State of the Industry Report: First Half of 2024 Recap

[00:00:00] Taylor Holiday: Welcome back to another episode of the Ecommerce Playbook Podcast: State of the Industry Edition. And today we're going bigger than a month. We're going an entire first-half recap. This is our bi-annual edition, a mega episode. We are looking at the entirety of the first half of 2024 in ecommerce and comparing it against the first half of 2023 to try and answer the burning question of how are we, as an industry, doing?

And today I'm going to, I'm going to hand off. The remote control, the quarterback's chair to Mr. Jeremiah Prummer, who is going to drive this episode for us. We all take turns here at the DTC Index kind of quarterbacking and leading these additions. And this one has been his love effort here. So he's going to play moderator for us today.

So with that to handle the intros and set up, I'm going to hand it over to the CEO of no commerce, Jeremiah. 

[00:00:57] Jeremiah Prummer: All right. Thanks, Taylor. Since you handed up to me, I'll go and introduce myself real quick. For anybody who doesn't know, I am Jeremiah Primer, founder, CEO of no commerce. And you know, just as a recap, we work with about 4, 000 brands who run surveys on our platform. And we're looking at lots of different big picture trends across that data.

The one that we typically are looking at, and that we'll cover a little bit here in this biannual issue is Looking at gifting data. So we've been tracking that throughout this year. We've got some interesting trends there. And I'll go ahead and hand it off to Steve. Do you want to introduce yourself real quick?

[00:01:31] Steve Rekuc: Yeah, absolutely. I'm Steve Reekook, Director of Data at Common Thread Collective, and I aggregate a lot of the data that we look at, build a lot of the models that we have, and one of which is working with Jeremiah and the data from NoCommerce and building a DTCCI Direct to Consumer Specific Consumer Confidence Index.

[00:01:50] Jeremiah Prummer: Awesome. Thanks, Steve. And Yarden, to you.

[00:01:54] Yarden Shaked: Hey, yeah I'm the CEO of Vero's Vero's provides KPI benchmarking on digital marketing and revenue trends we have 7, 000 brands in our co op, it's basically anonymized, aggregated first party data all the data is updated in real time and that's where we're pulling out these insights from.

[00:02:14] Jeremiah Prummer: Awesome. Cool. So as we're looking at what we're seeing for trends in 2024. Yarden, let's go ahead and stick with you. I know everybody's interested in ad performance, so I would love to know a little bit about what you're seeing so far this year.

[00:02:28] Yarden Shaked: Yeah. We've had a few episodes here where we've commented that things are actually despite sentiment quite good. So, basically spend is up on Metta and on Google. And And ROAS is actually also up specifically on MEDA, which is, you know, the bigger behemoth in this category CPM is slightly up, but, but ROAS has also improved about 5%. So on MEDA, say there's a 30% spending increase year over year with a 5 percent ROAS increase, which which is very impressive. But to think about, to put, to put this in context and to add a layer on from what we've been reporting, we, we're trying to figure out, okay, it's up 5% ROAS is up 5%, but from what base, right?

So, when we compare it what, what was this like in 2023? Was 2023 a good year? Was 2022 a good year? And so when, when we look at it what happened was 2021 was a great year in ecommerce and also in ad performance, they go together. 2022 was a pretty abysmal year nearly 40% drops in ROAS.

And then we're still on the comeback from that really tough year, and we're not back to where we were. So, 2023 had a 40% back up but 40 percent down and 40 percent up are two different things. So, you know, nearly, you know, 80 percent of the way of, of where we were. And, you know, for the increase of 5%, it still means that we're far away from from where we were, and we may never get back to it.

But these increases it's a positive sign, but it still is on a relatively shaky base after a couple years of struggles here. So, so we're coming back, but We, we want to be, we want to be better than, than, than where we were.

[00:04:22] Jeremiah Prummer: Yeah, thank you. And I'm curious to, like, when we look at the some of the commentary from what brands are seeing, especially looking at February and March and some of the significant declines in ROAS there. Do you have any thoughts on what the data is telling us could be causing those, those things and, and what the actual impact is for brands?

[00:04:46] Yarden Shaked: Yeah, look, I mean, from our, from, from our analysis and the way that we look at numbers from a macro perspective, like for, for the, for these purposes, we look at like, what are the, what are the trends across Meta or across Google, across Shopify? And actually there hasn't been a significant impact.

Like the big story in February for the vast majority of advertisers didn't get affected. And, and actually their performance, as we said, increased their, their performance improved. We did see an, in, Unusual amount of advertisers that significantly struggled. And, and, and they had real experiences that were tough.

