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DTC Podcast
Ep 614: Creative Is the New Conversion, Not Just Targeting -- Charlie Cole, Thuma
00:49:21
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- [00:00]
A
We saw certain segments had higher LTV propensity. Certain segments are those gateway drugs and you should identify them. You should be willing to pay more to acquire a customer who's starting their journey with your brand through that segment. Genuine creative has more of an impact today, and it's harder to do. Not only is Creative new, targeting the creative is the new conversion. And the number one challenge for DTC brands out there today is to think about both of them in context. If you're not doing all of your analysis using an AI tool today, that's a a big miss. The hard part is getting your data into a foundation and a schema that allows for the analysis. Every single macro factor is backing me up on this. You gotta build this one Muscle.
- [00:52]
B
This episode is brought to you by Triple Whale. If you're still making decisions based on messy scattered data bouncing between ad platform spreadsheets and dashboards, you're not alone. Most E commerce teams are stuck piecing together a story they don't fully trust. Triple Whale changes that. It's a complete intelligence platform built for modern operators who are done guessing. Triple Whale centralizes all your data, equips you with measurement tools you can actually trust, and layers in best in class AI to turn that data into clear recommendations showing you what's driving growth, what's hurting profit, and exactly what to do next. It even takes action for you. With Triple Whale, you can quickly spot trends, catch issues before they impact revenue and uncommon opportunities you would have otherwise missed. It's about moving faster, making smarter decisions, and operating with real confidence. That's why brands like True Classic, Whey Press, Juicery, and thousands of the fastest growing D2C companies rely on Triple Whale every day. They're saving time, increasing efficiency and unlocking insights that simply weren't possible before. If you're ready to stop guessing and start growing with clarity, now's the time to check it out. Visit triplewhale.com that's T R I P L E W h a l e.comt to learn more. Welcome to the DTC Podcast. Today I'm joined by Charlie Cole, who I met for 10 seconds in the elevator at Shop Talk this year. And I was like, come on my podcast. And you're like, okay. Charlie is the Chief Digital Officer at Thuma and a longtime DTC operator who scaled brands digitally like Samsonite and ftd. Today we're getting into what actually drives growth and why a lot of brands are still focused on the wrong things. Welcome to the podcast, Charlie. I'm glad that Elevator Happened.
- [02:33]
A
Yeah, that was one of my, one of my favorite happenstance encounters I've had in a long time. It's good to see Eric.
- [02:37]
B
Well, walk me through a little bit. Give me a little bit of your hero's journey. I'm always interested when operators work at really established brands and I think, you know, I saw on your LinkedIn you've thrown the word turnaround a little bit and I'm interested to dive in a little bit. What goes into a turnaround? So maybe just start with your, with maybe your hero's journey in the space a little bit.
- [02:58]
A
I always sort of simplify my journey in. I love to ask this interview question, which is if you were to start your career over and you were an entry level job, what kind of job would you apply for? And I love that question because it takes the word. Well, it should take the word generalist out of conversation. And yet some people will still say I'm a generalist, which I think is hilarious as an entry level job. But I love to say that I would have been an analyst and that's really kind of where I started my career. So graduated college in 04, was just sort of a math and statistics geek, just started looking for analyst jobs and fell into a digital marketing analysis job which is just this wonderful happy accident. And so that was phase two of my journey as I became a digital marketer, eventually moved to Los Angeles, helped build an advertising agency, all in the direct response space. And that sort of exposed me to the wonders of the Internet. And we eventually got a couple of E commerce clients and that was phase three of job which was E Commerce Oper. I was hired by Lucky Brand Jeans and I think 2009, 2008, 2009 to build and run their E commerce. And so that ended up being the next phase of my career. It was like lucky to assembled brands or sorry lucky to shift nutrition to assembled brands to eventually Tumi Tumi was acquired by Samsonite. And my job at Samsonite was like one of the coolest jobs ever. And it was to build out the entire internationally infrastructure of E commerce. So now you're in phase four of career, which is international E commerce operator. When I mean international, I'm talking 103 countries. I think the number was eventually that led me to be recruited to be the CEO of FTD which was phase five, which was private equity CEO and specifically private equity turnaround CEO. FTD was a turnaround in the purest definition. It had gone through a bankruptcy. The amazing FTD story and the Statistic that I think articulates what a turnaround really means is at the start of 2019, FTD was a publicly traded company valued at approximately $1.8 billion. And in August of 2019, so eight months later, it was bought at a bankruptcy auction for like 60 million bucks. So in the span of eight months, it lost what, $1.79 billion in valuation, or like 98% of their valuation. And then it's like, here you go, fix it. And so that's kind of where the turnaround journey started. And I've done some things after that. But the cherry on top, if that setup wasn't kind of turnaround enough, my first day at FTD was March 23rd of 2020, which was largely considered the first day of national lockdown for the pandemic. And so I got turned around with a little smattering of pandemic. And it was just this remarkably challenging and rewarding and for me taught me more about leadership and communication and family really than anything I've ever done. And so, and now, so since then I have like this three year divergence into tech sort of by accident. And then just recently, like literally recently in like the last two or three months, I got really intentional about my career again for the first time. And this is a little bit embarrassing to say in probably about nine years. And the reason I say that is I never really thought about what I wanted to do. Things just kind of kept happening. You know, I got to Tumi. Tumi got acquired by Samson. I had a recruiter showed up at ftd. Right after ftd I got a contact from another recruiter. And then after that recruiter, I got a contact from another person. And so after my last kind of run into tech, which was a lot of fun, I was like, God, I miss consumer, man. I miss consumer. And I had a relationship with the CEO at Thuma and he asked me to come in here. Um, one small correction. I'm currently the interim head of Chief Digital and the interim Chief Digital through M Still and just having a freaking blast. I love being back in Consumer so much and I think it's a very unique time to be here. So happy to dive into any one of those things, including, including the turnaround as. As you see fit.
