James Hersher (4:00)

Who are the kinds of companies you're working with? You're, you know, based in Slovenia. Are you working with local European brands?

Rock Cladnik (4:07)

No. Funny, we started with like in 2019 and that Kickstarter was a really huge thing at the time and that how we started. We had a big product from Slovenia called like Bird Buddy and we're running their campaigns for a while and that got us a lot of initial boost. And then obviously like Covid came and everybody wanted to be in like digital and advertising and so on. And we were advertising only like Slovenian kind of or like European brands scaling in Europe. And then we slowly got like US brands who were struggling to scale into Europe because of like localizations, different countries, currencies, cultural difference and so on. And that give gave us really a huge boost because we helped some of the big nine figure brands from the state scaling successfully in the eu.

James Hersher (4:55)

So I think that's a good jumping off point for, for the, the big, the big news of, of the day, of the week month. Like I think, you know, tariffs and the, the macroeconomics. Like I think we could have done this podcast a year ago and it would have been just like dead focused on, you know, in the weeds of these ad, of these ad platforms and talking about like social commerce. And now I think it is like, you know, clearly got to talk about like the macroeconomic picture and what's going on, like is that, you know, especially for like being. It's a strange situation. I feel like, you know, American brands in Europe, like you're in Europe, you're sort of helping in America. Like is it, is it an even more complicated picture for you than for a, an American like, you know, boutique agency right now?

Rock Cladnik (5:46)

I mean, we run American brands in America, American brands in Europe, European brands in America. So it's a pretty mix of pretty much everything right now. And like last year especially the second half was already pretty, pretty Hard for brands, especially those that have to create demands because of all the changes on Meta and the whole ecosystem when it comes to customer acquisition. And then Q1 in this year was also not so easy, but also obviously terrorist games. And it's like a dream, a parallel universe opened that you could not have imagined a couple of weeks ago. So all the discussion now goes back to, okay, let's figure out our KPIs, our numbers, if we really understand our numbers. What does it mean having a 20% error with 60%, 100%, whatever it is, how can we manage that? And a lot of SMBs, especially that don't have that big margins are hurting or are going to be hurt a lot by it? Like. Yeah, a lot.

James Hersher (6:54)

Yeah. Do you feel like, you know, or are you even seeing like a sort of ad pullback? Like, is there going to be just like a, A big. I think that that's a big question right now. Oh, like people think CPMs are going to be going down. Like, is it a time to get offensive? Like, generally, is there just going to be a. You expect a pullback? Like, okay, like we're selling less profitably, we just can't advertise as much.

Rock Cladnik (7:19)

I think this is all still kind of in the making, like discussing brands are discussing the strategies and what to do. I do expect it's gonna create a huge filter between brands that really understand their numbers, their acquisition, how much they're paying, Meta, whatever their number one acquisition channel is, and brands then don't. There's obviously a lot of discussion going, okay, we should pull back spend, not so much on the E commerce side because like without spend, you're not selling anything. But brands that are doing more like awareness campaigns or B2B stuff like that, those are definitely going to pull some spend down, but the majority is just going to go, okay, cool, survival mode from now on and let's figure out how we can still, well, survive in this new ecosystem.

James Hersher (8:11)

Yeah. Is there like a relative benefit? Because it's like, okay, if you're in, you know, China, like there are some places where the tariffs are much worse. Like, is there this opportunity to be like, hey, my, you know, Europe is a little more, a little like less, less tough.

Rock Cladnik (8:26)

Yeah. I mean, Europe didn't put any tariffs on China goods yet. Right. So in Europe, if you're a US brand and you're shipping to your third party logistics system in Europe from China, you're unaffected. Right. So those business are still like business as usual. American brands, on the other hand, those that have like low cogs and high margins. Those are going to be fine. Well, fine, not fine, but they're going to kind of survive this or like I'm not going to have such a nightmare surviving this. But brands that are kind of like lower uv, high cogs, lower margins, for them, it's a nightmare. Right. If you have a low margin and you get like even 20% tariff, there's almost no way to survive this. So.

James Hersher (9:10)

Right. Yeah, like there's just not, there's no, there's no fat to cut. Like you can't just, there's no, just like easy market.

Rock Cladnik (9:17)

At the same time, you know, when, when some of those smaller brands kind of stop working or just literally die, there's always so an opportunity to grab that market. So somebody's going to take their share.

