and maybe he's a big partier revenue. I just had a friend of mine that he's a freelancer and he just cut loose. His biggest client, big part of his income, he couldn't afford to lose him, but he knew two things. One was making his life hell. And second, if he didn't let them go, he wouldn't have any room to bring the right client in. And so he knew, he's like, man, this is a chicken the egg thing. I got to cut them loose to relieve the pressure from them, but also to make room for him to do the business developing he needed to do to bring the right client in.

Brett:

And it's painful, but I think deep down, we typically know, we know when it's time. We just allow some of the other louder voices of, no, hold on. It'll get better. You can fix it, they'll change or whatever. We allowed that to crowd in and we don't make that change. Well, we've already kind of talked about this a little bit, but I want to go deeper. So how do we use some of these tools or some of the tools that we haven't talked about yet to lead vendors better or to lead agencies better or freelancers? So we've got these other relationships that aren't just people on our team. How do we lead them better?

Peter:

A lot of the same tools, man. I think really a lot of it comes back to me in support challenge. So I don't know how many vendors that we've held onto as our company, I won't speak for you, where I kind of smiled and nodded and I'm like, I don't know. The data they're providing just doesn't make any sense, or I'm not really seeing the results. But they're nice people. They're nice people, and I feel like maybe if I hold on a little longer, things will work out. And instead in the very beginning, understanding what metrics to measure with the data you have now, iterating on those accordingly. And then asking the hard questions, just saying, Hey, how long do we persevere? Or, Hey, this data doesn't line up, or, Hey, I need a different report. I'm not really confident in what you're saying is not really lining up with our expectations.

So again, calibrated support. Challenge those people so that you in the end can do both. Do your business as service, but also them as service and cut 'em loose if it's time. Or they can iterate and they can find that gold coin or whatever you want to call it in your marketing space or in your supply chain or in raw material. And so I don't know, there's a lot of times where I've sat in a meeting and someone, a vendor has said something and I just smile. I'm like, oh, okay, sounds good. But then I get off the call and I'm like, that didn't make any sense. I didn't understand that

Brett:

And

Peter:

I don't want to look stupid. I didn't want to be like, Hey, I didn't really understand what you said. Can you repeat that? And now it's kind of a fun game for me to just ask the dumb question, Hey guys, sorry, dumb it down to a fifth grader. Talk to me. I'm a fifth grader. I don't understand what you're saying. I don't know how this pertains to us. This doesn't seem to be working, but you're telling me differently. What do you mean by that? Help me to understand. And so bringing that support challenge to a vendor or to a contractor in a way, it's the same thing. It's like the example of my buddy in the real estate. It's like you got to be able to do that in order to lead those folks better as well.

Brett:

And from an agency perspective, and we consult with clients, work with clients all the time, and sometimes clients come to us and they just say, man, my Google ads are a mess, or Amazon's a mess. I just need help, man. I just need help growing. Or I know I'm not scaling quick enough. Can you help me? And that's always fine. And we can dig in and we'll ask the right questions, we'll uncover things. We'll get to clarity around goals and objectives and how to support your business. But I always appreciate it. I always love it actually, when a client comes in and says, Hey, this is what we need. We're really, we're trying to reach this objective. We want to get to this top line, this bottom line, because we want to sell in three years. And so our golden metric is we need to acquire new customers at this CPA if we can do that.

And if we can do that on a consistent basis, we will be here forever. If we can't, we're going to have issues, we're going to have to make a change. Or sometimes we've had clients come to us and they say, Hey, in three to six months, we want to build an in-house team potentially or keep you guys on for consulting. But we help build things. And I love that transparent upfront conversation because then we as an agency know how to calibrate with that, and we know how to effectively launch a plan to meet those objectives. And then those conversations are easier too. And I think the same is true with an employee. You hire someone on to run to be a sales rep for you. You clearly say, we expect this kind of inputs and outputs. We think you should make this many calls and be able to answer this many emails and have this many discovery calls. And you just map all that out. This is what we expect, and we will be measuring it and talking to you about it and helping you improve and things like that. That clarity, I think the right team members love that too. And so yeah, I think just being very clear and then measuring against that, man, you almost can't go wrong if you do those things.

Peter:

And you know what else is crazy, Brett, is that there's such a gut rot around not knowing if you're doing a good job. And so the vendor or the employee, if they don't know and they're constantly wondering like, oh, is Peter mad at me? I'm not really sure. I don't know if I'm doing a good job. I feel like I'm doing okay, but he just asked for more, better, faster. And there's no way to put that in a spreadsheet. Yeah, we more better, faster. You want a specific number of what you're trying to hit versus the goalpost just keeps getting moved more, better, faster, more, better, faster. And then as the owner not knowing exactly what you wanted to begin with is foolish. And so for that client to ask you like, Hey man, this is what we need from OMG. We need this, this, and this.

Okay, great. Now we know exactly what you want. And guess what? We can report on that. And guess what? We'll know we're doing good or we're not because you told us what you were measuring. And then you quoted Peter Drucker, my favorite Peter Drucker quote is What gets measured gets managed. And so that falls right in line with just being explicit and support challenge here. There's no need to wonder, this is what you need. We need the CPA. Great. Awesome. This is what we're trying to do. What's an example of the absolute worst client that comes to you, Brett? What's that look like?

Brett:

Yeah, it's usually when things are really, really unclear. And then I love the more, better, faster. Well, what does that mean? What does more mean? And what does faster mean? What does better mean? And like I said, we're pretty good at asking questions and getting there. But what's also kind of funny is we always have these discussions around budgets, right? Because budgets are kind of like a fluid thing with a lot of e-commerce brands. And so the initial growth rep will hear one thing, and then there's another call and there's something different, and then there's the kickoff call and something totally different. And we're like, I don't think this person knows what their budget is. Or sometimes the CPA changes. And it's like we just had to really get way better at asking the same question about three or four different ways. Or you can just tell sometimes someone comes in, they're just buttoned up and they know exactly what they want and that's great. But if they don't, then you just got to keep asking questions and that's all fine. And I think it's one of those things where a good employee, a good agency, a good freelancer, they're going to take it upon themselves to, as Jocko willing talks about, lead up the chain of command, right? I'll try to lead the client better. I'll try to lead my boss better by asking good questions. And if it's not clear, I'll make sure it's clear. So yeah, I think that's important as well.

Peter:

It's so good. I love extreme ownership. That's where that quote comes from. I think on the leading up,

Brett:

It does. It comes from extreme ownership work.

Peter:

And I think that's a really great point, man. For anybody who's listening, who's on the other side of it and they're dealing with their contractor or their vendor and they're dealing with a customer that's asking for their services to know and help them understand what it is they actually want and how to measure it. And so that everybody knows what success looks like. I mean, that's a huge point.

Brett:

So good, man. We've covered a lot of ground and we are about out of time. I do want to ask one more thing before we talk a little bit about your coaching biz and how that works and get a lot of people to get in touch with you and stuff. Yeah. What about leading better meetings? I think this is a real pain point for team members, for vendors, for freelancers, meetings that should have been emails or Slack messages or whatever. But any quick tips on how do we craft better meetings?

Peter:

Yeah, I'm going to lean on EOS and traction for this. For us, having a level 10 meeting and then understanding scorecards and who's responsible for what and what seat do they own and what metrics they're, and then understanding what is it, identify, discuss, and solve. Is that what IDS stands for?

Brett:

Yes, that's correct.

Peter:

And so to drop things in that can wait until the next meeting to drop it in the IDS, and you can go through that and actually solve it on the meeting. And I love the idea of not leaving open loops. We have too many open loops emails that go out and you're not really sure if the person got it done, that's an open loop versus them replying back and we're like, got it done. There's just way too many open loops. And so if you can identify, discuss, and solve on the meeting and have it done and know what the next steps are, that to me, those are my favorite meetings. And so I think that they need to have a clear agenda, who's responsible for what metrics they're reporting on, and then understanding what the issue is and discussing it and solving it on the meeting when possible, not always possible. We follow that level 10 meeting structure. It's my favorite.

Brett:

It's so good. Yeah, understanding who owns this meeting, what's the objective, what are we trying to accomplish in the meeting? And then those other pieces you identified so important because I think in some cases, a meeting is the most efficient use of time you can have if you've got the right group, solving the right issues and talking about the right things. Meetings are fantastic if you're missing some of those components. If there's not a clear objective, not a clear owner, you're not really working towards something, you're just kind of chatting it up or trying to figure out where to go. Meetings are such a waste of time. And then everybody loses energy and then they don't want to go to the next meeting. And so yeah, we spend so much time in meetings, we got to put in the effort to lead better ones. If you do, it's like a breath of fresh air, a boost of energy, a shot in the arm organization. And so you need to make that happen.

Peter:

Yes, for sure. And one last thought on that, think about what you can do asynchronous. Could you have just sent a Loom video? Somebody asked you a question, let's not have a meeting. I'll just send you a loom and it's done.

