Ep 645: DTC Rundown: "Don't Run Ads Until $10M?," Evergreen vs Campaigns, and Sites Built for the Wrong Customer

0:00 Should brands wait until $5M to run paid media? Before we jump into today's all killer, no filler episode, a quick word about who makes this show possible. The DDC Podcast is brought to you by Pilothouse, the performance agency behind some of the fastest growing DDC brands in the world. Creative, media and customer journey all under one roof. 0:15 Performance and brand without the trade off. Every Friday we hand the mic to a Pilothouse operator to breakdown what's actually working in their space right now. Want a team that treats your growth like their own? That's Pilothouse. Head to pilothouse.co and now on with the show. 0:30 Speaker 2 There is absolutely no reason you should touch paid ads until you're doing 5 to 10 million in revenue. What's your take on this fellas? 0:37 Speaker 3 The biggest issue that we see is people are spending money talking to customers they already have who are already going to make a purchase regardless of whether you serve that ad or not. 0:49 Speaker 4 When you're doing a good job and reaching new people, your metrics should get worse, not better, because you're reaching the heart to reach people. If you're in the lead, sail with the same wind as the other leaders. Don't try something crazy unless you're already losing. 1:11 Speaker 1 This episode is brought to you by Triple Whale, the AI operating system for ecommerce. Just a quick gut check for brand owners and media buyers. Have you started your Black Friday Cyber Monday planning yet? If the answer is not yet, you're not alone. But the brands that win BFCM aren't the ones scrambling in November. 1:26 They're the ones planning right now. And here's why it matters. BFCM keeps getting more expensive. Last year, ad spend climbed faster than demanded, CPMS went up, and the seasons stretch from a single weekend into a full month of promotions. Show up unprepared and you spend more to reach the same shoppers right when your margin matters the most. 1:45 Triple Whale built a free resource to help the BFCM Hub. It's like a command Center for planning your most profitable Black Friday with everything in one place. Real benchmarks from 10s of thousands of brands so you know what performance should actually look like for brands just like yours. Free tools to set goals and forecast outcomes. 2:03 Strategy guides and checklists covering ad performance, retention and conversion, and AI powered tactics you can put to work before BFCM week hits. The best part? It's completely free and there's no login required. Go to triplewhale.com/BFCM 26 and start building towards your most profitable Black Friday Cyber Monday today. 2:24 Speaker 2 It's all killer, no filler. I'm Eric. This is the DDC podcast, and we're actually doing something a little different today, something I've wanted to do since the beginning of starting this podcast. I don't know, I don't even know if this show is still on anymore, but I followed this sport show called Pardon the Interruption, PTI, where essentially they have their hosts and they basically go through that. 2:42 The major topics of the day, everyone gives their take. Sometimes there's disagreement, always rambunctious, always fun decided that I could just code this up on Claude and just jump right into it with two eminent leaders on the pilot House side, we've got Jordan Gordon, host of To a Burp, the world's best e-mail and retention podcast. 3:03 He leads post click and retention at Pilot House. And we've got Rafael Gee who's a newcomer on the pilot House podcast scene but is rapidly rising up the charts works heavily in partnerships and client strategy. Welcome both to the first ever episode. We have so many titles now of the all killer no filler D to see podcast The Rundown. 3:22 We're doing it live and it's all happening. Welcome guys. 3:25 Speaker 4 Thank you, nice to be here. 3:26 Speaker 3 Nice to be here as well. 3:28 Speaker 2 I'll kick it off because this was a topic that that came up. I just got back from a beach vacation and I saw this tweet that was just absolutely blowing up on Twitter. It was from Cody Sanchez, who is an operator in the space, and this is what she said. 3:43 I'll die on this hill. There is absolutely no reason you should touch paid ads until you're doing 5 to 10 million in revenue. Learn how to create demand organically through content, partnerships and outreach first. That's enough to take you to that 5 to 10 million mark. Then, once that engine is running, layer ads on top. 3:59 If you do it the other way around, the risk is getting eaten up by rising ad cost before your margins can absorb it. Quite the hot take. One million impressions on X which is insane. 706 comments with marketers just freaking out about this concept that they shouldn't be doing their jobs until a brand has hit this critical mass. 4:19 What's what's your take on this fellas? 4:21 Speaker 4 I'm the free traffic guy, so I'll I'll take the free traffic side of this discussion. I do have some nuanced thoughts on both sides, but I'll start with defending this. You know, I've worked in E com for 26 years now. I think that the purpose of online marketing is to ultimately Dr. free traffic. 4:42 I mean, if you think about like, let's say you know, your ultimate, you know your total margins, 20% and 20% of your traffic is organic. Well, basically that that organic traffic, that's your profit, right? Everything else is paying to just build up that organic where your profit is. Those are obviously some big numbers I'm taking, but if you are not ending up with people coming to your site for free, right typing you into the domain or or you know, using very low cost methods like e-mail to drive people to the site, you're not going to be as profitable as the next guy and the next guy's going to win. 5:15 Building organic traffic alongside paid growth I personally, I'm torn because I like the sentiment of the tweet, but not necessarily the facts around it. Because the sentiment is that ultimately don't build the business that relies on paid media to drive the majority of the revenue. 