FINAL WARNING: Your Black Friday Strategy is Missing THIS!

[00:00:00] Richard Gaffin: Hey folks, welcome back to The Ecommerce Playbook Podcast. I'm your host, Richard Gaffin, Director of Digital Product Strategy here at Common Thread Collective. And I'm joined today, he's back from the front lines as he occasionally is maybe every, every couple of months, we have Luke Austin, who's our VP of Ecommerce Strategy.

He takes some time to out of the trenches to come join us and kind of give us a report about what our clients are thinking, doing as we lead up, particularly in this case. to Black Friday. So Luke, what's going on, man? How are you doing?

[00:00:27] Luke Austin: Doing good. Happy to be here. The yeah, it's funny. Richard and I were talking at the start of this and earlier today, we had, we had a couple ideas of different, different things we could, we could talk through But then in that I, I was sort of, taking an assessment for myself of what is top of mind, what are the things I've been, I've been thinking about and the, the back half of October in particular is just such a weird time for DTC e commerce and there's a lot we're jumping in between.

So I, I'm excited to have this conversation, even for my sake today of sort of just like clarifying. The top priorities. What, what are the most important things knowing that November we're knocking on the door of November kicking off and let's make sure we have the big, the big, most impactful things in place can be easy to get caught up in all the details, which are important as well, but yeah, I'm looking forward to this conversation for, for that.

[00:01:18] Richard Gaffin: Yeah, definitely. So yeah, that's, that's where we're framing this up, which is if you don't do anything else in November, December, you should do these things. And yeah, particularly in that context of, like you were saying, October is sort of a weird limbo time. And it can be easy to, to maybe sort of get your priorities out of whack.

So it's crucial, like in this time, To of course not do nothing, but also make sure you're focusing on the right things. And so that's what we're going to walk through today. So, let's talk about the first kind of one of your five points here, which is to offer your best offer. And part of the reason to do that is because discount percentage has been steadily increasing year over year.

So talk to me about that. Why, why is it important to offer your best offer? Isn't that something you should always do? What's what's, what's kind of the thinking here.

[00:01:58] Luke Austin: Yeah, definitely. So to frame it up a little more as well, like what, how I'm thinking about this is sort of like the prelaunch checklist for. For Black Friday, Saturday, Monday, which is we've all spent a ton of time, even starting July, August planning for our Q4 strategy, whole marketing calendar likely heading into October.

Like there's, there's a lot more buttoning up that happens now in the back of October. We're sort of like getting through this weird month and then having to take a step back to think through like, Are all the right pieces in place. Should I, should I like reconsider any of my core strategy pillars as we head into black Friday, cyber Monday?

And, and maybe that's the case for some folks, but these are sort of like the five most important things that are going to make the most impact at this point, as we head into, into November. And so, and in order, and we'll kind of go through them off, offer your best offer, raise your aim, your target spend more on meta.

Make content specific for higher share of wallet placements, and then send a bunch of emails. If we're doing those things, that, that is what's going to drive the most revenue outcome in the upcoming, upcoming season. So yeah, off, off your best offer, starting with that first one. This is, a lot of, a lot of this as well is framed up.

By recent conversations and the DTC index and on the podcast of data, we're seeing across the larger data set. But what's clear is discount percentage continues to increase over the last trillion, 52 weeks, year over year, about 10. 1 percent year over year for those, for those same weeks in discount percentage.

So this is a larger conversation we've been having for a long time, which is. New customer revenue and AMER is actually being propped up by higher discount rates for a lot of brands. Which means. That's offering lower discounts or at least lower perceived value discounts heading into the holiday season is going to be, it's going to be really challenging to drive meaningful interest and demand.

So, we're, we're going to talk about making money in terms of your, the AMER target you set. Cause that's, that's crucially important, but the discount percentage. This is the time to offer your best offer, particularly going into Black Friday ramping up into Cyber Monday. This is the time of year to be able to capture that demand because it's when the other brands are doing it.

And so pulling out all the stops in terms of, you know, Early access offers for your core customers, your Black Friday offer laddering up into a Cyber Monday offer. Maybe you have a, an early bird as well, but pulling out all the stops in terms of your best offer strategy over the course of those days, this is the time to do it, discounts, discount percentage is just going to continue to increase as we've seen be the case in the broader, in the broader space over these, over these recent years.