Brett:

I do love the Loom idea. Love loom videos. The asynchronous is really great. Awesome. Man. This has been fantastic, Peter. I'm motivated. I've always loved leadership stuff, but I want to get better. You're challenging me and inspiring me, which is super great. And so for those listening that say, man, I kind of want to understand those triggers and those weapon systems that Peter was talking about, and I want to really know myself or see myself to be able to lead myself and others and some of those things. Talk just a little bit about your coaching practice and then how can people get in touch with you?

Peter:

Yeah, for sure, man. We do some one-on-one and group coaching. It just depend on what you need and if we're the right fit. And so typically we'll do a discovery call and just figure out what it is that you're trying to overcome and whether we're the right fit or not, and whether you need some one-on-one or whether you need group. We have both of those going on and there's a lot of accountability associated with it, A lot of learning. I like to say we're not just inspiring, we need to be transformative. Otherwise, this is just that conference that you went to and you're super excited and you took a bunch of notes and then you put 'em on the shelf and you forgot all about. You had a lot of email that day. I do not want to be that ever. And so what you're going to learn, it's actually going to take root and then it'll just inject itself in your company culture and you'll start seeing it everywhere. And so that's what we're doing. I do have a free resource for your listeners. They can just go to whitestone coach.com and they can download a free resource. And there's a lot of those tools that I talked about. They're in there, they're free, and they can check them out and hopefully learn something. And if they want to get in touch with me, they can just email me, peter@whitestonecoach.com,

Brett:

Peter@whitestonecoach.com, or go to whitestone coach.com to get those free resources and tools. Peter, I would, ladies and gentlemen, Peter, you crushed it, man. And I knew you would, and you're a podcast pro. You've done this stuff, man, but so good. And we got to remember, everything's going to improve. Everything's going to get better when you lead yourself and when you lead others better. So thanks for the time, man.

Peter:

Thank you, Brett. Appreciate it, man.

Brett:

And as always, thank you for tuning in. We'd love to hear from you. What would you like to hear more of or less of on the show? If you found this helpful, then I'd love that review. I'd love that. Share. If you know someone else in the e-commerce space or, Hey, this episode applies to about any entrepreneur, if you found it helpful, share it helps other people improve, and everyone's going to thank you for sharing a good resource. So with that, until next time, thank you for listening.

‍

Episode 256
:
Frederick Vallaeys - Optmyzr

Using Generative AI to Unlevel the Playing Field

Are you dabbling with generative AI or using it to gain a competitive advantage? 

Are you getting better at using AI or staying the same? 

If you're like some professionals I know, maybe you've gotten frustrated with only slight gains using AI, so you've moved on.

I'll admit, I'm still just dabbling compared to my buddy Fred.

Fred Vallaeys is one of the smartest dudes I know. His perspective on AI is inspiring and sure to get your wheels turning. 

But first, take a peek at Fred's resume! 

  • One of the first 500 employees at Google
  • He was on the team that acquired Urchin, the precursor to Google Analytics 
  • He was on the original Quality Score team
  • He was one of the original 6 people who built the AdWords editor

Now, he's the co-founder and CEO of Optmyzr and the author of 2 amazing books.

Here's a look at the taste AI morsels we chew on in this episode:

  • Practical ways to use Generative AI that you might be missing.
  • How to ground the AI so it doesn't "hallucinate."
  • Understanding the best LLMs and how they impact generative AI.
  • How generative AI is different from Machine Learning.
  • Embedding, vectors, and chain prompting

Ready to step up your AI game? I am!

Transcript:

Fred:

The machine continues to learn. And so the answer it gives you today is not going to be the answer it gives you tomorrow. It basically gives them a function, a python function, to calculate some probability of next month's budget. And it's like, oh, great, it's able to do it. So now they come back every week and they plug into new numbers and they ask the GPT system to do it again and again and again. But it's not because it wrote to the correct Python code last week that there's a guarantee it's going to do so again or do it better this week. So every time you use generative, you kind of have to fact check, and that's to your point. I mean, wish I could go sit on the beach, but no, I keep having to validate what it's saying because if I don't, I'm going to get into a lot of trouble.

Brett:

Today we're talking about how to unlevel the playing field with generative ai. We don't want to level playing field. We want to slant things in our favor. Now, my guest today is one of the smartest dudes that I know, Fred Valets. Take a listen to this resume. One of the first 500 employees at Google, the team he was on acquired urchin. Urchin was, it's the U in UTM parameters by the way, but Urchin was the precursor to Google Analytics. Also, his team designed quality score. Quality score is like one of the early innovations that set Google Ads apart from all the rest that awarded ads for their good quality and quality score, so legendary. Also, he was on the team of six that invented ad Words editor. Now he's an author of multiple books, one called Unlevel The Playing Field, and the other called Digital Marketing in an AI World.

And in this episode we talk about how to understand the difference between generative AI and traditional ai, how to use it in very practical ways for your business, where people get it wrong, how to get the AI to stop hallucinating if it is, plus some really nerdy things like embedding and vectoring and chain prompting. It does get a little bit nerdy, but it's also super fun and super practical. So please enjoy this interview with Fred Valets. I'm here with Fred Valets talking generative AI and how to leverage it to grow your business, improve your PPC and do other wildly cool things. So Fred, man, how's it going? It's been a long time. Welcome back to the show, and thanks for taking the time.

Fred:

Yeah, thanks for having me back on, Brett. It's been too long indeed. It's been a weird couple of years and just got back on the road seeing a lot of the industry people. So good to see you again as well.

Brett:

Yeah, it's so fun to get back in person more and yeah, and I used to see each other probably at least once a year, right at a Google Marketing Live or something. And of course that has all dramatically shifted over the last several years, but getting back out there, just thrilled to have you here. And so I love the topic of ai and you literally wrote a book on ai, and so why don't you tell us a little bit about that book?

Fred:

Yeah, I mean, so it's funny because I wrote a book called Digital Marketing in an AI World, and this was published in 2019, and this was after I'd been writing on search engine line in 2017 on the topic of how AI would change the landscape and the P P C professional's job and the digital marketer's job. But that AI that we were talking about back then is so different from the AI that we're talking about now, the generative ai. So I wrote a second book, which is called Unlevel, the Playing Field, and the premise was to take that concept to the next level. So if you believe that the human is still necessary to produce better results, even in conjunction together with the ai, what are some of the techniques you can put in play to make your team perform better? Because as an agency, as an in-house marketing team, sure you can use all of Google's automations and you can get average results.

Now, anyone can get average results, which is really cool because before it wasn't possible for everyone. But if this is your job, if this is what you do, then average is not good enough. You got to prove your additional value. And that's sort of what the book is about is how do you take these really cool technologies and how do you make them your own? And then when it comes to generative, I think it's hugely misunderstood, used in many incorrect ways. And so I'm kind of on a quest right now to teach people how is it different from traditional ai? What does that mean? What's it good at? What's it not good at? How could you use it, and how do you get it to basically get a promotion as opposed to get fired because someone else used it better than

Brett:

Ted? And that's the topic of today, really understanding what generative AI is and understanding how we can use it to unlevel the playing field in your advantage. And I'm still the mindset that it's better to have AI plus smart humans. We're not wanting exclusively one or the other. We don't want to give the stiff arm to AI and say, no, no, no, just smart humans. That's all we need. Scared of the ai, but we also just can't turn things over to the machine and then go hang out at the beach. It's more about how do we leverage AI to do more, to be more strategic, to get more leverage out of what's going on. And so really excited to dive into that topic. We'll certainly talk about a few of the things that we're doing on our end as it pertains to ai, but I'm more, and I kind of this before we hit record, I'm more in the observing, learning, watching dabbling stage. I know you're going really hard into the generative AI space, so can't wait to get your perspective on that. But yeah, talk about what is generative AI and why is it different than traditional? How is it different than traditional AI and where does that trip people up?

Fred:

Yeah, I mean, so when you think about traditional ai, it's really been about machine learning. And we've been using that for a very, very long time. And when I say, I mean everyone listening who advertises on Google, you've had quality score for your keywords, and that has been artificial intelligence. And that thing has existed for over 15 years. So I joined Google in 2002, fairly shortly after I came there, Google started looking at ad rank as C T R was a factor of it, but then it was like, we're not just going to use historical C T R, we're going to use predicted C T R and how do you get predicted C T R? Well, that was a big machine learning system, and it was crazy because these machine learning systems back then, they took months to train, we'd feed the data, and it wasn't months, but it was like weeks.

And then so the machine be learning, and then eventually we'd get something out of it and then we'd be able to go and have the humans validate that the machine predictions were somewhat valid and then we deploy it. And nowadays you do the same thing in minutes, but that's sort of the traditional machine learning, pattern detection, feed it a bunch of your historical data and make predictions about the future outcomes of similar things. Generative is about you start with a blank slate and come up with headlines, come up with keywords, come up with songs, make videos. What's interesting is generative ai, the way it does this is super mathematical and it is based on machine learning. It's based on predicting the next logical word in the sequence. But it's not about giving you the number, it's about giving you the text, the verbose, the beautiful description of something that happened.

