Stop Gambling on Creative - Use This 6-Pillar Assessment Framework

[00:00:00] Richard: Hey, folks. Welcome to the Ecommerce Playbook podcast. I'm your host, Richard Gaffin, director of digital product strategy here at Commercient Collective. And I'm joined today by a brand new guest Mr. Ian Jordan, who is our VP of private equity partnerships here at Commercient Collective. Ian, what's going on, man?

[00:00:16] Ian: No, great to be here. Excited to talk talk shop today.

[00:00:19] Richard: Yeah, yeah. Likewise. So, I think it would be cool to start off here, Ian, having you tell the folks a little bit more about kind of your role here at CTC how you came aboard, and then we'll kind of dive into what we're talking about today, which I'll, I'll tease a little bit. We're rolling out sort of a new creative methodology quiz or assessment.

[00:00:36] And the idea then is you can sort of plug some variables into this quiz, and it'll give you pretty quick sense of like how strong your creative is right now. So we'll get into the details of that. But again, first, Ian, why don't you talk to me a little bit about kind of your, your role here and, and how this came about?

[00:00:53] Ian: Yeah, so my, my role here is primarily to serve as kind of that conduit between private equity, their portfolio companies or brands, and then Common Thread. So whether that's private equity firms that currently are investing in direct consumer brands, those looking to invest in direct consumer brands, and then on the flip side, brands that are either a portfolio company of a PE or venture capital for that regard as well. And, and then also maybe looking to be acquired in the future. So kind of bridging the gap between those and understanding how can Common Thread provide value and, and essentially help with value creation on both fronts.

[00:01:28] Richard: Yeah. That, that makes sense. And, and so it kind of makes sense then how this would play into this creative assessment. I mean, part of, part of this is, is sort of a, a process of due diligence in a sense for, let's say, firms that are looking to acquire an e-commerce brand or always... already have a portfolio and want to be constantly assessing the health of those businesses.

[00:01:46] So speak a little bit then to kind of how you came to this creative methodology cr- quiz.

[00:01:51] Ian: Yeah. So I, I-- my, my background is both on the brand side and the agency side. And from the brand side, starting you know, kind of low seven figures and then bringing it up to, into the eight figures. And the story's been the same across brands and, and companies I've worked for on the agency side, which is they want you to do the most with the least amount of budget, right? And so not all the time, but oftentimes it can be finger to the wind. So what's your methodology for saying, "Okay, well, next year we need to do 50% growth." It's like, "Well, how would you get there? What's needed to support that?" Inventory, creative assets, all kinds of planning. And there seemed to be a lack of methodology behind that, but that's what Common Thread is really good at, right? Putting those methods in- into practice, and then creating that roadmap and the guidelines for, for brands that they work with to follow, and creating that roadmap so that there is a clear line of sight and visibility into what's needed for growth.

[00:02:45] Richard: Yeah. You're right. Right. So let's then let's talk a little bit about, so why, why this creative assessment then?

[00:02:50] Ian: Mm-hmm. Yeah, so that's an underserved and I think maybe a blind spot for some brands, right? You have production costs, you have production quality, you have production diversity, all of which are elements and, and kind of pillars in this assessment. And oftentimes what you might find is a little bit of a finger to the wind.

[00:03:08] Okay, well,

[00:03:09] what did we spend on our photo shoots, videos, creator content last quarter, last year, in the prior years? And it's maybe less systematic in, in terms of the approach and measurement. And so it's okay, we spent 10,000 last year, we spent 50,000 or 100,000 last year. We're gonna do the same. Okay, well why?

[00:03:29] You know, why are you gonna spend that amount? Why are you gonna spend-- Why not spend more? Why not spend less? Why not diversify that across these other channels? And so that's what this quiz and assessment is aimed to kind of lift the hood up a little bit and understand where are you allocating that capital, and then what is the expected result? I mean, a, a good way to think about this is if you're talking in investments, you know, would you concentrate all of your investments into the top five performers? What does that mean for you, right? The, the answer is not necessarily, okay, well, that's a bad thing, but it does kind of open the door to explore what happens if one of those starts to go sour?