But for the most part most weren't affected. And like the broad set of data actually is, is on the improvement. And the reasons for that, you know, I think we can all lend a hand into, I think, as, as the ad platforms are becoming more automated and more AI based you know, there are bugs in software every algorithm change that you make has an effect and it's not as optimized as it would be.

And these are, you know, causing a lot of fluctuations and very random scenarios. And that's the, you know, that's the one thing with AI too, is in February, for example, you saw a lot of very random effects, like spend all shifting to Android for a certain advertiser or everything shifting to reels.

But it wasn't across the board happening. So there, there was clearly something a little off about the algorithm, but. Wasn't happening to

[00:06:32] Jeremiah Prummer: what I'm going for here, but I love getting his his updates on basically a daily basis of the bugs and issues that he's seeing in the platform. And it does seem like it's nonstop.

There's always something going on, something changing, even if it's not maybe impacting the, the entirety of, of the shape of the spend and, and the results of that spend. 

[00:06:50] Taylor Holiday: I think, I think it's hard. There's gonna be a theme in this conversation, I think, as we reflect on 2024 versus 2023. And this is always the challenge with year over year data is you're just asking a question of two things in context to one another. And sometimes that's as much about the comparative data set as it is about the present data set, right?

And so, you can look at, and I think you already did a good job there of zooming out a little further. Because the, the narrative of the year over year for. Two versus three 22 versus 23 matters a lot in this story to where that was such a hard year And I think that's really an underreported story in ecommerce is that 22 is when the bottom fell out.

It's when the What is the phrase the rooster came home to roost? I don't know what the phrase is But that's really when we started coming down hard off of that The post COVID wave, and you were really right in the middle of the iOS issues. People didn't know how to handle things. It was really a challenging time for sure.

[00:07:52] Jeremiah Prummer: yeah, Taylor with that, I'm curious what, what you think about the. You know what going to some news that came out last week, talking about the. Zombie zombie brands, I believe was the term that was used. What, I mean, when we look at 2024 and it being overall slightly positive from 23, I mean, do you think what we're seeing there is just the, the impact of, of what happened in 2022 finally playing out, or do you think there's something, yeah, just something else that involved there, I'm curious what your thoughts are on, on that.

[00:08:25] Taylor Holiday: Yeah, it's a good, it's a, it's a, it's a good question. I think that there's a bunch of factors that are contributing to each of those environments. And so much of growth in ecommerce comes from a brand's capacity to produce consistent new customer acquisition at a rate that they can afford. Right? And so the amount of growth that occurs is usually a slight lagging indicator to the previous period's efficiency of acquisition.

And so the reason 22 becomes such a challenge, it's really the lagging indicator to the post iOS world on's inability to efficiently acquire new customers. Right. And so that is when it catches up with you when all of a sudden you can't survive on your existing customer revenue anymore. And it just sort of bottoms out really quickly.

And it takes a while to rebuild that growth. Right. And so 23, you see new customer acquisition grow again this year. We're continuing to maintain it, but what we're seeing now is more of the growth today is coming from new customer revenue, our returning customer revenue, excuse me, but new customer revenue is still positive a little bit.

And so these things tend to be whenever the acute issue happens. Two new customer acquisition. There's a lagging problem coming. It doesn't happen immediately because a lot of these brands can offset that in a short time with their existing customer base.

[00:09:39] Jeremiah Prummer: Yeah. And I, I would say one, one thing that I've noticed and. Throughout the course of what we've been looking at this year is just the fact that new customer revenue is struggling a little bit more for larger brands. And I think a lot of what we're hearing on socials is, is some of is those brands.

So I wonder to Taylor, how much of, of what we're seeing in terms of people being concerned actually really comes from that piece of it. Specifically, the fact that new customer revenue is, it is up, it is positive, but it's not. Maybe as positive as, as brands would hope that it would be. Yeah,

[00:10:14] Taylor Holiday: in particular, they're usually the people that have grown really fast up until this point. Right. And so like they're, they're also like just used to really big numbers. And so 18 percent feels like what the hell, you know,

[00:10:25] Jeremiah Prummer: true, yeah.

[00:10:26] Taylor Holiday: it's, it is a special group.

[00:10:28] Jeremiah Prummer: When you've been growing at 100 percent year over year for four or five years, and then it just stops happening. There is definitely probably an expectation shift that has to happen there. Steve on the note of all of that looking backwards at, you know, 20 21, 20 22 and, and some of the, the, the forward looking pieces of, of the impact there.