So that's a big difference. But then sometimes people think about it and they're like, Hey, well it seems like I can go to Chad g p t. And by the way, when we talk generative and Chad, g p t, it's often interchanged, right? But Chad, g p t is just one of the vendors in that space. But you can go through it and you can give it a mathematical question, and then sometimes you get the right answer. And if you get the right answer, you're very lucky. Lemme tell you that because it's a prediction, it's not an actual mathematical equation that it's solving for. It's just like predicting what's the likely next word. And if you're lucky, it sends your question to the actual arithmetic and then you get the right answer. But there's no guarantee of that. So that's one scary thing because I've seen people go to it and be like, here's a list of keywords. Can you tell me the predicted cost per click for these? It's like, it's just guessing. It's not telling you anything actual from a database.

Brett:

Yeah. And so I think that's really appreciate that breakdown there. And we have been using traditional AI for some time, even going back to the quality score, which kudos to you and the team that developed quality score. I believe that was one of the original innovations that really made Google what it is today in addition to measuring backlinks and stuff like that in the really, really early days. But this idea of giving ads a quality score and then rewarding good ads and the whole ad rank quality score system, brilliant game changer, I think changed the industry for the better. And then of course, as we look at smart bidding, target return ad spend, target C P A, even Performance Max and all the things that are in there that still leans more machine learning and predictive ai. But I like how you laid that out. I've heard that even generative ai, it's still predicting, it's still predicting what should come next in a sequence of words, but it does, it shows up different and it functions a little bit different.

Fred:

Exactly. I mean it's all based on the transformer technology, which by the way, was not invented by OpenAI, it was invented by Google Brain. And then OpenAI, which was a nonprofit, took that technology, did really well with it, and then all of a sudden they were like, Hey, we're going to become a commercial company. And then Elon Musk, who was part of it, he got so pissed, he was like, oh, I'm not doing this anymore. So he left and now he's building his own version of transformer generative ai. It's all fascinating if quality score hadn't existed.

Brett:

So just to double click on that, so transformer that's sitting at the core of OpenAI, that was actually developed by Google.

Fred:

So it was Google Brain that did the academic research that developed that, like you're saying, right? I mean it's all very mathematical and prediction driven models. So I can't explain this because it's way beyond my capabilities, but again, in the sequence. So if you give generative AI a very simple phrase like the cat in the most basic example of generative ai, it's trying to complete your sentence. You basically are saying continue writing from this point forward. And so now it says, well, I could put in the word meows or barks, but how does it know which one is the better option? Well, it uses predictions and it says, well, when I've looked historically, and this is a large language model, so when we say historically, it means all the historical text that it's considered to learn, is it more likely that the word meows appears close to the word cat, or is it more likely that the word barks appears close to the word cat?

And so obviously now it says, well, it's 85% likely it should be meow and only 25% that it's barks. So it's going to say the cat meows, but it could have equally well said, the cat purse. That's another fine answer. And so that's fine when you're talking about being creative, writing headlines coming up with keywords. But if you're saying one plus one equals, well, likely it's seen two appear very close to that combination of words in the past. But again, it's guessing. And there's this fascinating study that came out of Stanford that was done recently, and it basically talks about the concept of drift in ai. And so what they did is they said, is the number 17,077, is that a prime number? It is a prime number. But they asked G P T four in March of 2023, and it was about 84% of the time it got the answer correct. And then three months later, by June of 2023, it was down to around 50%. And that's interesting, right? Because it used to be really good at answering that or quite good

Brett:

In theory, it should get better if it was at 84%, then several months later it should be getting better. Ideally you would

Fred:

Think, but this is what's happening. So they call this the concept of drift. The machine continues to learn. And so the answer it gives you today is not going to be the answer it gives you tomorrow. And that's quite scary because then I've talked to digital marketing professionals and they say, oh, I've been using the advanced analytics capabilities and G P T, and we can talk more about exactly what that is, but it basically gives them a function, a python function to calculate some probability of next month's budget. And it's like, oh, great, it's able to do it. So now they come every week and they plug in the new numbers and they ask the G P T system to do it again and again and again. But it's not because it wrote to the correct python code last week that there's a guarantee it's going to do so again or do it better this week. Every time you use generative, you kind of have to fact check. And that's to your point, I mean, wish I could go sit on the beach, but no, I keep having to validate what it's saying because if I don't, I'm going to get into a lot of trouble.

Brett:

Yeah, totally makes sense. We can't be totally unplugged and unengaged and you got to fact check and you got to spot check. So how can we use generative AI from a marketing perspective? What are some of the ways you are using it now? What are some of the clever ways you're seeing it used? Let's get practical for a minute.

Fred:

I mean, so there's the basic stuff in P P C and search marketing, which is give me some headlines. We have a responsive search ad, so we're being asked to provide a whole bunch of different headline variations, and as humans, we get bored and we sort of run out of steam. And so we have our 10 headlines and it's like, Hey, G P T, can you suggest five more? Kind of like this? So it's really good at stuff like that, and that makes sense right now, one thing to keep in mind is most people, again, they use chat, g p t and chat, G P T is like this one interface where you can have a conversation, but there's not that many tweaks and settings and things that you can control. Once you start deploying these solutions at scale, you're probably going to look at some a p I capability or a plugin for Google Sheets or a plugin for Microsoft Excel. So yeah, one thing that I think is really interesting, especially when you're thinking about creatives and headlines and how creative or non-creative you should be. Like say you're in a regulated industry and you can't really make stuff up or the AI can't make stuff up

Brett:

Finance or health related or things like that, you got to be really buttoned up.

Fred:

Exactly right. And so now you have this factor called the temperature in generative AI that you can control. If you are using a sheets plugin or you're using the A P I, you actually have access to this. And so you can say the temperature is zero, which means the model has to be very deterministic, and it can only say things that it's heard somewhere before or seen somewhere before. Or you can set the temperature all the way to one which is the highest, and that says, just be as creative as you want. And maybe in the example of the cat, it's going to say at some point, sure, the cat barks. Let me try something new and see how that lands. So that's basically one of the things people can do there.

Brett:

Yeah, it's really interesting. We're using chat GBT in a couple of ways. Of course, we run a lot of Google ads, and so we've got specialists that are writing headlines, and now there's kind of the generative experience inside of Google ads, which is pretty exciting. But we've been using it for a while to, as you said, if we're trying to write 20, 30, 50, a hundred headlines, that becomes difficult. If we're running a thousand headlines, that becomes difficult. And so utilizing Ative AI for that is great. I'm writing copy for the podcast and bullet points, and I, I'm creating other content. I found that when I want chat G B T to rewrite bullet points for me or rewrite headlines for a podcast or headlines for an article or something like that, I'm only using the suggestions a pretty small amount of the time, but it's still right, even if I only use 10% of what it's giving me, sometimes it sparks a thought or sometimes it leads me in a different direction or it is just a lever. It's a way to not start at zero. It's a way to jumpstart the next idea. And so yeah, it is generally quite helpful.

Fred:

It is. And I think the more that you start using it and the more you use capabilities like custom instructions and you start doing prompt chaining, it is going to give you better results, right? Because I find the same thing. If I give it a pretty simple prompt, I often have to rewrite it extensively because it might use words that I don't really like, even though I say write in my voice, but maybe I don't like my own voice, I want it to be different. So I've started using these custom instructions on G P T. So if you don't know what that is, it's basically under settings, you can say, this is my context, this is who I am, this is how I'd like you to respond. So as opposed to me having to have that interaction every time I start a new chat, it already knows this about me. And so one song that my kids are listening to a lot right now is A, B, C, D, E, F U.

Brett:

Yes,

Fred:

I've heard song, that song. And yesterday, my son's playing a variation of that, which is actually A, B, C, D, E, F, G, H I love you.

That's kind of interesting. Somebody took that song and what if I took something and did P, P C related A, B, C, D, E, F, and then P, P C, right? So I'm like, I'm going to go to G P T and I tell it, I like this song and I want you to write something like it. Are you ready to do this? And I'm thinking, I'm going to have to give a follow-up prompt, which is like, what is the starting the seed word that I want to start with? And before I even do that, it's like, oh yeah, here's a chorus. And because it knows my custom instructions, it knows that I'm super into P P C. And it wrote me a chorus right there about P P C. I was like, wow, that's spot on.

Brett:

We should share, we should drop that chorus into the show notes. If you're able to share it, that would be super.

Fred:

Right now I'm working on producing the, so I have the lyrics, I have the full lyrics. They're quite good, I think. So

Brett:

You're produce the

Fred:

Song, I have to figure out, yeah, I'm going to produce this song. And so this is not a P P C example of course, but from a marketing perspective, yeah, that's kind of cool if we can put a video out and do something cool along those lines. Now, I'm also, so I'm a Captain America fan.

Brett:

I see that.