[00:04:43] Richard Gaffin: so to clarify, it's not, it's not solely, we're talking about like, I mean, part of what we're talking about maybe is discounting or pushing your discount percentage as high as possible without, you know, completely murdering your margin. But I mean, we're also talking about all of the elements that go into offer building, generally speaking.

So I mean, it's part of what we're saying here is a little bit what we say every year, which is like, make your offer stand out because everybody's going to be pushing it. But maybe the idea there is that like, you're not really going to be able to get away with anything like, I don't know. I think we always say like 20 percent or better, but maybe you won't even be able to get away with 20 percent anymore or something

[00:05:18] Luke Austin: Exactly. Exactly. And I think there, any conversations that are having around offer changes at this point, even in relation to the different time periods of BFCM might be might be along the lines of a, like instead of doing 30 percent off, should we just do 25 percent off? And like, we'll make a little more margin and we don't have to be so aggressive on the discount percentage.

And whatever, whatever that conversation is for your brand specifically outside of those specific percentage, like what this is really connected. The second point, which is raise your aim, your target, like to think about making money in relation to your media spending, your Amy, our target, let the offer be stronger if you're leaning towards, Hey, let's, in that scenario, Hey, should we just do the 25 percent instead of the 30 and sort of see what happens?

It's like. Go with the 30 and let's make the money on a higher AMR target and really making sure we're allocating the right level of media spend. That's where we see a lot of the deteriorate deterioration in terms of the margin outcome happen. And with higher discount rates year over year, like. It's, it's just going to be more challenging for all the channels to succeed if we're sort of skimping on the offer.

So yeah, pulling out the best offer in terms of the offer strategy. Doesn't it's not just, Hey, go from the 25 percent to the 32 percent or whatever. But it is thinking about making the margin outcome more on your acquisition efficiency and your media allocation than the discount percentage specifically.

[00:06:49] Richard Gaffin: Gotcha. Okay. So you've alluded then to raising your AMER target. So let's move on to point two, which is to raise your AMER target for sale days. So break that down a little bit. What are we, what are we doing here? What's the thinking behind this particular tactic tactic?

[00:07:04] Luke Austin: So it's wild how different every e commerce brand treats a key sale moment like Black Friday, Saturday, Monday in terms of. The efficiency, they hold each of their channels to the acquisition, acquisition efficiency, or Amy, our outcome, the level of media spend allocation. It's, it's just wildly variable in terms of how people approach what these days should look like and the purpose that they serve to achieve the B the business outcome.

So this point's connected the recently on, on the channel, there's podcasts, Dan Richard did on, on titles, the addiction to growth launch entrepreneurs avoid paying themselves. And it's and it's connected to that broader conversation, which is these days, specifically Black Friday, Sever Monday, if you have an early holiday offer, these days are where brands should be putting dollars into their key shareholders pockets.

These are the days when you make money. These are not the days where. We're going to keep our AMER target consistent throughout the course of November and say, Hey, our, our break even is a, is a one eight or Hey, we're going for 20 percent first order profitability. So we're going to go for two, two AMER.

Let's hold that consistent through the month. That is, this is not the time to do that because there's so much discounting happening that we have to raise the AMER target accordingly. Plus we should be capturing the margin demand on those days rather than driving as much. As much volume as we can at break even or, or negative first order margin, which for, for some folks, this, this may seem like this is what y'all have been doing and are doing, but there are a lot of brands out there where, you know, These core sale days, Black Friday, Cyber Monday there's a lot of margin dollars left on the table because there's, there's such a priority around growth rather than using these days as a way as, as the core objective of making, making money from Black Friday and Cyber Monday and setting targets accordingly.

[00:09:03] Richard Gaffin: Yeah, no, I completely understand like how that could be counterintuitive, particularly given the way that people have been behaving in e commerce up, up to maybe the last couple of years, the idea that black Friday, cyber Monday being this primarily a volume play. And it is, but in terms of volume of revenue, not actual or money left over in your pocket, volume of profits, so to speak, maybe it's the way to put this as opposed to, you know, massively pushing your top line or getting the greatest number of customers in or something along those

[00:09:32] Luke Austin: Yeah, that's, that's exactly right. And, and so how we're, how we're doing at this, how we're doing this is the, our, our forecasting we use, we look at historical marketing moments and events to understand what are what, how our AMR fluctuates. So how much increased new customer demand versus our level of spend we see, which allows us to know how much we can scale while holding a similar level of AMR.