[00:04:03] What happens if one of them starts to fail? What's your plan to fill that gap? Do you have a pipeline? Do you have a plan for creating more content to fill once that, that the existing creative starts to, to fall down?

[00:04:15] Richard: Right. No, and it makes sense. I think like we've, we've talked to-- Taylor and I have talked a long time on this podcast about ROIC, return on invested capital, as sort of the fundamental metric or, or North Star metric for, for these brands, and particularly thinking about creative through that lens, which I think like you're alluding to, that's, that's often ignored as part of, I guess, the due diligence process for thinking through whether a brand's investing its money properly, I guess.

[00:04:39] So like part of, part of what we've tried to solve for is, okay, if you spend a certain amount of money on making a creative, do you have a clear expectation for the return on that specific piece of creative? And that's sort of fundamentally what our creative system I think solves for. So let's let's talk a little bit about, about what's in the assessment itself and kind of each in constituent part and how that sort of plays a role in kind of this whole story we're telling here.

[00:05:04] Ian: Yeah. So we, we broke it down into six pillars, and what they are, are kind of that volume and velocity is, is the number one or the first question that we, that we aim to answer. And what that really means is how much are you actually producing? Because what you're looking for is shots on goal, right? So a small number of ads we know drive a disproportionate results.

[00:05:24] And, and so if you have fewer ads, you have fewer shots on goal. I think with our, with our dataset, we have essentially determined that roughly outlier accounts for 3.5% of your total total ads, but they also drive you know, upwards of 80% of the revenue. The Pareto rule applies pretty strictly here from, from what we found. And so if you don't have volume,

[00:05:46] if you don't have the diversity, then you're going to lack in those at-bats essentially to, to identify those outliers. The second one are your, are your marketing moments. And

[00:05:57] so oftentimes what brands might have are-- and I don't mean promotional ones in this case, but those are an element here. But you have holidays, maybe you have product launches every now and then, but how many of those do you have and how can you either, you know, create them yourself or, or leverage what already exists in the marketplace? And so those are cultural moments, seasonal events, brand milestones, product launches. You know, I think back on the time I spent working with brands in apparel and retail, there's something called the NRF calendar. It's the National Retail Federation calendar. They're on a little bit different timeframe there, but it's, it's very common for those brands to have their spring season and their fall season. So just as, as some examples there, right? Like they're gonna do a spring capsule, a fall capsule, and then maybe some, some moments in between. But what that gives them is more opportunities to kind of flatten out the curve so that everything is not skewed f- to one season of the year, to one quarter, like maybe it's in Q3 or Q4.

[00:06:53] And so that's really important for cash flow, right? So if you have all of your cash concentrated into one quarter or a couple months of the year, that doesn't allow you to scale production, and that's gonna impact things like inventory, creative production, spend and media, and it, it's a domino effect in terms of the problems it can cause down the line, more or less. The third one-- Oh, sorry, go ahead.

[00:07:15] Richard: No, no, I-- no, you, you just keep rolling through them. That's fine.

[00:07:17] Ian: Sure. Yeah. And then from an account health perspective we kind of break this down into six measurements, and what we're looking to identify here are can we look at some leading indicators in terms of-- or instead of lagging indicators. And what I mean by that is it's very common to look at last month, last quarter, last year, say what happened, what worked, what didn't work, but are there ways that we can get ahead of that so that when planning the next round of creative development, we have a better sense of what's working and what's not in a, in a faster feedback loop.

[00:07:49] And, that's-- part of those

[00:07:50] Richard: do wanna sort of mention too that there's like... What we're talking about is more robust than just thinking through like I don't know, did this particular ad have a good ROAS or something like that? Which, you know, I mean, one of our other sort of principles is that past ROAS does not ea-equal future ROAS.

[00:08:05] So that doesn't even work as a metric. But but we've talked about this a little bit on the pod before around our sort of creative scoring, and this is kind of an adaptation of that in some ways. But the, the five metrics that combine to create the creative score are the percentage of ads-- evergreen share, we call it, the percentage of ads who are running more than 30 days.

