On this episode of the podcast, CTC Director of Growth Strategy Luke Austin sits down with Richard to identify the key characteristics of the brands that are best set up to thrive in 2024’s profit-first environment.
Watch on YouTube
[00:00:00] Richard Gaffin: Hey folks, welcome to the Ecommerce Playbook podcast. I'm your host, Richard Gaffin, director of Digital Product Strategy here at Common Thread Collective. Now, I'm joined today by our, sometimes on the front-lines war reporter Luke Austin, who's the director of Growth Strategy here at Common Thread. And Luke occasionally likes to drop in and give us some kind of updates from what he's seeing from clients on a day-to-day basis. And he joins us here today to give us his hot 2024 takes. Luke, how are you doing today?
[00:00:28] Luke Austin: I am doing. I'm doing good. I'm energized by the
momentum of this new year. We were just, we were just chatting through my four-month-old is, going through a bit of a sleep crisis and partly due to teeth pushing through her gums, which is a very uncomfortable experience.
So I have a lot of sympathy, but I don't have a lot of sleep.
But despite all that energized by this energy heading into 2024, and I'm stoked to chat about this topic today too.
[00:00:55] Richard Gaffin: And hey, teething, maybe is, is not a bad metaphor for what's going on with the e-commerce industry right now. Everybody's teeth are coming in, but it'll you know, result in a better outcome or whatever for us next next or this year rather. Anyway, I kind of mangled that. But the point is, it's a tough time right now, but if you can push through it, it's gonna lead to even better things.
And so I think that's kind of what you were talking about here in this tweet, which we're going to kind of Build this episode around a little bit. So I, I'm, I'll read it off at least the first one, and then we're gonna dig into three specific examples, maybe four or five too. We've a couple extras if we have some time.
But so I'm, I'm gonna read it off here. The brands that will re realize the most profit growth in 2024 are going to allocate the lion's share of their resource focus or their resource focus on amplifying their areas of strength rather than improving their areas of weakness. So that's the kind of fundamental thesis behind. The next three examples that we're gonna point out here. And, and to some extent this is always good advice, I think, to focus on strength rather than trying to shore up weakness. It's definitely a psychological characteristic of humans that we prefer to work on our weaknesses rather than growing our strengths.
Even though growing our strengths may be the most helpful to us, but I think Part of what we were talking about before we hit record is that 2024, it's gonna become crucial for us to be able to focus on the areas of greatest opportunity. So let's walk through, actually, maybe before we kick into the examples, why don't you talk a little bit about what brought this kind of thought on why you think now is the time to focus on this?
[00:02:26] Luke Austin: Yeah, so I, I think this . Is, should be the default orientation and, and should have been historically, but I think going into 2024, if we're, if we're zooming out and looking at the past few years, you know, broader sort of macro last year was really the tightening up and focus on margin, right? With the, with the, the years prior contracting, less, returning customer growth, all those sort of macro trends we've been, we've been tracking against the focus on profitability.
And and tightening in terms of cost ad dollars, et cetera. Last year was, was really the orientation. So I think going into this year we're sort of thinking on how do we, what is the incremental strategy or what does the focus need to be stacking on to that? And what's brought this up is usually at the end of a year, Q4, Q1 specifically.
Brands take a step back and look at their business performance and look for areas of opportunity heading into the new year. And for many of us, what that looks like is conversations in the context of benchmarks, right? Different, different reports or platforms that have benchmarks associated with different business metrics.
So we have, we have the GQ score. Many MTA platforms have benchmarks in their total dataset. We have a lot of benchmarks and stats as well. And, I think what's really interesting is when we all approach
benchmarks, usually what benchmarks do is highlight the areas of weakness or the areas of opportunity.