I'm curious what you're seeing with consumer confidence and some of these other economic indicators that we've been tracking and

[00:10:57] Steve Rekuc: Yeah, the, the point that comes to mind regarding 22 is that we saw a bottoming out of the Confidence Index. University of Michigan bottomed out in June of 22 OECD office of economic and cooperation and development bottomed out in like June and then went even lower in July of 22. So, like, it wasn't just iOS 14, 5 and kind of the, the letdown from post COVID world.

It was also consumer confidence just dropped. At that time, so I think there was that other. Aspect to it that kind of led to 22 being a particularly rough year.

[00:11:31] Jeremiah Prummer: what is what is it looking like, you know, now in, in relation to 2022 and 2023?

[00:11:39] Steve Rekuc: yeah, we've seen kind of a continuous rise like, particularly since last on our own DTC, we kind of saw on that bottom out kind of in the fall time, which is normally a typically DTC. Well, or doldrum in a way, and then kind of been rose up, obviously, for black Friday, cyber Monday. And we've seen the 1st, half of the year have particularly rising confidence.

And Q2 looking better than Q1 in terms of that confidence index. And a lot of that can be tied. I think we have a really good chart in our. Newsletter of the economic sentiment of the consumers that we're surveying versus stock market, basically, and seeing a very good correlation between those.

[00:12:27] Jeremiah Prummer: Yeah, absolutely. And one of the things too, that you know, in doing some research for this episode, the, the, sorry, I just forgot that the term so looking at this inflation has been stabilizing, right? So if you look at the chart, there was a pretty massive spike and you look at basically like end of 2021 through. Through mid 2023. There's a inflation is just through the through the roof. If you look back back over the last 20 years, it's peak inflation for that time period.

And so even just looking at what we're seeing now, like, that's come down a little bit. It's still higher than it was, and I'm sure that's going to continue to have some lagging impact. But it is interesting seeing that I've seen other people sharing information about. Things like the savings that people have.

So there was a lot of excess savings during cobit. And so all of this stuff is kind of coming back to normal. And so it will be interesting to see, I mean, what we're seeing is. 2024, when you look at all the macro economic indicators. If it is better than 2023 was. But I do wonder how much of this uncertainty is actually coming from the fact that. It's better, but savings are running out. Inflation is coming back down, right? Like, there's still a lot of uncertainty about, like, what is this actually going to look like in 6 months or 12 months, even if confidence is higher than it's been. 

[00:13:49] Taylor Holiday: Yeah, and inflation is a weird one, right? Because the decrease of inflation generally is related to a decrease in demand, right? So there's like, there's something signaling to us. And if you think about what the feds trying to do, it's really that's right. They're actually trying to raise unemployment and drive down demand in order to get inflation under control.

And so there is a consumer signal that sort of inverse to a Market sentiment where we're like, Oh yeah, interest rates are going to be cut. Awesome. But that means that there's a general struggle in the economy that's driving demand down at a way that's like, Ooh, okay. That could actually be a counter signal to our universe.

And that's where I think some of this, like. There's all these ways to glance at this, and we're trying to narrow it into the direct to consumer confidence index, because I think the broader market sentiment is affected by a lot of things that may actually, in some cases, be inversely correlated to the way that we actually think about The market and where consumers would be spending.

[00:14:43] Jeremiah Prummer: yeah,

[00:14:43] Yarden Shaked: Yeah, you could take like a tangible example of something that always surprises me in the data that we're looking at is inflation. You know, we see it every day is, is skyrocketing. But if you look at the data, actually like AOVs have increased dramatically. In the past couple of years, which you would have expected go hand in hand you know, with, with the rest of inflation rates, but, but they're not because for some reason there's not a correlation to, or there's not a very clear correlation to, you know, a meal at the cheesecake factory versus you know, skin cream online.

[00:15:21] Jeremiah Prummer: absolutely. Steve, did you have another comment you're going to make there?

[00:15:25] Steve Rekuc: Yeah, I mean, that also reflects how DTC can be a different dynamic than the overall economy. We saw that obviously in in Q2 of 2020 when like, DTC did fantastic, but the overall economy was tanking. Like, that's a much we're a different world. So some of the factors that would be great for us are horrendous for the overall economy.

[00:15:48] Taylor Holiday: And I think that one of

[00:15:49] Jeremiah Prummer: point on that. So looking at the direct to consumer confidence index I'm going to call this out specifically because I think it's interesting. When we layer that in with I believe it's the, the Michigan competence index that you included in here, Steve, we do see that while the overall trend lines are similar, we are, our index is very much focused on the, the impact on online spend, right?