5:31 Because at then, then at the end of the day, all of your sales are going to instantly haven't, you know, negative margin impact, right? Because you're paying for every purchase. But there's a reality that exists, you know, where business can wait to get to 5 to 10 million because generally, like as soon as you're hitting a million, about 1,000,000 bucks, you can see that there's product traction, good strong unit economics. 5:53 Once you start reaching about that five melt mark, there's other copycats out there, you know, so you're already competing for attention and paid media. Ultimately that's the job of accelerating customer acquisition. You know, if you have a good product, paid media helps it grow. If you have a bad product, you know, paid media, it's just going to make that business fail quicker. 6:12 It's just an accelerant, right? So I guess I sit in in the middle where I agree with her sentiment. If she means, hey, make sure that you use paid media to support a strong business. Don't rely on paid media to fund your revenue. 6:28 A. 6:28 Speaker 2 100% agree. And I we, we won't jump to the next topic, but it is yes and which is kind of the situation here. This is a yes and situation like you. All the bet, all the brands that come on the DDC podcast, all the ones that have these amazing stories, most of them have really found incredible product market fit, found their community, have have built an organic engine, but not all of them, especially in the pre iOS 14 era, there was that ability to really gain a lot of traction just from Meta and I still think that exists today. 6:57 But again, you can't be putting all your ad dollars into a bucket filled with holes, which is why you need to have that, you know, that organic side of things. What were you going to say, Jordan? 7:07 Speaker 4 Yeah, like this is along the lines of what Eric was saying, which is, you know, here's what's real. OK. I I worked for companies that were financed and the investors are like, this is how big you need to be in five years, you know, or I don't know where a bunch of these covenants are going to kick in. 7:23 Who knows, right? It's like, you better get this big. And so I didn't see the tweet coming into this, but but whatever the, the, the person who tweeted it, like they're speaking about, I would say a, a truth in marketing, but marketing is downstream from business, right? 7:39 And business is downstream from markets. And so it's like it's not necessarily going to be your decision, right, that the decision on your on your marketing mix is going to be based on so many other things. Still, though, remaining the deeper truth, like, you know, if you're not doing SEOAEOGEO, however many E OS there are these days, if you're not doing that stuff, you know, you can't scale other e-mail. 8:04 If you're not driving significant low cost traffic, then you better have damn efficient ads. And if you're going to have damn efficient ads, you probably just need to have a really hot product. And we do see these people who have like really hot products. They just for whatever, it's magic and they just boom scale right on ads. 8:22 Don't try this at home, kids. If you, if you don't have mix, you could end up in a really bad spot. If, if, if free traffic isn't a critical part of your plan. And when I think about this, it's like, OK, first thing you want to do is, you know, you get your, get your site set up properly, get your thing, get, get yourself converting properly. 8:42 Then hey, build out the next part of your, of your post click, get your your flows and everything set up. We're talking about scaling DTC here, right? You know, get your whole post click environment working well so that when you do advertise, you know, the ads are going into something efficient. 8:58 And then what do you do? Then do your do your keyword research and, and, and, you know, work on some intent bearing ad spend because it's going to be more efficient. And then the last thing you do is go super, super large. So you you would want to space this, you would want to space this out and always have the free traffic sources as part of the plan as you kind of work your way up the funnel, Ralph. 9:20 Speaker 3 Yeah, I love how you're kind of talking about his system and it just kind of sparked a thought for me. For me, the other pieces. I love it as a hot take. You know, obviously it's the Internet, so people are going to say things to get. 9:32 Speaker 2 Around it worked. With a million impressions of going to Cody Sanchez's handle there, it definitely worked. 9:37 Speaker 3 Yeah. And then when you brought up the hot take, I looked up on LinkedIn and her whole branding is being contrarian. So, you know, kudos Kodi on being on brand there. But I think the big thing that also popped up to me, as you know, if you take an operator, operator mindset, the other risk is if you're not spending in ads, you're not going to be able to really scale as a business over time. 9:57 It's, it's, it's skill set that you have to learn within the organization, right? 10:02 The hidden problem with scaling paid acquisition So if you're waiting till I know you're 5 to 10 mil to adopt that workflow, then you're really hands, what's it called your handcuffing your business, right? You're not building that internal knowledge base, You're not building the culture, you're not building the workflows. So you might see some cash upfront, but if you're one of the, you're one of the few unicorns that can get to that 5 to $10 million in a very short condensed period of time. 10:28 When you get to that $10 million phase, you're going to have to relearn and rebuild your culture and your team and resources to account for this as a cost as well as a skill set that your team adopts. You know, So it's really, yeah, it's just a bit blunt, right? 