So there may be a list of metrics or there's 10 metrics. And two of them you may be performing below your industry or benchmark average. And so what the focus becomes in most cases is, okay, how do I improve these metrics against the benchmark? If I can increase my conversion rate for this product category, I. To be more in line with the benchmark average or my business average, then I should see higher growth and performance overall. Let's make that the focus where what, what I'd argue is that's that, it's a good question, but it's not the best question
to ask in terms of making an impact in this year. The better question certainly, in terms of the disposition would be, “Here are my 10 metrics. Here are the two I'm outperforming. My category competitors or the data set against. How do I amplify those and make those even better?”
And focus as little resource and time allocation against the lower performing be benchmarks and the majority of it, majority of it, on amplifying.
The areas of strength. I think that's where, where we're gonna start to see brands in 2024 propel themselves against their competitors and within their categories because they've identified that and chose to take this disposition, this disposition against those areas rather than the, the benchmarks areas of weakness trying to incrementally improve those.
[00:05:12] Richard Gaffin: Gotcha. Yeah, I think it, it sort of stands to reason when you like, look at that. Let's say your benchmark read out on your dashboard or whatever, and you see the ones that are angry and read
and negative and that feels bad. So you wanna try to fix those. And I think fundamentally, like it kind of makes you feel like, Hey, if I don't resolve these issues with, with the weaknesses, it's going to kind of cause the entire thing to collapse.
But it sounds like what you're saying is that that's generally not really gonna be the case.
[00:05:39] Luke Austin: Yes. And, and there I, I will add, like, I don't wanna add too much nuance in or else this idea becomes less interesting, but
But there will be the like, mission-critical things that just need to be solved for. And like when you look at broader, like. Business metrics, like how we do this a lot is with four-quarter accounting, right?
And we, when we look at the cost of delivery or opex, like there are gonna be those mission critical things where it's like, my cost of delivery is, is 65% and way above where we'd recommend it, recommend it being that that needs to be a focus. It's, but it's more so within the, within the areas that are a subset of those business metrics, right?
We're usually not looking like, oh, hey, my cost of delivery like. Let's focus or not focus on that, but more so here's my conversion rate, here's my AOV, here's my 60-day LTV, here's my budget allocation between platforms or by month. Those subset of marketing metrics specifically that's where I think this disposition and this sort of framework becomes super important or else time can be spent on things that are much less impactful than the other metrics might open
[00:06:42] Richard Gaffin: Well, and actually, so I think this is one That this is a good indicator of like why these specific examples that you list out are important because they're good examples of ways that you can take that. Taking advantage of the strength or rather the weakness associated with maybe these examples is not mission critical in any way, but it does tend to draw eyeballs when thinking about decision-making pro the decision-making process.
So let's start with example number one. So. This is really, this example is really kind of about marketing peaks. So I'm gonna read off what you wrote here. Every brand has a relationship between spend and degrading acquisition efficiency. This brand's acquisition efficiency in January degrades at a lower rate than April, meaning they can spend more at the same A MER, that's acquisition marketing efficiency ratio. Don't try to make April, January, make your January even bigger. So unpack this for us. Like what? Like how does this play out?
[00:07:33] Luke Austin: Yeah, so what, what this is referencing is our spend aMER models the custom models that we develop here for the brands that we work with which helps to set budget allocation for brands for every month of the year based on three different optimization scenarios, maximizing contribution margin in that month, maximizing new customer revenue at break, even contribution margin in that month, or, or maximizing.
Contribution margin within a specific LTV time window. So this specific example, what it's showing is that in January of 2024, for this specific brand who's in a personal care space, they can spend $560,000 at a break-even contribution margin or better within that month. Whereas in April, they can only spend $440,000 at that same level of aMER efficiency.
So that's an increase of 25%, somewhere around there, a little over 25 percent in ad spend that they can push in January. Versus April. And there's a few things that this are tied to you. You mentioned marketing peaks and moments, which is absolutely gonna make an impact, right? When your marketing calendar lends to different times of the year.
That's gonna happen for this brand. They do orient their marketing calendar around these times of the year, but this isn't due to them running a big sale in January, for example. This is really due to the product category and the seasonality, being in the personal care space, new year, new me all, all of that stuff, and having the push in January.