- [07:00]
B
I feel like the FTD story is a really interesting one. How does it. Because people didn't stop buying. Well, maybe during the. Maybe when the pandemic started, there was less flowers being bought. But how did the. How does a company lose that much valuation when people aren't buying less flowers really during that, that period, you know, when it went down, how does that happen?
- [07:17]
A
It's kind of a. It's kind of a confluence of factors. And I'm sure If you asked 20 people involved in the situation, Eric, you get 20 different answers. So I don't think this is a binary question and answer. I think it's very much an opinion one, so I'll give mine. They made a bet on sort of the boom that happened in, let's call it the boxed flowers space. And when I mean box flower space, like brands that kind of got a lot of venture capital noise and like consumer noise at time, Urban Stems, Books, Farm Girl Flowers, right there was just like, hey, don't buy from a florist. Buy direct from us. Which candidly was somewhat a misnomer and if anything, even if not blatantly misleading. But the flower industry was divided sort of in like this one big bucket. It was divided in half, which was you had florists fulfilled flowers and you had boxed flowers. Meaning, like this came in a car from a local forest. This came from UPS, FedEx via a box player. Now, what I would tell you is that over correction by FTD led to a lot of fixed asset investments in the form of warehousing. Now, the problem with flowers is there's this phrase that we always use which was, you kind of build the church for Easter Sunday and It's empty like 49 other Sundays. And so more specifically, the flower industry. And these are ballpark numbers. Don't take them as fact. And certainly I don't know if they're reflective of FTD's business today. 30 to 35% Mother's Day, 25 to 30% Valentine's Day, and that leaves like 40 to 50% ish for the rest of the year. And so fixed assets become a real burden from a balance sheet perspective. And FTD made the decision to actually buy those warehouses, or at the very least, they had massive leases, and that led to a huge cash drag. So I think that was the start of it. It's just bad investments that kind of led to a drag in the balance sheet. And the other thing I'll say is that I don't believe in this. Again, I wasn't there, so I really couldn't say this factually, but I think that they sort of got supplanted in digital transformation by not only these upstarts who took small bits of market share, right? They probably, if I had to guess, Urban Stems Books, Farm Girl probably combined for 300 to 500 million dollars in revenue. So it wasn't a massive amount of market share. But the other thing is 1-800-flowers got really good at digital and they were an early adopter and I knew some of the operators there and I think they just got passed. I think they just got passed in sort of the digital transformation journey which caused them to lose market share. So take those as somewhat informed, but I wasn't their person and so I certainly don't want to purport it to be factual. And I'm sure again, if you talk to 20 other people, you get 20 other answers, but that's kind of how it happens. And I think if you were to put that into a rubric for how to fail at business, it would be, number one, make bad bets and number two, don't keep up with digital transformation, which I think both of those things are still true today.
- [10:18]
B
So you get in there, you get into FTD with the idea of helping them with this digital turnaround. Talk to me about the first steps you took to start that process.
- [10:27]
A
Well, I think the first steps are not unique to a turnaround or a high growth or anything else. And it starts with people. And it's hard, right? And I'd say it's hard because at ftd, this is a brand that I want to say at the time, it had over 110 years of heritage. A lot of people worked there for a long time. And one of the things that was astounding to me, and this was the first kind of bankruptcy and recapitalization and private equity that I've ever gone through, I'd never been through it before, so I was fairly naive. So I wonder how true this would be to other businesses in a similar situation is. You asked the folks that were there throughout it all and you say like, so, hey, what went wrong? What would you change, right? And you just asked that very basic question. 70 to 80% of people would be like, oh, you know, we were just unlucky. And I just, I was just flabbergasted by that, right? Like, it would be like, I grew up an athlete and I still try to be an athlete today. And it would be like saying like, hey, you just lost 100 to 30 in basketball. Like, what do you think would happen? It's like, ah, we just got unlucky, we'd get them next time, you know, and it's just, it was struck me as a very frankly unacceptable answer. And then the other 20 to 30% of people usually have quite the Chip on their shoulder and they're like, we did this, we should have done this, we did this, we should have done this. And so I think the first step, regardless of stage of business is evaluate the people and figure out who you want on that journey with you, right? And ftd, that meant that look, we just went through a bankruptcy. There's going to be a good amount of kind of balance sheet tightening. Are you ready for that journey? There's a good amount of change, systems change. Are you ready for that journey? And so I think for me the first thing was sort of to pick out the institutionalized versus the ready to change and evaluate the team and drive into it, right? And so that's first step in any, I think, new job. And it doesn't matter what role you're at, what level you're at, you know, what stage of business is at. The next thing was really kind of talk about how has consumer sentiment changed and how do we want to position the