10:45 So. 10:46 Speaker 2 Yeah. Do we run into brands in our audits that are that do find themselves in the and again, this is another tweet I saw a few weeks ago just about like the percentage of your revenue that you're spending on ads. And if you're over a certain point, you might as well just take a job in finance or something because you're spending like I say into into a bucket with a lot of holes into it. 11:03 And do we do we run into brands that have not figured out the math where they are losing money as they scale? 11:10 Speaker 3 All the time because there's a bit of a lack on spend discipline. And what I mean by that is the Jogo's point. A big part of what makes the business successful is that repeat purchase rate. But one issue that we see very often, you know, we're auditing anywhere from 10 to 15 businesses every single week, plus all the clients that we work on. 11:33 So we see a ton of brands across multiple categories. But you know, the biggest issue that we see in terms of wastage is people are spending money talking to customers they already have, who are already going to make a purchase regardless of whether you serve that ad or not. 11:50 Then they're using the performance of those ads that converted an existing customer to optimizer creative. So it becomes a self fulfilling prophecy. And the crazy thing is if you look at the attribution ads for businesses like that, they might look healthy on a balance sheet for a short period of time. 12:08 But when you look at the audience delivery and attribution, one thing that we see quite often is most of the revenue attributed was not generated via click. It was just a few through impression, meaning ad was served, the person ignored it, they purchased it anyways, platform took the attribution. 12:26 So like you're, yeah, you're basically spending the people that would already purchase you. Then you're using that false positive signal to optimize your creative, you know, and then it just gets you into a high frequency hole where you are wasting money talking to people that would already purchase you and you burn your cohorts. 12:42 Yeah. 12:43 Speaker 2 Speaking of organic and paid, yes and we're going to our next topic, which is you brought this to us RAF, which is yes. And a lot of times people talk about Evergreen versus campaigns. Today we are talking about Yes and Evergreen and campaigns frame this up for us. 12:58 Speaker 3 Yeah, 100%. I think the most exciting projects that we talk about Pilot House are like our businesses that are going through some sort of transition and in from a revenue scale perspective. 13:11 Evergreen marketing vs. campaign moments You know, one of the ones that are really fun to work on is, you know those businesses are coming from 7 figures into that 10 figure. And usually the dynamics we see it's, you know, single SKU product, right differentiated, you know, create scale. They attract a new customer base and then they rely on product differentiation and first time profitability. 13:31 Competitors come in, copy them, you know, new colors, slight modification because of the increase competition, ad cost rise, profit get impacted and they have to start introducing, you know, new products or new moments to get getting people to think about. 13:47 But they keep running Evergreen ads, you know, and bottom of the funnel ads specifically in that Evergreen cycle and talking about muscle, it's like a new muscle that you need to learn, right? So instead of reacting to what your bottom of funnel media accounts are telling you, you need to think about how to create demand versus capture. 14:11 So what we mean by yes, and is as you start scaling past that 7 into 8 figures, you have to think about how do you do Evergreen to capture that product differentiated demand and how do you create artificial demand through partnerships, new product releases. 14:31 So you can extend the LTV throughout a year, if that makes sense. And that becomes a new muscle because if you don't plan for it and you react to it, it will mess up, for example, your account setup, right? Because you're introducing a whole new set of variables, you know, new products, you have to update landing pages, set up e-mail sequences. 14:51 If you're not planned out for that, it will create chaos into your workflow. So it's making sure as you reach that scale, think about how you start structuring both. 15:02 Speaker 2 And be proactive rather than reactive about the campaign side of things. It makes me think of my buddy Brandon Harojo at Montana Naif Co. When he came to our event in 2023 or 2024, just showed us his product drop schedule for the next year. 15:17 And it would just gave, it just gave you a real reason to reach out to your audience and to potentially reach new audiences with each of those drops. And it just sort of punctuated the year and gave them the momentum that they could use, that they eventually had all these Evergreen campaigns that that caught people. 15:33 But it was those moments that they were creating with their campaigns that was driving all the momentum. 15:37 Speaker 3 Yes, I, I, I love that you said that because one, one of the lines that I like to use in our conversations is we need to shift our thinking from tests to bets, right? You get, you get the 10 million, like you have something, right? Like what's the rule of thumb? The hardest thing is to get the $10 million in revenue. 15:55 Once you hit 10 million, you're likely hit to succeed and scale past that, you know, increases significantly right from there. Like you got to shift your mindset from scarcity to an expert, right? So instead of testing things, not knowing what's going to work, relying on the platform to tell you what's working, you got to start creating some bets. 16:13 Here's the moment, the campaign, whatever that might be that I know I'm going to bet on, that's going to give me net new eyeballs because I have learned all these lessons from getting to 10 mil, you know, But again, the hardest thing for any human to do is, is change. 16:29 You know, change is hard, right? It's a philosophical change, you know, to go from tests. 