Creates this sort of category lift for them that allows them to push more into January versus versus other months. So it really is this sort of based on the product and the category that the brand is in. There's these, seasonality-related superpowers and lifts that they have innate to them that other brands don't have.
And so a brand that sells a lot of summer clothing doesn't get the same sort of composition in terms of their business strengths as this personal care brand does in January. Okay, so what that means is instead of approaching the budget allocations and what, what can happen a lot in these conversations is, okay, our, you know, April is one of our lower spending months.
For this specific brand example, we spend 440 k, we spend over half a million in in more, most other months in early Q1. How do we not have such a big drop off in our April ad spin?
That, that can very easily become the question that that gets asked. When we look at the spend MER model that's showing this discrepancy between January R and April spend, how do we not experience this big of a drop off in our April ad spend, which then leads to a drop off in April, new customer revenue?
How can we, how can we kind lift that and keep, keep our, our new customer realization more, more flat? Not a, not a bad question, but the argument here is that's not the best question to ask. The question, the, the better question to ask is how do we make our January even bigger? Don't try to make April, your January, if you're this brand, try to make your January even bigger because you have these, you have this lift due to the seasonality and the category you're in.
Based on your historical performance, that it's much more likely that instead of spending $560,000 in January, if you focused on aligning your marketing calendar, your creative assets, all the other marketing levers, focusing that on making January better, you could spend 600 K, 650 K and lift your new customer revenue a lot easier than the effort and budget allocation is gonna take in April to have the same sort of lift
[00:11:08] Richard Gaffin: Right. Yeah,
it, I think with these A MER models too, like I think what you're trying to do when you, when you maximize spend or when you grow, spend rather over the model, is you're trying to beat the aMER projection, I would imagine, right?
Because according to our projection for January, let's say in this example, were we to spend more, the idea is that aMER would then drop below the sort of ideal levels, but my sort of what I'm getting from this is that in January, the likelihood of your advertising being more efficient than expected is much, much, much more likely because of the seasonality of whatever product is you're trying to sell. Whereas the idea of somehow getting efficiency gains in April as you grow spend is that's kind of more of like a losing proposition.
Does that make sense?
[00:11:51] Luke Austin: Yes, exactly. Sort of like just adding fuel to the fire
rather than trying to make like your little backyard barbecue into a bonfire, right? Like you already have this roaring flame in January. You can like just throw like logs there and it's gonna devour them and eat it up. You just have this momentum that you can, that you can ride.
And whereas trying to push April into having that same level of momentum. In most cases, it is gonna require a lot more energy, a lot more money, a lot more resource allocation, all of those things.
[00:12:21] Richard Gaffin: Yeah. Okay. So the thought behind then example number two, it's, it's similar, but it has some, there's, it's a little bit different in the details, so I'll read it off again.
This is example two. Every brand and industry experiences a day of the week effect where revenue and performance on certain days of the week are stronger than others for this brand.
And, and Corey, if we can have you pop up the visual here for this brand. Sundays are the best and Wednesdays are the worst. Don't try to make your Wednesday a Sunday, make your Sunday even better. And, and in this particular example for our audio listeners, this brand, the difference between efficiency on Sunday on the rest of the days is dramatic. In, in fact, Sunday and Friday are their only looks like the only days sort of above average in terms of their revenue. So why don't you unpack this a little bit more. Like how does this differ then in, in terms of the way you think about it than the broader sort of month by month example?
[00:13:14] Luke Austin: Yeah, so same sort of idea broken down onto a daily and weekly basis rather than sort of like the calendar month and year planning. But this day of, day of week effect report is in, is in stats. So we can look for every brand and every industry. That we have as subsets within stats and look at what is the day of week effect for that specific brand and industry.
