How the Prophit Engine Creates Total Clarity

[00:00:00] Tony: But I see opportunities throughout the media stack where an operator, an engineer that's informed end to end from, I know what the model's telling me to do, and this is the trajectory of their business, but also at the unit economic level.

[00:00:18] Tony: I see these campaigns are producing more CM than we expected, and I'm gonna fund the crap out of them. And that might mean that I actually invest more than the plan initially accounted for. But I have the confidence because I have this end-to-end knowledge of how the plan was arrived, arrived at. And what's happening in the media accounts informed by the system, then I can make that decision to go.

[00:00:43] Tony: I, I or any individual using the profit engine, can make this decision to go fund these unit economic campaigns that are delivering cm. 

[00:00:53] Richard: Hey folks. Welcome to the E-Commerce Playbook Podcast. I'm your host, Richard Gaffen, director of Digital Product Strategy here at Common Thread Collective, and I'm joined by my two former D two C hotline compatriots here. Luke Austin and Tony Chop, the chopper and the weatherman. Actually, I got that mixed up.

[00:01:08] Richard: Luke's the weatherman. Tony's the chopper in case you didn't sort of put that together from his last name. But what we wanted to talk to you guys about today is part of this kind of overall rollout we've been doing of our profit engineer system. We wanted to talk a little bit about clarity and we've discussed.

[00:01:26] Richard: I think in bits and pieces, exactly kind of how, or the mechanism by which we think this provides e-commerce, business owners, CMOs, and so on and so forth, with a level of clarity they've probably never experienced in their business before. But I think for our kind of conversation here, what we're gonna do is we're gonna kick it over to Tony to dig into some sort of specifics of maybe practically speaking, how this has affected, people who've worked with us and what that clarity kind of really looks like in the real world. And, and in that sense, give you a sense of like what, how it could benefit you. So Tony, I'll, I'll turn it over to you to kind of, intro this idea to us, this idea of the clarity that the profit engine provides.

[00:02:05] Tony: Cool. Yeah. Thanks Richard. So, so let me just set it up with the, with the old structure, three people, three partial views of the same business growth strategy, owning the forecast, creative, owning the assets and media, owning the platform. And in many ways our, in the old world, our clients. S sitting in that space and, and helping us triangulate, helping us triangulate together and context degraded at every, at every handoff is, is something that we've observed forever.

[00:02:44] Tony: And so the setup here, and I wanna ping pong this over to you, to you, Luke, because I'm, I'm thinking of some practical examples of where this is, where this is actually manifested, but. media buyer seeing the ROAS or even the I roas target in the channel but doesn't, maybe knows the, the contribution margin target, but doesn't really necessarily understand all of the inputs into how that was arrived at.

[00:03:11] Tony: And these two separate people understanding two different things, having to extrapolate together. And I'll throw one more thing into the mix. The creative refresh coming Thursday of next week or something like that. So here's the setup for how this single operator creates clarity, and I'm curious your thoughts.

[00:03:31] Luke: Yeah, I think to the practical example, so this past weekend we had a sale running for a customer of ours. We had, we had multiple, but I'm thinking of one in particular, in particular that I was, following along with pretty closely and. Was watching this manifest in real time over the course of this weekend promotion, which is one of their big, sort of four tentpole moments of, of the year for this customer. And the interactions have historically looked something like. During ev even over the weekend during a sale, right? Like you have maybe three check-ins a day, multiple check-ins of like how things are looking, and there's three core people involved in the workflow across like growth forecasting, target setting, the me buyer, the Google media buyer.

[00:04:16] Luke: Then we have the person doing the creative assets and the the conversations. What I came to realize is historically the conversations in that way were leading, were an absolute waste of time and leading to worse decision making as a result of the siloed people and the siloed data. And I think this is actually really important to, to to sort of pull out in this conversation around clarity is that. There can be an initial sense of, okay, less people, less brain power, less better decisions happening as a result, right? Like there's gotta be some trade off and maybe it's 10% degraded, you know, brain, but at least there's some degradation, right? Like we've gotta. Like Tony, you gotta admit with this profit engineer thing, like if you're going from three people to one, there's gonna, even if it's 5%, there's gotta be some degradation happening, right?