brands in both a media, visual, merchandising perspective. And so now you're, you're kind of doing the, the idiom of throwing all the parts of the plane off the cliff and building it on the way down, which on the way down was particularly a good analogy in this case. And we had just a blast doing it, right? And it allowed us to kind of question everything, like what really mattered. And so it's a fun thing to think about, Eric, just as a consumer, right? When you go to buy flowers for someone, by the way, really cool part about the flower business and really challenging, I want to say it was like 90 to 95% of our transactions were not someone buying for themselves. So like, what does customer mean, right? Like does customer mean the person buying? Does customer mean the person receiving? And then you contextualize that with the events over it. A customer experience for Mother's Day is different than Valentine's Day, is different for a birthday and is different for a funeral, which is another really big part of the business. So like we had to think about our merchandising contexts in sort of a three dimensional chess sort of way. We had to think about them for the customer, the person buying, we had to think about them for the consumer, the perfect receiving. And then you had to contextualize them with the event. And so we really kind of devised marketing and merchandising strategies both from a media lifecycle, creative product perspective across those paradigms to figure out how we were going to generate customer demand in those kind of contexts. Because you really needed to think about what mattered. And what mattered to us was we came to the conclusion that we had to really think that we were kind of playing in the most important parts of people's lives, right? We were playing in the highest of highest. Weddings, birthdays, births, and the truly lowest of lows, cancer, diagnoses, deaths, miscarriages. Like, we really needed to sort of contextualize that gravity to design strategies that allowed us to capture market share. And that was certainly not a two day process, that was continuous evolution process. But I think once we kind of wired ourselves in that way, it sort of led to the transformation needed to do the tactical things.
- [14:32]
B
What year was this? This was in the. This was like 2020, 2021.
- [14:36]
A
And the thing that is worth noting, like I said, I'm a statistician by education, right? And I think that the pandemic has been politicized in so many different ways. But this is a fact. What I'm about to tell you is a fact. In 2020 and 2021, 30% more people died in America than any other years in history. And so regardless, if you want to tell me the reason, I don't care. But we had to contextualize that knowing that 30% of the people sending flowers were, or an additional 30% were sending them to services or more specifically, they couldn't attend a service. And so you just, you said something at the start of this which was, you know, maybe buying behavior changed. Buying behavior went positively nuclear in the flower category for about nine months. And so we had to basically create systems of marketing demand to allow for that, but also have a relationship with our board and our team believing and knowing and frankly hoping that it wasn't forever. So like there was a lot going on, man, and it made for a remarkably challenging job, probably the most fun and the hardest job I've ever had at the same time. And depending on which day you caught me, I was the happiest I've ever been or like the saddest I've ever been professionally. But overall, when I get to kind of look in retrospect, it was a remarkable experience.
- [15:57]
B
The reason I bring up the time is it's just what you went through, that exercise of really understanding the matrix of where you're meeting customers at, in, at the time in their life and who they are and what they're buying for. It's, it's like the, the block and tackle of marketing that has become even more important in the age of Andromeda or how people are thinking about using creative as they're targeting. So it's like you were ahead of the curve by like going back to like marketing basics a little bit with that.
- [16:23]
A
Yeah, Ye. What I was really just doing is like Persona engineering. Right. And it's just like the idea that a birthday creative should be the same as a funeral creative is insane. Right. But it also such a different product and like a Mother's Day gift is fundamentally different than a Valentine's Day gift. Right. And so like I just think at time I was, I was put into a situation and we as a team were put into a situation where those things are obvious. Right. But you know, one of the things I, I find myself thinking about today in a world where I'm selling living room and bedroom like furniture, is that a person coming into a search bar and typing in I need a new bed. They don't mean the same thing. Right. A 22 year old who just is graduating college versus an 18 year old who's just going to college who versus a 65 year old who's moving to a nursing home versus a 40 year old who bought their first home. Like they're all saying the same thing, but the Personas are different. It just so happens in FTD the Personas are kind of obvious. Right. So I think we were ahead of the curve just because of the nature of the business.
- [17:25]
B
And you mentioned Mother's Day. I'm actually later, I have a time block on my calendar to buy my mom Mother's Day flowers again, probably from the same place that I bought them from for the past three years. Because I just got a reminder you were mentioning the pre interview that you have all these different segments. Not all segments are created equal. So when it comes to pouring gas or pouring, you know, marketing into certain of these segments, you can't do it indiscriminately. Talk about that a little bit.