16:33 Speaker 4 To bets on on the bets the other really important thing to keep in mind is when you reach a certain size, you're actually trying to change consumer behavior so so the running that test you you can be testing a bunch of people whose behavior you've not yet changed because you have not yet conveyed your idea to a large enough mass of people in the region you're targeting or or you know kind of whatever. 16:56 So, you know, testing is for an existing market, but our job is to make new markets by explaining services and products people didn't even realize existed and how they relate to them. What I wanted to add to what you were saying though, was it's so it's so similar to what what happens once they pass through advertising and move into the kind of the post click and the e-mail and retention world. 17:21 I've always seen advertising is vertical and e-mail SMS is horizontal. We're speaking to people over a long period of time, but we also face similar problems or challenges in how to mix ever. But you call it Evergreen campaigns, let's call it yeah, Evergreen and, and launches. 17:39 We'll call it for e-mail, right, because all these things are campaigns. I've got it. By the way, I've got an episode, everybody in the world's best e-mail retention podcast where I talk about essentials. So you can go back and, and, and read further on my thoughts on that. But what's important to do is somebody enters into your funnel from the e-mail side. 17:58 Yeah, of course, introduce them to core product, send us some Evergreen messages and a welcome flow. But also after that, people, they wander through your life cycle and then nine months later they get pulled back in because they hit a new ad that's launched or they like a campaign that goes out and they they enter back into your kind of core post click world. 18:16 At that point, you also must resell your core product and revisit that Evergreen. You can't only have someone just in your newness because not everybody needs all your newness. There's a you've got, you've got some product that is a cornerstone of your revenue. 18:34 And so we have to also make sure we have the right mix as people re pass through our system of reintroducing them to Evergreen. It's really critical because if they don't want your small purple widget, they're going to just wander off if you don't your medium sized red and blue widgets. 18:49 Speaker 3 That's a really good example. I feel like we see that quite often in like supplement and beauty type of businesses, right? Because often times in supplement and beauty businesses, there's two ways you can enter. Generally you can enter through an acute need. You know, for supplements, I have, I don't know, I don't know, some flare up or something that I, you know, need to treat. 19:08 So you come in for an acute need and another way to enter is potentially somebody who's like, you know, I have acid reflux, so I want something that helps with my digestive systems. It's not like acute fix, but it's something I need to take on a routine basis. Same thing with skin. You know, you might have a flare up that you want to treat or you want to do get a new daily whatever skin routine. 19:29 So to your point, now depending on the entry points, there's an opportunity to cross all if they come in through the acute product, how do you cross all them into a routine? And if you bring them in through the routine, how do you cross all the come into the acute? So like that's what that muscle in coordinating and thinking about Evergreen and campaigns are important, right? 19:48 Because if you're a routine brand and then you're introducing acute products through campaigns, you have to coordinate with e-mail. So you have a system that allows you to feed that new customer based on the purchase, then they they made into the product opportunity based on the historical purchase, right? 20:06 So that that's the, that's the complexity that a lot of. Operators underestimate. 20:11 Speaker 4 The way that we think about that on our end is largely campaigns are for launches, flows are for the Evergreen and it can be core product, Evergreen or Evergreen that that launches based on the product that someone viewed. It's often just triggers off of product. It's harder. 20:27 We had that recent version where like, hey, how do we send an e-mail at the right e-mail to the mullet guy and then the right e-mail to the preppy guy. That's that's trickier with e-mail. It's usually based on the product that someone enters on. What I'm interested Raff is so you know, we have this breakdown and it's kind of it's like a technical breakdown. 20:43 And what I wonder is how you, how you control for the amount of Evergreen or campaign that someone is going to see, you know, through advertising, considering your advertising funnel might be like 3 weeks, but people are going to enter it multiple times and you and you don't always know who it was from time to time. 21:02 So how do you kind of think about controlling what what they see that high up in the funnel? 21:09 Speaker 3 That is a very good question. I guess if we're, if we're talking about let's say 8 figure businesses to 9 figure businesses, I think the most important thing at least you know, from the work that we've done JOGO that I see that's really tangible and tactical is being able to define your audiences across all your channels, who's existing, who's engaged. 21:32 And once you have those to find, you can truly prospect net new. I find that in that pocket of, you know, 8 to 9 figure brands, there are very few brands who have the technical discipline to keep those audiences clean. And I think unless those audiences are clean, you cannot truly remove wastage in your media spend, right? 21:54 Because if you don't have your engaged audiences to find, right? So you engage audience as somebody who has learned about you, visited your website, showed some sort of intent, you know, visited PDP at the cart, but hadn't purchased a message that is going to convince them to click check out and buy. 22:13 Audience targeting and wasted media spend It's different than somebody who has a problem, doesn't know about your brand. And we want to convince to consider them. But if those audiences aren't set up, then on Meta, Meta doesn't know. Are you talking to a new customer or are you talking to an existing customer? 