So what we see is our, our index has a big spike in Q4. And that's actually like, part of that, it's, Part of that is confidence. The confidence was rising, but part of that's actually that we're seeing better return on ad spend and better spending happening during that timeframe. So ours is a little bit disconnected from the overall sentiment.

And this is actually where year over year, this is going to start to become really interesting, I believe. So we now have on that index starting in mid March, basically of 2023 is when we started tracking this data. So as of March forward, we now have. Year over year data. So for us, what's been really interesting is looking at that, I, I believe Steve, that is up I wanna say 6% year over year is what we're looking at for that index specifically.

The others are up as well. And you can definitely go take a look at all that in the report. But it is good to see that. And I think that will be really interesting to look at when we hit Q4. What are we seeing year over year this year? Is it, is it better or worse than it was last year?

[00:17:13] Steve Rekuc: Yeah, absolutely. I think that's something that's going to be fantastic to take a look at. And like, obviously, we see the difference already in the 1st, half of the year. Well, more specifically Q2 and as we've seen it kind of rise, whereas, like, last year, we saw it kind of starting to decline in June.

And going into July, like last year, this year, we're kind of seeing the consumer confidence index that we publish significantly higher actually kind of trending upward rather than trending downward.

[00:17:43] Jeremiah Prummer: yeah, absolutely. Real quick.

[00:17:44] Taylor Holiday: Have you guys ever, have you ever seen, sorry, last thing on this inflation topic, have you ever seen the chart? That's like regulated categories, price over time versus unregulated categories over time. And it's, so it's like healthcare is like inflated the most in price, but the TVs alternatively have gone to basically zero and price.

And I actually think this is, It's not just government regulation. It's also like competition which is sort of what regulation limits. So it's in some ways a proxy for another, but our industry has a lot of deflationary dynamics like this, where prices get driven to zero in because somebody is willing to take less and less and less and less and less and less margin.

And if you think about like, Timu and Chien and these different things that sort of drive and Amazon generally, like, I just look at like the, the joke I always talk about is like Silicon wedding rings. When we started, we were selling one of them for 1999. And now you can buy 10 of them for a dollar. Like a lot of the things in ecommerce are less affected by this process because there's such highly competitive spaces that someone's willing to take less and less and less, less margin all the way down to the break even point,

[00:18:47] Jeremiah Prummer: Yeah, absolutely. And that actually

[00:18:49] Yarden Shaked: is the flip side of venture money, even the industry. So,

[00:18:54] Taylor Holiday: totally. That doesn't fund that same dynamic as aggressively for sure. This

[00:18:59] Yarden Shaked: yeah. But, but, but obviously, you know, foreign players and, and people that have are able to, to produce these with much lower margins. 

[00:19:08] Taylor Holiday: One.

[00:19:09] Yarden Shaked: it's a great point.

[00:19:10] Taylor Holiday: need one.

[00:19:11] Jeremiah Prummer: in your, do you think that would impact AOV or do you think that's really just a matter of like total dollars being put into like total volume of the the industry, not necessarily like an individual brand changing their AOV.

[00:19:25] Yarden Shaked: think it would impact OV. Look, I, I think, Like, like at some point, if you think about, you know, a DTC company is a business like any other company, right? Like they, they need to, they need to take out money past the marketing spend to pay their employees. And, you know, people also want to take money home from it.

And so, if you have a certain if you have a certain margin. That gives you that profit, which hopefully these companies do have you're able to keep eating at it to, to, to grow your business. And at some point, yeah, at some point you, you can't take it off anymore, but you know, until we get to that point the AOV can keep going down as the industry becomes more competitive, because if not, then you're just not going to be able to sell anything.

[00:20:12] Jeremiah Prummer: Yeah, absolutely.

[00:20:14] Yarden Shaked: Or, you know, the flip side, what we've seen a lot of, like, like we've done a lot of analysis on like what creatives are working the best and, and things in this current period. And, and we have seen Taylor, we spoke about this offline a couple of weeks ago. Like, we have seen a lot of the, the flip to like my product is not cheap.

Don't buy my product. If you're looking for something cheap, like that negative to say that your product is expensive. Jerry's like. There is something to the dynamic of like a lot of things that are very cheaply made and you can buy a ton of, instead you want to buy one and quality and, and that marketing is working.

So there, you know, there's more and more brands as well as having that being able to then hold their AOV or even increase it.

[00:20:58] Jeremiah Prummer: Yeah. And on that point, so looking at the gifting trend data, one thing that is very interesting in 2024. Is that we are seeing higher AOV for people who are giving gifts. And to be clear here, what we're looking at is the question, who is this purchase for? And if we look, we specifically are tracking people who said that they're buying for significant other and buying for a family member.