Fred:

So I'm trying to produce a comic book with some superheroes about P P C. And again, I'm not a good artist. I can't really draw, but I figured out ways to get generative AI to draw characters in a certain style and to draw images in a certain style. And so a lot of what I'm working on these days is make this generative your own, make it follow your brand guidelines. And that's really cool, right? Because once you get it to that point, now I could imagine you, as opposed to only getting 10% of the headlines and saying, these are good, what if we could get that to 20%, 30%? And that's again, that's the playing field because you're using really cool technology better than anyone else,

Brett:

And it really makes sense. And so you, you're taking your ideas that maybe you previously couldn't execute on either efficiently or maybe even at all, right? To use the art example, got this idea for a comic book, I'm an artist, I can't draw it, but I can explain my ideas to generative AI and it will create it for me. And so yeah, I love that love finding those little improvements and ways to go from 10% to 20% to 30% can be a real game changer. We're also using generative AI to review, do competitor research and look at, hey, this is a product that we're competing against in Amazon. And so we feed all the reviews to the AI and say, Hey, what do people like about this? Not about this synthesizes to me in the top five, top 10 topic thing. And then we can also use it for landing page copy, product detail pages, things like that. So all of that, again, stuff you could do on your own, but unlevel the playing field and gets you to a great place much faster.

Fred:

I don't want to get too tactical, but these are really great examples that you're putting out there. But I think a lot of advertisers or marketers, they kind get stuck at the level of how do I input, where do I even get these reviews? And then once I have the reviews, how do I give it to the machine? Because every time you talk to G P T, you put in a long blob of text. It's like, oh, sorry, I can only read the first 2000 words or whatever. Now you have to figure out chunking it up. So I've done sequences where I'm like, I'm going to sit here on chat and I'm going to give you 10 sections, process each of these and then give me the output. So a lot of the time savings are kind of lost in me having to give it that many examples.

I've been using Claude from tro, that's a Google backed llm claude.ai. What's really cool about that one is you can do five uploads with every chat that you have, and each of these uploads can have 10 megabytes of text. If you think about 10 megabytes of pure text with no formatting, not a P D F, that's a lot of text. This is really good. And then I've even there had conversations. One thing that I like to do in terms of blog production, a new topic comes out and I want to write about it. What I do is I turn on my iPhone, put in my AirPods, go outside for a walk around the block, 15 minutes, and I'm just rambling and recording myself the whole time. I'm like, oh, well here's what I think about it, and it's really cool that this new report includes the cost metric.

And then I'm like, oh, wait, does it include a cost metric? So I paused my recording, I go on Google, I'm like, oh no, it doesn't include the cost metric. So I turned my recording back on. I'm like, scratch that. It doesn't actually include cost, so that's not that cool, so don't mention that. But here's the other things that are cool about it. And then I take that voice recording, I transcribe it. There's a lot of transcription software that doesn't cost a lot of money nowadays, and it's really good. And so you get this transcript of just my stream of consciousness, which by itself is useless, but I give it to Claude and I'm like, what was I talking about? Summarize? It does a really good job. And even the points, the cost thing where I misspoke it understands that I misspoke and it doesn't make that part of the final summary.

And then I'm like, okay, well, so that's what I think, but now here is the article, the help center article from Google about the topic, or here's the blog announcement from the actual place that built this thing, what they say. And then maybe there's like, here's a couple of blog posts from other people who've talked about it and have validated that the blog posts are good, they're factual. And then I'm like, okay, so on what I think and the factual nature of this, propose some bullet points for a blog post, write me an outline. And then it's kind of that chain, that chain of prompting or the prompt chaining that's really worked a well for me.

Brett:

Yeah, it's almost like having a personal assistant, personal writer, researcher all roll into one. But again, it's so relying on your prompts and your direction and your input, it looks fascinating. So Claude, c l a u d.ai. So claude.ai, fascinating. I'll have to use that voice recording idea because that's something I actually, I'm an audible processor, I think better as I'm speaking sometimes. And I do like to be outside, so I've heard some people talking about that. Never use that myself, but I love that. Just pick a topic, start talking. I could see then using Claude to help you write a blog post or write social media posts or whatever. Just lots of options there.

Fred:

Exactly. And the one thing for people to keep in mind too is we've all had voice dictation for a very long time, and it's quite good. You can go into a Google Doc and you can start speaking and it writes your blog post. But I think where I always get stuck on that is I can't process in a logical manner what I'm going to speak. So that's why I prefer writing because I can go back, I can take a pause,

Brett:

You're chasing rabbit trails, you're looping, you're coming back. It's pretty convoluted. And sometimes when you're just speaking, and I think Google is better at this than Siri by a mile, but you start talking, then you're like, oh, wait, no, you didn't get that right. Well, okay, so lemme stop. Lemme correct that. Then lemme get back to it. And then now you've kind of lost your train of thought, right? So

Fred:

Exactly what I'm saying is don't do any of that. Just speak into your iPhone, into your voice memos and then transcribe the whole thing. And then don't even read the transcript. If there's mistakes in there, like G P T is good, they understand the context of what you were talking about and then sort of the same grammatical correction that Grammarly would do by looking at that word in context and knowing it's misspelled. Well, G P T does the same thing. It knows, oh, you probably meant C P C as cost per click instead of C, B, C with like B as in boy, which may be the transcripted, right? It doesn't matter. It picks that up and it's going to fix it for you.

Brett:

Really, really cool. Super helpful. You'd mentioned something before, you talked about drift with AI and how sometimes you can just start progressively getting worse in certain areas. How do you ground the AI so that you can get better results, better results for you?

Fred:

Yeah, I mean, so the easiest way to do grounding is what I just talked about, right? It's chain prompting and feeding it in. Here's the actual thing that I want you to transcribe, or here's the article I want you to summarize. Then it becomes sort of focused in that area. Now, one project that we did as well, so I took the two books that I've written and we wanted to build a chat bot around this, and we also wanted to bring a sidekick into optimizer. So where you could start asking questions about how is my account doing? And maybe we say, well, your budget is not fully spent, but your results are good, but you have budget available, so what is it I should do next? Well, in that case, we would recommend that you maybe increase your bids a little bit, or you find new keywords for more coverage so that you more fully spend that budget.

So that's the advice that we want to give. So how do we ground it, right? Well, there's a couple of ways of grounding. So the first way of grounding is in G P T, there's a thing called function calling. So keep in mind G P T by and large, the data that it has is from a couple of years ago, and then anything specific to your account or your situation, it just does not know. But what you can do is you can say, here's the structure of an A p I call the J ss o n to do an a p I call that's going to give you back the information that you need to do a good job. So if you go and say, tell me something about the budget, it will know, oh, I have a function which allows me to query for the budget for this account.

And so it constructs the J ss o n, the Js O then gets sent on to whatever a p I needs it. The j ss o n comes back with the answer, and now you've grounded it by saying, this is the actual budget, or this is the actual amount of money that you've spent. Make that part of the answer. And then it can do its construction of, okay, well it seems like you spent less than you wanted to and now it needs to give advice. Okay, so how do we give advice? And this is where we get into embedding. So embedding is this kind of advanced concept of vectors where basically the question that you ask is turned into a mathematical number and then that mathematical number is compared to every page of the book. And how do you get mathematical numbers for every page of the book?

Well, you have to embed the book, and this is actually not that hard. So if you look at open ai, they have an a P I that's called embedding. So you feed it one page of the book and you say, give me the mathematical representation of that one page. And then you store these mathematical representations in a vector database. So Pine cone is one example. They have a free plan available, so you put it into Pine cone, and now what happens is if the user comes to my chat bot and wants to have a conversation about their account or advice from the book, we take their question, we turn it into the mathematical representation through OpenAI, they do that for us. Then we compare that mathematical number in the vector database and then it says, well, here's five pages that seem to be similar in the mathematical representation.

So these five pages come back, get given to the large language model, and now the large language model construction response from those five pages. And so what comes out of it is not based on all of the text that the model's ingested, but it's based on five pages in my book. So it is grounded, it is factual through function calling, and that is a way to make it your own. And of course there's many marketing applications to this as well. So you could build a model that says, here's my style guideline, here's every page on our website and how we describe products. So when you go and make ads for these products, it's grounding it in how you speak.

Brett:

Dude, that is next level. That may be one of those we're have to pause back up the recording a little bit, listen to that again, start making notes. There's a lot to that. Super, super interesting. And it really interesting, I think for a lot of people, and I confess this to you before we started recording, I'm more in the learning phase with ai. You are getting after it, and a lot of this is next level stuff. So super interesting. I want to talk a little bit about large language models. I know you talked about Claude, which is kind of backed by Google, and you talked about transformer, which was part of Google Brain. So what do we need to understand about these large language models? Do you have preferences on which ones are better? Which ones are better for different circumstances? What do we need to understand here?

Fred:

Yeah, I mean, so large language models have bias is sort of the first thing because they've been taught based on a certain set of text. And one fascinating example to me is if you ask a large language model a question about gun control, you're going to get a liberal sounding answer. And if you ask that same large language model a question about religion, you're going to get a conservative sounding answer. Why is that? Does it have a political affiliation? Well, no, it doesn't. It's just because more liberals have written about gun control and more conservatives have written about religion. So it takes that tone of voice, it mimics that. So the question that becomes about can I build a large language model that maybe it doesn't talk about the things we don't want to talk about? So could I build a large language model just based on my corpus of data? So the books that I've written, the FAQs on the optimizer website, the support questions that we've had. So the answer is no, you probably shouldn't because you're not going to get to the volume of text to teach a good large language model. That's

Brett:

Not a large language model at that point. That's just too small of a set of data.