[00:05:06] Luke: And maybe the cost savings make up for it, but that's not our, that's not our hypothesis or nor our experience. It's actually better results and better decision making as a result. As a result of one all the time spent in like send the message, hop on a huddle at 10:00 PM the day before to adjust the budget budgets and talk it through.

[00:05:26] Luke: And then multiple Slack message through the rest of the day. And it's all this time and resourcing that's going into that first of all. Right? So you have to factor that into your ROI calculations somehow. And then the other piece of it, which is like. Okay, met buyer. What do you think about these campaigns?

[00:05:41] Luke: Should we bump the budgets, increase the bids? Should we reallocate the media distribution and like get getting another perspective? And they give your perspective and then you're like, okay, well here's my perspective. Let's see how we can like synergize these things and like triangulate and map them together for the most optimal. And what it came down to is like. I can see the revenue pacing, the contribution margin, pacing. I know the inventory positions. I know the cash and profitability concerns for the customer. And so the decision I was going to make related to what the budget and bid should be set on those campaigns and the media allocation across all the platforms. Was was it is the better decision and getting, getting the input from additional sources that have partial view into the thing actually leads to degradated da. Yeah. Is that, is that right? Degradated deci decision making in that? So degraded. Thank you. So, so I think that's, that's something that's important for us to, it has been important in this process for us to wrestle with, can we actually produce better results and better decision making. That, that arrives from the streamlined workflow and having the full picture and that, that has to be true. Otherwise, it's just like, you know, cost savings for the sake of that with, with poor results. And that's, that's not,

[00:06:52] Luke: that's Not. what any of us are, are after, 

[00:06:55] Tony: isn't about cost savings. It's not what it's, that's a, that's an artifact of being able having like executional and operational, like excellence on our end. It's just, it's just an, it's an artifact. It's not the, it's not the intention. How'd the sale go?

[00:07:10] Luke: It was way better. Crushed, crushed projections. I mean, it was the, the, the revenue projections landed, landed higher. We were able to spend less, it was just, it was just cleaner, more concise decision making as a result of all the signals. And I think there's a real pull, and I see myself in it as well.

[00:07:29] Luke: It's like for, in that sale, I'm making the calls throughout every hour of every day of what we're gonna be doing, right? Like, I'm, I'm the, and, and even so I kind of want another piece of input or two to sort of like. Make me feel good about my decision or like, create a alternative point of view to like poke, you know, poke holes in it.

[00:07:49] Luke: Like, I, I want that, like I found myself, like, instead of being like, I'm the single operator I, I want that. And what I realized is that it was leading to. Slower and less effective decision making as a result of having these additional signals that didn't have the full context. And I think that's the, that's the most important thing here is not like, okay, let's all make decisions in silos, right?

[00:08:13] Luke: Let's not, no. It's like, yes, still get the additional perspectives, but make sure it's coming from a source that has all the sources connected to it, right? All the data sources, all the perspective. And so in that case, like, when it's coming from, when it's coming from the lens of like, okay, what was our ROAS platform ROAS year over year based on that, I would do this where it's like, wait a second, based on the cash and inventory position, or based on the MER year over year, like, these are all different ways of framing up the idea and you're gonna, you're gonna lead to a different decision as a result.

[00:08:45] Luke: So it's, it's critical that the decisions being made all the way from. Forecasting the revenue down to what bid and budgets should be set on the campaign have, have the full context in mind. You can't, otherwise it's going to lead to a worse decision.

[00:08:58] Tony: End to end it. It's so interesting to me to think about as a person who's changed bids and budgets and media accounts for 20 years, like how, how could I even consider making any of those decisions? At this like end node of the system, absent having this level of clarity that you're referring to by being the one who creates the forecast and the plan.

[00:09:21] Tony: So when we talk about clarity, like from the, from the people perspective, we're talking about having sort of top to bottom understanding of how the business operates from the p and l to the meta bid at x, y, Z campaign. And the the. What's the word I'm looking for? The fidelity of having all of that information exist within one person in one system.