And every business, every industry has a really interesting behavior in terms of the ad performance in terms of the revenue and spend that they can get through on certain days of the week versus others. It's, it's really, really fascinating. And I think . One, one way where this idea can connect to be a bit more specific and tactical is, let's think about it in the context of Black Friday and Sour Monday, which are days that we're all very familiar with and that we all know have really different
Revenue contributions, right? So the, the idea around Cyber Monday is you get this massive evening bump that you don't experience on any of the other days over BFCM weekend, right? This is something we were tracking against a lot. Most brands see this, where you get a late in the day bump on Cyber Monday.
And much of that is due to, well, one, it's the, you know, the end of B, f, C and weekend. So it's sort, sort of folks waiting for that final offer. But then two . Folks back at work, right? Have different obligations during the day, and then those evening hours have have opened up more, and that's where a lot of that demand is captured.
Whereas Black Friday is, is less so, that way. And then the weekend as well. Those days are a lot more flat in terms of the revenue contribution per hour. And then Cyber Monday has just this, just massive bulge at the end of the day where this revenue is captured. And so. What's happening is there's, there's really specific consumer behavior things that are happening on each of those days that make the revenue contribution and performance different.
On Black Fridays every Monday, Monday weekend. So this idea for the day, day of week effect is along the same exact lines where every brand has a very different, really different demographic that they're going after, right? Breakdown of male versus female of the age ranges, which, which within those customers.
That in itself is gonna create interesting dynamics in terms of the time of day that your customers are shopping and even the day of the week that they're shopping within, outside of just the demographic. And then there's the product and category consideration where there's likely certain days of the week where for your subset of customers, they're thinking more about certain products versus others and converting on certain products versus others as well.
You have different time windows during, you know, a workday scrolling through their phone on a 10 minute break, whatever it might be, versus . A week in and you have a couple hours and are doing more research, like there's gonna be very specific behavior related items for your customers that are gonna lend to this.
And those are just two examples. There's, there's a bunch of other things that could potentially impact this as well. What that leads to though is a really a really clear breakdown of your strongest days of the week and your weakest days of the week. And again, going back to this main idea, if you look at your benchmarks.
It could be easy to say for this first example, Wednesday is our worst day. How do we get Wednesday to be more in line with our baseline average of revenue, contribution and performance? But I would argue the better question is how do we make our Sunday even better? It's our best day of the week. There's something going on there.
Let's amplify that. Let Wednesday stay where it's at, because there's probably something going on with Sunday where we can ride the wave and see an even bigger contribution in terms of revenue and performance on that daily week specifically.
[00:16:57] Richard Gaffin: So how do you think about like executing against like a, a day of the week or taking advantage of the days of the week that are most like opportunistic for you? So is it just a matter of like, you just, we crank spend on Sundays and we pull it back on Wednesdays? Or like what el what other things can you put into place?
[00:17:11] Luke Austin: Yeah. So, uh, I'll start there on, on the tactical side of things like . I, I think cost controls like lend themselves to this
argument pretty clearly as well. And that's a lot of times where we tie this in, where it's like, have the budget set on your campaigns, have your cost controls, and when the performance and demand is there, it's naturally gonna spike up and down.
And folks who use. Cost caps, bid caps are roas consistently in half for a while. You're already seeing that in your accounts where you're like, oh, this is weird. Like, certain days are just better than others and spend more. But I'm not really pushing any buttons. So I think that's on meta, that's a case to be made on Google.
- There's a case to be made to make sure to have the same budget allocation available so that you're not running out of budget on those bigger days of the week. You don't have search impression, share rev and revenue lost to budget on your core campaigns. So those are tactical ways that you can sort of make sure the counts are set up correctly.
Outside of the this though, like it really goes back to the marketing calendar and what are the . What are the moments and ways that we can lean into Sunday even more.
And you can do that through the sequencing, your marking calendar, your email, email, syn, cadence, like all all of those things.