22:30 Speaker 4 Yeah. And it'll just, it'll just optimize for the existing customer, right, Because it's. 22:34 Speaker 3 It's going to optimize towards the customer that's lower in the funnel, but you've already paid to convince them to come to your site. So you're kind of wasting money. And also, once they convert, you're not getting the right signal to optimize ads to new customer acquisition because it's largely based on engaged customer converting, right? 22:53 So it creates this false dynamic. So to answer your question, I think directly, tactically, it starts with audience definitions because until you define your audiences, then none of your tests are truly valid. They're always going to show that you're creative. 23:11 That speaks to people lower in the funnel, engage in existing, perform better. And that's where you get stuck in that cycle where over time, your repeat customer revenue is going to outpace your new customer revenue. And then when you burn your cohort, and I know this is something that you're passionate about to Joe go, once you burn that cohort because every cohort has an LTV, then your business tanks like bottoms out. 23:34 It doesn't matter if it's Jordan, Ralph, or Eric like there is a Max LTV to lifetime LTV to any customer cohort. 23:43 Speaker 4 My LTV is half because I'm super cheap. 23:45 Speaker 3 Yeah, there you go. I'm also cheap too. 23:49 Speaker 1 Q4 is coming and if you've ever run holiday ads, you know that it's the most expensive quarter of the year to advertise and budgets get tight real fast. The good news? Universal Ads is giving away $30,000 to cover 1 lucky brands TV campaign for all of Q4. Black Friday, Cyber Monday, holiday promos, all of it. 24:07 No strings attached. And you don't even need ATV Ready AD to enter, just head to universalads.com/Q Four Dash Contest, check out the official rules for eligibility and enter today. Even if you're not the winner, every eligible brand that enters gets $500 in matched ad credits, so entering is a win either way. 24:26 Don't wait, the clock's ticking. Enter at universalads.com/Q Four Dash Contest, No purchase necessary. See official rules for details. 24:37 Speaker 4 One more quick point to the audience was, hey, make sure you go into Clavio and Meta and hook your segments up because those segments can give you some control over who's who's senior brand. 24:46 Speaker 3 Exactly. And and that's a crossover there too, you know, with cookies disappearing. Shopify has server side data. Clavio also has some great engagement data that will allow you to split and divide your engaged customers as well too. So yeah, 100% one true. 25:03 Speaker 2 Just to encapsulate this one before we move on, what are the hallmarks of a brand that has this dichotomy yet between Evergreen and campaigns wrong? What's happening in their business if they're if they don't have the this ratio correct? 25:19 Speaker 3 I think the biggest thing at least that I see on my end is this is what I would hear. Let's say on, on, on a call with a client, it's our growth is slowing down. Then you know when you strip out, you know, let's say their growth, let's say it's like 15 percent, 12103, you know, it collapses. 25:38 Then let's say you put those growth numbers in one chart. Then underneath you map out the ratio of new customers to existing customers. You'll see the inverse flipping, Right. So at the, you know, 1520% growth mark, maybe it's at 5545, you know, then it starts going 524850504060, and then it starts collapsing. 26:01 Yeah. As you turn a burden through your courts. Yeah. 26:04 Speaker 2 Which side do they have, Matt, is is it sort of they're not doing well on both or is it quite often as you may be described in the intro, a little bit like everyone's got their. 26:12 Speaker 3 Evergreen. 26:12 Speaker 2 But they're not being as intentional about their moments and their campaigns as they need to. 26:16 Speaker 3 To be yes, I, I think once you hit 10 million, you know, past 10 million generally for most categories are past that early adopter phase, you know, where you have differentiated product people looking for a solution that doesn't exist meets it acceleration growth, right. You're kind of past that entrance come in. 26:33 But the most important thing to keep about think about it, you know, you're filling a bucket, right. So the I guess the more people you have to feed, the bigger the pool of water food, you know, has to has to be right. So ultimately, if you're only spending on Evergreen, you're limiting the amount of opportunities for you to make an impression and get in front of your customer. 26:58 So over time where this yes and perspective comes in is don't let go of the learnings and the operational strength you created to convert existing demand. That's going to be important always, but you have to layer on additional skill sets. 27:15 So on the Evergreen side, it's about demand capture, but also demand creation. You know, how do you communicate to somebody that wants your product, not that it's in a mature, you know, category that's competitive and how do you introduce your brand as an option, as an option to be considered to buy the example I always like to use. 27:38 I worked in automotive at a certain junction in my life for quite a few brands. And one of the interesting things is, you know, car companies, you know, have ads running all year on TV and radio. It's probably like turn on daytime TV, you go to your, I don't know, to the doctors or something. 