[00:09:47] Tony: Now let me switch over to the other piece of the puzzle, which is critical and none of this works without the clarity that that comes out of. Instead of fragmented data, unifying revenue, marketing costs, and forecasting, modeling data all into one system, because again, without that side of it, none of this is possible.

[00:10:10] Richard: So one thing that I wanted to add here that I think might be helpful is like, what I feel like we have here is like, there's two layers of clarity that this provides. So one is the clarity of the data, which you just mentioned, Tony, right?

[00:10:19] Richard: Like you have sort of. Validated data across all of your different platforms pulled into one place.

[00:10:25] Richard: So there's a sort of an understanding of what the basic kind of north star metrics, point of truth, whatever, all that stuff, right? But then there's second layer of clarity, which is what Luke was referring to or kind of, alluding to over there was is essentially what you have the profit engineer has is a form of like executive. Power kind of right? They are able to make decisions based on the access to the data without people having to essentially vote on it or there has there without there having to be sort of these layers of approval or people sitting around and kind of like focus grouping what the right decision to be made is.

[00:11:00] Richard: Because this person has such clarity of vision across the data, they're able to have clarity to vision. A vision in terms of decision making. And as everybody knows, a strong executive is the fastest, best way to make decisions if they have all the information and they're good at what they do. And that's essentially what we're providing,

[00:11:18] Tony: Yeah, lemme say the quiet part out loud. Luke didn't spend any time this weekend convincing a MetaMedia buyer that the change was the right or wrong change.

[00:11:29] Richard: Yeah, there's, there's no one else in the decision process. It's just Luke can have an idea and he can make it happen. And because he's good at what he does, it's going to bring about a faster, better outcome.

[00:11:40] Tony: Yeah, he's, of course Luke is. Luke is amazing at what he does. He's also informed by this like really high level of clarity from the system. So let me add the third piece of the puzzle to the clarity sort of. Architecture, which is the daily target tracking across the stack. So you can see where you're at, where you're headed, if you're behind, why, if you're ahead.

[00:11:59] Tony: Great. So the clarity around the people, the decision stack, the clarity around the data itself, and then the clarity around the forecast and the target and what you're trying to go after. And that part right there is really important about in, in our interactions with our, our partners. Like you might ask yourself like, why do I care about this?

[00:12:16] Tony: If I'm gonna be, you know, if I'm gonna work with CTC? Well, you care about it because our ability or profit engineer's ability to work with you on this forecast that's informed by modeling new and existing customers, the history or business, et cetera, et cetera, that creates an operating plan that all of this then goes and lenses through.

[00:12:34] Tony: And that is as clear as it gets my friends.

[00:12:38] Richard: Right. So it's basically what what you're saying is like to, to kind of summarize that third level, if I'm hearing you correctly, is there's clarity of data. There's clarity of decision making, and then there's to you the client, there's clarity of information and communication back and forth. Because there's this operating plan with daily targets, there's a clear understanding of what those are.

[00:12:57] Richard: Our ability to report that to you and for you to get whether or not we're failing or succeeding, becomes very, very simple and easy to understand. Does that feel like a fair summary of that?

[00:13:08] Luke: Yeah, I think, I think so. I think the, the one thing I do want to press in on a bit to make clear is like, yes, we've talked about the, the operator at the system, at the inter. Intersection of the system making the decisions. But to be clear, the decisions I was making would have been the decisions any one of our profit engineers would've been making.

[00:13:31] Luke: Right? So this, these weren't decisions I was making as a result of my individual experience running direct to consumer eCommerce brands, right? Or, or, yeah. Right. So it's, it's the. The data being all in, in one place and being in a system that allows us to identify the opportunities. And then an engineer who understands how to operate the system and identify the opportunities, and of course, as experience related to the specific industry that we're in, can make those, can make, can make that, and, and that's, that's what produces the leverage, right?