And that's kind of the measure that we use when we look at, at the impact of gifting and also AOV. And so what's been really interesting in 2024 is we're actually seeing. Gifting as a whole is a little bit lower than it was in 2023. People are seem to be buying more. A larger percentage of purchase are for self as opposed to a gift.

But what we're seeing is that at key gifting moments, Valentine's Day, Mother's Day the A. O. V. Climbs dramatically for people who are buying for a family member or a significant other. And I think that maybe speaks to what you're saying. The one time that you don't want to go cheap is when you're buying a gift for somebody, right?

And so that's a really good opportunity actually for brands to say, okay, this is not a, we're not going to make this something that's cheap. We want, we want you to actually invest in the person that you're giving to. And in that context, maybe you aren't going to look for the deal all the time. You're going to actually look for the best gift for that person.

So that's been an interesting trend that we've seen in 2024. All right, cool. So diving in a little bit more, I think we kind of briefly touched on this, but A. S. C. And P. Max. I think is an interesting trends that we're seeing yard in or tailored today. Either of you want to jump in and give a little bit of commentary on on that, because we are seeing basically just a higher percentage of the ad spend on both Google and you and meta going towards those those channels.

Not the right term, but being spent in those ways. 

[00:22:55] Taylor Holiday: My lawyer has recommended that I no longer comment on Google related advertising initiatives due to some recent conflicts. So I'll, I'll let Yen handle this one.

[00:23:04] Jeremiah Prummer: Okay, All right.

[00:23:06] Yarden Shaked: I'll give some, some, some context. So, obviously in the past a year and a half or so meta and Google released advantage plus and P max respectively, which is they're you know, more automated AI based targeting system. This has gotten rapid adoption which makes sense.

Both one, it does solve a need for these companies, but also the ad platforms are pushing it pretty heavily. And so, Within a very short timeframe, they're at about a 35 percent of the share wallet for each of the individual ad platforms. So. Advantage plus 35 percent of total meta spend that we track and P max a very similar 34%.

And the, the, the difference between the two that we're seeing is meta is continuing to grow their non advantage plus part of the pie. So both are growing where Google it's more of sort of zero sum. Like, people held their Google spend the same but moved a lot of the dollars into PMAX.

And yeah, there's a lot of implications of what that means in terms of performance and where revenue starts coming from that we'll let Taylor get into.

[00:24:26] Taylor Holiday: Yeah, I think that we continue to just see. Ambiguity of actual incremental impact from both of these products in a way that people are now seeking out answers to. And I think that I have an appreciation that I think Meta has been more progressive in supporting that the funding of that research to help answer the question faster that Google's now deciding that they're going to have to step through the door because people just don't know what to do with their 5.

5 ROAS on a PMAX campaign. They just don't know how to interact with it. They don't know whether to scale it. They don't know whether to pull back. They don't know how actually to assess the impact. And so I think it's leaving them in a position of really being unclear on how to interact with the ad product.

And so I think that that's good. They're going to, to their credit. And I think Zach Cox over there does. It deserves a lot of praise for leading the charge on trying to advocate for advertisers. And I think that they are making and listening to some changes or at least fighting to bring some more clarity.

They're leaning into some product optimizations that could solve it. So I'm a little bit more optimistic than I've been, but it has certainly been a really challenging period to interact with the Google ad product.

[00:25:32] Yarden Shaked: Yeah, I mean, I think Meta has sort of less like, as we spoke about, Meta is pretty obviously incremental, right? Like it's a, it's a, it's, it's the behemoth. It's a 70, 80 percent of share wallet for these advertisers. They see they're putting dollars and dollars are. Are coming back. And of course, you know, with attribution these days, it's unclear which exact campaign caused what and but but it's quite clear that that's incremental where Google, it is a smaller piece of the pie.

You know, a lot of it comes from brands search and then how do they hear about the brand? So, it, it, it is a little more confusing and same with TikTok, right? Where TikTok it's most of the time, you're not clicking in from the video, go on the website and buying as you are for Meta and Google. So.

And also, you know, their stances, Taylor, do in a way make sense and speak to the the position of, of you know, how these ads are delivered.

[00:26:32] Taylor Holiday: Yeah, I mean, look, you're right. Discovery happens on I. G. And then domain capture happens in Google. These are just different stages of the customer journey, generally speaking. And so in that case, I can understand why Meadow would be very proactive and saying test our incrementality. Like, there's a real incentive there.