27:57 You just look up whatever TV is there, they'll be a car ad running. The reason why that is is because in a car purchasing cycle, it's so complex. So unless you are one of the top three car and model types that somebody's considering and thinking about, they're not even going to purchase you. 28:18 So doesn't matter how much revenue you have or how famous you are, if you're not in one of those three competitive sets for current model type, they're not even going to look at you. That applies for every category. So to your Evergreen spend now you know, when you used to be the only player, it's fine. 28:35 You're the only player they come into. You just got to harvest efficiently. There might be some alternatives, but there's nothing exactly like you when you have 10 mil. There's copycats both, you know, small emerging startups that are innovating in your category or big guys that are, you know, trying to copy you and, you know, beside you, right? 28:54 So now what you have to do is how do I make sure that now that I built this market, I become the brand that is on top of those three brands that they're considering when they're trying to purchase this type of product? You know, so it's adding in the demand creation, every green layer as well. 29:12 I think sometimes people call that brand building. I feel like that comes with a bad name. I like to think about, about about demand creation for your category, because if people don't think about you when they want to buy you, then nobody's going to come to your site free, you know, traffic to your site, you know, Yeah. 29:32 Speaker 4 So to add to this, so it's like, so this is first of all, constant impressions, right? Constant impressions. What we're talking about, what I want everyone to remember here is, is unique opens are impressions and they're impressions for people who they've given you permission, they've been on your site. 29:48 And so an important part of e-mail, like the question, the original question was what does it look like when someone is not doing this right? So on the e-mail side, you've probably, you're probably too skewed to campaign and not skewed enough to flow. You've got enough flow revenue because all your Evergreen should be automated. It should be coming from flows. 30:04 When you make an Evergreen campaign, it usually falls in its face because when someone's checked out, they only want newness that's all that interests them. So it's usually about disparity. Also, you can see Clavio revenue is really low versus Shopify revenue is another indication you're doing wrong. But that said, all those campaign opens are brand impressions. 30:24 And so thinking about how those brand impressions feed into the very top of funnel of people who maybe you need to have them aware throughout the year, even though you're only selling in summer, you gotta they have to be aware throughout the year for it's for whatever reason, the opens are a huge part of that e-mail is also for advertising. 30:43 It's just a layer below below reach. 30:47 Speaker 3 Yeah, I, I, I 100% agree, right, 'cause like you can send an e-mail and even if that person is not ready to buy you at that moment in time, the fact that you popped up in the inbox reminds them it's like, so next time, next time I'm going to buy and I don't need jeans right now. Next time I'm going to buy jeans, remind me I really like those pants, right? 31:04 It's just it's. 31:05 Speaker 4 Once someone's forgotten about you, how hard is it to get them to be aware of you again? 31:09 Speaker 3 100% right. And I think that's like one of the most important muscles to learn in that structure. So to answer your question, Eric in a succinct way would be on the Evergreen side is layering not just the demand capture, but the demand creation and then the campaigns are really opportunities to create visibility for your brand and and there's 22 components. 31:31 Yeah, there's moments where there's campaigns that are revenue driving. There's also campaigns that are just eyeball seeking. So like, you know, when IKEA, let's say sustained craze on like oversized tote bags, right? And then IKEA made the tote bags purchasable because, you know, fashion, runway trends, whatever that might. 31:48 Speaker 2 Be IKEA bags are my favorite tote grocery bags of all time. It's not match my hat. 31:53 Speaker 3 It's going to be a tiny slice of the revenue, but a huge share of of their impression conversation, right? That campaign is not directly revenue generating. Basically get the bags like 5 bucks like it's, you know, and IKEA's AOV is probably much higher than that. 32:08 So it's going to as a percentage of revenues, it's tiny. But the impressions it created, created visibility for IKEA, which generated other revenue, right? So when we think about campaigns, again, the mindset is revenue seeking, demand capturing. 32:24 But the beauty of the campaigns is also how do you create salience and visibility, you know, and then having the right understanding and expectation internally of what campaigns are going to try sale and see visibility in eyeballs that will lift the business overall versus what do you expect to drive revenue from. 32:40 Speaker 2 Lovett let's leave that for now. We'll revisit it on a future D2C, The Rundown, all killer, no filler D2C podcast. Let's move on to the one that Jordan brought to us, which is some insights from the trenches, some of the things that you've been seeing in chatting with brands in and around the business. 32:55 What do you what do you got for us, Jordan? 32:57 Speaker 4 Yeah, RAF and I are are working a bunch together now. That's how, that's how he, he joined our now throuple of three dads who are talking about econ. And so I, I just brought a couple of things that he, both he and I were both involved in. So we we could have a little bit of talk about them. 33:13 And what I just noticed was we kind of were talking to two brands that pretty much the same time that both of their sites were like they were really set up for existing customers, right. And look, I'm, I'm working, you know, e-mail retention CRO. We, we, we do a lot of, a lot of our work is, is talking to customers and getting customers to repeat. 