Fred:

Exactly. It's pretty small. And there's pretty interesting studies that show there's really like an inflection point and it needs to be a very, very, and we're talking about on the smallest side. So meta has a large language model, which is based on 70 billion parameters, 70 billion parameters, and that's small. Five times bigger is Google's model, which is called Palm two, so that's about 340 billion parameters. And then five times larger is G P T four, and it's split eight ways. But basically when they combine this all together, it's five times as large. So it's in the trillions of parameters, it's 1.4 ish trillion and we're just not going to get there. So we have to look at these different models. So Metas is good. It's called Lama Lama two. It is free for commercial use. So it's not the biggest model, but it's free, which is really appealing. As with anything from Google, I think it's a little bit too factual. It lacks creativity in my mind. That's always the frustration I have. That's the frustration I have with Bard as well. If I ask it to write something, it's like, yeah, it's kind of correct, but it doesn't read nicely, so I have to teach it too much to take on a certain tone of voice. G P T four, I mean, what comes out of that is beautiful. I really love how G PT four writes sort of the inferences it makes.

Brett:

You can get it to write in any style. We were got to get the office who's always getting Chad G P T to write memos that he sends out. I want this to be like a snarky third grade English teacher's voice or whatever. And it is pretty good. It's pretty good at adopting that tone.

Fred:

Exactly. And so that's sort of the three models that I would look at, the three primary ones. But then even within the large language model, if you say that you go with open ai, you have to start thinking about costs, right? Because Chad, g P T, sure you pay $20 a month, but you're not going to scale your business. You're not going to scale an agency or a big in-house project with that. You're going to have to use the A P I in some capacity to do things for 10,000 products for 15 advertisers that you're working with. And so when it comes to the A P I, now you have choices. You can use model 3.5, you can use model three, model four. And sort of the trend is every model becomes three times as expensive as the previous one. And then if you get into the really old model, it's like a hundred times cheaper, a thousand times cheaper, but that cheapness comes at the cost of it's not as good, it's just not very good at writing headline.

So at the very minimum, you probably want to use model three. And then speed is the other consideration I love, you can go and talk to G P T four and you can sit there reading the response as it's generating. So by the time it's done generating, I've already processed it and I'm like, yeah, this is good, or No, this is bad. It needs a tweak, G P T 3.5. On the other hand, it's like, boom, here's the response. Here's two pages of answer about the thing you just asked, which is amazing. But if speed is of the essence, which it often isn't in business, then 3.5 may be a better model to stick to. And then you sort of ask what's up with these different large language models? And so training your own model, that's like question number one, should you be doing that? And then if you want, we can talk about fine tuning and embedding, which are sort of prompt engineering, which are those next two levels that are probably a bit more accessible to the average user.

Brett:

So we talked a little bit about embedding already, but how does that apply in this context and kind of the prompt engineering? What advice would you give there? Where do we maybe get it wrong naturally? What say you on that topic?

Fred:

Yeah, exactly. So the prompt engineering that oftentimes is about things like in context learning, and it's about providing that thing that you wanted to summarize or that you wanted to talk about or the source of truth for what it's going to verbalize. And so again, it's about function calling. It's about turning things into vectors and storing it into a vector database. But again, it can also be about simple prompt chaining. The other thing people often don't really understand about generative AI is that open AI's initial models, we're not chat-based. Now chat is nice because it becomes an interaction and that interaction has memory. So the thing you asked five questions ago, that's part of the memory of that large language model. And so it brings that back and it keeps grounding things in what you asked at that point. Whereas the original forms of generative AI were much more in completion mode.

So it was like, here's a list of five bullet point headlines, and then you would say, now complete this. And it'd be like, okay, here's 6, 7, 8, 9, and 10 in that same style. So it would use your one prompt to come up with the next thing. But prompt chaining is probably one of the easiest ways to not go into embedding, but sort of prompt engineering, give it better or give better answers based on what you've built up to. And the other thing, like you said, this isn't like having an assistant, right? You can't come into the office and say, Hey, write me a blog post. I mean, sure, but what about how long? You have to give it very specific instructions, take a few minutes to come up with a really good instruction, and what would you have put in the email to your employee to help you with that? That's a good instruction probably for a large language model. So you still have to do that work. But what's cool too, that is you can actually use, so we use Mid Journey for image generation, and there's a very specific way of prompting Mid journey. So you can go to G P T and you can say, write me five prompts to get this sort of an output from Mid Journey. And now the one AI is telling the other AI what to do. And that works really well too

Brett:

If you want to get better at prompt engineering so that AI gives you better answers, use AI to help your prompt engineering. It totally makes it very meta.

Fred:

And then you know what, at the end of the day, Google's AI is reading the content that you've written to decide what's good enough to recommend to a user. And by the way, that's the other thing I was really, my mind was blown when Google and Microsoft, they started putting generative results. Because when I looked at chat G P T and people would ask the questions, I go, what's the highest tallest mountain in the world? Okay, it's Mount Everest. Maybe it's K two, I think. I'm not sure if that debate ever got resolved, but it's like, okay, well, so it seems to know things, but it's often also making things up. There's this great story I was talking to a friend who's a PM at Google, and he was in a meeting and they were debating what's the average conversion rate in B two B P P C?

And they were not agreeing with him that it was around 30%. So he goes back, G P T had just come out with chat G P T. So he goes, ask the question, and G P T comes back and he's like, yeah, it's about 30%. So he feels super validated, but he's like, well, can you give me some examples of reliable c r REM companies that talked about average conversion rate in the past year? It's like, okay, Salesforce, HubSpot, Oracle, and it's like these PDFs to these amazing sounding reports. So he clicks on the links and it's 4 0 4 error after 4 0 4 error. And what the large language model had done, it was like, well, you told me reliable C R M companies. So HubSpot, Salesforce, Oracle, it knows that it's like something that was written in the last year. Oh, let me put 2022 in the title of the link.

And by the way, G P T doesn't even look at links after 2021 or some of the models Don, right? So how does it even know that? So he was smart enough to click on it and not lose his job as a result of making stuff up. But then it was like, well, now all of a sudden Google and Microsoft, they're doing generative results. So how do they make sure that that is correct? That's exactly what they use as they use embedding. So it's not like they have a large language model and that thing magically knows the right answer to anything. No, they're still running it through Google's ranking algorithms and they're saying, well, look, here's 20 high ranking pages about whatever you asked. And they use vectors and they use semantic search to do that. And then it says, okay, now give these 20 results to a generative system and summarize it. And that's why the answer is usually fairly correct because it's not making stuff up and it's grounding by in context learning of saying, here's the 20 articles that I want you to take back and do something for the user with.

Brett:

It's amazing. It's amazing. So we're running out of time. I want to talk about just a couple things here as we wrap up just to see if you get a perspective. So how do you see chat-based AI changing Google's core, which is search, right? So there's, there's all kinds of debates and articles and stuff online talking about, Hey, chat, G P T is going to destroy Google search, and will Bard be enough? And Bard's going to upend Google's economic model and stuff. How do you see chat influencing search and search ads?

Fred:

Yeah, I mean, it's a big unknown. And the question is how do users interact with this chat? And I've been fascinated because I think Microsoft's approach to generative is much less aggressive, at least on the search results page than Google's. And you would think as the number two player, Microsoft would be incented to really change things up. But for them, it's a fairly small section that runs on the right side, and then you can expand it up in the edge browser to be full page. Whereas Google, it's like, I've turned that capability on, and half the time I don't see the organic search results anymore because they get pushed down by the generative answer. I think I've already seen improvements where Google is getting quite good at knowing what deserves a generative answer and opens that up by default. And something where it's more debatable, if that's helpful, it stays closed until I say, go and give me the generative answer.

But what you do have to realize, and you see this within Google, is that like I'm saying, what's in that generative answer is still what came out of the top ranked organic results, the top ranked shopping ads show up in there. It's just summarizing it. It's just providing a different interface to interact with them. But then the big question is, how does the user interact? Does this become a zero click search event where they got their answer? And if that's the case, then it probably wasn't commercial. It was probably not going to be leg gen anyway. So at some level, like who caress, right? But those things where the user does need to click through to buy something to get more information from your company, those links are appearing in generative. So I would say, I mean, keep doing the things you're doing, use generative AI to be more creative, to produce better content.

But if you're just turning it loose and saying, generate me 10,000 landing pages about different cities for my hotels, that's probably pretty risky. You need to ground it, you need to train it, you need to fine tune it so that it speaks your language, and then you still need to have human quality control on top of that, and that's going to produce good content. Google might appreciate that. That might become part of the rankings, but at the end of the day, this is Google's cash cow. So if the cash cow dies, then I think we're in a lot more trouble in general.

Brett:

Yeah, yeah. They're going to find a way. Google's always good at figuring out how do we still monetize this? How do we make sure there's plenty of ads to click? Because you got to keep the machine going and you got to keep advertisers happy. And let's face it, we all love Google search. If we're searching for something that has commercial intent, if I'm looking for a product of some type or a place to stay or a place to go, people click on ads. People click on ads even more oftentimes than they click on organic results. And I love what you said though, even the generative results that is pulled from, if it's something product related that's pulled from a shopping theater, it's pulled from a website. And so having the right structure, the right ss, e o, the right feed optimization, all of those details really, really important. And if you have that, then you're not going to get just left in the dust likely by the generative results.