James Hersher (9:28)

Yeah. Do you feel like, is there like a, like a teemu say? Like is there. So if you're a teemu like and you're still selling in Europe, you're, you're essentially like unaffected. Like is that, you know, from my perspective it's like, oh well, at least like TEMU in the US is crushed. That's almost my like only silver lining here.

Rock Cladnik (9:47)

Yeah. The team and all the drop shippers. But you need, you need to keep in mind a lot of these people are not really paying taxes the way big brands are paying them. Like a lot of these China dropshippers are selling. What are they called? Not tax invoices, but oh my God, I'm losing the word now. Commercial invoices with lower, lower prices than what the actual price is. So all the terrorists or everything that comes with it, it's like lower than what they should be. So they're always going to find a way how to work, work around the system. But in Europe, for example, Temu Shein and all these big China brands are just like going all in, I would say. And up until somebody from Europe decides, okay, let's put an end to it. Because I was just looking at it, we're talking about 500 billions of China export to the States and 550 billion to the EU. So just imagine a couple of those hundred billions being relocated to Europe. It puts an additional pressure on the Europe e Commerce.

James Hersher (10:51)

Yeah. Interesting. Yeah. These are, it's a, it's a complicated global supply chains. It's a, it's fascinating to see how these sort of plays out so differently country to country. I also want to, I want to sort of f. Go back to, you know, how you, how you ended up starting flat Circle and just, you know, sort of playing around with meta and learning it. Like I think that that is there are a lot of people, individuals who are, you know, consultants or agencies in the sort of D2C advertising space and who, yeah, sort of found themselves that way. Similar sort of story. Like they were just like, yeah, playing around, like took an interest. Fascinating to see how it worked. Tinkering with the platform, is that still like a something, you know, if you were like coming in now, like, is it still like a fun, interesting. Like, do you think it would be the same sort of experience, like learning it and being like, oh, okay, like, you know, I'm, I'm getting into this.

Rock Cladnik (11:56)

No way. Like the, the learning curve at like five years ago or seven years ago was way like you can learn a lot of things a lot faster, right? CPMs were lower. You will get a lot of data faster. There wasn't no iOS 14, no data delay, no issues with third party data, cookie blockers, all the stuff of DevTools gone. So it was a lot. Well, I'm not going to say easier, but it was a better, a nicer experience and much faster. The main issue or the main issue, the biggest challenge right now it's that starting a brand is a lot more expensive than what it was. And to be successful you need to have a lot of knowledge. It's not so easy to run ads anymore. And even though Meta and other platforms are really trying and saying, oh, we are SMB friendly and that kind of stuff and AI is going to help you out, but I think it opens a lot of challenges that perhaps some, let's say those who are just starting are not really, it's not easy for them to, to kind of, to kind of figure it out.

James Hersher (13:03)

Yeah, I do think like if you go back like five, 10 years, like you could, you know, there were lots of, there were lots of these sort of like new brands that were just, you know, only on Facebook essentially. They had a couple of like cool videos that did well and a Shopify site and like that was enough. And you know, I even think even with like TikTok, like there even was this a big like spike. And I remember talking to people who like, oh, if I were like starting a brand right now, I would be starting a brand that was like, for Tick Tock, like this is what works on Tick Tock. We're doing it like for Tick Tock. And I don't know if that even like, if that sort of wave has just like, has played out at this point, but if you were like how you know you're, you're interested in starting a new like e commerce business or like you know, where, where could that interesting startup brand happen now? Like are those places still viable? Like if you were talking to me like oh I have some, I think a cool like idea like a product I can manufacture like is yeah. What you know, what do you do compared to five years ago?

Rock Cladnik (14:08)

I mean the logic and the fundamentals are still the same. Right? If you have a good product and a good offer and something perhaps that nobody has seen before, whatever, you're going to make it. Right. And Meta is still the number one platform when it comes to customer acquisition. The difference between five and 10 years ago is just, it's, it's harder there and there are a lot of people kind of okay, I have this brilliant idea, let's test it. Then at the same time something that you didn't have 10 years ago, you can test your ideas or your like your products or offers or whatever with like seeding them with micro influencers and trying to get that organic reach and just see and analyze data you get from there. And that's a good alternative. So yeah, there's still, still, still ways to do it.