And Google has created a system that is an Obligation for a lot of us to participate in more than a desire to. And I think that's where I look at the product and go like, that is not a place you want to be longterm for a customer. You don't want to be an obligation of spend it. You know, you eventually that gets innovated away because customers get dissatisfied.

You want to be delivering value to people that they're excited about. That's making real business impact. So I think that's, that's the challenge for them now.

[00:27:13] Jeremiah Prummer: One thing that is interesting in some research that we've done, and we're not covering it in this issue, but if you go back to, I believe it's the May issue and look at this Google has an impact on maybe this isn't the right way to say it, but customers who discover a brand on a different platform, so let's say they discover a brand on meta or Tik TOK or snap, and then go and search for that brand on Google.

So they have a. This is looking at attribution survey data. So they say, I found this brand on Tik TOK, but then they have a Google click. Those customers actually have a higher AOV on average than customers who are coming direct from the platform. So there is an interesting thing here where, you know, for Google, the, the idea of it being a requirement essentially in order to do business is absolutely true, but at the same time, there is a, a, a reality that there, there can be a really positive impact.

I'm driving somebody through search, right? If somebody is doing research, that's kind of a necessary step and buying higher AOV products for, for most people. Not necessarily the case for everybody, but not many of us are going to go by well, at least I'm not going to go impulse buy, let's say a 500 car seat, right?

Like I'm going to do some research on that. And so I may have discovered that through something like a, an ad on Meta. So incrementally, like there's going to be, that's going to show an impact there for sure. But if I actually go do some research, read some other things, and then finally I, I come to that website through a Google search, there is a release, Google is still having a positive impact in that context, but it's just harder to know what that impact is because the incrementality of that is not going to show up in the same way.

Right. So, I, it is really, I, I do, to your point, you don't want to be the obligation, but it doesn't, it also doesn't mean that there is no value creation in that step. Right. And so, like, I look at it in that context where, you know, when from the attribution survey standpoint, which is kind of the primary piece of our business, I oftentimes tell people that that Google is going to over attribute itself, but that doesn't mean that there's no value there.

And so I think that's the balance that we're all trying to find with each of these platforms is what's the actual value. Of the ad spend that's going into that. And are we under overvaluing it? And those are just very challenging questions to be able to answer.

[00:29:33] Taylor Holiday: Yeah, I mean, I, I think what you're talking about is the incremental efficiency of the channel, right? So that, that's really the question here is that I agree that there's probably incremental revenue created. The question is at what cost? And that is what I think people are really after is that you have to create incremental value in excess of your cost.

And that is actually a really high bar. And in sitting in the position that Google does, I think that there are cases where those, Economics are inverted in a way that doesn't feel great.

[00:30:02] Jeremiah Prummer: Yep. And the problem with something like P max is it just obfuscates it more to your point, Taylor. So then there's a question of like, sure, this looks really good, but is it, is it actually creating my incremental volume?

[00:30:13] Steve Rekuc: And I think kind of, this has also led to more incrementality testing from our side to, to validate what the channel is saying is that if they don't know that row as is true or that the row as that P max is reporting is actually creating incremental revenue for the brand, then the best way to test that out is like, do a geo holdout from a third party.

[00:30:37] Taylor Holiday: Yeah. And I think when we do that, I'm going to speak in generalities and I have an episode coming out with the CMO of measured or CSO of measured here next week where I was trying to get him to give me sort of some general sense of things. But what I'll give you ours are from a few is that you see meta, if you're using like on a click based optimization, it's underreporting it's incremental impact, whereas P max is overreporting.

Substantially, like usually it's about a 30 percent incremental value relative to reported value on P max. Now there's a thousand different structures, so you have to be careful, but that's now the default. The default number we use with a customer before we can get to a specific individual incremental study is now like 30%. a huge Delta

[00:31:21] Yarden Shaked: Like the default, the default knock that you put on it,

[00:31:24] Taylor Holiday: Exactly. Yeah. So if you tell me you have a nine to one, we're going to apply a 30 percent value before we get to the specific incremental study for your result for your business. Yeah.

[00:31:34] Jeremiah Prummer: Yeah. I would say like that lines up with what we see on attribution surveys too. Not, I mean, I know not everybody trusts those, but it's, it's going to be pretty similar, right? That. The actual impact of from a discovery standpoint, if you're talking about how somebody is discovering a product or a brand compared to, to ad spend.

So,

[00:31:53] Taylor Holiday: Yeah. I think I would, for the end of this, I'd love to, I think the real meat of this edition and what everyone should go after and really care about is like this giant same store year over year revenue growth data. Cause I think that'll allow us all. And I'd be curious if we all did this as a group is like.

