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On this episode of the podcast, CTC Director of Growth Strategy Luke Austin sits down with Richard to break down a phenomenon we noted in our most recent monthly DTC Index report: Google is losing Share of Wallet to Meta. 

Luke breaks down why this is happening, how Google is dropping the ball when it comes to product updates, and why Meta is better for incrementality.

Show Notes:
  • Visit Parker today to learn how to scale with a focus on profitability. 
  • The Ecommerce Playbook mailbag is open — email us at to ask us any questions you might have about the world of ecomm.

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[00:00:00] Richard Gaffin: Hey folks. Welcome to the e commerce playbook podcast. I'm your host, Richard Gaffin, director of digital strategy here at Comethreat Collective. And I'm joined this week by our on the front lines, war reporter, Luke Austin. Luke is of course, our director of growth strategy here at Comethreat Collective.

And he's back with some insights from a day to day life of digging into accounts and kind of seeing what's happening with our clients. So, Luke, what's going on, man?

[00:00:26] Luke: We got a lot of people that met a performance marketing summit this week. So I'm at home, not in the office with no background noise, which is it's kind of nice for the purpose of this. But yeah that's sort of the, the big, the big focus on our, on our end. And I think in a in sort of a cynical way, it leads into this conversation we're going to have about Google losing share of wallet.

And some of the reasons we think that's, that's happening. So, I'm set to jump in.

[00:00:48] Richard Gaffin: it's, it's, it's appropriate that everybody is away at meta because that's kind of seems to be what's happening broadly on the platform. So, a couple of touch points here before we jump into it. We had the DDC index recently released where we had some information about the share of wallet and Google losing share of wallet relative to Meta.

To meta and then also there's, I think Taylor, Taylor tweeted yesterday, a couple of days ago around maybe some specifics around how Google reps interact with brands. And then there's just some sort of interesting stuff to dig into about incrementality on both platforms. But anyway, the headline here is that overall Google is losing share of wallet to meta to the tune of, let's see, meta has scaled from 75 percent to 80 percent of share of wallet.

With other platforms, losing Google has gone from 20 percent to 16 percent TikTok going from five to 4%. But of course the big story here than being that loss on Google's part and the gain on Meta. So, Luke, I know you have three very specific reasons why we think that this is happening. So we're going to dig into that and then maybe we'll have a little conversation afterwards about.

So what, what do we do? So let's, let's kick it off with Well, let's maybe start with your first point, which is of course around a narrative and how that might be perpetuating this decline.

[00:02:00] Luke: Yeah. So, and then to add some more context to this data point around share of wallet. This is from the DDC index that that we put out in, in, in tandem with some partners of ours and the what we're seeing is the share wallet increasing on meta declining relative on Google. And then within those platforms we've seen that the share of wallet within Google has increased towards performance max over time.

And then on meta ASC advantage plus shopping campaigns has increased to those. So the, you know, the, the newest ad products within those platforms are taking more of the shareable within those platforms specifically. But what we're seeing is. Advantage shopping is taking incremental share while, and it's taking some of the money away from Google.

That's where we're seeing this, this happen. Whereas performance max is taking up more of the Google share of all within that platform, but the overall show share of all within Google is declining relative to meta. So I think this is really important as we speak relative to the new ad products and the innovation happening within the two ad platforms.

Cause I think that's the, that's the main thing that we're, that is leading to the decline in share wallet within Google specifically. So the first reason that that I think Google is losing share of wallet is. Because Google is losing share of wallet. And it connects to the narrative around what is happening on that platform and specifically what other people are doing on that platform.

Within this space, specifically, do you see e commerce growth marketing? There are a lot of. Conversations that we all have with other brand owners, operators, marketers with agencies and with all of our clients are having those conversations at different times as well. And what we're seeing within, even outside of the sphere of DTC Twitter and what happens there in conversations between those folks is As folks are pulling money away from Google and leaning more into Meta or other platforms that perpetuates the cycle in a way where other folks start to lose confidence when they start to see the leaders at big brands that they look up to or other agencies that they respect that that is the trend that they are seeing that perpetuates the cycle.