But personally, like I, I would really want to understand why and, and for your brand, you need to go directly to the customers to to, to get that information and better understand that. So, doing diligence on the breakdown of your demographics, age ranges, subsets of your customers per product category, understanding who those folks are, that, that might be converting more on Sundays versus Wednesdays, for example.
And then outside of that. I think one of our, one of our partners, no Commerce this is a really helpful way that their post-purchase surveys can be utilized as well, is is to look at what, what folks are saying and ask questions directly related to this uh, as well to, to see what the impact could be on those days of the week.
- And then, and then calling customers. Like I've, I've worked with several brand owners who are so connected to their customer profile and their customer makeup that and, and part of that was just because of the connection they had via phone calls and would be diligent about you know, every week calling three to five of their customers uh, chatting about them, why they love the brand.
And, and so I think that's, that can be a way to get closer and find out who these folks are, why they're converting these days, and then how you can amplify that by additional offers, additional communication via email, SMS on those days.
And then of course, having your account set up tactically as well.
[00:19:46] Richard Gaffin: Gotcha. Yeah, there's an interesting, it strikes me there's an interesting, almost like detective game to be played here of looking at the type example one, so like the sort of the monthly cadence, like where the peaks happen, and then example two, which is the day, day of week, and then guessing what industry the, the brand is in, you know. And I think like,
[00:20:03] Luke Austin: yep.
[00:20:04] Richard Gaffin: I th the point there is like, like kinda you're pointing out there is, as a brand, you yourself have more detective work that you can even do. Like, there's some mysterious stuff on this, frankly, like, why is Sunday so good? But Saturday's not good at all in this particular example. Um, you know, so the, the simple explanation is that like when you're buying products personally, when you have a lot of personal time, you're going to buy those products.
But that's not necessarily the thing that is happening here. So anyway.
[00:20:29] Luke Austin: And just to add onto that, it's really interesting. So a way that this comes into play is one of our customers, Travis Matthew, they a lot of their, their folks buy their, their clothing for golf and Sundays are the best day of the week for them. And I think that's really interesting. It ramps up actually Friday and then Saturday and Sunday, and then it drops back down.
But when you think about when the golf courses are, are most crowded and when most people go out and play golf, and even brands like Sunday Golf and other ones that really have attached themselves to Sunday as that day where you're golfing people are thinking about either by playing golf, watching golf, or just thinking about golf more on Sundays.
And likely that's what's leading to the higher conversion performance that they see during those days. Which, which is just really fascinating. There's a really like real-world impact that's leading itself to this data.
And they could orient their marketing calendar, they could orient everything around that if they really wanted to double down on that natural trend they're seeing from their customers.
[00:21:25] Richard Gaffin: interesting. Yeah. All right. For all our listeners out there, figure out what is your day of the week. Which one do you own? And figure out how to lean into that. Okay. Let's, let's, let's move on to our last example here. So, this is around product-specific LTV. So I'll, I'll again, I'll read this off. And then Corey, if you can put the graphic up, the product a customer buys on their first purchase substantially impacts expected LTV, in this case, customers who buy product three. So in this example here, we have five different products and those, this is a status readout and so Customers who buy product three contribute 49% more revenue within 100 to 80 days, versus customers who buy product two, don't try to improve your product to LTV. Focus on selling more Product three. So we talk about SKU-specific cohorts all the time, but talk a little bit about how you would execute against this or what, what kind of tactical decisions does this example lead us towards?
[00:22:20] Luke Austin: Yeah. So again, going back to the framing this in, in light of benchmarks, it could be really easy to look at this visual for this brand. And I don't have the totals here in this screenshot, which, which I could add in.
But essentially what you'd be doing is looking at your 180-day LTV. For this brand, it's probably somewhere around 200, $200 in terms of average between their five top product categories.
So the average for this brand, top five product categories, let's say it's a $200, 180-day LTV. So when you look at this report, product two is at $156. It is the lowest of all the product categories in terms of a hundred ad day, LT, v contribution. So. Naturally, the question could become, okay, product two is the one that is lagging the most in, in our top five product categories.