- [17:49]
A
Yeah. And again, I think this is a good example that is applicable to any business. And I've always had a very kind of unromantic and sort of, I don't know, it's probably because I had dare in high school. You refer to certain products and segmentation as gateway drugs. Right. And a gateway drug is something that once you kind of have a good experience with it, you keep coming back to it. And so you actually just articulated yours. Right. For you, a Mother's Day flower gifting experience has served as a gateway drug for you and whoever that brand is. Right. And so I will tell you that is a better LTV segment. Now granted, my information's four Years old. Right. But so again, I wouldn't take it as fact, but there are certain events. If you forget about my knowledge or your experience, think about it just practically, what buying behavior. If you have a good experience, we'd be like, I'm just going back here. Mother's Day, Mother's Day. It's your mom. You want to make her happy. You could send her flowers every year and she'd be so happy Valentine's Day. If you send the same bouquet every single year, funeral flowers. Boy, these guys have never let me down. And this is a really important moment. Right? So what we saw is certain segments had higher LTV propensity. And I think that's true in every business in the world where there's certain segments that are those gateway drugs. And you should identify them. And to put it very tactically, Eric, you should be willing to pay more to acquire a customer who's starting their journey with your brand through that segment. So, you know, at Lucky Brand, it was denim. At Tumi, actually, one of the biggest, like, LTV gateways we had was sort of. We thought of things as close to body or away from body. So basically, do you wear it like this or do you hold it like this, like piece of luggage? Close to body. Women's was huge. If we could really win on sort of like women's briefcases, women's bags, that actually was a great indicator of ltv. So, like, I think every business in the world has these things, and it's shocking to me how few business optimize to the right ones. That doesn't mean you change your entire strategy. Right. You're still gonna have core products that are great introductions to brand, or Maybe they're high AOVs, you don't really care if they come back. Uh, but I do think it's something that we should all be thinking about and certainly true in the flower profession.
- [20:07]
B
What can you say about the turnaround at ftd? Like, what. What were you with. With these, the segmentation tactics, with this, you know, attention to the staff and the detail.
- [20:15]
A
What.
- [20:15]
B
What were you able to execute at FTD in your time there?
- [20:19]
A
The thing that we did the best was, and this is a really unsexy answer, but we realized that the key to the business was our supply chain. And our supply chain was 10,000 disparate florists around the country. And that was a really important thing because the florist, it is not a one to one relationship between you and your supply chain. Right. So if you think about it, I'm Here in Edmonds, Washington, right. There's a florist at Edmonds, Washington down the road. I'm on FT.com, somebody comes in and orders a dozen roses and goes to hit click seconds before that happens, there is a chance that you walk in off the street to that florist and says like, I need every rose you got. So when you have this push and pull relationship and you have disparate inbound into a stable supply chain, you have to create a really great relationship with those folks so that they fulfill your product somehow, some way. And you need to somehow effectively communicate to the customer that this is a possibility. Right. That replacements or substitutions are going to happen. And so the smartest thing we did was realize those realities and merchandise accordingly. So I'll tell you an amazing statistic and this is going to be a plea to customers around the world. And I'm making a plea to you not just from the florist point of view and not just from the flower marketplace's point of view where this happens to be a convenient truth. But I am making this plea to you based on the person you are sending flowers to. By far the highest customer satisfaction skew on flower websites is florist's Choice. I want $100 bouquet that's yellowish and then just let the florist go because the florist A, is probably better at designing than you are, B, probably has a better read of trends than you do, C, knows what's fresh and doesn't look bad, and D, knows what they have and can get it out the door really quickly. And so, and I mean by orders of magnitude, Eric, like 20, 30, 40% in NPS. And so we realized these truths and started merchandising accordingly and really trying to drive these products that we knew in our supply chain realities are still most likely to have the best customer experience and thus have the best mps and thus have the best return rates. And so I think that was one of the things we did that was really smart. And again, it is a good concept for every business around the world. Right? Like how do you start with the end customer experience in mind. It just so happened that ours was slightly. Well, and by slightly I mean a lot more complicated from a supply chain perspective.
- [22:57]
B
And it's a double whammy because it's better for the customer because they don't have to choose in a lot of cases. And it's better for your supply chain in that it has flexibility to what is available.
- [23:05]
A
Everybody wins. Yeah, everybody wins. But I Think I always hate things that sound too good to be true. Or in this case, every florist would look you in the eyes and tell you that you'd be like, really? Don't you just want to get your way? Your old yellow flowers? The reality is it's actually the best thing for everybody in the entire chain.
- [23:22]
B
One of the things that we talk about on this podcast all the time, we've been saying for, since we started in March 2020, the beginning of the pandemic, Creative is the new targeting. That's never been more true today. How does that play out for you through your career, maybe in your brand today?
- [23:36]
A
Well, I mean, I think that you kind of don't have control over targeting anymore. And so what? The way I grew up and the way you probably grew up is I have memories in 2005 and 2006 of being in an office with these guys named Chris and Sean. And we were creating keyword lists and basically sequel, developing keyword lists for every city, state in America to generate real estate leads. Right. So you needed Seattle, home for sale Seattle. Homes for sale, Seattle. House for sale Seattle. And we literally would have, like, I think it was 66,000 keywords for every metropolitan area in America. And that's what we did. And so the targeting was based on predicting what people were going to search. And you had the Google AdWords tool and then you had synonym generators and
- [24:20]
B
you had all this stuff, misspellings, all of it.
- [24:22]
A
Yeah. And like negative keyword. Now Google's like, don't worry about any of that. In a world of Google AI maps, it doesn't matter if somebody types in Big Mac or luxury home furniture. If it's relevant. We got you. We'll serve you. Okay, great. So now I don't control my targeting anymore. But the only way you get served is if this thing you serve gets clicked on. And so that's where this idea of creative is the new targeting. I think it's so true. And this idea of creating things that are compelling is sort of the easy part. I will date myself here and I'll talk about people that used to buy the Yahoo. Mail sign in page and, like, arbitrage the traffic.