And so I think even before we start to get to some of the technicalities and measurement and. The ad products themselves, just the fact that this is the narrative, and this seems to be what's happening in conversations with other agencies and brands perpetuates the cycle in a way that I think the narrative has a really strong impact on this outside of any specific technical uh, impact itself.

[00:04:34] Richard Gaffin: Yeah. I mean, I think an important thing to point out that you pointed out before we hit record here was how few of our decisions are actually data driven. And I think part of that is illustrated here, which is that people are making a choice to pull back on Google just because they see everybody else making that choice or making, or see brands that they aspire to be or brands that respect doing that.

So. But then let's maybe get, dig a little deeper to the reasons in the first place this may have happened. So, let's jump to your, your second point here, which is around particularly how Google manages their platform and their relationship with people using it.

[00:05:07] Luke: Yeah. So one thing that Meta does really well is. Every quarter there's initiatives around new testing opportunities that Meta puts out. Every brand gets access to some version of that list. We get a list from our agency partner rep of probably over 50 testing initiatives every quarter.

That meta is putting out net new test structures. And then we have access to a pool for the agency clients specifically around incremental coupon budget for conversion lift studies. But the key here is that Meta is putting out specific test recommendations based on new ad products or new additions to their ad product they're putting out or things that they're seeing across their data set that they're wanting more brands to test into to validate hypotheses on their end or help design their roadmap.

Um, And so MEDIT is putting together lists of testing initiatives of different ways to structure stories only and reels and AFC website only versus AFC website and shops. All of these specific test recommendations that are pretty easy to set up within meta's experiments tool. And you get some credit incentive against these credits three to one or four to one.

And then potentially an additional pool for engaging in conversionless studies on a quarterly basis. So it makes men, it makes it really easy to engage in. Tests that align with their product roadmap as they develop it, and they come alongside brands and offering a coupon match to test into these, knowing that we talk about this in terms of creative and testing all the time.

Like, there's going to be likely some trade off in terms of short term efficiency when you're engaging in a specific test, especially if it's a multi cell test. And so they're recognizing that they still want to push, testing to these new initiatives and so come alongside of brands in the coupons that they offer.

In contrast, Google makes it really difficult. Or yeah, Google makes it difficult to have access to the clear measurement tools within their platform in the same sort of self service way. And don't, they don't have as clear recommendations as meta does in terms of here's our top 50 quarterly testing initiatives.

And then here's the, you know, add credit or coupon match that we're going to put against them. It's much more difficult. And so what I, what I think that does connected to the narrative is. Is it can indicate that there's less innovation happening within that platform and potentially less confidence internally as well as externally around Google's ability to really deliver strong results and continue pushing incremental results to the platform if there's on a clear measurement product development road map, and then they're not, you know, bringing those opportunities on a consistent basis to, to folks.

[00:07:45] Richard Gaffin: Yeah. So, I mean, it sounds like part of it is that Google does not encourage engagement with the platform, maybe in the same way, in the sense that. Meta gives people who are using Meta or whatever the opportunity or really a very clear reason and it's sort of a no risk reason to dig into new product innovations of which it sounds like there are more.

Whereas on on the Google side. Not only are there seem like there are fewer testing initiatives or, or rather like product developments or something like that, there's actually less incentive or no incentive given to even engage with them, which then perpetuates the sense that there actually is no innovation happening on the platform.

Does it sound accurate? Okay.

[00:08:28] Luke: level of transparency as well also just leads to more skepticism when, when there's not, there's not clear results. And it's sort of the same narrative with that, that PMAX has had since inception, which is the black boxy nature of it, where you can't get reporting on the audience level, you can't get reporting on each of the different components of the asset group level, like there's, there's this level of lack of transparency that I think contributes to that.