Fred:

Exactly. And I think this whole track of having more authority, more influence, I think is really going to continue to matter a lot. So for what it's worth, I mean, something that I've written, because I've written a lot about it, it's been linked back to like Google's going to say, well, something that he produces probably is going to be better than something that's been no name author. That is probably just generative ai. So build your brands, build authority. It's same things we've been doing before. And then we also have to think about multimodality, right? We're seeing fewer and fewer clicks from text-based search results. We do more video. I mean, we're doing this podcast, right? It's because people like listening to people, they like seeing people. That's how people get a lot of content these days to do more of that.

Brett:

But it also does sort of just go back to Google's original. One of the original thesis was what if great ads are just answers to questions? And so then it's a matter of, okay, well, how do I answer the question in a really great way, whether that's through text or video or through my feed or through the page or whatever. And yeah, it comes down to just building a great brand and being great at merchandising and creating a great experience. And if you do that, yeah, the AI is going to help you, not hurt you in the long run. Fred, this has been amazing, and we could keep going and we just barely scratched the surface, and a lot of people's heads are spinning. Mine was spinning at several points in this conversation, but if you want to dig in, read your books, read your blog, check out optimizer, how can they best do that?

Fred:

Yeah, all of those ways. And then you can connect with me on LinkedIn. So frederick vales optimizer.com, go take a look at our blog. We produce A P P C town hall, which is every month we do a video episodes. So we talk to interesting people, and I think you've been on it, so have great conversations there. But yeah, thanks everyone for listening. And if I made head spin, I'm sorry. I hope I at least gave you some nuggets. I'm working to dig deeper

Brett:

In a good way, in a really good inspiring, yeah. Yeah, you're generating ideas, man. People are going to be able to listen to this and put this into, I also feel smarter just by listening to you, so that's always good. So awesome. Fred Valets, ladies and gentlemen, I'll link to the books. I'll link to everything in the show notes. So check that out. Check out optimizer. And also you spell optimizer too, Fred, because that's an area where people get tripped up sometimes.

Fred:

Yeah, O P T M Y Z R,

Brett:

Which just turned 10 years old, by the way. So congrats on that. Awesome piece of software top rated. Check it out if you need some help with your P P C optimization and with that, until next time, thank you for listening.

‍

Episode 255
:
Byron Myers - Glimmer Wish

Why Your Prices Are Probably Wrong

Price. It’s an emotional topic for shoppers and for brands. 

As shoppers were more influenced by price than we care to admit.

As brands we’re often afraid to change our prices. And our current prices were probably created a long time ago. It’s almost a certainty that they price for at least some of your products is wrong right now.

Byron Myer’s is a super smart dude. He started Inogen, a med-tech business, while in college and took it public in 2014. Now he runs Glimmer Wish with his wife and daughters. He used price theory and price strategy to add tens of millions in sales at Inogen. He’s also used it to scale Glimmer Wish from 0 to over 7 figures in less than a year. 

And this isn’t a “let’s raise prices a bit and see what happens” approach. This is a scientific, mathematical way to find the optimal price to maximize profits.

Why Is your pricing wrong:

  • It’s likely based on flawed strategies like competitor benchmarking or cost plus. Both strategies are ok to start with but do NOT produce your optimal price for total profits.
  • You’re following old customer psychology that states you should always charge $19.99 instead of $19.97 instead of $20 or $22. Often this is incorrect.
  • You haven’t changed the price in over a year.
  • In the current environment if you’re not changing price or running tests quarterly, your pricing is probably off.

This topic will make you more Cold. Hard. Cash. Give it a listen!

Byron:

Everyone is so data-driven on ad performance, right? Or they're doing a CRO experiment and they're just diving into the data. But then again, they haven't looked at price in five years on their main selling product. So take that same mindset you use that you're so analytical with on your paid ads and apply it to pricing because there's just so much value. It's one of the easiest things you can do now that you know that there is a process to do it, to improve profit for your business, all of that profit's just going to flow straight to the bottom line. And it's best for almost every brand out there. I could almost guarantee you're at the wrong price point right now.

Brett:

Hey, it's time for the Spicy Curry segment. The point of the show when I get just a little bit spicy. And how is this for spice for you? Your prices are wrong. Almost undoubtedly what you're charging customers right now is not optimized. And I think the reason for this, and we talk about it in the show, is because we kind of are reactionary with our pricing strategy. We price based on co competitors competitor benchmarking or we use cost plus, but we never look at how does our price impact conversion rate and total volume and total profits. And here's the deal. Mathematically speaking, there's a way to find the right price for your business, the right price that will maximize total profits. The deal, we can't take percentages to the bank, we can't take competitor comparisons to the bank, but what we can take to the bank is cold hard cash. So in this episode, Byron Myers and I talk about pricing theory, pricing strategy, and pricing optimization, that you're going to love it. You got to check it out. So now back to the show. I'm here with Byron Myers and can't wait to dive into pricing and pricing strategy, but I want to hear a little more of your story, Byron. And so you're a longtime entrepreneur, very successful guy. You started a med tech business, then now you got a business with your wife and daughters. And so we're going to talk about both, but talk a little bit about your med tech business, why you started that and what the scoop was behind that.

Byron:

Happy to and just great to be here as well. Brett, this is, you're one of my top three podcasts of all time I listened to on the regular. So love that. It's an honor

Brett:

That warms, that warms my heart. That's better than a fivestar review any day, that verbal affirmation there. Love it. Thank you

Byron:

For sharing that. So yeah, my entrepreneurial journey started back in college, uc, Santa Barbara entered a business plan competition with a couple friends just for experience. Didn't want to start a company, but we stumbled onto a great idea, just completely driven from the market, just trying to solve a problem for a grandmother, and that was a portable oxygen concentrator. So basically made its own oxygen from room air and would replace all of the oxygen tanks that people had to drag around, which obviously have a limited capacity. And again, just all from the market. None of us were engineers. I was a math econ major and so it was another founder and the third was biology. And so we really developed the technology along the way after we had a full understanding of the market. But we launched that company still while in college. Ultimately took it public in 2014 at the peak, our market cap was over 6 billion. Definitely has stumbled since then. But I put in a good 20 years with the company and now actually I'm doing a new company Glimmer Wish that my daughter came up with haircare and skincare. And that has already been more fulfilling, has been more fun, more rewarding personally than taking a MedTech company public. It's just been great to do it with family

Brett:

And that's one of my dreams. I would love to start a business, start a brand, do something with family. We have a small real estate business that a few of my kids and my wife, my wife mostly runs it, so that's fun. But we'd love to do more. Building a business with family kind of fun. And it's great. Even if it doesn't make a lot of money, it's still enjoyable. And so I love the story though of Enogen where most people that start a school project, Byron, they just try to get a passing grade and hope the teacher doesn't call 'em out too much. They're just throwing stuff together. But you built an idea that eventually turned into a real business that eventually iPod. That's crazy. Not very often that that happens for sure. And I know maybe the recent history hasn't been as great for the company, but great while you were there, sounds like, and things do change for sure. I love this topic of pricing and price optimization, but when did you first become passionate about pricing? Was that something that just kind of evolved over time? Was there a eureka moment? Talk about why you became so focused on pricing.

Byron:

Yeah, yeah, great question. And this has really become my passion project now because brands I've just noticed don't pay attention to pricing, but how I stumbled across this at some point along the way in the Inogen journey, I wanted to put some more tools in my toolbox. And so I did the Rady M B A program, which is at uc, San Diego down the coast from where I was in Santa Barbara. And just in one economics class, the professor was talking about pricing just sort of on the side more on a theory basis. But I took the M B A program for my business. I want tools. How am I going to grow my business, make it as successful as possible? I didn't want just the M B A to further my career on my resume. So I saw there that economic theory allowed people to optimize prices by really solving for prices. But in the textbooks it's done with quantity and on a theory basis. So I adapted that to the modern e-commerce seller, which was all on conversion rate and made a bunch of changes and then used it in Inogen and used that process repeatedly year after year to optimize prices. And we improved profit by millions by doing this. And so now I'm doing it in my new businesses and it's working well and I just want to share it with others.

Brett:

Yeah, this is so interesting because I think most people when it comes to price, they're more reactionary. They're looking at what competitors are charging, they just arbitrarily pull something that's kind of what do I think I can get away with? What do I think I can charge here? Rather than being strategic and mathematical and applying pricing theory. And to your point with your previous brand, this was responsible for millions and millions of dollars in profits by improving your pricing model. And little changes in price can have a dramatic impact on profits, but little changes in price can also have a dramatic improvement or change in conversion rate. And so really excited to dive into this topic a little bit, but where do you think most brands get priced wrong?

Byron:

Yeah, I think that probably the most common error is that they just set it and forget it, right? They think about price once and then never look at it again. But the second most common problem is that they're setting prices incorrectly. And I think largely using the methods that you mentioned, they're looking at co competitors. That's competitor benchmarking. They're doing cost plus trying to get their margins to a certain place. But all of those methods, I mean they're great when you don't have any data and you need to launch with something, but once you have data, you need to use a mathematical tool. And to be fair, I just don't think brands are aware that you can mathematically optimize price to maximize margin. I mean, it's not a just arbitrary point. You test and test a few prices one way to do it, but you're not going as far as you can. There's an actual method you can use to get to the right price point. There is a correct price which you can solve for.