- [25:06]
B
And I used to buy that all the time. Yahoo Mail Monster was the single greatest placement I ever used to see.
- [25:11]
A
We used to buy it as well.
- [25:12]
B
And that's crazy.
- [25:14]
A
And all you're trying to do is like when the Internet started and people started doing E commerce, like, the classic display ad was click here for a free iPad. And it was all bs, right? And so in some ways we're all chasing the click through rates of the click here for the free iPad. But here's the, the hard part about it is you have to marry that creative at the tip of the spear with your landing experience. And so I think in some ways the creative is the easy part. If all you do is think of it in a click through rate vacuum, you actually have to think about it. And this has to be enticing, it has to be honest and it has to be mirrored by what happens for that consumer when they land. And so if I go on there and I say I do creative and I pay for like Ryan Gosling and board shorts and I don't know, like Kim Kardashian in a bikini, right, it's going to get clicked on a bunch. But then if they land on the site, neither of them are there and it doesn't really make sense, then you're just going to pay for a bunch of clicks that don't actually convert. And so I think that not only is the creative is the new targeting, the creative is the new conversion. And so I think you have to marry those two things. And so I think it's a bit of a danger to think about either of them in a vacuum. And the number one challenge for DTC brands out there today is to think about both of them in context. And so if you do so, not only is the targeting important, but I really encourage folks to think about how you're marrying it with its landing and e commerce experience and to merge it
- [26:42]
B
to the first thing we were talking about. Merge it to all of your avatars. Right? You're no, you're no longer advertising to a segment of people. You know, in this sort of faceless way. You really are creating different customer journeys for your different avatars for the different occasions that, that they might buy and then using like lever or just hoping that the algorithm finds those people at the right time.
- [27:04]
A
Yeah, yeah. And that's the leap of faith, right? The leap of faith is that you sort of have a choice, right? As meta and Google take away your targeting abilities through its various kind of through Andromeda and through Aimax and through whatever's next. You know, you kind of don't have a choice. You have to make creative compelling. You have to give this algo enough compelling creative. They're gonna be like, this one goes to this person, this one goes to this person. Because remember, you are aligned incentive wise at the click level. But they sort of don't care if they buy at your site. And so it's kind of your responsibility to make the marriage to your experience but it's also your responsibility to give the algos enough options so that they can optimize for you. And that is a hard juxtaposition for sure.
- [27:51]
B
Funnel congruency is something I've been talking about ever since I was buying the Yahoo mail monster for bids.com and actually making sure that what we're showing on our various creatives, you know, even back then it was with UTM codes triggering certain things on the landing pages or dynamic insertion on Google back in the day. I think this is something that people don't talk enough about. There's so many people that send to regular purchase pages essentially versus anything custom. Can you give me an example of a time that you created really good funnel congruency through to the post click landing page experience and it really impact your conversion rates.
- [28:22]
A
Yeah. So I think a classic example of this. I'm going to go back a ways because I think it's a really good example and it's sort of a hilarious one in the modern day political spectrum. I'm going to go back to 2011 and shift nutrition where we did a sampling campaign with Dr. Oz who I'm pretty sure is now a politician. And so you know, but Dr. Oz at the time was like on TV if he said by the way, this is going to cure your alopecia, like people would buy it. Right. And so we did a supplement campaign with Dr. Oz on his spot and basically he's like click here right now to get a free sample and people would go directly. What we did is we negotiated the rights to have him through the entire campaign, the landing page, the checkout page, the checkout confirmation and the sample itself. So few people do that. Right. And it comes back and this is going to be. And I'm really going to date myself, Eric, but it's still applicable today. How many people buy a creator for a real and they stop thinking about it from there. Right. In a world where creators. I was just reading last week about how Taylor Swift is trademarking her voice for AI and other things. In a world where we are doing all of this stuff to manipulate and trade. The power of a true influencer and the power of a true creative and the power of brand has never been more important. And yet we keep on thinking about it. It's just like I got the real. I'm good, I'm going to send them to a PLP and so next thing you know, I hire Eric to start, you know, speaking about Thuma, Eric does a post and goes, I love my Thuma bed. It was perfect for me as a person with a 2,500 square foot house in suburban America. It was easy to put together and then you land on a grid page and Eric's gone. And we're not talking about suburban America and we're not talking about 2,500 square foot homes. And so way back then we nailed it. And we nailed it because we negotiated the right usage rights. And yet I would bet most of the brands listening to this today just buy a real and call good.
- [30:32]
B
I'm just impressed that you I was back in the performance marketing space at an affiliate network back then and I wonder how many of the brands promoting Acai actually know negotiated with Dr. Oz to get them on their landing page and how many just slapped them on there.
- [30:45]
A
It probably just slapped. I mean. Exactly. Right? Well you know, there is still that you got to think about how many folks are probably doing that with like Forbes today. Right. It was easier to ask for forgiveness of permission. And like that's the other thing that I think is so strange, you know, in modern day D2C is there's, there's this. I've never seen paid placements have more of an organic impact. And the reason I say that is if you go to GPT and you type in a non branded post right. Like what is the best T shirt? Most of the sources are like listicle affiliates. So like I feel like genuine creative has more of an impact today and it's harder to do. And so it is. I think your point of creative is the new targeting and the contextual connection between your creative and your then experience. And you alluded to this. It's more important than ever because everyone else is just trying to be like let's put together a listicle and talk about everyone and try to like arbitrage traffic as an affiliate. So I do believe this is getting more and more true today.