And one recent interaction that we observed is Google actually using a third party. Third party incrementality data point to support why we should be spending more into P max with branded terms and specifically scaling up more into P max overall. I'll get more budget to P max and specifically P max branded terms included.

And so it wasn't a test that they had done internally. It was a third party test. I think that. I don't expect that they were involved much in more. So they just kind of found the resource and used to back up. And then the results of it were also misinterpreted where it was, you know, PMAX with branded terms was.

More incremental than PMAX excluding branded terms. But overall, the core takeaway of the test was that PMAX in general was over reporting and less incremental. And so the brand that engaged in this test brand we all know has you use that to inform their budget allocation and reporting from that platform.

And so using the third party signal, Using a third party measurement tool and then misinterpreting results also, I think perpetuates point that you just brought up, which is sort of like this, this lack of transparency or confidence and Google internally being able to make a case for why their product is really incremental at driving business growth outside of, Hey, spend more within our core product Pmax.

And you know, we'll add in some more granular reporting over time. Profit bidding, we know is something that's coming down the pipeline, but I think it just leads to the perception that Metta is doing a lot more product innovation is a lot more confident in the results of its platform because it's because they're, they have a testing roadmap that they align that they aligned their recommendations with.

[00:10:42] Richard Gaffin: So let's talk then about, about those results. That one gets from meta over and against Google because that's essentially your last point is that one works better than the other. So let's dig into that a little bit.

[00:10:52] Luke: Yeah. So the, the third, the third point here is what we consistently see across. Our data set and the brands that we run, geo lift, holdout tests incrementality testing with is that meta is consistently higher incrementality than Google. And specifically we're gonna, we're talking more, more so Google P max.

So higher than Google branded search, higher than Google P max. And substantially not not not a small level of incrementality increase within social versus search. And so What we see using the third party tools and measurement and how we partner with brands is social continues to contribute at a higher level of incrementality, whereas performance max low is a lower level of incrementality.

And we talked about incrementality at the work. This word is getting used a lot more now and specifically this year than it ever has before. But really what you're looking at is. Isolating usually you're holding out a specific subset of geos. You can do a scale test as well, right? But you're in most cases you're doing a holdout test within a specific number of geos, and then you're increasing or decreasing spin within a certain channel or tactic and looking at how those geos respond in terms of the overall business metric that you're measuring.

It's usually Total revenue or new customer revenue or new new customers. And so, in the reads that we've seen from infantality studies is that social has an higher incrementality than it is usually taking account for on a click basis, especially looking at a one day click. So if you see a If you see a 1.

81 day click Ross and your meta platform more so than not, we see that incrementality readout readouts will say that the actual contribution for meta is at least as good, if not greater than that 1. 8, whereas on P max, the P max campaign is saying. Okay. I'm running at a 1. 8 but the incrementality readout in more cases than not is saying that is below the level of reported by a significant amount.

And it may be the 1. 8 reported, but it's actually a 1. 2. And so we see this consistently a large discrepancy in terms of incrementality versus paid social and paid search. And then and then what we see in terms of the business impact is that as we ramp up into meta through a. Cost controlled specifically value optimized structure that's oriented around net new offer angle and concepts, right?

The whole thing that we always talk about, but as we scale up meta through that framework We see the impact on the business top line, whereas engaging in scale tests on Google we tend to just see maybe more conversion rally value report in the dashboard, but lower efficiency and much less substantial impact on the business outcome through that channel.

[00:13:31] Richard Gaffin: And just for the folks who don't know, including myself, what's geos.

[00:13:35] Luke: Yeah. Sorry. Geography is just some subset of, usually it's some set of states or postal codes. Or areas. And so you'll really simply look at a, some percentage of the regions or geographies for a certain brand that contribute a meaningful amount of conversion volume to be able to isolate and use that as indicative of the whole.