How do we increase product twos? LTV closer to the baseline of that $200 versus product three in the screenshot being at $233 is substantially above the performance of the other cohorts. And so the other question could become, and what I'm suggesting is the better question is how do we just sell more product three?
Because there's, there's something about product three. That's leading to this higher value of customers over this time period. Part of it is the initial the initial value of the order. And then likely, the thing that most contributes to LTV is the product itself,
the experience of the product itself, the quality of the product, the nature of the product within the category versus competitors as well.
And that's not something that's gonna be easy to improve for product two, you're gonna have to try to think about how do you increase the initial AOV of that product which is a challenging a challenging problem without dramatically infecting the, affecting the conversion rate. And then you're gonna have to think about, how do I increase the LTV, which is most closely related to.
The product composition itself. How do I improve the packaging? How do I prove if, if it's a consumable, how do I improve what the product's made of, right? And the experience of it for customers. That's, those are really, really challenging problems to solve.
What if you said, no, I'm just gonna focus on selling as much product three as I can?
It's our, it's our best product, converts to the highest rate. The customers come back at the highest rate for that. Let's focus our budget. Let's focus our team resourcing. Let's focus our creative resources on driving the highest volume of product three that we can, because there's already something there that is a strength in comparison to our other product categories.
[00:24:49] Richard Gaffin: Yeah, no, I think, I think this is a, a really good example of that because uh, like you were kind of pointing out product two, so this is the product with the lowest LTV is already also the lowest a OV product, which is like one explanation maybe for why it's, why it's lower, but also the percentage gain over a period of time. I. Is again, much lower. So
the reason I point that out is that the, the hill that you would have to climb in order to get product two to the level of product three, because you're starting out at a lower a OV, that is gonna be a much, much more difficult proposition. To even get that to a place, it would have to grow substantially more over 180 days to even kind of come nose to nose with product three.
So again, it's all, all a matter of just like harnessing This is, I don't know if, I dunno if you, Luke, have ever read Breakthrough Advertising by Eugene Schwartz. This is an old copywriting creative manual from like the fifties. But one thing that he says that has always struck me is the idea of marketing is about harnessing forces that already exist. It's sort of like, hey, we build I don't know, windmills that harness the, the wind or something like that. Or we build a plant that harnesses water for energy. And I think like everything that we're pointing out here is an example of that. Taking a force that already exists, buying patterns that already exist in your industry, preferences around product, and then just leaning into that and harnessing the energy there.
And I think the, the flip side of that is that if you, if you say like you build a windmill in a place with less wind, the windmill is never gonna be able to work faster. And that's kind of what we're talking about here. I was gonna say too, with, with the product example as well, we have .At least I worked on in the past one brand that made sports bras.
And one thing that they discovered was that women like to buy a lot of sports bras. And it's not necessarily that they've worn out, it's that they like the different colors or they buy different colors when they start liking a product. So leaning into that product made more sense. So there's things specific to the product itself that may lend itself to repurchase as well.
[00:26:41] Luke Austin: Yeah. And that one, that, that example's interesting too, because I'm assuming for that, for that brand, I think I know which one you're talking about. They have other products that are higher A OV. Initially those products would drive more if they're selling other ath lei wear. But if the sports bra have that much of an increase in LTV in the repurchase rate that's on, that's gonna show up in that LTV window.
And trying to get the percentage lift of leggings to the same rate as sports bras or what, whatever the other products might be. Or inversely trying to increase the a OV of sports bras without that impacting LTV. Like, those are really challenging problems to solve.
So to your point, how do we, how do we harness the energy that's already there?
And then, and then try to lean into it to make those strength areas even stronger for us because . They're already a competitive advantage. And what a lot of brands wanna do is let's hedge our betts, let's add other product categories 'cause we need, you know, a larger assortment to compete in this space.