James Hersher (14:54)

And for, for flat circle, to what degree are you focused or you know like entirely on like the Meta family of apps? Like what, you know, where are you, what ad platforms are you on?

Rock Cladnik (15:05)

No, we do everything. Like three years ago we saw Meta declining as an acquisition platform. We saw where meta was heading with account simplification, Power five trust algorithm, blah blah blah kind of headlines and what in reality that meant, okay, we're becoming less efficient at acquiring your customers. So you have to, you need to have a very well put and set up funnel multiple touch points with your customers and potential customers and that's when we start evolving flat circle not just to being meta only advertising, but basically A360 agencies. So Meta, Google, YouTube, Snap, TikTok and email and all the other channels.

James Hersher (15:50)

Okay, so you even are off of like the walled gardens and into like email. Do you do just like open web style? Like do you have like a DSP that you use like that?

Rock Cladnik (15:59)

No, we do everything but it's a very client dependent like clients have very different needs or we just know that we and what we focus on is having kind of the best talent in house and offer that those services to our clients and be very responsive and very adaptable to whatever the need. Sir.

James Hersher (16:17)

Well, I think that this is a good place to jump to a sponsor quickly I want to follow up on a couple things. Some of the challenger platforms and you know, this idea of like services and the agency role. But quickly, let's, let's throw it to the advertiser and then we'll be back.

Alison Schiff (16:49)

I'm Alison Schiff, managing editor of Ad Exchanger and with me I have Andy Frawley, the CEO of Data Axle and I have a few questions for him about some burning issues. Hi Andy.

Andy Frawley (17:02)

Hello Alison. Thank you for having me.

Alison Schiff (17:04)

So it's no secret that many businesses struggle with fragmented data spread across multiple platforms. This is something Ad Exchanger covers all the time and this leads to inconsistencies and inefficiencies. So how can organizations break down these silos and create a unified data foundation for better marketing and better business performance?

Andy Frawley (17:24)

It's a great question, Alison. This is one of the burning questions that the data acts what we see within our customer base. And while a lot of brands have made progress on linking legacy data together from their operational systems, what's happened over the last really five years is we're seeing this massive new set of data that's being generated which is the exhaust of all the digital advertising platforms. And so linking all that data together with third party data with or the first party data really requires an identity spine. Historically, brands have relied on third party identity graphs to do that work. The trend we're seeing is that brands would like to own that identity spine and so help build that identity out with third party data, with first party data and have a spine that links the known to the unknown. Obviously in a highly compliant fashion.

Alison Schiff (18:19)

Yes, always in a highly compliant fashion. That's very important. Well, marketers are shifting from vanity metrics to outcome driven strategies. How can brands use cross channel analytics and AI to ensure real business impact in a changing digital landscape?

Andy Frawley (18:40)

We certainly recommend to our clients to focus on business outcomes, whether that's new customers, more customers, more profitable customers, customers that stay longer and, and really move away from the vanity metrics of opens and clicks. So there's two important concepts when we, when we think about this. One is incrementality. You know, is the marketing effort creating incremental outcomes, I. E. Sales and causality. Is it the, the marketing treatment that's actually causing the, the consumer to buy or act in a certain way and the, the crush. Analytic tools need to embrace both of those concepts. You know, the complication or challenge is somewhat back to the first question. First you have to be able to link a lot of data together and second, there'll be, you know, Places where you have sparse data, where you don't have complete data sets. And so we're also seeing people using gen AI to help generate those customer journeys and have a, you know, analytically based view of what the media exposure is across multiple marketing treatments, down with.

Alison Schiff (19:45)

Data silos and down with vanity metrics.

Andy Frawley (19:48)

Absolutely.

Alison Schiff (19:49)

Thanks for the insights, Andy.

James Hersher (20:06)

Welcome back. So I want to, I want to follow up with Flat Circle, having evolved from really just focusing on Facebook, then the Meta family of apps to, to, you know, whatever your clients need much more of like a 360 picture, you know, what's your, what are your thoughts on some of these? Maybe sort of like social challenger platforms. So you know, TikTok maybe is more, has like kind of achieved like near earth orbit, has like escaped that like sort of velocity. But like, what about the Pinterest, Snap, Reddit? Like they're big platforms, they've got a lot of users, they're all public now. But do you see the same traction? Are those exciting places for you?

