Performance Marketing Reboot - 7.18.24
A Marketing Newsletter for Performance Marketers Converting to Marketers™
Hi folks,
I’ve been a bit busy with non-work things lately, so we’re a little late in shipping content this month. The good news is the marketing world does not, in fact, slow down when I go on vacation, so I’ve got a lot to talk about (sorry).
On a personal note: I got to spend this past weekend in Yosemite National Park. It was my first time visiting the park and I am still thinking about the experience several days since returning home. What an incredible place. I will spare you all some marketing strategy insight tied to my time in the park, but go visit (even if you’ve been before).
Highlights:
TikTok shops - is social commerce finally breaking through?
“No One is On Snapchat” is a Myth - and more evidence on why audience matters.
The macro picture is (still) confusing + some data that may help you understand your business.
A Must-Bookmark page for all Marketers.
Test I’m Excited About:
If TikTok Shops is not on your radar, it should be.
I started my career at an e-commerce company called zulily, where we spent a lot of time studying what was happening with shopping on WeChat in China. We tried live shopping on social and it didn’t work (granted, this was 2014-2015). I separately have watched Meta and other platforms try to roll out commerce solutions - the story there the last few years was generally the same, at least at scale. Thus, when TikTok tried to bring shops and live shopping to the US (huge for them in Asia), I was highly skeptical. But the tide is turning, at least for social commerce (we’ll see about Live) and our own testing is starting to make me a believer.
We had one client partner with TikTok on a shops specific promo in May, which helped highlight the massive scale/virality TikTok shops provides.
Highlights (over 6 week period):
Shopify tracked TikTok Revenue scaled 880% QoQ
TikTok spend scaled 471% relative to baseline
Relative to a normal onsite sale, we saw 3-4x scale on TikTok specifically
What excites me the most here is the runaway scale. Of course there are plenty of caveats (promo, the product, CLTV etc), but when I see this type of outlier performance, I’m inclined to believe there is more here.
TikTok has long been “plagued”, at least from a measurement POV, by addictive browsing behaviors that prevent people from leaving the platform to go shop. Shops’ ability to shorten the funnel, attach products to creators, and keep people in-app looks like it may create a breakthrough in US social commerce. More updates to come on this as we test more.
Post I like:
This analysis from Measured featured in a Business Insider article and shared by Measured CEO, Trevor Testwuide. This hits on several elements that are critical to a modern digital (performance) media strategy:
Audience matters - it’s easy to look at social channels as interchangeable and directly comparable, but that is lazy thinking. Each network houses a very different audience and promotes very different behaviors. When you research who is on these platforms, the imperative for your business becomes very clear. We have an audience x channel infographic I’d be happy to share with folks if you DM me.
TikTok - is very hard to measure, and the effects look more like TV than other social media channels. You really need MMM or long-term conversion lift studies to evaluate the impact of the channel. I think most brands continue to be under-invested in TikTok due to these limitations.
Snap’s performance investments - are paying off. We see similar returns for our clients that are active on the platform - and this performance data is backed up by MMM. I encourage everyone to reject cynicism about snapchat, and look at it objectively for its strong, unique audience and now strong ad tools.
Macro Observations:
I originally wrote an entire section here detailing why I felt we were headed for a prolonged period of depressed consumer spending. Then I saw June retail sales data (+3.4% YoY, +0.4% MoM), spoke with a few trusted advisors, and decided that maybe I shouldn’t become a macro strategist and prognosticator.
All the above said, I will focus on the facts that we do have, which are impressively mixed:
Consumer spending data, not great: the $100k+ income group has buoyed spending growth, while the <$50k and $50-100k brackets are at or approaching 2+ year lows in spending (source: Morning Consult)
Survey data, not great: the $100k+ income group, responsible for most of the spending growth this year, is hinting at a slowdown in spending. ~31% of those earning $100k+ cited concerns around making ends meet in the next 0-6 months, up from 21% last year ( +47% increase YoY). Granted, consumers often act differently than they say they will in surveys, so this is a weak signal.
Services spending > Goods Spending, still: this likely comes as no surprise, as the experiences over goods, post-lockdown revenge tour continues.
The devil is in the details (or sector): this has been the story for the last 4 years and the trend continues. While macro, average numbers suggest growth, some categories are getting crushed. The below are MoM numbers which reflect some seasonality, but also highlight some of the categories that are slumping:
My Takeaways:
Mixed Sentiment & Noise = Hyper Competitive Environment: growth will not be easy as brands scrap for every dollar. And growth will largely not be achieved through micro optimizations or short term focus. Brands need to be thinking more strategically (longer term, bigger picture and holistic marketing i.e not just ads). Every brand breaking through the noise right now has done this - if you need examples, I can show you.
If you’re winning now, be very thoughtful: Success breeds competition, complacency and likeminded thinking. Your recipe for success today is being copied AND likely will not help you win 6, 12, 18 months from now. How are you evolving your strategies to stay ahead of industry trends and competitive copy cats?
Keep Your Eyes on Big Retail: If you sell goods, and don’t sell through retailers like Amazon, Walmart or others - what is holding you back? You may have good reason, but I’d encourage you to challenge your assumptions. Byron Sharp’s “physical availability” matters, especially in an increasingly competitive & tough environment. Reminder that 56% of consumers start their shopping searches on Amazon (eMarketer, Feb 2024), and 29% start on Walmart. Plus, both Walmart and Amazon posted double digit ecommerce gains in Q1…consumers love these marketplaces, and likely want to see your brand there.
Reading:
Trump wouldn’t ban TikTok? Without getting into politics, election odds etc, this is 1) a bit surprising and 2) has meaningful implications for us as advertisers. It’s clear TikTok will continue to be a policy focal point, BUT it’s possible the downstream impact to brands/agencies will not be meaningful.
June retail sales report - if you want to look at a more detailed view into specific categories (this is from census.gov).
How we’re using MMM to unlock TikTok: no surprise, but we consistently find that GA (last click or any out of the box MTA) undervalues TikTok by about 7-10x. WARC suggests it could be as high as 22x. If you’re on TikTok, you need to either build simple methods that help you trust its “working” (post purchase surveys, short term incrementality tests) or go advanced with modeling and MMM.
Reprogramming the Broken Marketing Brain: Paywalled, but another critical piece from Eric Seufert. In this, he details specifically how reporting systems built around customer acquisition are holding marketing back. I couldn’t agree more.
A must-bookmark link for Marketers: this is a compilation of Tom Roach’s (Brand Strategy @ Jellyfish) best LinkedIn posts. I think is a must-follow on LinkedIn and is one of the leading thinkers in modern marketing.
This Post re: Nike’s Struggles from JP Castlin: is a can of worms with regard to the true limitations and economic challenges of a pure DTC model. However, Castlin uses Nike’s (very significant) DTC challenges to highlight the overall limitations of the model - namely profitability, driven by high cost to fulfill and returns. The piece referenced on WARC is called “The Gravity of e-commerce”, if you have access to read/download (I highly recommend).
Thanks for reading. Don’t hesitate to reach out with questions.
Kevin