[00:08:23] Ad concentration, which is like the share of total spend in the top five, like how diversified are you or not, is another way to think that. Spend degradation and ROAS degradation, is that being tracked week over week? And then what percentage of your ads are generating zero revenue in a given period?

[00:08:38] And really, that, that kind of all works together to give you a picture of what your hit rate is. And actually, is that only four? Oh, yeah. ROAS degradation, spend degradation is two. Okay, great. Gotcha.

[00:08:49] Ian: Yeah. And, and like you said, we've, we've talked about in the past, and so if anyone wants to learn about them, they can find that information, what those mean in more detail, and those are more or less summarized in, in this in this assessment. So if you're unfamiliar, then maybe that's the first indicator that it's, it's an opportunity to, to learn a little bit more. But yeah, I think just with, with consumer behavior, the diversification of channels, algorithm changes within Meta as well, right?

[00:09:14] It's just important to understand all of these metrics because they're gonna roll up into an overall success score, more or less. You know, if you're, if you're kind of missing the mark on one or many of these, then you're either gonna be losing at-bats, you're gonna be losing in terms of clicks, you're gonna be losing ultimately revenue and contribution margin.

[00:09:31] You're gonna be leaving money on the table, which we don't want to happen. And so down the line, that's a capital allocation problem, right? If you're, if you're not maximizing on that input, you can't maximize on the output.

[00:09:42] Richard: Right. Okay, let, let's roll then into the fourth pillar here, which is entity ID which is o-of course, another way of saying production diversity or creative diversity. So speak to that a little bit.

[00:09:53] Ian: Yeah. So I think we've, we've talked about this in the past as well, but Meta's algorithms are really good, for better or for worse, at identifying similar creative, and that also plays into the channel, right? So whether you're, you're just advertising on Meta, if you're advertising across different platforms, but particularly with Meta as well, they are not looking for copy changes.

[00:10:14] They're not looking for just an image change. It needs to be materially different enough in order to be identified as a completely separate ad. Because if it's not, it's gonna group all of your ads into one entity ID, and so those ads aren't even gonna get served. Maybe you produced 100 ads, but if there's not diversification within that, that set of ads, they're all gonna be lumped together.

[00:10:34] And again, this is just reducing the number of at-bats you have and opportunity for that creative that you spent money on to then get a chance to perform.

[00:10:44] Richard: Yeah, and, and we, and we've spoken to that before, but yeah, it's, it's just getting I mean, I think like it's definitely-- it, it-- I think people aren't as aware as they need to be maybe is what I would say of

[00:10:55] Ian: Mm-hmm.

[00:10:55] Richard: the way in which Meta reads two different, technically different ads as being the same ad. So entity ID, entity ID let's say if you have a still image of a pair of sunglasses with a piece of copy on it, and then you run a second ad that's the same image but with different copy on it, technically from a creative standpoint, that could make some difference in terms of the way that people interact with the ad.

[00:11:18] But Meta will identify them as being the same ad. So you've created two ads, but you're only getting credit for one, and that's sort of the thing that you have to fight against here.

[00:11:26] Ian: Right. Right. And it differs

[00:11:27] vacation too. I mean, this is what we kind of do here at Common Thread, right? So it's, it's your static brand ads, but there's also creator content. There's additional video content that you can shoot. All these

[00:11:37] different formats can be materially different enough that they show up as those different entity IDs, right?

[00:11:43] So, interviews, branded ads, affiliate ads, static ads. You can kind of think about those in, in different mediums and applications, and that, that creates the diversity.

[00:11:54] Richard: Right. Okay, let's, let's keep rolling here then to to number five, which is expected value must exceed production cost, which is of course another way to say the unit economics of your sort of creative. So let's speak to that a little bit because obviously I feel here's where the connection to sort of capital allocation becomes a little bit more concrete.

[00:12:12] But why don't you speak to this a little bit?