Rock Cladnik (20:54)

Well, yes and no. At the same time, most of the e commerce brands are very focused on whatever channel brings the biggest incrementality. Right. And this has been the focus for the last like two years when the tools came out that you can actually measure that and like customer acquisition, it's like the number one focus and then retention it via like email or text messages or whatever. Snap, Pinterest, Reddit, TikTok and with TikTok shops and so on, they're really trying hard to kind of eat into metas, metas, whatever you want to call it, basically get some of that traction. But they have been pretty unsuccessful so far. Except if you're having like a brand that's in a very specific vertical and you know that your customers are active on those platforms and you're able to engage with them in a very high way to kind of make it worth advertising there. Right. Because one thing it's organic posting organic stuff and organic content and getting customer engaged. The other thing it's converting the customer within, I don't know, 24 hours and make a purchase. So those are like two completely different stories. And Meta is still the number one platform when it comes to this, like the number one responsive advertising channel. YouTube shorts probably being number two and then TikTok and all the others.

James Hersher (22:28)

Okay, gotcha. Yeah, that makes sense. And I also want to like, you know, you mentioned sort of incrementality being the focus the past couple of years. That that one always like, it's like I'm trying to like dig in there because obviously you know, I cover a lot of like incrementality measurement, all that. But you know, more and more the more I like look into it, I'm like eh, like a lot. You know, I think there is this sort of picture of like, oh, like incremental new growth, like new customers. But you know, often like how incrementality is framed is, you know, sort of seems to me like like not exactly like it. You know, an incremental customer might be. All these platforms are going to credit whoever's new to them as like an increment. If it's the first time they've converted this person for you, it's incremental everywhere. You know, incremental could just mean like, you know, there's, there's an email they didn't like match, they're adding like a row to your CRM. But like, maybe it's not actually like incremental business. You know, I feel like personally like pushing back on the sort of like notion of incrementality as it's defined and measured everywhere. I don't know though if that's anything like marketers are seeing if that is like an issue in the trenches.

Rock Cladnik (23:43)

It is a huge issue and it's something that, I don't know, we talk about it like probably on almost every second call. What's really important here is just like you have an ideal marketing model mix in your mind for your brand and an ideal funnel pad that you take your customer, potential customer through and then you try to put as many, well you try to base your decision on data as much as possible and all these tools that are out there either for like measuring attribution, incremental test and whatnot, you need to have like a little distance between okay, this is not. Or like the answer is you're getting are not black and white. Right. So you need to put a lot of context into it and then like keep testing. So if you run one test, it's definitely not enough. Two tests, three tests is not enough. So it's like an ongoing process and always question your whole funnel and strategy. But once you have some sort of data and you're backing it up with your results over time should kind of put more weight into that than for example, oh my God, let's try YouTube shorts in a specific region and do an incrementality test and you get great results and you see, oh my God, YouTube is really incremental for us. Let's switch our ad spend totally to YouTube and like fast forward three or a month, three weeks or a month later. Our blended results suck what they do wrong. Right. And this is something that we see happening. So like all these, like I said, mmms and incrementality tests, they should have a lot of context and be tested. Like an ongoing process of testing and evolving and testing and evolving.

James Hersher (25:28)

Sounds expensive to me.

Rock Cladnik (25:31)

It is expensive. That's why like, smaller brands are just like incremental. What? No way. And I'm not gonna pay a lot of money to test that. So.

James Hersher (25:41)

So yeah, well, that makes sense. And to follow up on the, the sort of the services angle and like you mentioned, like the Power five, like where meta's going, which, you know, a lot of people listening may not sort of be aware. This is like a reference to really, I think like meta putting more, much more of the like human operator function into its, like algo, into its AI and, and sort of, you know, just doing that itself within the platform. And, and yeah, you know, I think there is this like, question or tension of like, okay, where's the, the role of like human services that like third, you know, that layer of expertise, you know, is that, is that all sort of is the, is the, the path we're going on, like, we're just rolling downhill or that's going to be more and more of that handled by like the meta algo or, you know, where is there the services need.