And then we also look at the returning customer revenue and relationship to that new customer revenue and how much that increases and changes versus a normal non sale period. And so as a starting point, just looking at historical promotion, product launch periods and understanding how much that AMER increases is, is really important.

And then one, adjusting up the AMER target for your customer. Individual sale days to account for the higher discount rate. And if there's a higher return rate expected based on the offer that you're running and then to adjusting it up further based on the the margin outcome that you're wanting to see as well.

So if breakevens being adjusted up for a discount percentage, and then we're wanting to realize, you know, X percent profit margin on each order. In addition to that, adjusting it there, because what. What happens the, it's very normal and on a day like Black Friday to push for more volume and more growth.

ROAS looks great. Let's spend more. And then you look back and there's been there's a lot of media allocation, high revenue outcome, but there's a lot of profitability left on the table because we spent past an AMER. That was optimal for producing the business outcome that we are after. So.

Setting the right AMER target, specifically raising your AMER target for those individual Black Friday, Cyber Monday sale days to a level that gets that allows you to make money from those days when all things are considered is the first, is the first step because the budget allocation is just going to pace, pace accordingly downstream from that.

[00:11:30] Richard Gaffin: That makes sense. Yeah. So the profit first philosophy doesn't change on Black Friday. In fact, it just intensifies. So, let's okay, let's roll into number three then, which is to spend more on meta whether to concentrate your metas, your spend into meta in Q4 specifically. And there's an interesting screenshot that you shared with us before this, which we can maybe slap up on the screen for our viewers which is that Google share of wallet.

Actually sort of starting in about mid mid year, like June of 20, this is last year's data for June of 2023, Google's share of wallet slowly decreases into the end of the year, having its sort of lowest Valley on black Friday itself. Whereas Medishare of wallet actually steadily increases starting in the middle of the year, peaking actually around black Friday and then at Christmas and kind of the end of the year as well.

So part of what that's meant to illustrate is the idea, of course, that, you ought to concentrate your spend on meta into four, but maybe unpack that for us a little bit more.

[00:12:25] Luke Austin: Yeah. And again, I think this is intuitive from, for, for most people where the, the level at which we can increase scale on meta versus Google, there's, there's just a a really different relationship there in terms of the platform's ability to scale. And that's part of it. Like this, this point is connected to the prior point in the case where.

The increase of share wallet on meta part of it is a much higher investment of ad dollars there because that platforms can scale more. And potentially that was too much to scale in general, in terms of total media mix in light of the AMER target. So, that's, I think that's, I think that's worth noting as well, just, and just in thinking about the total budget allocation, but again, we're assuming we have the right AMER target set now as the second step.

And then in terms of the allocation, the large majority of that is going to go towards. Towards Metta, Google will be able to increase in scale, but the efficiency on that platform where the performance on Google is mostly related to be able to being able to capture demand that is already existing and that scales at a much lower rate than, than Metta is able to.

So, anticipate spending a much higher. of your total budget allocation on those days and having enough creative volume to be able to fuel that scale. So really the, the impetus for that for expecting that is Planning the budgets accordingly and planning to create a volume accordingly for that platform, knowing that we're not going to go into Black Friday, Saturday, Monday, you know, we spend 65 percent on Meta, 35 percent on Google.

So that's going to be what the allocation is. Meta is going to get a much larger percentage of that total budget, and there's going to be higher budget allocation overall. So the campaign set up the creative volume needs to be commiserate with that expectation.

[00:14:11] Richard Gaffin: Gotcha. Okay. So, and then speaking of share of wallets, so this is interesting because it's segues segues nicely into point number four, which is to make real specific offer content. And so we have a note here of the share of wallet on that placement has been increasing dramatically. Now. It's sort of paired with the idea that last year, there was a big decline in reels volume.

