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How brands are blowing up without Meta
Keurig buys Ghost, Belliwelli gets to Series B, the election spikes CPMs
The DTC Times
October 27th, 2024
So you want to scale your fresh, new CPG company do you? Better get good at Meta media buying and ad creative, right?
Not necessarily.
DTC exploded about 10 years ago thanks to the emergence of insanely powerful social advertising. Drop shippers and digitally savvy upstarts rushed into the space as everyday consumers became more and more comfortable with buying online.
Shopify appeared on the scene and made it much, much easier to launch and manage an online store.
As the industry matures, there remains a reliance on Meta and digital advertising in general. Around 70% of DTC ad spend goes to the Meta monster.
And there’s a good reason for that - Meta’s advertising platform is the most sophisticated the world has ever seen.
But things aren’t as easy as the early dropshipping days. CACs are growing all the time. Competition mounts. Finding other ways to grow while maintaining your margin is becoming necessary.
Today we talk about a couple of CPG brands that did just that, using both old-school and new-school methods. And how it’s led to a big money acquisition and a series B raise.
Oh yeah, and the election is impacting CPMs (because most folks still advertise on Meta).
Today:
Keurig acquires Ghost Energy ← 4 years to a 10-figure exit via differentiation and distribution
Belliwelli Raises $10M ← Without spending a single dollar on ads (find out how)
The election is impacting CPMs ← Find out how much
Quick hits ← Winning hook formulas and what kind of ads Boomers like.
KDP Acquisition of Ghost Energy
Keurig Dr. Pepper (KDP) just acquired Ghost energy drinks for very nearly a billion.
Is that crazy?
It’s rumored to be 3X their revenue, so for CPG, pretty big. Not crazy. Humm Kombucha sold for 3.75X and Nutpods for 4X. It does dwarf other M&As in the beverage industry though (source: Drew Fallon):
Ghost only launched their energy drink line about four years ago, so the very brief time horizon to a massive exit like this is what is truly noteworthy.
Here are the acquisition details: KDP gets a 60% stake in Ghost for $990 million now, then gets the remaining 40% in 2028. They’ll also be injecting $250 million over the next year to transition Ghost’s distribution network over to KDP’s.
In other words, the total acquisition could amount to $2 billion+.
How did Ghost become so valuable?
Ronak Shah, CEO of Obvi weighed in with some thoughts.
They’ve only been around for 4 years, and get this: it wasn’t about scaling on Facebook.
Instead, Ron notes killed it with 4 fundamental tactics:
Differentiation
Energy drinks have been getting big. You don’t need us to tell you. Their trademark characteristics: flashy packaging, ads that make you think you’ll become some kind of superhuman and… unhealthy ingredients.
Ghost kept all the good stuff and did away with the bad (plus some nootropic and vitamin supplements).
They walk a fine line between the “healthification” of energy drinks and the “candification” of supplements. The candification theme held strong as they released sweet-flavored powdered supplements (e.g. protein) co-branded with candy names like Sour Patch Kids and the like.
To top it off, Ghost describes itself as the “first full disclosure energy drink”.
Licensing deals
Partnering with known brands to create wacky “new” flavors (Sour Patch Kids?) gives people another reason to check them out and notice them on the shelves.
Brand
Building on this, they focused on brand over performance, tying their face to gaming crews like Faze Clan and music festivals like those of Insomniac Events.
Distribution
While all of this was happening, they sold a minority stake to AB InBev early to accelerate their penetration into retail. In year one. This is because a top sales executive of Ab InBev’s came across the drink while shopping and thought it was cool, then cold-emailed Ghost.
Gotta be good to be lucky and lucky to be good I guess.
Takeaway: The power of differentiation + brand + distribution + luck. Great formula if you can find it.
But in all seriousness, they put themselves in an ideal position for it to all come together, massive props to Dan Lourenco and Ryan Hughes out of Chicago.
BELLIWELLI Raises $10M w/ zero ad spend
Another candification winner.
Belliwelli, a fiber, probiotics, and collagen supplement brand just got a $10 million Series B cheque from Invus, a previous investor. The key to their success? TikTok.
"We're spending $0 on ads. This is just taking off, and it's because of TikTok," their founder Katie Wilson said.
My god, the margins.
Their TikTok looks like:
Walking up to people in the shopping aisle, making them put down the competitor's product and gifting them BelliWelli instead.
Dropping scoops into their drink on the spot and getting their genuine reaction to the flavors, live.
Going up and down the Walmart aisle and creating content with people who come through.
@belliwellihealth As soon as I realized…I happy cried #target #wholesome #viralproducts
Always featuring the founder. So you get that genuine, personal narrative plus the authenticity of people buying and trying the product in the wild.
Nothing groundbreaking. Just really effective.
They get about 40 million organic views per week.
Why they’re winning:
Candification (again): flashy pink and sleek-looking containers in an un-sexy category (gut health).
Instead of having to talk about “gut” and “health” they focused on an underused keyword: “fiber”. Which is genius because everyone feels like they need more fiber - someone just had to make it attractive for them.
They once made a viral campaign called “Hot Girls Have IBS” and according to reports, their next big one will be called “Hot Girls Need Fiber”.
Takeaway: The fun health thing is blowing up. Older brands like Mariani Packaging Co., a family-owned dried fruit company, now Probiotic Prunes, are finding success with it.
What other unattractive, drab, boring, categories can be made fun, exciting, and tasty? Think about it and maybe you can catch this trend.
Is the election affecting your CPMs?
Most of us still have to actually advertise on Meta.
Let’s check in to see how the US election is impacting things.
Cory Dobbin (ex-Shoelace CEO as of this week) shared their clients’ CPMs Aug-Oct 2023 vs. Aug-Oct 2024.
On average, CPMs increased by 32.4%.
With some notable outliers, but the trend here is strong. Is there any reason to believe this whole data set may be skewed? Not really. Shoelace serves all kinds of eCommerce brands.
Ah, but increased CPM might not mean increased CPA, right?
While that can be true when CPMs are driven up by “normal” things, like getting in front of higher intent audiences or seasonal demand spike that means so will purchases typically. So CPA remains relatively stable.
BUT when it’s driven up by a flooding of the entire North American ad inventory that has nothing to do with a demand surge, CPA’s might not follow.
As Kody Nordquist said:
Takeaway: Well, at least it’s over soon. And BFCM is just around the corner.
Who is your money on? |
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