No, you have a competitive advantage and a foothold in these certain areas. What is your day of the week? What is your strongest product? What is your strongest month based on the seasonality harness, those time periods, because you're gonna be able to beat out the competitors . In your space with a lot less resource and, and, and time allocation than, than trying to move the, the weak areas.
[00:28:02] Richard Gaffin: Yeah. Okay. So let's, let's talk real quick about that fourth example that we discussed before we hit record, because it takes another angle on this that is interesting because it's around, sort of, around media buying a little bit. So why don't, why don't you, let's jump into that, unpack that a little bit.
[00:28:15] Luke Austin: Yeah. So, this brand example. They sell primarily to Min and they have low repeat revenue. It's, it's it's predominantly new customer revenue driven in terms of the brand's growth.
Strong returning customer revenue, but new, the new revenue cord's a lot larger. So those two factors are at play and. Their A MER new customer acquisition efficiency and their Facebook roas are in the top percentile of our brands. They outperform brands within their category and otherwise substantially at growth over time.
And it's really incredible how they do that. There's a lot of reasons why that's the case, but one of them is that they sell to men who have cheaper CPMs on meta than than the female audience does. So with that we've been, we've had conversations and what can what many of us have had conversations around is channel diversification, right?
We spend primarily on Meta and Google. We wanna spend on some other channels to test them out. Snapchat tv, TikTok Criteo ever. It might be to see if we can find some traction on those channels. Now, what do we all know about ? New channels are, new marketing initiatives in general is they are inefficient to start out.
It takes time to learn. It takes time to build up the optimizations of the campaigns, learn what creative works in those platforms, so there's going to be that degrading efficiency to start out for this brand. Really the, the question should be. We have outperforming new customer acquisition efficiency.
And part of that is because we have a really good product that we sell to a customer of to a group of customers on Facebook that is cheaper than many brands have access to. Let's lean into that as much as possible. While that opportunity exists because it is a strength and something that they have competitively in the market that many brands don't have who are paying 50, 75% more on CPMs just because of the space that they're playing in and the customers that I. They sell to. So in terms of a, a, a budget allocation and channel diversification versus channel focus conversation the, the same principle applies where the question is, what is the thing we're really good at that other customers don't have? And for this brand, that is a superpower of theirs on meta that
For them to lean more and more into, would most likely get them the furthest in terms of growth versus others in their
[00:30:40] Richard Gaffin: Right. I think that's an interesting example because as you were sort of alluding to like this particular brand really wanted to diversify and that was an important part of their strategy when an actual, an actual fact, like what we were kind of pushing back with was to say, actually you need to do more of the same and do it harder because it's going really, really well.
And sometimes it's a hard thing for brands to hear, because I mean, to some extent I do suspect it's just 'cause they're bored of doing the same old thing or they suspect that there's an opportunity that's kind of like they're going to miss if they don't get on certain trains. But one question I did have that, I think this whole conversation begs a little bit, and it's related to the the question I had at the beginning around weaknesses. At what point do you make the decision. To say that I actually truly think that we're, we've hit the ceiling on this opportunity and now we can focus on our, on our weaknesses and shoring those up. Not necessarily the same as, oh, hey, these things are mission critical. Maybe they're not, but let's say like, at what point do they say now it's actually, maybe it is a good time to, to expand or to, yeah, grow new channels or try a new day or whatever.
[00:31:49] Luke Austin: Yeah, it's a great question. The timing, . The timing of it is really difficult. And to that point, many times when you're asking that question of, okay, should we be looking at other options, it's already too late or getting close to too late because there's indication that something isn't working. So in most cases, you actually want to have those additional options available to you before you get to the situation where you're asking about additional options that can help us to course correct, because there's most likely already some sort of pain point.
