OPERATORS Podcast Episode E085: AppLovin and TV Ads

Release Date: December 4, 2024

In Episode E085 of the OPERATORS podcast, hosts Sean, Matt, and Jason are joined by their esteemed guest, Katie from Kaiden Lane. The episode delves deep into the intricacies of modern marketing channels, focusing primarily on AppLovin and Television Advertising. The conversation is rich with insights, practical experiences, and strategic discussions that are invaluable for eCommerce professionals seeking to optimize their advertising efforts.

1. ERP Systems Challenges

The episode begins with a candid discussion about the complexities of implementing and managing Enterprise Resource Planning (ERP) systems.

• Katie's Insights:

  • Katie emphasizes the difficulties in ERP integration, particularly highlighting her own struggles with Simple Modern: "It's so incredibly painful when we finally did it with Simple Modern. Usually, the integrations on these things are just an absolute bear." (01:09)
  • She underscores the variability in contractor quality when dealing with ERP ecosystems: "We hired a contractor and got integrations that sucked, forcing us to redo them internally over the last couple of years." (03:23)

• Sean's Perspective:

  • Sean humorously likens ERPs to telecommunications providers, suggesting that they are inherently designed to manage dissatisfaction: "ERP is like telcos, they're in the business of managing dissatisfaction because they're so difficult to use." (03:35)

• Matt's Rating of NetSuite:

  • Both Matt and Katie critique NetSuite, giving it a low score due to its complexity and reliance on external contractors: "It's really hard to get above probably the high threes." (02:30)

2. Staffing Strategies with Temp Agencies

The conversation shifts to staffing strategies, particularly the use of temporary agencies in managing workforce needs.

• Jason's Experience:

  • Jason shares his innovative approach to staffing in the warehouse: "We use a temp agency... if they're complete duds, we just send them home." (05:21)
  • He highlights the cost-effectiveness of this method compared to traditional hiring and counseling: "It comes out cheaper than hiring and counseling and writing." (05:21)

• Matt and Jason Discuss Quality:

  • Matt praises Jason's method, noting the reduced personnel issues: "Nobody shows up to my office with a staff. I mean, we still have people problems." (05:49)
  • They debate the balance between quality and cost, with Matt noting a premium pay rate to attract more competent workers: "We pay like 4 bucks more an hour... you wind up getting much more competent people for a marginal cost increase." (09:45)

3. AppLovin as a New Marketing Channel

A significant portion of the episode is dedicated to exploring AppLovin as an emerging advertising platform in the eCommerce space.

• Sean's Introduction to AppLovin:

  • Sean clarifies his relationship with AppLovin, distancing from affiliate motivations: "I have not made any money talking about AppLovin... this is non-monitized by those guys." (12:03)
  • He provides an overview of AppLovin's business model and its expansion beyond mobile games: "They're an ad network that traditionally, their ad space has been mobile games... but they've shifted really hard towards attribution and driving revenue." (14:20)

• Comparing AppLovin and Meta:

  • The hosts discuss how AppLovin's CPMs compare favorably to Meta's, offering competitive Return on Ad Spend (ROAS) at a fraction of the cost: "We're getting as much last click ROAS with Meta... about 1/5 of the spend." (15:17)
  • They speculate on the sustainability of AppLovin's performance amidst increasing adoption: "Is it gonna last? Nobody knows. It's kind of a gold rush right now." (15:47)

• Audience Reach and Ad Engagement:

  • Sean notes that AppLovin reaches a vast daily user base (140 million), rivaling major platforms like TikTok and Snapchat: "They have 140 million daily users... as big as TikTok or Snapchat." (16:14)
  • Jason points out the engagement level, where users are compelled to watch full-length ads, unlike the brief attention spans on Meta: "They have to watch for like 20 or 30 seconds." (16:58)

4. Television Advertising Using Tatari

The discussion transitions to Television Advertising, focusing on Tatari as a strategic partner.