I assume in November, December, but talk us through like that, like, thinking about share of wallet, maybe on a more granular level in terms of placement.

[00:14:38] Luke Austin: Yeah, so this is another point from the DC index, which we're able to see the change in change and share wallet by by placement within each platform. And it, it's helpful because it gives us insight into some of the platforms priorities, right? In terms of reels more of a priority on metas part, more more inventory, their brand spending more in there.

It's sort of like virtuous cycle and that, in that way. So, it gives us insight in terms of the platforms priorities. But I think it, it also potentially illustrates that there's some opportunity on these on the placements that have increased in share of wallet. But that historically on sale days, we haven't seen that same level of increase on, and so reels was one of those that another point from the DTC index was that real, the reels placement share wallet decreased pretty substantially in November and December relative to the rest of less distribution.

And I think what, what's challenging about. Reels placements is tends to be more content hungry, more UGC video, creative, et cetera, versus a black Friday, sour Monday toolkit. For a lot of, a lot of brands, the majority of spend goes towards your Your ad that is just brand name, big, bright red letters, 50 percent off, up to 50, 50 percent off Black Friday, Cyber Monday, static image.

So that's a necessary, but I think what's what there's an opportunity that exists for brands to be able to capture some of the demand within placements like reels by Thinking through and planning for specific content, orient around their holiday offers that serve well within that specific placement.

Cause it's, cause it's challenging to do, right? It's not like offer in your face. But there's, there's ways ways to do it. And I think a good example TikTok, one of the things that they've done that we've seen be that probably one of the, you know, one of the few things that tends to work well from a conversion standpoint during these holiday periods on that platform is These like gift code sticker overlays on the UGC creative.

And so able to use your discount code, leverage existing top performing UGC video creative, and then have like a sticker overlay that like fits in the placement really well, really big and bold. You can click on it easily. So ways like that within reels within stories to be able to have Content that's more native to that placement, but that still shows the offer very clearly as well.

In a way that people can can are aware of it I think is, is another opportunity that brands who are planning for more spin on meta and need more creative volume, they're thinking about the placement specific creative as well, in addition to their business as usual, evergreen sale toolkit.

[00:17:25] Richard Gaffin: Gotcha. So just to clarify, then, like, the, the idea here is that the decline in reels in November and December had to do with maybe that particular channel getting flooded with creative. That was not meant for real specifically, but just because everybody's trying to advertise everywhere. They kind of.

Maybe dupe and add into a reels placement without actually making it real specific. And therefore as a percentage or whatever reels usage decreases, like how is that

[00:17:52] Luke Austin: Yeah, it's possible. I'm, I'm, I think it's harder to to pull out what the specific cause of it was, whether it was, you know, Not having the creative there. And so the performance wasn't there because the right creative wasn't there. And so because of that, people pulled back or the cost controls of people using them pulled back from that placement and index more and other delivery.

So is it? Yeah, the creative leads to lower performance, then leads to lower distribution within that inventory. Is it not having that creative led to led to lower delivery just by nature, by nature of itself, or folks sort of throttling delivery within that placement as well. But I do think it definitely, it definitely hinders around having the right creative that's going to perform well within that placement, but that still ties in the, your Black Friday, Cyber Monday offer in a way that's different than here's my static ad with our site would offer by now.

So

[00:18:47] Richard Gaffin: which is to send a bunch of emails more than you think. And that's actually a piece of advice that we've kind of harped on, you know, just not even seasonally, but kind of like, it's sort of an evergreen piece of advice is that the more emails you send, the better you do.

But. Let's unpack this a little bit, like what it means to really send more emails than you think you need to in this period.

[00:19:07] Luke Austin: whatever you did last year, Do more of that as a starting point and then add in a couple additional and then, and then maybe have some more in the back pocket just in case is, is generally how I'd approach it. We have on our, on our holiday long form blog on the site, we have a breakdown of recommended recommended minimum sin cadence for each of your main Offer days over the course of Black Friday, Cyber Monday.

So, on your early access day and then on your core sale day et cetera. And what that looks like is, so, doing like a VIP email email and SMS pre launch day one launch day, sending three emails and two SMS messages. So on a core day, so this is Black Friday, main launch day, three emails and two day two to four.