- [31:46]
B
And the other thing that everyone's talking about creator content and affiliates, I feel like affiliates are a big. I think anytime you run into financial troubles, the affiliate world like swells in a way or whenever you're in, in you know, financially unstable times or, or lack of consumer confidence. I feel like affiliates are really good at like rushing into the void and filling the. And I'm hearing every day about new brands launching really comprehensive affiliate campaigns. How do you with, with your current brand handle sort of creator content affiliates versus maintaining brand control?
- [32:20]
A
Oh Your last point kind of answered the question. Let me not talk about Fuma for a second. I'll come back to it. Because I do want to address just a larger point. I think there's this really sort of predictable and tragic and hard to recover from journey that brands go to. And it goes something like this. Hey, we're launching our own brand. We're just gonna be a website only and we are never gonna have a sale. And then that works until it doesn't. Then they're like, okay, we're just gonna have a semi annual sale and it's just gonna be stuff that we mark down that we truly are just seasonal and we want to get out of inventory. It works until it doesn't. They're like, okay, we're gonna have a permanent sale page, but it's just gonna be like, whatever stuff's gonna. And let's let it kind of build. And then it does that till it doesn't. And they're like, all right, we'll do a 20% off site, off site wide, but we're just gonna send one more email a week. And they do that till it doesn't. And then eventually they're sending seven emails a week. And then eventually they're on Amazon. And then eventually they're doing every single affiliate deal on earth. And what's happening over that timeline is just margin arbitrage. And they've lost control of their brand, they've lost control of their pricing, they've lost control of their merchandising. And most of the time, the really like the dumbest thing that happens is they haven't actually done any product segmentation across all these channels. So these sites inadvertently are just sniping at each other, right? They're. If you take the price down to 98 cents, we're taking it down to 98 cents. So you go to 97, we're going to 96. And it's just like. So they try to get around it with like buying more, save more, because that's harder for a promotional spider to understand. And if you went around the Internet and you looked at all the brands, you'd be like, well, that happened to them. All that happened to them. All that happened to them, right? And a lot of brands today, they're struggling. You can actually go back and map it to what happened. And so we don't do that, right? And we have the luxury of thinking about our brand in a timescale that is not quarter to quarter. And so to answer your question directly, we want to Work with affiliates that we feel like are authoritative. And so if we can work with Architectural Digest, we will. We are not going to go and spray 20% off coupons. It's not kind of endemic to the brand. But I do believe the affiliate world is segmented in a variety of ways. There's the promotional folks, there's the clearly AI generated listicle folks. We really want to focus on the folks that we think have authority in the space, not just to our customer, but to the trade holistically. And so that's kind of our strategy, I would say is not indicative of the trend that you alluded to. We're much more using in a more traditional PR way.
- [34:57]
B
I would say it's such a dangerous word because it means so many things to so many people. Right. And, and there's, and there's. So if you go into it blindly without a really curated strategy and you know some real boundaries about what you're accepting and what you're not, it's a real, it's an ability to, to get yourself effed. Pretty good.
- [35:14]
A
Yeah. And, and I gotta say, Eric, and this is a prediction, it doesn't feel sustainable for the amount of authoritative sourcing that's getting in the LLM world. And what I mean by that is like who are these people? Right. Chances are most of them are just like AI generated sites in real time and they're ostensibly fake sites. It does remind me of early Google, right. When you can rank by doing link stuffing at the bottom, you can rank by doing this stuff. But eventually we caught on because in a world that gets more and more automated and more and more AI generated, I think the consumer demand for brand authenticity increases. I think there's an inverse relationship between those things. And so I do think affiliates are having a moment in the sun. But I think the people that are actually generating great content and are great brands will rise to the top. And maybe that's wishful thinking, but I have seen it happen once before in that, in that arena.
- [36:08]
B
Yeah, a hundred percent. You mentioned LLMs and AI. What do you think is the. This is a broad question again, but what's the biggest unlock for you in this age of AI that you're applying to the businesses you're working at?
- [36:20]
A
Analysis. I think back to how I started my career and I'm not sure my job needs to exist anymore. The hard part is actually getting your data into a foundation and a schema that allows for the analysis. Right. So I think people have this romantic lens which is you can drop all your data into one place and then you start asking questions. But like, what do you want to be your system of record for traffic? And what do you want your system of record to be for attribution? What do you want your system of record to be for web analytics? And what do you want your system of record to be for advertising? The effectiveness, like it's not that easy of a question. And so it does require some work to get the data schema the way it is. But just this morning, just this morning I was able to do analysis in four minutes. That would have taken me four hours. And I didn't have to ask anybody. And I could do it myself and I could keep on asking questions. I could be like, what about this? And what is that source? And oh, what was that placement? Right. And so I think if you're not doing all of your analysis using an AI tool today, that's a big miss and I'll give you a silver medal answer. Creative experimentation. I think creative experimentation. I use the word experimentation very, very intentionally because I don't think it's great at everything and I don't think making creative and AI is perfect. But to like mess around and conceptualize, it's pretty damn good. Those are the two unlocks that I use on a daily, if not like multiple times a day basis.