Rock Cladnik (26:41)

This is a very good question. And this is something that I personally ask myself and have a discussion with myself probably over every weekend when I'm going on a walk or something, because I'm trying to figure out, okay, where it's the added value of a media buyer or like a human going to be in the next five years, right? And it's, and it's not going to be in the ad account. Like for the last five years, Meta has been going from account simplification, power 5 to ASES advanced, whatever, right? And what they're constantly doing and we're now finally seeing it in the ad account happening like this year, they are trying to, well, they're not giving you control over your ads anymore. They want to be everything, to kind of be on autopilot. So. And you can see it like when it came, for example, when ECS came out last year, I think we have like a dozen different user interfaces, how to work with new campaign setups, excluding customers, excluding engagers and stuff like that. And we were measuring the data in our back end with other tools. Like, we saw that meta is basically just whatever you Kind of put there. There's no way to affect the algorithm. Who is it targeting was all going, brought with the percentage of customers that were getting retargeted and that's it, whatever the setting you set up. So what I'm trying to say is like, you're losing a lot of manual control of how your campaigns are set up. And with the whole push towards having a lot more creatives, creative variety and volume, and especially with AI coming out, media buyers and everybody working in this ecosystem, their added value is going to be outside of the ad accounts. So trying to figure out what the best structure is to kind of hold and to work with all these assets that are going to be there. Try to figure out how to have as many personalized experience for meta users that are your customers, because that's what meta is pushing for and putting a lot of context behind of the numbers you're seeing and work with that.

James Hersher (28:48)

Yeah, I'm always amazed because I sort of feel like year after year, like quarter after quarter, you hear stories about like the meta platform just, you know, misfiring major, major glitches and issues. You know, big spenders just talk about having these like huge problems, but they, you know, the, the results, they just, they just, you know, they just crush ad revenue growth every quarter. Every time. Like, it almost seems like the, like, the bigger, like the problems is like the more like, you know, more like Facebook advertisers across the board are like, oh, What a terrible Q4. It's like, oh, well, if meta's gonna have had a, they're gonna report a great Q4 is what that means. And I'm almost like, okay, like how does that, how is it that the case? Quarter after quarter?

Rock Cladnik (29:37)

Yeah, yeah, it's the same story basically. But meta is the number one. There's like, it's meta and then long time nobody and then I don't know, either TikTok or YouTube shorts or like Google. So meta is really far in advance when it comes to, well also how easy it is to set up campaigns, that's one thing. Or, and start advertising and how responsive and reactive their algorithm is to find, find the new customers.

James Hersher (30:10)

Yeah, right. And like you said, like the other platforms have, you know, they've copied meta's approach in terms of like, okay, here's our conversion API and here's our like, UI that like looks the same and it all, we're following the same idea. But like you're not, you know, that doesn't make you meta. Like, I think it partly is like Their reach, the different just sort of canvases they have to reach people and yeah, probably get some sort of like action.

Rock Cladnik (30:34)

Look at it this way, for example like people are used spending time on meta. Well on meta on Instagram or on Facebook on WhatsApp or threads in different ways of different point of times. Right. And for example with TikTok came out, it's like TikTok, it's a highly engaging video consuming platform and you're basically just scrolling and swiping and looking at things but probably not paying too much attention to it unless something is really highly engaging and then when the ad comes you're just skipping, skipping, skipping. Meta on the other hand they have a lot of data about you across different platforms, your different behavior behaviors. When like cookies were still not or third party cookies were still a thing. Meta had even more data about you. So they, they, they knew, they knew, they know your behavior and you very, very well and they can predict in advance what you're doing and that I think it's the biggest minus of the other platforms but and perhaps TikTok that's trying really hard to copy meta like customers or customers user are spending time on TikTok in a very different way than they're on Instagram. Two different type of persons.

James Hersher (31:42)

Yeah. What about Amazon? We haven't, we haven't discussed them yet. I don't like. Is that part of the picture for you?

Rock Cladnik (31:51)

It is part of the pictures. Very brand dependent though. A lot of brands don't want to be on Amazon at all. They're just trying to not even go into that discussions and many of them are either like preferring retail over Amazon. So. Yeah.

James Hersher (32:11)

Gotcha. Okay, so is that, is that sort of partially like not like a Europe thing or is it.