So mid, mid campaign. Keep the momentum going with one to two emails and one SMS message per day. And then day five, final day, close out with the sale agency, send three emails and two SMS messages again. So I think that's a helpful starting point of sort of pre launch VIP, early access email SMS, launch day, three emails, two SMS.

Days in between one to two emails and one SMS. And then final day again, three emails and two SMS throughout the course of that day. And then within that context, thinking through what you did last year and and seeing if there's additional opportunity to do reasons to non openers of any of those emails any of the other days.

But I think using that as a minimum starting point Is really important. There's just so much noise on each, on every single one of these days from every brand within ad placements, but then social media platforms with the email inbox that like the, the hesitation around sending more emails tends to be around potential increases in unsubscribed rates and the experience for your customers.

But the. If they aren't buying from you when you're offering your best offer of the year, like they're, they're, it's on, it's less likely that they'll buy from you at another point in time, in which case the risk of them unsubscribing. It, it, it doesn't seem like too, too big of a risk from my perspective.

Plus they're getting in, your customers are getting inundated with so many other messages that the likelihood of them unsubscribing due to increased message cadence from you as well is, is pretty low. So like, if there's any time to pull out all the stops, this, this is the time. And we just haven't seen any data that increase in email revenue in email send cadence.

Leads to a substantial increase in unsubscribes. That is worth the trade off of the revenue that's being left on the table due to those additional SEDs.

[00:21:55] Richard Gaffin: Yeah, I think like to another way to put it more simply is that generally speaking, more emails equals more revenue. And that's just more or less the relationship. And so, of course, at the time when you stand to make the most revenue, which is over Black Friday, Cyber Monday, it just makes sense to ramp up the thing that you can reliably, or you can rely on to generate more revenue, which is, of course, email sends.

And I'm sure that there's a limit to it, but you're probably not finding it, I think is maybe the point we're trying to make.

[00:22:22] Luke Austin: Totally. Yep.

[00:22:24] Richard Gaffin: cool. All right. Well. So I think that that kind of wraps it up for this, this, these five is like, is there anything like in summary, or maybe if there's one of these tactics that you could point to as being the most important or whatever, like, what, how would you, what would you want to leave with with our listeners here?

[00:22:41] Luke Austin: Identifying what the, your AMER target should be on each individual day of November and December since Cyber Monday is in December this year. But every single day, there should be clear, Thoughtful rationale that has buy in from the key decision maker all the way to the execution within the ad channels on why that is our AME, our target for that individual day.

That every day is going to behave very differently and represents a very different margin profile in terms of the discount rate, the products that you're selling, if you're doing bundles, the cogs associated with those products. And so the offers you're running in early November versus your early access days in in black Friday versus your actual day of black Friday, all of those days have really different considerations in terms of the composition of returning new customers, the margin profile, and the product mix that necessitate AMER targets on a daily basis that reflect each one of those considerations.

The channel ROAS targets and then the budget allocation should just be downstream from that of what is my acquisition efficiency I'm going after based on my business objective. That takes all that into consideration. There's a lot of work that goes into that on our side and identifying why each day why each day's efficiency target is set at the level it is.

And why that's leading to the amount of budget volume that we're pushing. And so that I, I, I can't stress that enough. That is what we are spending a lot of time thinking about. And right now refining as we head into November. To make sure each day has a clear plan, so to make sure we're not leaving anything on the table in terms of upside and revenue demand, but that we're not pushing past a point that's going to result in unprofitable top line revenue that doesn't, doesn't accomplish anything for, for the business profitability longterm.

As well, so that that would be the main thing that I would that I would stress and that were we're putting a lot of effort into refining and making sure each one of those days has a clear target that everyone from key decision maker down to channel execution is clear on what the objective is for their channel on that individual day.

[00:24:54] Richard Gaffin: That's right. All right, folks.

Well, yeah. So if this is the type of thing you want us to help build for you, it's probably too late for black Friday, but it's the type of thing we can help you prepare for, for next year, for 2025 and beyond. All right. Well, Luke, thanks again for joining us. And of course bringing all of your insights from the frontline.

It's always really valuable to us and to our listeners and for all of you out there. Appreciate you listening. We'll see you next week. Good night.