• Sean's Experience with Tatari:

  • Sean shares his long-term relationship with Tatari, praising their integrity and support: "Tatari actually good people to do business with... they gave me back $400,000." (36:27)
  • He elaborates on the flexibility of remnant buys, allowing for cost-effective ad placements during extra innings in sports events: "Just try to buy extra innings... optimize for the cheapest cost per view." (48:58)

• Jason's Journey into TV Ads:

  • Jason recounts his initial hesitations and subsequent successes with TV advertising: "We ran our first ads, thought they were great... switched to a direct response approach and doubled performance overnight." (35:04)
  • He emphasizes the importance of creative optimization and the impact of voiceovers on ad performance: "We switched over our commercials... it improved performance. It doubled it overnight just with our freaking voiceover." (38:16)

• Best Practices and Insights:

  • The hosts discuss the nuances of TV ad buying, stressing the need for interest-based targeting over broad segmentation: "It's interest-based targeting... you want, you want the best last click ROAS as possible or as many new customers in the door at the cheapest price?" (46:25)
  • They highlight the trust factor associated with TV ads, as consumers often perceive televised advertisements as more legitimate: "You're paying attention on TV, you figure they're legit because they're on TV." (45:07)

5. Holiday Marketing Strategies

A considerable focus is placed on holiday marketing, particularly leveraging the Q5 window around Christmas.

• Sean's Q5 Strategy:

  • Sean introduces the concept of Q5, a prime sales window from the week of Christmas to early January: "Between today and the end of the year, we have to do $70 million. So it's good luck, everybody." (52:15)
  • He shares the massive revenue spikes experienced during this period: "On the last day of shipping cutoff, we probably do $2 million or whatever. It's a huge revenue driver." (52:15)

• Katie and Matt's Approaches:

  • Katie discusses the early launch of holiday sales to maximize visibility: "We did early holiday sale in October... Your cutoff is the latest Black Friday could ever be." (56:43)
  • Matt reflects on inventory management during peak seasons: "We're trying to get ahead of what we think we're going to sell. We pre-make our best sellers while we have capacity." (54:36)

• Adapting to External Factors:

  • The hosts talk about external events like Chinese New Year impacting holiday strategies: "Chinese New Year starts two weeks earlier than it ever has... it's a crazy time to be in eCommerce." (57:15)
  • They also touch upon consumer behavior shifts due to events like elections: "We had a killer day the day before the election... Post-election saw a huge pickup." (58:09)

6. Closing Remarks and Insights

As the episode draws to a close, the hosts reflect on the day's discussions and share personal anecdotes that underline the importance of team dynamics and company culture.

• Team Respect and Leadership:

  • Sean shares his leadership style, blending respect with authority: "I told everybody, I'm not your fucking dad. Figure it out." (62:11)
  • Jason and Matt commend Sean's ability to earn team respect through hands-on involvement: "I think your team probably really respected you for doing that." (62:15)

• Final Takeaways:

  • The episode emphasizes the diversity of marketing channels and the necessity to experiment and optimize: "Use AppLovin and TV to reach new audiences while maintaining strong performance on Meta."
  • The hosts encourage listeners to leverage new platforms like AppLovin and to integrate traditional channels like TV advertising for a holistic marketing strategy.

Notable Quotes:

• "ERP is like telcos, they're in the business of managing dissatisfaction because they're so difficult to use." — Matt (03:35)
• "We're getting as much last click ROAS with Meta... about 1/5 of the spend." — Sean (15:17)
• "They have to watch for like 20 or 30 seconds." — Jason (16:58)
• "We pay like 4 bucks more an hour... you wind up getting much more competent people for a marginal cost increase." — Matt (09:45)
• "I have to deal with, with Katie. So we go over here..." — Matt (08:31)
• "They treat that like remnant." — Jason (49:13)

Conclusion:

Episode E085 of the OPERATORS podcast offers a comprehensive exploration of both digital and traditional advertising channels, providing listeners with actionable insights into leveraging AppLovin and Television Advertising to drive eCommerce success. The candid discussions around ERP challenges, staffing strategies, and holiday marketing further enrich the episode, making it a must-listen for professionals aiming to navigate the complex landscape of modern marketing.