Brett:

And it's really great that you said some of those tools, competitor benchmarking or cost plus. It's okay if you don't have data or you got to start somewhere, so you got to start somewhere. But yeah, ultimately is your goal to compete with your competitors or is your goal to maximize profit? Is your goal to get a certain margin on each item? Or is the goal to maximize total profits? Right? We don't live on percentages. We can't take percentages to the bank, but you can take cold hard cash to the bank. And so yeah, you can find mathematically what the right price is. So can you walk us through what does your model entail? How are you weaving theory with practical tools and stuff? So walk us through that a little bit.

Byron:

Yeah, you can really set up a few simple tests, which you need to gather the data, which you would then do calculations with. And you hear a lot of people say sometimes, especially now, just raise your price, see what happens, see if you're better off, which again is better than not doing anything. But I found that many times brands are better off lowering price because you get such an improvement in the conversion factor. And so as you said, it's not about maximizing the margin on a per sale basis, it's the total margin in the business. So what you need to do is run several price tests and pick higher prices, pick lower prices really as far away as you can, 10 20% or more. It kind of depends where your price point is and capture the conversion rate data at each one of those price points.

And there's tools out there to easily do this. Like the simple shop is one where you could see conversion data on a per product basis. You can get it in ga. Shopify doesn't show conversion rate by each product for some reason, but I'm hoping they're going to improve that. But then you're essentially drawing this relationship, which is actually the demand curve. Every business has its unique demand curve, which is also price elasticity. So that's how demand is changing. So in other words, how the conversion rate for your product is changing as the price changes. And so each one will have a different slope, a different shape of that demand curve. And once you have that data, then you can do some real math. And from there it's just an equation. You need some other points of data, but you're just doing calculations to find the right price and not between those test points that you did, but any price along the whole demand curve which will maximize profit.

Brett:

Yeah, it's super interesting. So not just what the prices you tested, but look at that demand curve and the concept of price elasticity. It's brilliant and it does unlock new thought processes and a new level of profitability for you. I remember actually this is one of the areas in college really sticks out in my mind. The price elasticity of demand and understanding that for some things are very elastic. Heart surgery as an example, you need heart surgery. Does it really matter what it cost? You're going to figure out a way. It could be 10,000, be a hundred thousand, be 200,000, you're going to figure it out if you need it to save your life versus gasoline. I don't know, the two gas stations next to each other, one's 10 cents a gallon cheaper. You're probably going to do that. Why wouldn't you 5 cents, even 1 cent a gallon cheaper? If you notice, maybe you would take that into account and that's inelastic, right? And so what you've got to do though is you've got to price, you've got to have enough tests of price to build that demand curve for your business and then you find the sweet spot along that curve. Am I understanding that correctly?

Byron:

Yeah, pretty much. And almost every brand in e-commerce is pretty elastic, which means it will vary. The conversion rate will be sensitive to price changes. And so almost every brand can benefit from doing this exercise. And you need to understand what that price elasticity value is for your business. And then you can find out what the optimal price point is doing a bunch of math.

Brett:

And now that I just said that, did I inverse those? I know what I described was good, but I think I described one as elastic when it was not elastic, and so I didn't want to spell you out. Econ class concept is the same. I swapped the words, whatever. So yeah, demand is inelastic for heart surgery, demand's going to be what it is,

Byron:

Elastic

Brett:

For gas, so

Byron:

Correct.

Brett:

Thanks for not calling me out, but there was something in there that you said, I was like, oh, wait a minute. Yeah, I said that backwards. How many tests are we maybe going to need to run and for how long can help map that out?

Byron:

So at a minimum, you want a higher price point than your control and a lower price point than your control. So you have three distinct points where you're using your control price as well. Ideally I like to do more, but it kind of comes down to the brand's ability to track data, to simultaneously run tests. So you're doing these simultaneously. Ideally, if you're not set up to do that, you can do them sequentially, then you have to take into account seasonality. You have to have some normalization factors that put the data back so you can compare it with the prior data, but that's all doable. This is all better than not looking at price at all. So we're better off no matter what. And a lot of people get all concerned about is the data statistically significant and all that. Of course you can use calculators online to find out if it is and the amount of data you need to run for it to be stat sig and all that. I try not to get too hung up about that because again, you're all better off no matter what, but I tend to run a test for at least one month regardless of the volume that a brand's doing. So ideally you're simultaneously running three different price points for at least a month

Brett:

Would be control, higher price, lower price, run those all three simultaneously, ideally for a month.

Byron:

Correct. Then you'll have plenty of data to do the calculations.

Brett:

And when you're running these price tests, are you mainly suggesting someone does this on their Shopify store or on Amazon or both or does it depend on where they get the most volume in any insights there or does it matter?

Byron:

You can do it anywhere for a glimmer wish. Amazon's doing great for us right now. That is our best channel. And so we're leaning into Amazon. I've done all of the data using Amazon data. You can get to conversion rate data in Amazon, you can change prices, you can do some price AB testing, but you don't need to wherever your most volume, the volume is for your business. I recommend doing the process, but you can do it everywhere.

Brett:

Yeah, super interesting. Cool. And so anything specifically for a Shopify store owner? I know you mentioned can see conversion rate by product. So if we are running a Shopify store, that's where we need to lean into GA or some other tool

Byron:

You can use ga. I use, I think it's $5 a month and no relation on my part, but it's called the simple shop.com and it's just an overlay and it will show you everything you need to know, conversion rate data by product and a bunch of other helpful info. So it's a pretty inexpensive solution.

Brett:

And then you're getting the data, you're running the calculations, and that's going to basically the calculations you run, is that going to give you one price? Is it going to give you a price range? What is that going to spit out for you?

Byron:

It will give you the exact price to maximize total profit. Now, there's two separate processes actually. You can maximize total revenue or you can maximize total profit. And those are two distinct price points. That's not the same price to accomplish both. And so if for some reason you want to maximize revenue, you're valued on revenue, not on profit, it could be

Brett:

An exit and you want to show that top line growth and there's some real business reasons to do that

Byron:

Potentially,

Brett:

But you're going to maximize profits.

Byron:

So you could do that. And I like to do that anyway just to see where that point is. But most brands are going to want to maximize profit, so it will give you the exact to the cent price. Now from there, I recommend doing some fine tuning just math, and then I talk about in a course I have where you can bring in consumer psychology and some other factors where you do want to finesse that mathematical price point a little bit sometimes to just fine tune it,

Brett:

Yeah, get it to maybe end in an interesting number. You do the dot nine 9.99 or 0.97 or 0.67, whatever, what you do in there to optimize. And then you're also taking into account other things like how's this going to impact my sales velocity on Amazon, which could impact rankings, which has a bit of a virtuous circle I guess because it's looking at conversion rates, it is taking that into account.

Byron:

It is, and it's also taking into account in the equations you need your marginal cost, so that's the cost for one additional unit. And so you're not including fixed costs in there like rent and overhead and actually not even including advertising costs, which a lot of people would include, but just that cost really of your product, any processing costs, fulfillment costs. So some of those Amazon fees are going to go into that as well. But you need your marginal cost and eventually you get your marginal revenue from your demand curve. And so to get marginal revenue, you have to do some derivatives. So I don't want to scare people, but there is some math involved, but I have a calculator to make it easy. So you don't have to do all that hard work, but you're setting marginal costs equal to marginal revenue. And that is what is from the textbook that when you do that, profit is maximized at that point. And so it's just how you manipulate the data to get it into the economic theory to maximize profit.

Brett:

Nice. So you need to understand it for the most part, but yet you don't have to run all the calculations yourself, just get the inputs, use your tool, and then it will spit out the answer. Now, once you get that optimized price and it's to the penny, and then you maybe tweak it a little bit to use consumer psychology and things like that and to make it look right after you do that, now how often are we going back and looking to run a test again and maybe change our price or reoptimize,

Byron:

Right? I'd say at least twice a year. And this will depend on a lot of factors, how much volume the brand is doing, if there are changes, competitors coming out, other products launched right now, just the economic environment, so uncertain, I would probably be doing things every quarter because everything, what this process is using is real buying decision. That's why it's so much better than any other method. It's how people are spending money from their own wallet. That's the data you're using. So everything's included, the economic factors going on, large macro factors where your competitors are priced, even using the cost of your product, your cogs, because that is changing as well. So all that data is factored in to these decisions.

Brett:

And man, with things changing rapidly right now and inflation still happening in uncertainty, this process is coming up with your demand curve and it's very possible. In fact, it's almost a certainty that demand curve is shifting a little bit right now because of outside factors, because of competitive factors, because of economic factors. And so running these calculations on a quarterly basis makes a ton of sense. Any other, I know we could get into more of the nitty gritty or break down the formula, but that would be difficult to talk about in a podcast. And so we're going to plug the course. I know you've got a special discount for the listeners. We'll talk about that in a minute. But any other insights on how we should be thinking about price or any mistakes that we left out? Any other general thoughts there?