33:32 But like your website, in my mind, having a website set up for your existing customers is generally not the play. And so I'll just talk through some of the things that I saw RAF and, and, and just jump in if you have any, any kind of comments on them. 33:49 One brand was a drink and another brand was a, a food service that you could order meals like to together. We won't discuss the exact brands of course, but like. 34:04 Speaker 3 Different categories, different categories, but almost exact same problem, yeah. 34:08 Speaker 4 Yeah, different categories, almost same problem and so on on the the the drink. It's it was interesting because like, I hadn't thought of this until going in RAF's much more CPG kind of guy usually so, so much further further down that I'm not thinking about a lot of things he's thinking about. 34:23 But a lot of their even their first time buyers were actually existing customers because they're they're they're coming in from retail. So they're when we even looked at their metrics, we're like, oh, you know what, what are your first time in your repeat? Even the first time we're generally repeat. And so the site had just naturally morphed into this thing that would only speak to people who already knew what their product was, which actually meant what I saw and why, you know, we, we discussed some, some optimizations to the site was that they weren't even explaining like their, their, their USP. 34:56 They were very lightly explaining their USP on the site. 35:00 Speaker 3 Yeah, there was like no introduction. You know what they're about, what makes a different, none of those classic components. And that's definitely something we see quite a bit right now. A lot of wholesalers or manufacturers, CPG brands are trying to go direct to consumer. 35:17 It is a blessing and a curse because ultimately opening up a sales channel means that you want to attract net new customers, if that makes sense. But if you are a billion dollar brand, you know, and you open up an ecom store, Meta is smart stupid. 35:37 Google is smart. Well, algorithms are just smart stupid. They're going to find the least path to resistance. So what's most likely going to happen is regardless of the ad, the ad is going to serve get served probably in the cities where you have existing retail distribution, it's going to serve that to people that have already purchased you because they're more likely to engage with it. 35:59 Then you're just cannibalizing the sale versus acquiring a net new customer. And to the point because the signal is truly a false positive, right? You're, you know, it looks like a new customer because it's a new customer on that platform. 36:15 You start making creative choices like on your website that are grounded in conversions that are repeat customers. So then you start dripping out content that talks about your brand difference, introduce introduction education. That all gets dripped out because you're like, well, the highest converting thing is, you know, this direct conversion, whatever page. 36:36 Yeah, that's because that person already knows you and they've purchased from you and they just want the convenience of getting shipped on subscription to their house or something, you know? 36:45 Speaker 4 Much is on a core truth. I think this is like, you know, one of these, I don't know if it's a universal truth, but it's a truth that you see everywhere in in e-commerce, which is when you're doing a good job and reaching new people, your metrics should get worse, not better, because you're reaching the hard to reach people, right? 37:03 And, and I very often have this discussion on the e-mail side. It's like, hey, why's the click rate going down? Why's the open rate going down? We'll look at the size of the audience. We're reaching a larger audience. Those are harder to get them to clicks. Of course, the click rates going down, look at the clicks. And so the, the important thing to think about when you're doing this is don't look at the rates, look at the absolutes. 37:23 What you want to be doing is having your having your rates go down in a in a context where your absolutes are increasing a. 37:30 Speaker 3 100% you know, and, and the flip side would call that incrementality, right? And if you have a wholesale business like that, you're often times quite mature if you're getting distribution at Walmart or Target or Whole Foods, right? And I find often times, just because of the operational structure, it's a wholesale LED business. 37:48 So they're geared towards retailers, right? So the DTC team is almost set on an island, right? But if you, you know, just strip all of that political complexity out, right? The simple thing should be that your DTC store should focus only on driving customer acquisition in places where you don't have retail distribution, right? 38:09 You drop in, spend the ads in there gets popular cult following, then your salesperson can go in and be like, hey, you know, have you heard about XYZ? You know, where the hot whatever direct to consumer brand in New Jersey now whatever, you know, you should take us on as retail distribution. 38:25 That's incremental to your point, it's interesting to absolute volume. The cost might not look as good deficiency because again, you're not you're not harvesting demand, you're creating that new demand, right. So in those situations, I think we often times encourage wholesale brands to really think about like what's the goal of DTC? 38:42 You know, if it's just about showing efficiency numbers, you're never going to be able to scale incrementality, you know, and you're always going to have a tough time building a business case internally within the wholesale business. But if you truly are a business that doesn't know how to drive distribution and you want to create an ecom site to own your distribution, then focus it on the places where you don't have distribution and work with your retail team to build that demand and then have the sales team close the demand, right? 39:11 So to that point, I think maybe it's going to go full circle to our earlier conversation around no, no ad spend. I think it really goes back to making sure that your signals are clean, you know, because then if you're optimizing to existing customer signals, you're going to build a site that's, you know, optimize towards what the algorithm is telling you. 39:31 And the algorithm is smart stupid. You know, like you have to own the context. 