What do you believe? Assign an emoji to your sentiment. Where are you at? So maybe, Jeremiah, can you go into that part of it?

[00:32:16] Jeremiah Prummer: That's exactly what I was thinking. I wanted to do that as well. So, yeah, in terms of year over year growth, I mean, Yarden, I you know, we're seeing. I'll let you speak to it actually, but it looks solid from, from what we've seen.

[00:32:29] Yarden Shaked: I couldn't explain what the analysis is. Taylor was on a nine operators pod this week, last week to go over this, so, so he can give the full review, but basically we took a bunch of data from various and different cuts of same store and the distribution like of the actual stores of how they grew or declined.

In the first half of 2024 versus the first half of 2023 to look at instead of just looking at a median or an average change, what is going on across the board? What is happening to most ecommerce stores? And, you know, what, what we see is, is, is most are actually growing, but, but I'll, I'll let Taylor sort of dive into, you know, his analysis here.

Yeah,

[00:33:17] Taylor Holiday: Yeah, I think it's good. So one, there's a lesson here in measures of central tendency and the difference between median and and mean here that is really important. And I actually have come to a push more and more that barrels uses median more often. And especially when we think about percentages, like one thing to know is that Positive percentages can go to infinity and negative percentages can only go to 100.

So when you think about averaging, if someone tells you the, the average percentage growth of any data set, it's going to be weighted to the positive, like dramatically in our industry. And so it's almost a useless measure. Like, I think if you looked at the average percentage growth year over year. For the store, it's like 74 percent or some absurd number that if I just gas lit you all into saying that number, it would be like a great headline and would be factually true, but would be, I think, a really insufficient way of telling the story because at the same time, I could say that I would say that the median growth number and I don't have it is 9%.

I believe is, am I saying that right across all the stores? I'm not going to give them the category slices, is But across all stores,

[00:34:25] Yarden Shaked: 10%.

[00:34:26] Taylor Holiday: 10%, right? Those are very different outcomes. And then on top of that, another thing I'll say is that roughly 50 percent and this is, is the bulk of the data are plus or minus 10%.

So the majority of stores are roughly flat. I'm guessing none of them had 10 percent growth goals this year. They probably had more than that. The tails are large, the medians about 10 percent and the mean 74. And so as you put that all together and you start to analyze it, you can see why a lot of people might be feeling stagnant, they kind of feel stuck.

And that's a lot of the story that you hear on on Twitter and what might be the case, but there's also a large contingent of people that are winning. I was on a podcast this week with Ryan Bartlett from true classic teas. And he's like me and a bunch of my people are all in a text thread going, we're smashing what's, what's going on with everybody.

Right? Like, so there are people on tails here and whatever community you aggregate in, you're likely going to seek out people that have a similar narrative or experience to your own. We all are guilty of that, but that's why I think this data is so beautiful is because you see each node of a very large sample and you can see just that how many different stories there are.

And then you can start to analyze it a lot of different ways.

[00:35:38] Jeremiah Prummer: Yep, absolutely. And in terms of the takeaway on my side, I would say I'm optimistic. I think I don't think we're going to feel good about things this year. I think 2024 will not be a feel good year. I would say like for my own business, that's the same thing, right? Everything is, everything still feels challenging.

But I, I think I'm, I'm optimistic about 2025. And I, I would say, you know, 2024 is like if I look at the data, it looks like it's, it's okay. Right. It's just not 2021. And I think it's going to take some time, even if you look at one more quick note too, I don't think we have ever shown this chart in anything that we do, but if you look at the share of commerce, that's happening on line, And you look at the charts, right?

There's that everybody's seen this chart and the, the share of commerce is climbing over time. And you see this massive spike in 2020 and then it drops, right. And then it starts to come back up. And so we still haven't, we're, we're below that curve still. Right. And so I think like, or sorry, we're still ahead of the curve.

But the, the growth is, is happening very slowly. And so I think like what we're going to start to see is next year probably is when that should normalize and it will start to feel more normal again. That's my, my hope. I just don't think we're going to see it this year. I think it's just going to be a you know, sort of the same sort of cautious, cautious optimism that six months from now, things are going to look really good. Steve, where are you at?

[00:37:05] Steve Rekuc: I feel pretty optimistic. It's going to be interesting to we were looking at Q4 and how, black or cyber Monday falls into December this year. So it's a very compressed kind of. Holiday season that we'll have the holiday gifting season gets compressed and then on the front end of that, November has the election that is going to take away and we'll talk about that in the next issue where increases CPMs some, but I think it also takes away interest.