[00:14:07] Luke: For. The, for the partners that we work with is that we are able to we, we are able to own this full workflow by, by having the engineer that can operate the profit engine to be able to produce outcomes and that to be done in a replical way. Right. So like, I think that's the important thing just for us to highlight as well, is like. Luke who cares, right? Like the, the profit, the profit engine is identifying the opportunities. And it's like, because the data is all there, it is just so clear to us. Like we know what the, we know what the ROAS targets are based on the marginal profile and the incrementality factors associated with each funnel stage in each platform. And so the decision to put more budget from this campaign and that campaign is like, is the dec the, the decision to be made, right? Like, not. Like, I can make this decision and like I, I feel confident in it. But that is, that is the right decision across the portfolio of accounts. And I think this sort of ties to how we look across look at things across our media portfolios.

[00:15:07] Luke: Tony, I, it could be interesting to sort of connect the dots as it relates to the, one of the, the areas that you sit in and looking across. A large number of our media portfolios. Right? And, and seeing that across our customers and being able to identify the opportunities that exist across, across the board there, right?

[00:15:24] Luke: Which is like when, when the system is set up right, to be able to show here's the performance, here's the contribution margin. Camp by campaign, adjust for the margin and the incrementality. What it leads to is like rep replicable actions across tens and tens and tens of accounts of like. Push more into these campaigns, adjust the budget bits here, et cetera, not like a individual workflow for some unique individual, right?

[00:15:47] Luke: It like the, these are the, these are the opportunities that surface. Once you have the framework in the system installed, that then someone with the capacity to make them can do so in a replicable way. And it's not up to like, oh, can Tony like up to Tony's decision on this? Or person, person x.

[00:16:04] Tony: Yeah. Yeah. Is Tony available? Is other person. You know, I got a ski trip to go on this weekend, so, you know, to, to this like, to the spirit of like the historical interplay between, you know, media and growth, like within CTC and even in your, your company who, who was ever listening like this interplay between different groups of people. I think one of the. Challenges. One of the, one of the things that I've observed, let's put it that way are.

[00:16:42] Tony: The separation. Our growth teams would look at the financial modeling and the financial forecasting and come up with budgets and targets for the media channels. And then go, here you go, media. Go get it. And then on the flip side of the coin the media folks would say, okay, cool. Here's my, here's my target that I need to go get, and I gotta go do everything I can to go get that.

[00:17:05] Tony: I think in, in sort of it's like this. Pursuit of this plan, which is, which is really important. But I see opportunities throughout the media stack where an operator, an engineer that's informed end to end from, I know what the model's telling me to do, and this is the trajectory of their business, but also at the unit economic level.

[00:17:29] Tony: I see these campaigns are producing more CM than we expected, and I'm gonna fund the crap out of them. And that might mean that I actually invest more than the plan initially accounted for. But I have the confidence because I have this end-to-end knowledge of how the plan was arrived, arrived at. And what's happening in the media accounts informed by the system, then I can make that decision to go.

[00:17:55] Tony: I, I or any individual using the profit engine, can make this decision to go fund these unit economic campaigns that are delivering cm. So, I don't know, it's kind of a long diatribe of something that I've like, I've sat with for a long time in like. Expanding into opportunities that are even greater than we expected, potentially backing out of things that didn't go as, as we might have hoped, as quickly as possible.

[00:18:22] Tony: I'm curious, Luke, if you have any reflections on that, like specific to the, the sale that happened this weekend, was there sort of movement in the media accounts like, like in different directions or further than you originally anticipated? You, you mentioned, we actually might have ti tightened up a little bit.

[00:18:35] Tony: Potentially. We were seeing better results on the returning customer cohort. We didn't save some CM dollars on the media side in that way.

[00:18:44] Luke: Yeah, there there were definitely, there were definitely shifts in the portfolios that related to. The split between. They're domestic or US and international markets and the amount of the, the opportunity that existed within those, and then changes year over year in terms of the spend on, on Google as well, which is a, sort of brings up another piece of this, which is the revenue.

[00:19:09] Luke: The revenue for this, for this sale was. Paced well ahead of projection. It was, it was just like a lot, a lot stronger than we anticipated. For, for a number of reasons. And then the, the competitive performance on Google in particular, like we were, we were able to own that space really effectively, where even for this moment, we had had more of a challenge in the past where we were just like front and center. And I think what it, what it sort of. These recent the start to this year really is highlighted for me across for what we're seeing across our brands is that the, this year, 2026, I think for many brands presents the main opportunity is how can you spend more. How can you spend more ad dollars into Yes units, units of growth, new, new channels and and additional creative volume that is representing net new creative IDs, but making an investment.

