What is AppLovin and why you should care

The next big thing. 

Sometimes it’s just a fad.  

Sometimes it’s real, but you’re too early in the Gartner hype cycle to take advantage. 

And sometimes it’s the crest of a wave you can ride. And being early is better than being late.

TikTok has been the “next” ad tech darling for a while. But there might be a new kid on the block. 

Today we look at what DTC some brands are calling the next major ad channel for e-commerce. We also share some key retention tactics and the challenges of retail (from a founder who has been there). 

Today:

• Is AppLovin for real? ← Meta-like results for early brands…

• How to marry your SMS and Email marketing ← hint Don’t treat them the same

• The pros and cons of retail ← What to consider if you’re trying to break into brick & mortar

• Quick Hits ← Find tips on how to lower discounts but kill it on BFCM anyways here

Is AppLovin the next big ad channel? 

Remember when we told you about AppLovin, whose stock had grown 600% over the last two years? 

Quick recap:

They’re mainly a mobile game ad network whose latest algorithm is delivering “Meta-like results” according to people like Sean Frank from Ridge.com. 

He and others in DTC are fired up about it because mobile game ads are traditionally for more mobile games, but AppLovin is currently running a pilot for eCommerce brands. 

The craze is at its peak: AppLovin was just recently crowned tech stock of the year. 

If you need any more proof, Zach Stuck from Homestead went and posted his results with the network:

Friday 11/1:

• Spend: $12,029.14

• Platform ROAS: 2.33x

• NB 1DC ROAS: 2.37x

• MMM ROAS: 1.83x

Saturday 11/2:

• Spend: $12,017.14

• Platform ROAS: 2.69x

• NB 1DC ROAS: 2.55x

• MMM ROAS: 2.25x

Sunday 11/3:

• Spend: $12,022.34

• Platform ROAS: 2.47x

• NB 1DC ROAS: 1.73x

• MMM ROAS: 1.57x

Monday 11/4:

• Spend: $12,002.04

• Platform ROAS: 1.85x

• NB 1DC ROAS: 1.53x

• MMM ROAS: 2.57x

If you’re spending enough (there seems to be a $20k/month minimum), you might be eligible to enter the pilot. 

Sean Frank shared an AppLovin contact for everyone to see on Twitter, so we may as well share it here: 

You can also go through Zach for an intro.

Things to watch out for: 

• Take these performance numbers with a grain of salt. These operators have battle-tested ads to repurpose and a lot of money to burn on tests. 

• These are 8 and 9-figure+ brand operators talking. They have the level of brand equity, awareness, and budget to tackle a new channel like this. 

Takeaway: we’re still bullish on AppLovin’s offer, especially early days pre-saturation. 

Which won’t last all that long - AppLovin reminds us themselves in their 2Q24 earnings call: 

“Our customers run marketing campaigns with target return goals, but tend to have a much higher appetite for spend on our platform than we can deliver today. And why can't we deliver more today? Because our current system can only find a limited number of users who will meet their revenue goals.”

Stop treating SMS and Email the same

Feras Khouri, founder of an 8-fig. DTC brand and New Standard retention agency, recently shared how SMS and Email shared how to leverage both Email and SMS in your retention strategy.

The fundamental difference is this: SMS is more intimate. Every single one will be opened, so don’t break that trust. 

Email is your main marketing channel. 

SMS is to make them feel special. 

His Dos & Don’ts → 

Do: Set up your core flows with both. 

Welcome messages, post-purchase follow-ups, abandoned cart reminders… 

Don’t: Treat SMS like email. 

This is not a channel to duplicate your email marketing in a more invasive way.

Instead, try sending them exclusive early drop announcements or some behind-the-scenes content. Make them feel like they’re part of something. 

Takeaway: As Jordan West reported from the eCommerce Roundtable a few months ago, SMS value has dropped as a result of marketers “ruining everything” they touch.

Think of SMS as more of a place to bond with your clientele, rather than just drive sales. Trust the knock-on effect. 

Note - Stay tuned for a fireside chat with Feras and co-found Eric Rausch here at DTC Times.

Is the retail grass greener?

Breaking into retail… many a DTC brand has dreamed of it. 

But if you think it’s all gravy, Isaac from Kanpai Foods and Mini Katana is here to remind you it ain’t that simple. 

Pros:

• More reach

• More revenue

• More credibility

• Lower acquisition costs (you’re not solely reliant on paid and organic)

• New customer experience options (in-person)

• More data

Cons:

• Aggressive demands from retailers

• Aggressive fees, slotting, chargebacks, and more

• If your product doesn’t sell, you get dropped quick

• You only get one chance with most retailers

• It’s capital intensive, i.e. the cash conversion cycle sucks. 

• If your retailer is short on cash, they might try turning you into their bank. 

Takeaway: Achieving scale in DTC is incredibly tough, but getting retail is mo’ money mo’ problems. 

Pros and cons to each, so if you’re looking to break into mass retail, be sure your brand, team, supply chain, and bank account are ready for the challenge.

Quick hits

• Jimmy Kim shares some tips on how to find new ideas for SMS and email marketing.

• Meta is auto-opting people into “test new enhancements” option. Make sure to turn it off.

• How to discount LESS during BFCM and still kill it.

• Athletic clothing brand Vuori lands a $845M investment at a $5.5B valuation.

BONUS - A free Big Profit playbook for BFCM that includes bundling ideas, pricing strategies, and pricing tips.