If everyone's focused on the election and focused on those sort of issues, they're probably less likely to purchase. I remember seeing in our own data that purchase week of the election didn't look so hot in terms of customer acquisition.

[00:37:45] Jeremiah Prummer: How about you Yarden?

[00:37:46] Yarden Shaked: Yeah, I, I, I was in, in, in this in this month when we looked at the past four years instead of just the last year, year over year I was actually happy to see that we are not nearly back from the base. Like, we are not nearly where the peak was where. If you think about like the S and P 500, we've already crossed the peak, like after the drop and a lot of other metrics we have but here, but here we have it here we're still, you know, it's a decent year.

It's not a, it's not a terrible year. There's not alarm bells ringing businesses are. Still alive. Most of them are still in the positive. They're not in the negative and there's still a lot of room to grow. And we'll, we'll keep going. I know there's an article about zombie businesses and stuff.

I, I think people need to remember from those type of articles, like that happens and that is what I industries are like in startups. That's like that. I mean, yeah, there's companies that people start and they fail and they close and a lot of them. And there's also a lot to succeed. Like, that's just, that's just how it is.

And now it may be more because the funding cycle is different than what it was. And people are at the tail end of the funding that they had, and they're not able to raise again at the year. valuations that they had, but like in, in general, I think that there's more room to be optimistic and, and, and we see by the numbers that there's a lot of places to grow.

[00:39:18] Jeremiah Prummer: Yeah, for sure.

[00:39:19] Taylor Holiday: The other thing to remember is we're just talking about online store growth, right? We're not talking about wholesale growth. We're not talking about retail growth. We're not even I think this is this specific data set us only yarded.

[00:39:31] Yarden Shaked: No,

[00:39:32] Taylor Holiday: It's global.

[00:39:33] Yarden Shaked: it's global, but most of the revenue is us based.

[00:39:36] Taylor Holiday: Yeah, so I think that the when businesses think about pursuit of growth, I think that not very many people still exist in this idea that all of the business growth forever should come from your direct channel.

I think more and more were an industry normalizing to a more omni channel distribution as a business and trying to meet customers where they're at. And I'll include social commerce in that, which there's a really cool little insight in Okay. You're this month's edition about share of wallet by specific spend channel, like isolating Instagram feed versus Facebook reels versus Tik TOK shop versus other things that I think that's a category that I continue to be bullish on.

And so there's lots of other ways that these businesses are growing. So to see growth out of just that channel, I think is a positive indicator for our industry that I look at and go, okay, relatively, This is positive, maybe not peak hysteria or holy fast. This is the fastest growing business sector in the United States.

None of that necessarily, but growth with the opportunity to continue to move forward and brand succeeding, some failing, and then a bunch in the middle. So, that's about it.

[00:40:43] Jeremiah Prummer: Yeah, absolutely. And on the, on the point of what you were describing Yarden, I mean, there's. There's all those stats that have existed forever. Nine out of 10 businesses fail something like only 10 percent of businesses ever hit a million a year in revenue, all that kind of stuff. And so we are really looking at an industry where there's a lot of people that are hitting these successful milestones and doing really well, and even in that there's, there's always going to be some drop off.

So cool. Well, I think yeah, this has been a fun one again. I think, you know, the numbers that we see are looking positive. And it's. Definitely check out the episode. There's some really good stuff that kind of contextualizes all of this over time. Looking at the ad spend, revenue the confidence of consumers, all of these things.

So, in this context, let's see, Taylor, I believe we have a code, right? I did not see.

[00:41:31] Taylor Holiday: Summer 50,

[00:41:32] Jeremiah Prummer: There we go. Yeah.

[00:41:34] Taylor Holiday: sunshine and rainbows over here. Summer 50 gets you 50 percent off. And this is going to be the biggest, I think it's the largest issue. We're constantly having to hack down the number of graphs because we're reaching email limitations, but it's a huge, this is a big one.

[00:41:47] Jeremiah Prummer: And I will say too if you are subscribed, you do get access to the historical issues. So in this issue, we're referencing back to a few different things that we've looked at in the past. So definitely make sure that you, you know, get this issue, look it over and then go back in the archive and take a look at some of these other things that we've looked at, because there is a lot here.

I mean, there's, this is going to be 150 plus pages, I think, that we're, we're at by the time this is uh, Or maybe not quite that hundred hundred plus pages of total research that we're going to be looking at here. So lots of interesting data going back to the beginning of this year. Well, I think that's it.

Thank you all. And I hope you have a wonderful July.