- [37:34]
B
And then what tools are you using for this? Are you a Claude guy?
- [37:36]
A
I'm all of them. I'm a GPT Pro and a cloud pro account. I don't play in perplexity as much as, but I found that certain things are better at certain things, you know, like. So for example, just recently an unlock is the Figma implementation with GPT. Really great for messing around with flowcharts. But so like I'm sort of in. I definitely have my favorites, but it's on a case by case basis.
- [37:58]
B
The other thing you mentioned in the pre interview about AI unlocking was about customer facing and the actual promise of actual personalization. I referenced on this podcast a hundred times, but the, the guy from Minority Report walking into the gap and, you know, having this AI conversation about his last purchases, you know, that are piped into his ears essentially. What are you using AI for in the realm of personalization?
- [38:21]
A
Well, if you forget the funny part about that scene, it was actually a conversation with the Japanese guy's eyes that he had had implanted in his head.
- [38:29]
B
So it's like, oh, that's right, it wasn't his sweater. It was the Japanese guy sweater.
- [38:32]
A
It wasn't his eyes. It was the guy's eyes, right? So it's actually a great scene. Underrated film, by the way.
- [38:37]
B
Great film. Yeah.
- [38:39]
A
So let me get out of my Tom Cruise fanboy and move over to the actual question. So I have said, and I think I actually wrote a LinkedIn post about this like two years ago, that personalization up until about two years ago was a misnomer at best and BS at worst. It was segmentation. Right. And I'm going to continue to talk about dating myself for a second, but I remember when IBM bought the Weather Channel So that on WebSphere you could be like, well, it's 70 in New York and 40 in Seattle. We're going to show T shirts over here and sweaters over here. Right? That was the start of personalization. That's not personalization. Like, that's segmenting to millions of people based on a data point. And up until this point, that's kind of largely what we did. But we started to move our way down this world where, okay, I'm going to start showing a different landing. It's going to be the same URL, but it's going to look a little different based on your UTM parameters. And I'm going to start showing you something a little bit different with merchandise sort order based on your past browse behavior or based on a Persona that fits into a UTM parameter. So now we are really, really close to having a dynamically created page based on all the data available. Now here's the rub. The data available is getting smaller and smaller and smaller and smaller to DTC websites. It's getting hoarded by the powers that be that know it's its most powerful currency. Not just for a control perspective, but for an AI perspective. Right? Like knowing everything Eric did on meta's entire universe, or knowing everything Eric did on Google's entire universe or Apple's entire universe. That is their most valuable asset. So they're not just going to give it to you, right? You got to figure out how to get it to your where you need it so you can actually personalize experience. So, but what we have today is we have computational power, we have the site speed, we have the increase in like 5G. And I would caution, by the way, like, site speed still isn't great in a lot of the United States, so don't get kind of in your own little coastal bubble. But we have all these things that are just meta forces that are allowing for us to truly personalize the experience. In your website, if you got the data to do it and so that macro horsepower, it's akin to like we're ready for the car to go 200 miles an hour. In the past you had to drop the car off a cliff and let it reach terminal velocity. And then all of a sudden engines happened and then 100 octane gas happened and then the V8 happened. Right. So we have that same sort of macro thing happening where now it's a true possibility if you got the data to do it, but I would say if it's not a core part of your strategy answering those two questions, how do I get the data and how do I power my website? Then you are way behind. And it's just a really fun thing for me. Like the idea of go back to my example before. Let me use three really different examples for the exact same search. Swimsuit for my vacation. One person is a 20 year old college attendee going on a girls trip with her sorority sisters. One person is my wife. I won't tell you her age, but we got a six and a seven year old and we went to Puerto Vallarta three weeks ago. And one person is my wife's mom who's coming with us. Do you really want to show them the same thing? Even based on that one piece of data I just gave you? The answer is are you out of your mind? And so if you just think about that and you think about what data you do have to use and maybe you have like LFR or maybe you're just limited to Klaviyo, or maybe you're just limited to Shopify or just whatever you've got to ask yourself what do I got? And then do your best and then figure out how to make that thing. You got the data input that much better.
- [42:24]
B
The last point, I actually have a rapid fire I want to give to you right after this. But you mentioned one of the things I see debated on DTC Twitter right now is this concept of volume of creative. You know, we've already articulated that creative is the new targeting. You want to have funnel congruency when you're doing it. You want to, you know, be speaking to your various avatars. What does this actually translate to into volume of creative? And I know it's not just you're not testing iterations anymore, you're testing like hypotheses where you're saying, okay, I'm trying to meet this customer where they're at in their purchase journey with this creative. Put it out there, just maybe talk to me high level how you think about creative volume and output in this
- [43:02]
A
environment today, It's a really great question and I have a fairly rudimentary point of view about it, which is how much can you get a statistical read on? Right. So if you are a 30 million dollar brand, or a 60 million dollar brand, or $100 million brand, or a 200 million dollar brand, frankly Eric, that's not enough data to answer the question. Because the real question is how many signals do you need to get a read on a creative. We are a luxury home goods brand. Our AOV is much higher than like a beauty brand. So a beauty brand on a $200 million business might have, I don't know, 20 million transactions because their AOV is 10 bucks. If you are a $200 million furniture business, you might have a hundred thousand transactions, right? So the real first question you have to ask yourself is how many iterations can I realistically expect to get signal back that's significant enough for me to make decisions to get the next batch? That's where you start your question. Right. And so I think, you know, we, we've been trying to scale it as we scale, but I think the question has to be rooted in good old fashioned statistical efficacy. And it's different for every brand because if you only have 100,000 transactions a year, you probably can't test more than 40 creatives a month. If you have 10 million, you can test 400. And so like start there, start in just the statistical wherewithal needed to get a read and then deal with the hard things like how many Personas are actually relevant and what's our manpower and how quickly we turn around. But I really root the answer in like a place piece by piece basis based on good old fashioned statistical significance. So. Pardon for my boring ass answer.