[00:20:02] Luke: I think the past few years, like we've talked about this in different ways, has for some of us. It made us much more conservative in our approach to things of, Hey, let's hold the A MER target really, really strictly and let's operate much more efficiently. Where the, the tariff impact WA had become more real for brands, sort of back half last year, beginning of this year. And then. And then really hit as, as folks started to run outta inventory and making those purchases. And so what we're seeing right now is a little bit more of like a blank space in some categories as it relates to being able to, like, for this brand there, it was just a lot less competitive than it was the same time last year or even a few months ago on.

[00:20:37] Luke: And, and Google that like, we were able to spend, spend less and have the same occupation of, of the, of the serp. And then the meta performance signaled to. A similar thing, and then it showed up in the, in the revenue pacing against where we, where we thought we'd land. And so I think that's going to be the thing is like, how do you have a system set up that can give you clarity into where there are opportunities to to invest additional media and creative dollars that is going to produce incremental contribution margin? Because you can and there are opportunities. The question is. Are you clear on where, where they sit on a channel basis, on a product basis on a market from a market standpoint? But are you clear on where the investment opportunity exists? Because that's the biggest, that's the most challenging problem to solve, right?

[00:21:22] Luke: Like to grow the business. Where do we invest the additional dollars that are gonna produce growth? So having a system set up for clarity. We'll, we'll allow for that in which I think like the 2026 relative to last year is gonna provide more that opportunity for.

[00:21:39] Richard: I was gonna say real, real quick, like I think that's a great encapsulation of what this provides, this idea, like if your meta. Media buyer right now doesn't have some understanding of your brand's sort of inventory position and how it sits relative to the current tariff situation and all this type of thing. Your MetaMedia buyer is not making the best decisions for your brand. Right. And I think the number of me MetaMedia buyers, generally speaking, who have access to that information is like you could count on one hand. And that's essentially what that. Profit engineer is providing, they can make that level of decision on kind of like the nitty gritty day-to-day thing for meta, using these bigger pictures kind of lenses to see that. But yeah, no. Tony, I know you wanted to jump in there.

[00:22:18] Tony: No, that's it. That's right. It, I just, I reflect on this idea like clarity isn't. It's not something, it's not like a feature that we built into the profit engine and or enabled for a profit engineer. It's, it's, it's more like what naturally happens when you stop splitting the picture across people, across tools.

[00:22:38] Tony: It, it's, it's a, it's an outcome of the consolidation of the information and consolidation of the action.

[00:22:49] Richard: All right. Well, I think that's a, that's a good enough summary as we're gonna get here, Tony, so, appreciate it, you guys. Anything else you guys want to add on this particular topic?

[00:22:58] Luke: I will bring it back to the litmus test. Think about, reflect on your weekly marketing meeting, weekly growth meetings, weekly internal meetings. How much time do you spend in those conversations trying to understand and get a sense of where you're at and what's working and what's not, versus how much time do you spend on actually acting and making decisions that are gonna change that trajectory? And if like it is, for most brands and most meetings that happen in our space, 50, 60, 70, 80% of the time is. So what, what's going on? What's, what's actually impacting the performance? Where does the opportunity actually exist if the majority is in that bucket? Versus we're clear on the opportunities and we're clear on the gaps, and let's spend the majority of time thinking through the best ideas and actions to be able to bridge that gap. That, that's the, that's what we're, we're looking to solve with this and what an integrated system with. Equipped profit engineer at the, at the center of it helps to, helps to enable us to move more of that time, reduce the time from insight to action.

[00:23:58] Richard: That's right. All right folks, well, we're gonna leave it at that comment our co.com, hit that higher risk button. Let us know you're interested in the profit engine system and remember amongst the many benefits that it will have to you. Fewer annoying meetings, less emails, less figuring things out, and more action. All right, folks for Luke and Tony, take care everyone, and we'll see you next time.