That's, that's pushing in that direction. So that begs the question how, how to bring these new initiatives or opportunities into the like tool chest or the, the levers that brands have to pull without siphoning the resource and time allocation from the core focus areas. And I think that that to me how I've seen it done well is not so much in terms of
Timing or a certain performance threshold or efficiency, efficiency, efficiency threshold, but more so, in regards to a, at every time devoting a specific and defined amount of resources and time to those activities, but not exceeding that. Because what can happen is the problem areas or the weak areas, a lot of times can get the lion's share of focus, or at least the attention for a certain time will go over there.
So I'm not advocating for it, take those out completely. But I'm saying in terms of the key focus areas of the brand, don't make those, them have have something in place where we say, okay 10% of our media budget goes to testing X. Right? Like a lot of brands have that sort of testing rule. . And so similarly for new initiatives, channel expansion, et cetera, I, I think having a defined amount of time and budget allocation that's gonna go into those in an evergreen constant basis is really important so that you have those levers available to you when those, those situations come about.
But being really diligent to make sure that the time, focus and money allocated to those doesn't exceed, exceed that predefined, that predefined amount or else quickly, it'll become, the 10% will go to the 20% to the 30, and then all of a sudden there's more money being put into the problem area, which makes it more of a problem area.
And now that has 80% of the resources and you're trying to make your, your Sunday, your Wednesday. And and we've, we've just gone back on the thing that we said we're gonna focus on for the year.
[00:34:17] Richard Gaffin: No, that, that makes sense. Like approaching those problems with the understanding that the opportunity there is incremental or even Totally speculative what, but that doesn't mean that you shouldn't be looking and shouldn't be attempting to put, put the amount of effort towards it that the opportunity demands, which is not nothing, but it's also not everything and it's not even close to being the majority, I think.
[00:34:38] Luke Austin: Yeah.
[00:34:39] Richard Gaffin: cool. All right. So I think, I think that kind of covers it. Is there anything else you wanna pull out here? Anything to summarize? Any last piece of advice you could leave to the folks?
[00:34:50] Luke Austin: I would just say that for me, this thought exercise has been, has been really fun. And I would encourage those of you who are still sticking around and listening to us in this conversation to be really dramatic in brainstorming around this idea and how we were tossing this around is like for, for, um.
Uh, the personal care brand that we talked about earlier where they could spend a lot more in January versus April the same efficiency, right? Rather than saying, Ooh, let's maybe move 10% of budget from April to January. Like, maybe that's where you land. You know, like something along those lines. But in the early stages, I would, I would encourage you to be really dramatic with your ideation around this.
What if we cut our April? What if we cut our summer budget in half April through August and allocated all of the, all of those dollars, which would probably be close, you know, for this brand, upwards of half a million dollars in advertising to Q1 and riding the wave that exists for them in the, in the, in the season.
What would need to happen for that to be true? What marketing moments could we lean into? What's the incremental performance we could see? Think about this in big swing opportunities because I, I really am fascinated by this idea and I, I want to see more brands in 2024 have marketing calendars and budget allocation plans that, that just kind of look crazy from the onset.
You're like, wait, wait, wait. You're spending $150,000 in in January and a million dollars in in June? Talk to me about that, and it's informed by all of this where. The seasonality picks up in the summer months, and it's a clothing brand that lends itself to that time period. And they have marketing moments that align with it.
And January through March, they like run efficiently. They don't try to push a bunch of budget really efficient from a contribution margin standpoint, but summer is where it's happening for us.
I'm, I'm, really I'm really interested in seeing more of that this year and I think we are going to, as brands find their, their strength areas and, and, learn to ride those waves more.
[00:36:52] Richard Gaffin: There you go. All right. Maybe a little homework. Everybody go out, find your strength area. What's your big day of the week? What's the month that's most important to you? What's the product that people come back and buy the most? well Luke, thanks for joining us. And thanks to all the folks listening.
Luke, we're gonna Be hearing a lot more from you this year, as I understand it a lot more frontline reporting as we kind of watch how these types of trends unfold over the coming year. But all right, everybody, appreciate listening and we will see you all next week. Take care.