[00:12:14] Ian: Yeah. I mean, I think in my experience, there's always h- healthy, maybe there-- that can also be a scale, but like a healthy tension between finance and marketing, right? You know, the finance's job is to make sure that every dollar spent is well, well worth its, its, you know, its its allocation. And from the marketing side of things, it's really hard to say, "Okay, well, we need more budget," if you don't have a way to measure that, right?

[00:12:38] So it's like, here's the expected outcome,

[00:12:40] and I think it's not probably as, as common as would be beneficial to brands to say, "Okay, well,

[00:12:46] this, this creative production, whether it's a photoshoot, video, or just spend with your affiliates, what is the expected result?" Because once you have both sides of that equation, it's much easier to have a conversation around,

[00:12:59] "Can I have a little bit more budget?

[00:13:00] This is how we're gonna maximize this

[00:13:02] budget. Here's the, expected results of this budget." And then that way

[00:13:05] you can, you can get a little bit more honed in and s- prescriptive with, with the asset creation.

[00:13:10] Richard: of a sense what happens or what has happened in the past rather, which is that it's essentially based on feelings. The finance side doesn't want to spend more, the creative side does want to spend more, and that's kind of where the, the conversation ends. But what this provides is like a very clear expectation of return

[00:13:30] Ian: Right.

[00:13:32] Richard: that, from that point, you can construct sort of a common sense budget around what would make sense to spend on this, given that we expect the return to be X.

[00:13:40] And having that clearly communicated and everybody understanding it, I think makes a huge difference.

[00:13:44] Ian: Mm-hmm. Yeah, I think the difference is, like, it's treating it as a creative production as a cost center, right? Whether depending on the conversation you're having, instead of treating it as like a supply chain with a measurable, measurable return on that investment. So it, like I said, just gives you both sides of the equation that, that weren't there before.

[00:14:03] And so once-- if you wanna anchor in performance and, and kind of that reality and the data, this gives you that, that opportunity that wasn't present before.

[00:14:12] Richard: Yeah. All right. Let's then let's, let's jump to, to six here which is what we're calling production system maturity. So I would assume that that's sort of like the quality of your operations the, your, your creative operational sort of like flow, like what you're building out. So just speak to this a little bit, like, and what's in the quiz here?

[00:14:30] What are we trying to like measure?

[00:14:32] Ian: Yeah. Yeah. I mean, you may have systems in place in order to produce quality ads, quality video, quality photography. You know, everything is there on paper to check the boxes, right? So the, the health metrics in the account are all within the range that you'd expect them to be or want them to be. The discipline is there.

[00:14:50] But where some things tend to break down is in that actual production timeline and the feedback loops, right? So you can have, again, on paper, all the boxes checked, but if it's gonna take you three months instead of three weeks or three days even, depending on, on how fast you can turn it around to produce those ads, you, you maybe missed your window and, and the opportunity to maximize on that.

[00:15:12] So this kind of ties back into, to the tentpole moments, which it takes time to produce them. So if it is something that's gonna take longer, how are you adjusting for that within your processes? Are you saying, "Okay, well, this, this set of ads or this creative is going to take three, four, five weeks to produce." The, the moment is in the end of spring. Okay, we need to start that process a couple months in advance so we have that there. And then as you get better and faster at that, right, then you can start to allocate more resources or better resources. And I think a way you can kind of think about that is manufacturing, right And we've this internally, but if your manufacturing costs stay the same, but you have more output because of the efficiencies that you gain, now all of a sudden you're not increasing your cost at the same time, but you're able to produce more. AI has been a huge accelerator in this, and I know that we're seeing some, some great success here internally. That's not to say everybody should just be defaulting strategic-- You know, all the-- I guess should be defaulting immediately to AI. There needs to be a framework in place for production and measurement, but that's just one other element that's, I think, available to people today in terms of how they can think about the production and the volume needed to get those at-bats and identify their outliers in order to maximize the revenue on the backside of this.

[00:16:28] Richard: Yeah. It's interesting, like, as, as you're talking, I'm, I'm really struck by how much work has gone into demystifying creative for finance people with this. You know what I mean? Just, just sort of generally speaking. Like we were, we were talking about before, there's been historically this constant tension between the money people and the creative people, and their, their brains are-- left brain and right brain is fundamentally different.