39:36 Speaker 4 The other brand, the right, the, the kind of packaged meals, right? The, the interesting thing about that, when we went through that, like I went through the site, I was looking at this one not from an e-mail perspective, but from a, from a Shopify perspective. And like first you had to go through their kind of meal essentially quiz, like, let's just call it quiz. 39:56 It wasn't really a quiz, but it was a, a process, a quiz like process that you went through to build your, your meal plan based on nutrition. Lots of really cool stuff. Look, first of all, this drove me crazy. Everybody out there, you know, I get, I get, I go into that thing and I'm locked in like I just, I'm just clicking on the site. 40:13 I just, oh, click, hey, learn more, whatever the button was and then boom, I'm pulled into this thing. I can't escape. The only way I can escape is to go back, which is so frustrating. Like because I've I've progressed through the site, all I got to do is undo what I've done and go look at what I've already looked at. 40:30 So just, you know, tip out there for everybody, like just don't just immediately lock someone into something they don't want to be in, right. But one interesting thing about that they and they weren't selling samplers is the other thing. So I had to go through this process. I got locked in this process if I even went out and I'm like, wait a second, I want to just try this stuff. 40:51 I'll try this stuff. That wasn't possible. The only way was to was to go basically, you know, Hail Mary, get them to buy onto your subscribe and save plan right off the bat. And the kind of deeper problem with that, like this is someone can make a for that someone, someone can make a case for it. 41:11 But the problem in my mind is we've already got an industry that has settled on what works. Thousands of brands have put together a format that works, which is buy the four pack sampler and then we upgrade you to subscribe and save. And they were just, they're completely against that. 41:28 Speaker 3 Yeah. And and the interesting thing about this brand is that there were one of the early adopters in the category. They're the first entrant entrance about 10 years ago. And now this category is saturated, but they kept the same playbook. They hit the price right out of friction because they were the only option, if that makes sense. 41:46 And that acquisition method worked 10 years ago when they were the only option. Now they're not and there's new ways to attract and other brands that scale past that. And that that ended up being their limiting factor because, yeah, they weren't, they added so much friction to the first purchase. 42:03 Like I'm going to just share the numbers in range. But you know, over, I think it was over, let's say over 90% of the people that started the quiz never checked out. We show them that it's like, obviously people are interested. They want to know, you know, now you're burning all this money getting click throughs to people that are going through the quiz, almost getting to the end. 42:22 So it's feeding the algorithm saying that, hey, this is a type of customer that's attracted and they're leaving when you know you're getting the wrong customer to educate themselves. And that's what your funnels built on, you know? 42:32 Speaker 4 Also because they had a non standard build. This is something I really want to stress for everybody. Look at how, look at the, the, whatever the conversion type that you have, whatever your conversion is, look at, look at what's out there. What's out there is probably what's working. The reason people are doing it is because it's what's working. 42:47 This thing was, first of all, it was a custom build. So that meant that it was really annoying because we actually couldn't even measure sessions properly. Like sessions weren't measured properly because it was a custom build. But even if, even if sessions were being measured properly because they're doing something totally weird and non standard, you talk to a professional like me, I look at, you know, dozens of brands who have your conversion type. 43:10 But I say, oh, I can't even use my benchmarks. I can't even look at your numbers to know if they make sense 'cause you're doing something else weird. And so if you're in the lead and they were already a leader in the pack, if you're in the lead, sail with the same wind as the other leaders. Don't try something crazy unless you're already losing, you know? 43:27 Speaker 2 And don't just to close. We will save my mystery bonus topic for later was a good one. We'll do it next time. So you got to come back if you like this format. But I was chatting with a friend the other day. He works in hospitals. He works for the health authority in Victoria. And he was just talking about how you also like your business. You're constantly having to evolve it. 43:42 You're like, and it's sort of like a foreign concept, I think to a lot of industries. Like everything's changing. But I feel like in our space, it's like change is the norm. And yeah, if you get stuck in your ways, you're going to get left behind a lot. You have to be looking at what's it's the it's the beauty beauty of being in the space and it's the curse. 43:59 And we'll be back to talk about it. If you guys like this format, let me know at Eric at direct to consumer.co. If you want to be a guest on this Pardon the Interruption, D to C rundown format, let me know. Otherwise, guys, this was awesome. We'll we'll catch up with you in a similar format again soon. 44:16 Speaker 4 Cigars and whiskey next time. 44:17 Speaker 2 Cigars and whiskey. 44:27 Speaker 1 listening to today's episode. If you're not a subscriber to our newsletter, you can do that right now at direct to consumeralloneword.co. I'm Eric Dick and this has been the D to C podcast. We'll see you next time. 44:43 Holiday starts early on Walmart Marketplace. Apply to sell and get your inventory to Walmart fulfillment centers by September 15th to prepare for millions of holiday shoppers. 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