Byron:

The biggest thing was that I would just encourage brands to look at price mean. Everyone is so data-driven on ad performance or they're doing a C R O experiment and they're just diving into the data, but then again, they haven't looked at price in five years on their main selling product. So take that same mindset you use that you're so analytical with on your paid ads and apply it to pricing. Just so much value. It's one of the easiest things you can do now that you know that there is a process to do it, to improve profit for your business, all of that profit's just going to flow straight to the bottom line. And it's best for almost every brand out there. I could almost guarantee you're at the wrong price point right now.

Brett:

And man, how much easier is it to go out and adjust your price than it is to AB test landing pages or split test your bullet points on Amazon or hire a C R O firm and go through that process? All those I would recommend, I've had recent podcasts, guests and episodes dedicated to C R O and how to improve ux, and that's all valuable, but it's a lot easier to adjust price. And I think we forget how much price impacts conversion rate and then again, how much little price changes can impact profit one way or the other. And one other thing that's interesting about price is it can impact your ad performance, right? I'm a Google shopping guy from the very beginning of Google Shopping, and we see it all the time. Back when we used to do SKU level bid adjustments and pulling data at the individual product level, you could see it, you drop price and Clickthrough goes up and you drop price and more people see the product, you drop price.

And even before any of that happens, Google starts showing the ad more because they know that if the price is lower, more people are going to click and more people click, that makes more money for Google. And so yeah, there are things that shift here, and so it makes all the sense in the world to look at this the right way and also to know that you're probably at the wrong price point. Honestly, this is interesting. This has me thinking about pricing from a service standpoint. So a service model, and actually just to click on that, just this is mostly for my benefit, but I know we have other service providers, other industry people that are involved that are more service-based. How do you apply pricing in a similar pricing model to a service?

Byron:

And you can also apply it in a B two B scenario as well. For an actual product, it gets a little tricky because then you tend to go into quantity rather than conversion rate. But if you a service where you are displaying prices, you are measuring that in a conversion rate scenario where you're probably capturing a lead and then converting that lead. It doesn't matter if there's a Zoom process in the middle of that or a phone call, you're still having the conversion data. I did all this at Enogen using phone sales. It was before e-commerce. So you can apply the process to pretty much any selling environment you may have to make some tweaks. I'm happy to talk to brands if they have unique situation of how they could apply this to their own store SaaS or B two B, whatever it may be. It can definitely work.

Brett:

Yeah, really cool. Let's talk a little bit about Glimmer Wish. So you mentioned it, I know you're running with your wife and your daughters. You have more fun with that than you did your previous business even though the previous business went public. But where did the idea for Glimmer Wish come from and what do you guys sell?

Byron:

So my daughter came up with the idea, she was 10 at the time, and she always wanted these just fun looking haircare skincare products in the store. And then my wife would look at the label and see, oh, this just has all these terrible chemicals in this product. You're not getting this. And so it was my daughter's idea, well, let's make fun products. Kids want these ones that she saw with clean ingredients that moms will approve of, right? Because the clean products were boring. Nobody wants something in cardboard and it smells like lavender or something,

Brett:

Or patchouli or something.

Byron:

Yeah, exactly. So we custom mold, mermaids, unicorns in these fun shapes, these fun bottles, all with clean ingredients. We do haircare products and skincare, and we launched to the market about a year ago, and it's going great, and we're just having a ton of fun.

Brett:

What a cool concept. And I love that your daughter's the one that came up with the idea because yeah, most shampoo bottles, conditioner bottles, haircare product, it's just a tube or it's, it's a cardboard sleeve or something, which by the way, there is a market for that. We have several brands that create clean products and someone who's really interested in avoiding plastics or whatever, they're going to gravitate towards that. But what about kids, man? They want cool products. And it is actually easier as a parent to get your kid to brush their teeth or put conditioner in their hair, take care of self-care if it's fun, if the packaging is fun. But most of that stuff, for whatever reason, I'm sure it's cost related and probably a few other factors, but most of that stuff is garbage, right? It's garbage that you don't want to put on your body or in your body. And so yeah, it's a really cool brand. And I'm looking at one of the unicorn, the unicorn conditioner right now, which is super fun. And I'm also, now I'm looking at your pricing, got me thinking how long did it take you to come up with your specific pricing? And so actually, do you mind if we talk about the pricing?

Byron:

Sure.

Brett:

Cool. So I see some of these, the unicorn shampoos, $22 unicorn conditioner, 22 body wash is 18, mermaid haircare, duos 44. So those are ending in a low number. And I know psychology or some of the teachings in the past were like, Hey, end in seven or higher or whatever. So talk about these prices and how they compare to maybe where you started.

Byron:

Yeah, well, I'm definitely using what we talked about for my own business as well. And like we said, Amazon's working really well. So that's where most of our data is. We're on Shopify too, and trying to grow that channel, of course, but Amazon's about 60% of our revenue, and so most of our data's there. It's easy to test things on Amazon. And so we launched at around $17, $18 and use the traditional processes. You don't have data. So yeah, we did competitor benchmarking, we did cost plus, and our cogs were high when we came out of the gate, so we kind of had to price it up there a little bit. But once we had data, ran the process and found out our optimal price point to maximize total business for the company was around $22. So we went with that. And then once you run that, you implement those prices, then you verify, okay, am I getting the right conversion rate, which the process predicted I would get? And that's the,

Brett:

So you got to go back and check it, right? Process said this price point, this conversion rate, but does that actually happen? So you got to run it and then verify the data.

Byron:

And so we did. And then the fine tuning, that's an interesting point because I think here the consumer psychology has shifted a little bit and it's what happens. Everyone used to price at 1999 would be kind of the price point. And you're seeing a ton of brands now, especially in the beauty space. So I think kind of geared at this audience, which we're in our customer are moms buying the product, moms are buying the product, and they're buying all these other products and related industries. Everyone is moving towards just rounded off, just give me a price, $20, don't say 1999. I think other industries that still works, but the latest trend is to just give me a flat price, even one number that I can take to the bank.

Brett:

A lot of people are saying, yeah, I get what you're trying to do. I know this is a pricing tactic. And so yeah, now people are just like, give me, I want clean ingredients. I want clean pricing. Exactly.

Byron:

Yeah,

Brett:

No

Byron:

Gimmicks.

Brett:

Yeah, really good, really good. Byron, this has been fantastic. You got me motivated to talk price more frequently with customers and take a closer look at that because one of the things we talk about a lot back to the C R O discussion is we run a lot of top of funnel traffic as an agency, a lot of YouTube, a lot of Google shopping, a lot of search and more. And so we love conversion rate optimization companies and specialists because if you can improve your conversion rate a little bit, now that changes the economics of your top of funnel campaigns. Now we can go harder on YouTube and we can push performance max more and we can grow the business. Same is true though with price, we start to get more profitability or we optimize price for conversion rate, which leads to profitability. Same thing. That has an impact on top of funnel lines. I know I mentioned Google shopping a little bit ago, but it has an impact on all your ads. So big fan of this. So for those that want to check out the course, how can they find it? We'll link to it in the show notes of course, too, but how can they find it? And then I think you got a special deal for everybody as well.

Byron:

Absolutely. So the course is profit professor.io, go check it out. It's just my passion project, just trying to help people and definitely want to do a discount for your listeners, 50% off what we can do. Just use code O m G

Brett:

Code O M G, and that's at Profit professor because he's taking you back to school. But he doesn't in a polite way, even when he is a guest on your podcast, if you make an error in describing something, he'll kind of let it slide and be gentle about it. But a profit professor, really, really good stuff. So use that code, omg, get 50% off, I think impossible for this not to pay for itself and not to help you tremendously so likely. This is a lever you are not pulling either not pulling frequently enough or not pulling in the right way. And it's another way to optimize your business. Byron, so glad I had you on. This is really, really good. Can't wait to share this with the e-comm world. And any parting thoughts, anything you want to share? I'll also shout out to girl dads out there like myself, I got six daughters. I got to go buy some unicorn shampoo now. I think that's going to make some people very, very happy. But any other asks, tips or anything to close on?

Byron:

Well, as you're looking at the course, just know I'm available. I want to help people. And I love just connecting with brands too. If you want to reach out, hello, at profit professor.io is the email address. Happy to help you through the course or just talk, see how we can help each other. We're all in this together. So I want to thank you too, Brett, it's been an honor. I love the pod. I listened to every episode and it's just been great to be here

Brett:

Now. It's going to be both super exciting and potentially a little bit weird to hear yourself on the podcast.

Byron:

Absolutely.

Brett:

But you did a great job, really informative. Love this. Can't wait to share clips and share the whole episode. So Byron Myers, ladies and gentlemen, Byron, thanks for taking the time and we'll have to do this again sometime.

Byron:

Sounds good. Thanks a lot.

Brett:

Awesome. And thank you for tuning in as always. We'd love to hear feedback from you. What would you like to hear of on the podcast? And if you haven't done it so far, we would love that five star review on iTunes. It helps other people discover the show. And with that, until next time, thank you for listening.

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