So you'll say you're going to take out 17 percent of your total conversion. Volume from a subset of regions that 17 percent based on the historical performance is really indicative of what the overall performance is going to be like. So you take those out, exclude them, and then you use that to assess scaling up or down on specific channels and how those geographies respond is going to be indicative of how the whole response.


[00:14:18] Richard Gaffin: Okay. Fascinating. Yeah. Cause that, my follow up question was going to be if Google is such a black box, how do you know that it's incrementally worse than Facebook is? But essentially that sounds like it's the answer. So let's then dig a little bit deeper into kind of maybe trying to understand some of the why's here.

So if the point number three is that. Google or rather you see higher incrementality on meta and not on Google. Any ideas as to why that might be the case? Yeah,

[00:14:51] Luke: important to say that there is for every brand, there's a level of spend within Google, within each of the main tactics, brand search, non brand search, performance max potentially display YouTube demand gen depending on the size of the brand. There is a level of spend that is that is going to be at the efficiency level needed.

The question is, what should the right ROAS target be that you assess for that platform in terms of its effectiveness? And so incrementality tests will help to get to how much is the, is the, is the platform over under reporting the actual impact on the total business outcome? And then you can adjust your efficiency target up or down accordingly, and then allocate the budget.

And so I think the core takeaway is. Most brands should still be spending on both, but what we're seeing in the share wallet is brands are spending less on Google. And that's what will happen when you get an incrementality read that's lower on that platform and incrementality read that's higher on paid social.

Great. We'll move some budget from Google to meta because we can push more there. And actually the efficiency is lower on Google. So we are going to continue spending on both platforms. It's just going to be at a lower level on Google than we have historically based on the incremental impact we're seeing from that channel.

So the, the reasons why, why that are, I think. The we, we talked about meta and Google in terms of demand creation and demand capture. It's not, it's not that simple, but I, but I, I think it's important just to understand where these platforms sit in, in the funnel and what the behavior is of folks within.

Each of these platforms. And so, it, it makes sense to me that Google would that, that performance max specifically, you know, the shopping PLA and then your search within Google, it's a, it's an intense search. Your platform is going to have a lower incremental outcome than a platform like meta which is more generating demand.

It doesn't necessitate someone expressing interest in a certain keyword or brand term. So I think just in terms of how, where the platforms are positioned and how Google is search driven, they've tried to expand out of that, right? With performance max. That was, that was one of the big things for them is rolling it up and trying to create, create net new demand.

What we're seeing though, is that the ad inventory within Google display even within YouTube and discovery, that was, that's the demand generation channels within that platform that they sort of start rolled up with soft shopping and search and the performance max product. And, and those placements are are, are lower incrementality than, than than a meta placement will be.

And so I think that's part of it, just like where it sits in the funnel and that it's a search intent driven platform. And then. Outside of that, going, going back to our earlier conversation the, the innovation within the product, I think would have been helpful. My, my, my perspective is that orienting the innovation around standard shopping which became smart shopping, but rather than going in the direction of performance max, I think that's the direction.

That's the direction we're headed on this direction. A lot of other people are headed is reengaging with standard shopping because that is the core placement and the core product in Google that that really work. And that's what we see work most, even with performance max. A lot of folks were going to feed only asset groups to get to hack into shopping only placements.

And so I think it's just a fact of. Trying to strip out some of the less incremental channels within the platform, get back to core search and shopping and utilizing the standard shopping tool to get back there since the performance backs just isn't shaking out to drive the same level of performance.

[00:18:20] Richard Gaffin: which I, which I think kind of leads into my next question, which is that, and I think I have some sense of the answer here, but if If there's a fundamental difference in terms of funnel placements, let's say between Google and Facebook or Google Meta rather. Why is it only now that? Google is losing share of wallet vis a vis meta.

