Issue 14 - Fresh Features & Financials

April showers big May flowers. And more Meta mischief and machinations, apparently.

Alliteration aside, this week we take a look at some new features popping up on DTC’s biggest ad platform, as well as a new bug hampering ad accounts (because it can never all be just good news).

Beyond advertising opportunities and anxiety, we share some killer financial growth resources. Want to learn how to build the ultimate P&L? What should you do if your growth stalls?

Intrigued? Read on…

1. Meta’s new AI and Shops

2. Bugs & Learnings

3. Financial Strategies For Growth

 Meta Leans into Shops and AI

Meta Shops Optimization

Peter Czepiga shows you how to leverage Facebook/Instagram Shops via Meta Checkout in this thread.

• Peter highlights the ability to target shop destinations through Meta's "web+shop" adset type. Unlike TikTok Shops, this isn't a separate campaign, allowing seamless integration of web and shop ads.

• Also, did you know Meta is apparently offering 20% off to users to buy via Meta Shop? Here’s why they are so keen to offer this incentive according to Eric Seufert.

Generative AI in Meta Ads Manager

Ad creative mastermind Dara Denney recently introduced the rollout of generative AI features in Meta's Ads Manager which should be coming to all advertisers soon.

• Check out her full video breaking down the new features and taking them on a test drive here.

• Jessie Healy elaborates on the AI update, noting 4 intriguing capabilities: new image variations based on original creative, text overlay capabilities, text generation for headlines, and image refitting for different aspect ratios.

Takeaway:
Marketing tech is constantly changing and evolving, especially since Meta is not resting on its laurels as the Gorilla in the room. The new AI enhancements in Ads Manager and Shops capabilities are worth a spin to see if they can aid your efforts.

Bugs and Learnings

A new Meta bug just dropped

David Herrmann recently ran into a significant bug in Meta advertising, affecting account operations without response from support.

• Unfortunately, there isn’t much you can do when random messages like “Oops, we can’t find a funding source for your ads” crop up in your ads manager.

• Stay vigilant, harass Meta support, and see if you can deploy some spend in other channels in the meantime.

Google vs Meta attribution? Meta wins.

At least according to this Tweet from Taylor Holiday:

• Related: In an effort to help Google improve its ad platform, Taylor recommends four fixes:

  • eliminate Branded Search as a paid product

  • bring back Standard Shopping as a hero

  • default more shopping intent searches in the “Shopping” tab.

  • build more robust shopping products that include Youtube videos.

•  Reading between the lines, Google needs to focus less on the “easy money” that is Branded Search because it tends to be nominally high in terms of ROI, but is actually lousy at driving real, incremental revenue. Catching up to Meta will mean creating ad products that are truly useful in terms of creating awareness and demand.

Does advertising on Meta help lift Amazon sales? 

Yes says a recent study by the attribution and incrementality platform Haus. In fact, Meta ads can have an even greater impact on Amazon over DTC for omnichannel brands. From the study:

• This is encouraging news for brands that run Shopify stores and Amazon sales simultaneously. If Meta campaigns have a strong “halo” effect on Amazon sales, it drastically increases the overall efficiency of your marketing efforts.

Takeaway:
As always, keep an eye on your ads manager because even though Meta is the biggest (and probably best) platform to spend your ad dollars, it is still often beset by bugs.

Take steps to understand attribution and lift impact when it comes to your ad spend, especially if you are selling through more than one channel. And…don’t be fooled by those gaudy Branded Search ROAS numbers that Google reports.

Financial Strategies for Growth

Optimizing ROI and Retention Upsells
Daniel McCarthy discusses the impact of retention upsells on ROI calculations.

• He explains how brands focusing on optimizing for retention can skew ROI figures, essentially deferring initial acquisition costs to later stages, which can be misleading if not accounted for properly.

• What does that mean exactly? His conclusion:

• You can find the whole article here and a spreadsheet for calculating marketing spend ROI here.

Building the Perfect P&L for CPG Brands
Drew Fallon of Wayflyer and Iris Finance recently took a deep dive into the financials of 7,000 CPG brands to define the “perfect P&L” across 9 DTC categories.

• His extensive review provides tailored advice for improving bottom lines, an essential framework for strategic financial planning. Find the 85-page report here.

• What happens when growth stalls and your P&L starts to drift into the red? The latest Bridges episode with Taylor Holiday goes in-depth into “the hardest problem to solve.”

We recommend watching the whole thing, but here are some highlights:

• Restarting the growth engine is crucial for long-term success. By focusing on new customer acquisition, DTC brands will expand their customer base and drive future growth. Setting realistic goals and understanding the relationship between CAC and revenue is essential.

• Tracking key metrics such as contribution margin, new customer acquisition cost, and customer retention rate provides valuable insights into the health and growth potential of the business. These metrics should be included in regular reporting to monitor progress and make data-driven decisions.

• Collaboration between marketing and finance is critical throughout the entire process. By integrating finance metrics into marketing dashboards and vice versa, both departments can align their goals and work towards a common objective.

• The ultimate goal is to achieve homeostasis, where the CAC, Opex, and profitability are in a healthy balance. Maintaining a lean Opex, focusing on new customer acquisition, and monitoring key metrics can lead to long-term success.

Takeaway:

We’re as guilty as anyone for overly focusing on marketing spend, but running a DTC business goes beyond ensuring immediate marketing ROI. Understanding the detailed components of your P&L can guide better decision-making for sustained growth.

Quick Hits

• The top 6 e-commerce thought leaders you should follow on X (Twitter).

• The 6 big ideas leaders can take from the Netflix culture document via Mike Beckham of Simple Modern.

• Ben Sharf of Platter shares the 3 features on Shopify stores that tend to have the highest impact on conversions.

• The DOJ shared their arguments on why they consider Google’s ad platform to be monopolistic.

• Are you a DTC brand looking to get into physical retail? Eye for Retail argues you need to optimize for velocity (speed of sales) over distribution (volume of stores).

• Johnny Hickey is putting together a list of recommended DTC agencies. Check it out here.