- [44:41]
B
Beautiful. All right, rapid fire. I actually haven't done this before. Let's try it.
- [44:45]
A
Oh man, now I'm really intimidated.
- [44:47]
B
What's the most overrated DTC tactic right now?
- [44:50]
A
Using Meta's conversion signal.
- [44:52]
B
Interesting. I just did a podcast yesterday about their new incremental attribution option that I think a lot of people are switching over. They're actually the first, the first ad platform that I've heard of to actually decrease what it was taking credit for. So it's no longer taking credit for clicks that come from people clicking on videos or whatever. And they're actually not taking impression conversions for a number of things.
- [45:13]
A
My, my seven year old daughter is in a dual language program, English, Spanish, and she's in second grade and she just brought back her reading report card. And it was freaking incredible. It's like it was probably one of the most impressive report cards I've ever seen. Do you know how much less impressed I would have been if she wrote it? And so it's just like, what are we talking about? And so like I, I just think you should never let any advertiser or vendor grade their own homework. So how about that? All DNC people grading their own homework. That's my answer to your question. As opposed to me just picking on meta.
- [45:43]
B
Underrated channel. What's the most underrated channel today?
- [45:46]
A
YouTube.
- [45:47]
B
YouTube.
- [45:47]
A
You have to do it way different. Which is, I don't think, I don't think I'm good at it yet. But it's for sure the most underrated
- [45:52]
B
channel you have to do. We're finding that as well. It's the, it's the most underutilized channel in our, in our media company as well. We've just kind of built it as this afterthought. But it does require really its own full strategy. Really does.
- [46:04]
A
And it's so fun because it's like you really kind of. I think it's, I think it's a very one to one. As in like strategy to brand channel. You can't just like take this bunch of assets and chuck it over and hope it's going to work. Which I think makes it fun. It makes a fun challenge and makes you. Gives you your chance as a brand. Differentiate.
- [46:19]
B
What's the first thing you'd fix in a $10 million brand? You just came into revenue.
- [46:23]
A
10 million.
- [46:23]
B
Yep.
- [46:24]
A
I think my PE is going to show here. They probably have too many people. That should be like a three person brand.
- [46:29]
B
It seems like the answer a lot these days. And then what's going to matter most in the next two years?
- [46:34]
A
The thing we talked about, marrying your creative to a personalized lighting experience. Full stop. Not close. Every single macro factor is backing me up on this. Every single one. So get really good at it. Get like, you gotta build this one muscle. But it's not limited to just advertising in like a paid media. It's also true in life cycle. Right. So marrying your creative message to your landing experience. Full stop.
- [47:03]
B
My last question was like, what's one thing that someone should take from this podcast? But I imagine that's the answer right there.
- [47:07]
A
Well, but can I add one more? One more. And it isn't a D2C tactic. It's actually a merchandising tactic. None of this stuff matters if your product doesn't have a reason to exist in a world where Amazon and Walmart and ebay and now Quince are commodifying the entire supply chain and distribution. None of this stuff matters if you don't have a direct answer to that question. And so don't forget about having a great product. So I'll add that as my cherry on top, which is not a D2C tactic. It's just a really important tactic because it used to be. And Eric, you know this is better than anybody. It used to be you can make the same acetate glasses in the same factory as the other people and just be better at meta. I do not believe that's true anymore.
- [47:55]
B
Charlie, I'm really glad we met in the elevator. If you want to meet Charlie in an elevator sometime, you got to go to Shop Talk, check him out on LinkedIn Connect and say what's up? Thanks for coming on the podcast. This was fantastic. I would love to be able to. I think we should be doing this at least least you know, biannually where I can keep keep checking in with
- [48:11]
A
some of your insights. I'm happy to. And I want to add on to one thing on one thing. The reason I do these things is truly to meet people like Eric. So if you haven't friended me on LinkedIn, if you just want to sell me something, by all means, take your shot. Right? But I truly like to make connections with folks and so I'm really happy to have met you in the elevator as well. But I'm also the only reason I go to Shop Talk is do meet people. Right? And I'm a true believer in open networking. As long as that open networking isn't just like superficial sales backhandedness. I get it. I'm not an idealist. I truly understand that there should be great relationships between vendors and brands and sales. And I've been on both sides of the table, so hopefully I can be empathetic about it. But as it pertains to adding me on LinkedIn, please don't hesitate. I think it's the only reason we should all do stuff like this, so I'll leave you with that.
- [48:57]
B
Thanks again, Charlie. This was awesome. Thanks so much for 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.