[00:16:52] But the a- the actual, like, impact of creative is undeniable. And so I think in the past, a lot of attempts to systematize creative have been attempts to systematize the actual messaging and creative output. By which I mean, "Hey, we did one ad that looked exactly like this. We need to do it again." And that's sort of the messaging that comes from, from the people funding it, because that seems like the safest bet.

[00:17:15] But of course, we know in the world of advertising, that doesn't actually-- it doesn't actually work that way. Again, past ROAS does not predict future ROAS. What worked in the past may not work in the future. Creativity or creative requires creativity. And what this creates is a situation where all of the production elements around creative are systematized in such a way that the-- what's go- goes into it and what comes out of it is understandable in terms of sort of like the cost-benefit analysis or whatever.

[00:17:44] But the actual creative that gets put out has to be diverse, so that's already part of it. And the system is like, is pushing towards taking more swings and doing more things. And so I think that, like, I don't know, it feels like it sort of solves that tension between the left bl- brain and right brain there by making the actual process of creating or producing it more understandable.

[00:18:04] So I'm curious in-- You know, I say all that, but, like, I'm looking at the kind of the results slide of this assessment that, that we're we're talking about here. And, you know, having clicked some random buttons, I have a forty-two out of a hundred creative score. What-- How do we interpret the scores, kind of like the different sort of tiers maybe, or grades of score that you could potentially get on this assessment?

[00:18:30] Ian: Yeah. So I, it's funny, I, I used to have a a boss that would say to me, "Hope is not a plan," right?

[00:18:34] Which I think is very true, right?

[00:18:36] And but then I think to take that a step further, that plan can come in very different evolutions and phases and I guess w- levels of maturity is probably the right way to say it, right?

[00:18:50] So y- you may have a 40, and maybe you're, you're scoring really high in terms of your, your asset production and maturity in certain areas, but maybe have an, an area for opportunity in others, right? So it's not like a, "Hey, you're bad at this." It's a, "Hey, there's opportunities for you to improve in these strategic areas." And I think if you, you look at it in that way, there's, there's always going to be lower hanging fruit depending on, on who you are and where, and where you are in the score, right? So if it's on the proactive measurement that we talked about you know, in, in number three, which is the account health awareness, and you, and you talked about those five key metrics, maybe you're looking at one or two of them.

[00:19:30] Are you looking at all five of them? That's, that's just a really quick area that's an easy measurement, right? Like there's tons of tools that can get you access to, to metadata. And then I think with the right setup or working with the right teams, the right partners, that's an easy thing to measure. And if you have that, that pulse, now all of a sudden, okay, well I can check that box, I can check that box.

[00:19:49] And then you're starting to build those rhythms and just that 1% better every day is, is how you start to progress through, through this assessment. And again, like it's not, it's not like we're expecting people to score themselves and say, "Okay, well what do I-- what can I do tomorrow to get from a, a 40 to 100," right?

[00:20:06] You're gonna see improvement in your results if you go from a 40 to a 50 or a 40 to a 45 even, right? Like there's going to be material results on the tail side of that. But I think what a lot of brands that I've worked with need is a partner and a system that that kind of holds everyone accountable to these results, right?

[00:20:25] To those outcomes. If this is what you want, this is what needs to happen. We're laying the foundation and, and we know what needs to happen in order to achieve those results. It's just what's desire and, and kind of the, the level of focus that's required to get to that. And I think that's, that's kind of where you can also maybe think about where you might fall in that assessment is, okay, in order to get to call it 100, the priorities need to be set.

[00:20:48] Everyone needs to be bought into them, and everyone needs to kind of start executing on that on a day in, day out basis.

[00:20:54] Richard: Mm-hmm. Yeah, it also like, it gives a pretty clear sort of, triage prioritization, which I, I think is sort of what you're r-referring to, is that for instance, in, in this v-version that I just kind of-- Again, the answers are random, but a forty-two out of a hundred. But then it's very clear from kind of the breakdown of how I f- this particular quiz fell into each of those six pi-pillars that volume and velocity is just a huge issue for this hypothetical brand.