So, I mean, it sounds like part of the answer might well be that people have been taking PMAX out for a spin and they're now realizing that it doesn't work in the way that they want it to, or that it can't, it can't create an incrementality in the way that it was attempting to maybe in the last couple of years.

But can you think of any other reasons beyond that? Why this, this might be the time

[00:18:59] Luke: Yeah,

[00:19:00] Richard Gaffin: realizing that.

[00:19:01] Luke: so we've It, the, the stat we mentioned at the beginning in terms of the changes in share wallet was in reference to 2024 as a whole. So it's, it's been a trend that's been happening for over the course of this year. And even in the DTC index we have a graph and that, that shows May, 2023 um, uh, and so over a year ago, we can kind of see like where this trend started and you can see, it's just been a slow, continuous dip.

But then the start, start of this year started to dip even further. So I would say it's been a gradual sort of like Google has started to, has been, has been feeling it gradually. And then Meta has been taking taking that share of wallet slowly over the course of the last 12 months. It's less yeah, it's, it's it's, it's been more of a gradual change.

I think in. When we see the inflection point of beginning of this year, and you can kind of see this on the chart and the DTC index, but in, at the beginning of this year, you can start to see more of a drop within the channel. And I think quite honestly, like part of that could be just the, the calendar you're starting.

Brands re evaluating their budget distribution, engaging a new income totality test as well. And then having a little more leeway to take some broader swings, right? Rather than the end of the year around Q4 you don't, brands tend to not want to change up their media mix too substantially, but at the beginning of a new calendar year, there's more leeway to let's engage them in a, in some tests to inform our budget allocation.

And then let's take some swings and really driving growth through. The channels that are showing that strength in particular meta, so it's been more of a gradual decrease and then the inflection point around this, the beginning of this year, I think, just has to do with the timing of a new year starting and getting out of sort of the Q4 rush and be able to take a step back to approach the budget allocations.

[00:20:51] Richard Gaffin: All right. Well, that makes sense. So, maybe let's, let's leave the folks then with your thoughts on given the scenario or given this reality, I suppose, what's the, what's the actionable takeaway there? Is there a, so what to this that the folks listening at home can take to their own businesses.

[00:21:10] Luke: Yep. So we've been having these conversations in depth on our end. And likely this will be a good follow up potentially within the new tactics series. I don't know if we can plug that at this point, but on how we're changing our initial launch Google strategy at CTC in alignment with what we're seeing in terms of these data signals.

And what we're what we want the in terms of the platforms contribution. So on our end, we are making bigger shifts to starting accounts in more of a standard shopping oriented structure rather than a PMAX oriented structure. And we have a lot of specifics there in terms of brand terms, exclusions, non brand terms, exclusions, exclusions.

How we're excluding existing customers with those campaigns. So we have a much more granular breakdown of what that structure look like. But but at the core, it is standard shopping oriented rather than P max oriented. Cause. We want to maximize delivery against the shopping channel.

That is what we see consistently be the strongest performing rather than having the ad inventory spread across display discovery YouTube within the same sort of campaign type. So much more standard shopping oriented. Along with search and some of the demand gen layered in. But I think what we're seeing is Pmax has increased the share wall within that platform, but overall Google is losing the share wallet.

And so. So that product itself, I think there's questions there and it's worth adding profit bidding beta is something that Google is rolling out and they're making it available on the standard shopping side of things as well. So we're able to leverage some of Google's new tools that we care about within the standard shopping structure which which is helpful for us as well.

So that's the bigger shift and can get a lot more granular in terms of what that structure looks like standard shopping.

[00:22:47] Richard Gaffin: right. Well, more to come on that, but Luke, I'm Thank you as always for stopping by sharing your insights and to everyone listening out there appreciate you listening. And if you want to check us out, you want to have more of a conversation with us around maybe how we can put this in place for your business, common thread, co.

com. Click the hire us button, drop us a note about what you're looking for, what you're interested in, and we would love to talk. All right. That's all for us. Take everybody. We'll see you next week.