Your Q4 BFCM cheatsheet

Plus! The demise of Temu??

So we’ve been beating up on Google a lot around here recently. 

But maybe you shaven’t been persuaded to drop Google altogether as an ad channel - maybe you’re still tempted by PMax’s shiny ROAS numbers? 

If you’re a brand spending dollars on Google, and if you’re worried about how to maximize your ad budget before BFCM, make sure to check out the in-depth findings in our first two sections from Olivia Kory this week. 


And if you are battling against cheap overseas knock-offs or worried about the impact of fast fashion spending on Meta…well, we have good news for you. 

With that, this week’s menu:

  1. PMax Truth, or when to use Google’s black box

  2. How to fill your funnel for Q4 

  3. Not a fan of Shein or Temu? Pop the champagne

  4. Quick Hits ← Check for more Google Shenanigans if you’re 🇨🇦

PMax Truth

Are you still using PMAX? 

It’s gotten a bit of a bad rap here at the DTC Times because it seems part of Google’s broader attempts to funnel advertiser money into its unwanted, low-quality ad inventory. 

PMax, initially a black box that was tough to decipher, was caught spending more on Search than advertisers wanted and making dubious attributions. 

But… It’s so easy to use. 

We all wish it would do what Google says it does.

And to be fair, they continuously update it, which is why operators keep experimenting with it. 

One of those Operators is Olivia Kory, from Haus.io, the incrementality and attribution platform.

Since Pmax puts money into Search, it’s important to check whether you should be including or excluding branded terms from your campaign. 

  • Finding 1: 50% of the time, including branded terms drives more incremental revenue than excluding them. However, when excluding them won, it drove 24% more incremental revenue on average. 

    • In other words, branded search wins small, while exclusion wins big. 

  • Finding 2: Excluding brand terms lowers CAC. Every time. 

We don’t know what the sample size is here, but Olivia mentions a range of 19% to 60% lower CAC, or an average 40%. 

The combination of findings 1 and 2 is likely because including brand terms targets existing customers more than new. 

<blockquote>“You will get more revenue when you include brand in PMax. You will get far less profit. 

Having brand in PMax allows the system to spend $150 to generate $100 in revenue while still looking good at the blended level because of the performance of brand. 

This is also one of the challenges with scaling because your ROI on incremental spend goes negative BEFORE your blend is below target.”</blockquote>

Finding 3: Brands with an AOV over $238 drove 27% more incremental revenue when including brand terms. 

There’s a lesson here. 

Never take other’s results for absolute truth. 

Brands’ situations are all unique and what applies to one may not apply to you. 

Olivia’s explanation here is that because higher AOVs drive less purchases, the algorithm has less data to work with and therefore has a harder time driving conversions without branded terms to help. 

So if your AOVs are high, be careful before excluding brand terms. She cites an analysis from Smarter Ecommerce which suggests the signal threshold is in the range of 300 to 1,000 monthly conversions. 

Takeaway: 

  1. If your top KPI is new customer acquisition, exclude brand terms. 

  2. If you have low-volume, high-AOV, you might want to keep them. 

  3. For brands in between, try setting up a script to monitor what search terms you advertise for. If it’s mostly branded, set target efficiency to treat this as a bottom-funnel campaign. That means high ROAS or low CPA.

  4. A general optimization strategy is to test shopping-only PMax against your full placement one. According to Olivia, low quality inventory creeping into search and shopping “can be even more insidious than branded queries”.

  5. Always test to confirm for yourself.

Oh and…

Prepping for Q4

Want to “fill your funnel” before Q4 demand hits? We’re talking Black Friday / Cyber Monday (BFCM) of course.

Guess who has advice for you? Olivia Kory. 

But before we jump in, you need to know what a holdout test is. 

To know the incremental effect of an ad (i.e. its “lift”), you launch a campaign in an area with two groups. The first sees the ad, and the second is blocked, or “held out”. The difference in conversion rate between the two groups is the true impact of the campaign. 

The Haus.io team decided to track how long it takes for the holdout group’s demand to come back to baseline in the weeks after the holdout. Why? Well, if their demand returns fast, they were probably poised to buy already, meaning they were at the bottom of the funnel.

If demand returns slowly, then you know the ad channel drives longer-term impact, and probably acts on the top of the funnel. 

One more thing: they call lift measured during the holdout “immediate lift” and that after the holdout, “delayed lift”. 

Okay? 

Here’s what they learned from past pre-BFCM tests. 

  • Finding 1: Delayed lift exceeded immediate lift in 73% of experiments. 

    • The short term performance indicators in your ads manager only represent a fraction of the impact of your ads. Most of it will come weeks later. 

  • FInding 2: Video campaigns drive 286% more delayed lift than search.

    • Mostly Youtube and Connected TV. 

  • Finding 3: Delayed lift is 79% higher during Q4. 

    • Even for direct response tactics like conversion campaigns on paid social or search. 

So, what should you do? Takeaway, according to Olivia: 

  1. Drop your daily efficiency targets, especially in early-mid November when window shopping is at its peak before BFCM. 

  2. Video campaigns work best. Make sure to run a lot of ads in October to figure out what works, then double down on them when the time comes. 

  3. If you can, measure the latent effects of your key channels before BFCM so you can fine-tune your gameplan for December. 

Also - Resources to up your Q4 game

When it comes to BFCM, you want your marketing firing on all cylinders.


A lot of attention is paid to paid social, CRO, and retention, but not enough brands think about the organic social component. 

On September 25th, join Nick Shackelford of Brez, Thiago Nogueira of Insense plus a roundtable of experts as they discuss how to optimize your organic + paid social tactics. Just in time for Q4. 

Learn how to build your seeding and affiliate programs, understand key social media trends, and create a smooth buyer path from first click all the way down to the checkout. 

BUT! 

If you’re still worried about conversion rate optimization, check out this podcast with Ned MacPherson of Power Digital. 

In it, he talks about the value of…losing. 

Not that anyone wants to fail or losing money, just that failure is part of the process and can be invaluable if you take what it can teach you. 

🤯 Losses can uncover weaknesses, inefficient processes, or unmet customer needs.

📈 The pain of a loss can be a motivator to analyze, adjust, and optimize business operations.

🚀 Analyzing why a loss occurred can lead to innovative solutions.

💪 Learning from setbacks fosters resilience.

🤝 Addressing customer concerns arising from losses can build trust. 

Do your learning now and apply your insights to your store before BFCM hits. 

Goodbye Temu?

The Biden administration recently passed a "Notice of Proposed Rulemaking", which basically means it’s still under consideration, curtailing three sources of unfair competition for U.S. E-Commerce operators. 

The legislation in brief: 

  1. There is no more duty-free import for packages under $800 in value. 

  2. You now have to give your social security number for imports under $800 to go through. 

  3. Products like toys and children’s furniture must come with compliance certificates meeting U.S. safety standards, even when imported in sub-$800 batches.

Here’s who that affects: 

  1. Fast fashion/import sellers like Temu, Shein and Aliexpress. The duties will hit them hard. 

  2. Air freight that capitalize on high volume, cheap shipments from China. That volume is about to drop.

  3. Fulfillment centers that engage in tax avoidance, many of which are in Mexico and Canada according to Jon Elder. 

Takeaway: Chinese knock-offs are about to go extinct. Well, that’s an exaggeration, but you get the idea. Should this happen, most DTC North American DTC brands will be ecstatic. 

Quick hits

 

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