Rock Cladnik (32:17)

Yeah, Amazon has a very straight line like going across the center of Europe like they do West Europe but in East Europe they're not a thing. So there are many brands kind of exploring. Oh my God. Okay, let's go into German market via Amazon and then they're trying to figure out all these secret taxes and the cost that you have if you want to fulfill in Germany that are very vertical specific like SKU specific and it becomes, it can become a huge mess if not done properly.

James Hersher (32:50)

So maybe maybe one that's a little more like general hopefully like it can make it optimistic. But you know I do think that like okay, the third party data, the cookies and just a lot of the like the things, the cool stuff that you used to have about that used Facebook used to have and That I think made it like this really like, fun thing to tinker with. Okay, that's sort of gone. Like, you know, like, how do you sort of like keep the, the like joy of it, you know, bringing in new people, like hiring, like, okay, like what? Make like what's really, like, where do you bring in like the fun and sort of, you know, I don't know, wonder or something like that.

Rock Cladnik (33:27)

I mean, the dopamine boost that you got like five years ago when the data was appearing, ad account instantly and you didn't need, I don't know, 10 different tools and spreadsheets to make sense of the numbers you're seeing. Ad account, it's still here, but it's different and it's. Perhaps it's not happening every five minutes when you refresh your ad account, which was the case in the past, but it happens after you successfully complete a campaign or a new product drop or send an email campaign that work really well and stuff like that. So there are a lot of small wins happening and like smaller brands growing and growing fastly and still achieving like great results year over year. And there, that's where the fun is. It's not so much in the ad accounts themselves anymore, but more like on a bigger picture. And if media buyers were like kind of introverts that didn't want to talk with anybody and just like, okay, I'm going to put my headphones on, listen to whatever music it's going to be and focus on my ad accounts, well, right now that's not the case anymore. It's very team type of sport and you have to basically speak with all of the departments to make sense out of anything you're doing.

James Hersher (34:39)

Yeah, that's interesting. I like that you make like the, the dopamine hit point because I do think like these social platforms are very aware of that. Especially like on the user side. Like I, you know, I don't know, people maybe don't know. Like TikTok for instance. Like if you join TikTok, your first, your first like 10 posts, they give you like a sort of an artificial boost, like, which sort of came out in Europe, I think, because they had to disclose like as if they were sort of ipoing and it was like, huh, interesting. Like all these other things that like TikTok is like really like careful and aware of like how it's giving dopamine boosts to users. And I think YouTube too, like just changed its like shorts view metric, which doesn't like change anything about like YouTube shorts. It's just like wildly inflating the YouTube views to be sort of more like on par with TikTok where it counts like every replay or anytime a video starts as a view. But it's just like a pure like okay. Like it's just a dopamine thing for like YouTube users. And I think there is within the ad platform accounts like to a degree there is this knowledge of like, okay, like here's like we gotta hit these people need a dopamine hit too. Like I think all these platforms have like a sense of like, okay, like letting you know like this was a win.

Rock Cladnik (35:58)

Well just, just let's put it this way, like five years ago for Black Friday, right, you would have a whole team of media buyers in one office eagerly refreshing ads manager every five minutes and adding zeros to your daily budgets to scale them up. Right. Last break Friday was more like this, okay, two weeks in advance we were thinking, okay, what are going to be the starting budgets? So you had and then okay, are these the right starting budgets? They'd be higher, blah blah blah. And how we're going to scale them because you don't have the data coming back to you like instantly anymore. So a lot of more of pre work and routine has to be done like weeks in advance than on the actual Black Friday when it's just okay, these are the budgets. Let's, let's start everything and hope for the best. Basically then in the past life you should just okay, eagerly refresh everything, start adding zero scale, double multiply, duplicate everything and yolo.

James Hersher (36:58)

Well, I guess we will see this Black Friday. We'll see if it's like a red Friday this year. It's like feels like okay, who could even predict out that many months from now? But I will certainly be in touch. I will be covering Meta's Q4 bugs and glitches and freakouts again this year. Rock. Thank you for joining me. Been fun and and I'm sure we'll talk soon. Thanks everyone. See you next week.

Rock Cladnik (37:28)

Bye bye.

Alison Schiff (37:36)

That's a wrap. Thanks for listening. And a special thanks to our sponsor, Data Axle. Helping businesses create deeper data driven connections with customers. Whether you're reaching new prospects or strengthening existing relationships, Data Axle delivers the insights and solutions to make every interaction more impactful. Explore more@dataaxle.