[00:21:19] Against some of the other ones have, also have poor scores, but this one is particularly bad. And so it gives like a pretty clear, maybe not a specific tactical executional path for you specifically right now, but it does give a pretty clear sense like there is an issue with the weekly cadence that we need to have more creative, as opposed to focusing on, oh, we gotta think about creating more marketing moments.

[00:21:44] Maybe you do, but right now, volume is going to be the name, the name of the game for you. So it gives a, a, at least a clear sense of like this general sort of realm is where I need to be focusing my efforts and kind of rallying the team around in order to get where we wanna go.

[00:22:00] Ian: Yeah, and I think the, the objectivity of, of working within these, you know, kind of more strict parameters and data gives you that clarity on what to work on next, right? Like it's not, it's not as subjective as just a, you know, again, to the finger to the wind, "Oh, well, this, this creative worked. They like this model.

[00:22:19] You know, I think, I think personally the video will do well because I've seen video work well over here," right? It's okay, well, no, we, we have a measurement system. We can objectively look at the data and say what's working and what's not. It's-- no one's taking it personally. You know, you are... It's expected to try to iterate, to test, see what's working, what's not.

[00:22:37] And to the point you made, what worked last week, a month ago, a year ago is n- there's no guarantee that that's gonna work tomorrow, next week, next month, next year. It's constantly evolving and constantly changing. And so

[00:22:48] this gives, you know, I think is another way you can think about it too, is maybe you score a 50 today, maybe you score a 50 a year from now because maybe you weren't keeping up with, with the requirements and the expectations of, of that measurement system, right?

[00:23:03] Like, it's easy to kind of back off of that. "Oh, we did this today, we got from a 50 to a 70," but then maybe next year, same time rolls around, you're like, "Man, performance is tanking. What's going on?" Well, I mean, this is a quick way to say, "Well, are we, are we doing these things day in and day out? Have we built those rhythms and those motions into every day and every week that we can ex- you know, not expect, but better predict our results," right?

[00:23:27] So...

[00:23:28] Richard: Yeah. All right, cool. Well, let's, So we're, we're rolling this out. I think, like, by the time that you all hear this podcast, this will be available. It'll be up on the CTC's website. So check it out there fill it out, and I think, like, ultimately, like, what, what we think that this can reveal to you is that what you believe is the issue with your creative production may not actually be the issue.

[00:23:48] I think that's a sort of a lesson. Like, if it's, "Oh, we, we don't have enough video," or maybe it's even we don't have enough volume, and that may well be true. But actually, the issue ultimately could be something else. It could be diversity. It could be your production pipeline. I bet for a lot of people, it's going to be not enough marketing moments.

[00:24:02] There's all kinds of little things that this can reveal about sort of the, the creative DNA of your brand and how that can be appro-- im-improved if not rapidly, then at least you can change course fairly quickly after doing this. So, Ian, anything else that you wanna kinda mention on this?

[00:24:20] Ian: No, man, I think it's-- The, the point at the end of the day is to move from placing bets to a more strategic investment. That's another

[00:24:28] way to think about it, right? You're not gambling. You're, you're rooted in data. You're looking at what information is available to you, and you have a plan to execute against that investment. So predictability, profitability are kind of the name of the game, and how can you maximize those in the long

[00:24:45] Richard: Yeah, that's right. All right. Well, that's, I couldn't have said it better myself. It's, it's not a slot machine. It's I don't know Maybe it's more of a, a poker than a blackjack or something like that. I'm not sure if that's the right analogy. But the idea is that, yes, you are able to take this thing that people have thought of as uncontrollable, mysterious, difficult to measure impossible to think of in any, any other way than a slot machine.

[00:25:07] That's actually not the case, and I think what this assessment does is give a clear sense of how you can think about creative objectively. So, check it out, folks. It's gonna be live, cometthreadco.com. Check it out. Ian, thanks so much for joining us. We'll-- I'm sure we're gonna have you on soon. But until next time, everybody, take care, and we'll see you